Today's 1000+ point plunge for the Dow Jones Industrial Average can be attributed primarily to algorithmic, programmed trading. In an absence of any particular news during a trading day, the massive selling (or buying) that occurs during the opening or final hour of a trading day illustrates that a good deal of selling is occurring because of broken technical market levels which triggers further selling and a negative feedback loop. In addition, the massive rise of passive investing in indexes - which are laden with overvalued growth stocks unlike the reasonably priced value-based, dividend stocks we own - is major contributor to the recent sell-off as valuations come back down to earth for such overpriced companies.
Today's 2%+ market sell-off has certainly unnerved some investors. Like any market move in the short-term, it's important to take a deep breath and think about your long term goals as we assess our outlook and strategy. So, has anything changed?
After receiving a tip from my Uber driver, a call from my uncle Ed and questions from my kids about Bitcoin, I thought I would pen a few words about the cryptocurrency. It's important to first understand that anyone who bets on Bitcoin, or any other cryptocurrency, is rampantly speculating rather than investing. There is absolutely no way to fundamentally judge the intrinsic value of Bitcoin as it produces no cash flow nor has any earnings. As such, it is of course impossible to also make any determination when to buy or sell it.