How high is too high?
You pot smokers out there know what I mean! High can be fun, too high can be scary. On August 11th it was: "20 Million Tuesday, 28,000 Tuesday – Record Infections, Record Highs" and, speaking of infections, happy 6M America! We had 5M on August 10th… Anyway, August 3rd was "Monday Market Movement – Nasdaq 11,000 and Bust, Again?" and, 10% later, I was certainly wrong about that one.
AAPL was $425 on month ago, now it's split 4:1 and it's $129 so 4x that is $516, that's up 21.5% in 30 days for the World's biggest company so of course the AAPLDaq is up 10% but AAPL had help. GOOGL has gone from $1,450 to $1,650 (13.7%), AMZN from $3,100 to $3,450 (11.2%), FB from $250 to $295 (18%) and, of course, TSLA has gone from a split-adjusted $300 to $500 (66%) over the past 30 days.
This is NOT reality, this is a game. When you are playing a game and the rules are not clear and they keep changing – your chance of winning becomes random or, if someone else is making the rules, then your chance of winning is pretty much zero and you might want to play a board game under those conditions but should you really be playing with your retirement account?
Please just THINK about what you are doing. As I noted last week, there's very few stocks pulling up the whole market and, while some of these sky-high valuations may be justified, the weight of the thousands of others that are not begins to put a drag on the indexes at some point. Think of each index Dollar added to the underperforming stocks as a weight the high-flyers need to carry with them to get to the next level. At the rate the Government is spending and the Fed is printing – we do have a lot of lift – but it's not infinite and every day the markets move higher adds more weight that needs to be lifted to the next level.
Evenually, gravity will take its toll.