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On February 13th I posted my opinion that a stock market correction was close at hand. I doubt many heeded my warning and why should you? I’m not an analyst, trained or educated in finance, but I could see the warning signs, followed good advice, and gave my own examples of why I thought it was overdue.

At the time of my February 13th post, the DOW was close to 31,500 points. On February 24, it ended the day at close to 32,000. On February 25th a correction started, and I don’t think the bloodletting is done, even after Friday’s close.

2/24/21: 31,962
2/25/21: 31,402
2/26/26: 30,932

In my previous post I mentioned overvalued stocks, such as Tesla.

Using Tesla as an example, its P/E is 1280x. Meaning, the price of Tesla stock is 1,200 times greater than what it is earning in profit, but investors continue buying, gambling they can sell it for more to the next fool.

Tesla was at $816 when I posted. Friday it fell to $675.50 in after-market trading.

I mentioned investors buying anything on hype, without doing due diligence. I gave new IPO, Bumble, a dating app, as an example of buying a new public offering on a first-day buying frenzy, not based on fundamentals. It was offered at an opening of $43.

Bumble ended the day over $70.
That’s a market value of $14 Billion on a company that had a net loss of $81 Million in the first 9 months of 2020. Bumble’s owner became a billionaire in one day, rather than a multi-millionaire.

Bumble went as high as $85 a few days later. It now sits at $67 and has a lot further to fall.

The Dow Jones Industrial Average fell 1.8% in last week’s stock market trading. The S&P 500 index sank 2.5%. The Nasdaq composite tumbled 4.9%.

The 10-year Treasury yield rose 9% to 1.46% after briefly topping 1.6% on Thursday. While good news for many financials, higher rates weighed on growth stocks.

Growth stocks being hit hardest was also something I mentioned in my previous post.

Doing my own chart analysis, I can see the possibility of another 1000 point drop in the DOW before it reaches support levels around the 29,900 area, but it’s very possible that won’t happen because of one thing.

The intervention of the Fed and an influx of new money for retail investors.

The House passed the $1.9 trillion Biden stimulus plan early Saturday, including $1,400 stimulus checks as well as a $15 minimum wage that can’t be included under Senate rules. The $1400 check is in addition to the $600 already sent out.

Our fiat monetary system is printing money to support the economy, but there is nothing that gives that printed money value. It isn’t backed by gold, or any other tangible asset.

This causes inflation. An excess of printed money loses value and buys less.

To hedge against inflation, interest rates are raised, but higher interest paid by companies seeking loans for equipment, payroll, and other needs causes a devaluation of their stock.

But, here’s my take on the big picture.

As I mentioned in my previous post and suggested to others, I closed my positions in the growth stocks I had, and reduced positions in the others a couple of weeks ago, opting to hold cash for what I foresaw coming, and look for a different opportunity.

I think the worst of the correction is done. Not because the economy is any better than it was 2 weeks ago, but because retail investors are getting another windfall. Actually, three of them.

First, the $600 stimulus check. Second, their tax refund. Finally, the last stimulus check of $1400 (expected to eventually pass in the Senate).

Many are still not paying rent, utilities, or mortgage payments. I know one who doesn’t even pay for trash pickup. Most of these people, who don’t run out to Walmart for a bigger large screen TV, or wasting what little money they have on flash drives for videos, will be plunging more money into the stock market. They’ll want to take advantage of lower stock prices. This may result in another short bull run.

For me, and many investors, I’ve gone to the Crypto currency sector.  No, I didn’t buy Bitcoin, but I invested in stocks involved in the mining of Bitcoin, or the blockchain technology. I can’t buy the actual coin in my Roth IRA. Only stocks can be purchased. I got lucky in getting in as early as I did, though not as lucky as those who bought in December and January.

As you are reading and hearing in the news, Bitcoin is no longer a currency used between computer geeks passing it between one another, when it was valued at less than 1 cent per coin.

Banks and corporations are now buying Billions of dollars worth as a hedge against inflation and have plans to accept them in lieu of cash for conversion.

As cash becomes trash, Bitcoin will rise in value (though it went through a price correction last week, independent of the stock market correction). If it remains above $40,000 next week, I expect it to make a run for $75,000 in less than 6 months.

Despite every autonomous government in the world despising the the thought of any currency being used in place of their own fiat money, it is becoming increasingly popular with each passing year, as a means to maintain wealth in inflationary times.

FUN FACT: Laszlo Hanyecz didn’t expect to make history in 2010, when he wanted to prove Bitcoin could be used as currency.

He posted on the Internet he would pay anyone 10,000 bitcoins if they would buy him two pizzas and have them delivered. After two days of no takers, he asked, “No pizza?”

Two days later, on May 22, 2010, Jeremy Sturdivant, an 18 y/o took him up on his offer. Hanyecz posted a picture of his two pizzas and paid Jeremy with a bitcoin transfer in what’s believed to be the first transaction using cryptocurrency to pay for a product.

At the time, each bitcoin was worth less than a penny … about $0.0041 to be specific. The pizzas cost about $30, so Hanyecz offered $41 as an incentive in accepting 10,000 bitcoins.

Today, those 10,000 coins are worth $464 Million.

I’m willing to buy Jeremy two pizzas for just one of those Bitcoins.

Notice: Any and all discussion of a stock or investing should not be considered financial advice and is for entertainment purposes only. I often lose my car keys and forget where I parked my car. I am not a financial advisor. Do your own analysis before investing.