Thoughts on short term market direction
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The market’s reaction to AI spending has been flat-out shortsighted. Investors want instant profit from something that, by design, requires massive upfront investment. It’s the same mentality that would look at a half-built city and complain it isn’t generating rent yet.
AI infrastructure isn’t a quick trade; it’s a multi-year buildout of compute, data pipelines, model capability, and product integration. Spending heavily now isn’t “wasteful” — it’s the cost of owning the future. Every major technological leap has followed this pattern: invest aggressively, endure a period where the cash flow looks ugly, then harvest the returns once the system is fully built and scaled.
Markets pretending this should behave like a consumer app launch are being irrational. You don’t build power grids, highways, or telecom networks for short-term comfort. You build them because once they’re in place, the monetisation becomes unavoidable and enormous.
It's not even as though the names selling off are even vaguely correlated to the perceived concern.
I see this as just a one of those market quirks. It will find something else to focus on in short order. Like rates 'cos jobs data was good'
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Well that nice little kick up yesterday morning has been followed by a (slightly larger) dip down this morning. I'm ever so slightly down on where I was two days ago.
Ho hum. In it for the long term and all that ... hopefully things will trend upwards over the coming couple of weeks. I look forward to the 'unavoidable and enormous monetisation'!
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Havnt posted here before and last was on PH. Anyway short term I get my fix from a 212 account. Most of funds are in with Corbens but to try and stop me chopping and changing as long holdings are clearly the best I play with some funds in 212 which then satisfies the stockmark genius delusion I have in sell sell and buy buy buy and min, hour, day trade.
Keep up the good work with Cobens. my PHT has done brill. -
Nice to see you back :).
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see Micron post - when companies shatter expectations only good things can happen
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Adam ..do we have any interesting news updates etc coming our way in January..
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Adam ..do we have any interesting news updates etc coming our way in January..
@Ducati996R said in Thoughts on short term market direction:
Adam ..do we have any interesting news updates etc coming our way in January..
Well it looks like the words 'Trump' and 'Tariff' are being mentioned again. And those two words in the same sentence aren't usually good. Let's throw in 'Greenland' as well, and I think we could have some very interesting news updates.
Anyone have any opinion on where this one is going? US invasion? Eurozone troops fire on NATO allies? Putin/Jinping laugh all the way to the arms launchers? Or all bluff and bluster from The Orange One and it'll blow over like a short sharp rain shower?
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Trump yet again.
There’s chatter around the ‘net about Trump interfering with US interest rates and setting them below where they should be, and the resultant market reactions, along with people thinking that borrowing is cheap and piling in, and then can’t repay - hmm, where have heard that before?
Anyway, any thoughts on the likelihood of this, and if he does, what the effect might be on our funds? Are we shielded to any extent?
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It's speculation however it's no secret Trump wants a weaker $ to drive trade and fix the trade imbalance. On the flip side US companies in theory do better and their stock price goes up. And ccy pairs are relative. GBP is hardly in a great place either. I largely ignore this sort of tinkering and sitting where we are with our flag ship portfolios I can't see any issue. If you want US company exposure and that is the tilt you can't avoid the dollar-and for clarity we aren't in the hedging game because that costs money and you need to lock in cashflows today which is just adding another layer of speculation.
What we have seen over the last 9 months is DT commenting -5 mins later it's something else. Focus on the businesses and if they do well, so will you.
Earnings season kicks off next week so that is all that matters.
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It's speculation however it's no secret Trump wants a weaker $ to drive trade and fix the trade imbalance. On the flip side US companies in theory do better and their stock price goes up. And ccy pairs are relative. GBP is hardly in a great place either. I largely ignore this sort of tinkering and sitting where we are with our flag ship portfolios I can't see any issue. If you want US company exposure and that is the tilt you can't avoid the dollar-and for clarity we aren't in the hedging game because that costs money and you need to lock in cashflows today which is just adding another layer of speculation.
What we have seen over the last 9 months is DT commenting -5 mins later it's something else. Focus on the businesses and if they do well, so will you.
Earnings season kicks off next week so that is all that matters.
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It is a proper challenge, ignoring all the trumpian noise, isn’t it!
My main non-Cobens pot is my Aviva DC pension. 60% global fund, 20% North American & 20% BNY multi-asset (in a very weak effort to counter any US collapse
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I keep checking and thinking “I should de-risk some of that properly”, but then I remember if I had de-risked this a year ago when things looked a bit sh!te, I’d have missed out on some serious gains
I do expect some form of correction this year, but then the Tangerine one has another vocal aneurysm & things drop….& climb back up when TACO does it’s work.
Sometimes doing nothing is the best policy. As my mum always said: “when in doubt, do nowt”
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Hi Mike,
You will always see movement but almost without exception those moves have been driven by rhetoric and posturing. The underlying businesses have never been in better shape, which would seem at odds with the idea that we will see a real correction.
Let's see what the second half of the week and next tell us.
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Do we expect Meta,Microsoft and Apple to beat the forecasts
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Snag is that I need to pay a tax bill at the end of this week so if I take money out then I will miss the imminent gains ... boo!
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Do we expect Meta,Microsoft and Apple to beat the forecasts
@Ducati996R said in Thoughts on short term market direction:
Do we expect Meta,Microsoft and Apple to beat the forecasts
Hi Ducati,
No sugar coating-I expect Meta to have a very strong quarter with revenue close to $60B and earnings circa $21B ($8.50). Long term I think Meta will grow rapidly
MSFT, I expect growth in the late teen 17-19% over 2024 comps. Expect $80B revenue and $3.90 ish
Apple. Always difficult to gauge, very china market dependant. Rarely disappoints. Services being its real furnace. Overall our Apple exposure is modest cf where we have been with the holding. It's a very high quality SWAN (sleep well at night) holding but it's double digit growth days are probably behind it-still has its place in many portfolios.GOOG-the one to watch. Still generating very impressive revenue and margins. GCP (cloud) growing rapidly-probably the brightest minds work at GOOG. A very deep repository of IP across robotics, autonomous driving, quantum, search, media(YT). Very pleased we bought with both hands when it was unloved. If any company can rival Nvidia for outright earnings and size, it's GOOG. I can't see a scenario where we would sell it (rebalance yes but sell outright, doubt it).
NVDA, a coiled spring imo. We await the china orders. Even without China I expect a big beat this quarter and a raise. Guide was $63B I recall and they could hit close to $70, normal rhythm being + $8B coq so the 70/80/90/100 is in scope-add china and we step up maybe another $8B/q. Margins are nothing short of huge. Net conversion over 52% for every dollar in sales, maybe 54%. Its real PE is sub 25 and its growth rate is around 50%
MU don't report until March but SK Hynix report on the 29th so we will get a glimpse of the current pricing market then. Difficult to say how rapidly Micron grow due to the very erratic but positive spot market. Suffice to say, it was only 4 months ago that the market expected $20 EPS (PE 20 even now) and this flipped to $34 EPS with current Q guided $8 ish and I think that is very low. They could report $10+ and imo they will, guiding higher still. Micron produce the very best HBM4, it's 30% more efficient that SKs silicon-they've sold it all until 2027. They recently purchased a new facility to jump ahead of their existing roadmap and are spending $20B on Capex to scale as quickly as possible. The stock has gone parabolic but is it expensive-no but it will probably remain volatile as the market absorbs the duration vs price appreciation.
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Many thanks for your thoughts