Stock Market Cappuccino

Is the stock market in cappuccino mode? You bet—there’s talk of froth everywhere, and a lot of people are getting nervous. The Wall Street Journal’s buzzing about how individual investors are turning bearish, scanning the horizon for signs of market froth—those bubbly, overinflated prices that could pop any minute. But here’s the reality: more often than not, there’s going to be some froth somewhere in the market. Prices get ahead of themselves—it happens. Things like the tech sector can start looking a little too foamy for comfort. So, what do you do? Here at Watchdog on Wall Street, we’ve been hammering this home for years: you’re not going to go poor taking a profit. That’s right—don’t let greed keep you hanging on for ‘just a little more.’
A lot of folks out there are terrified to sell because they think, ‘Oh, I can make so much more; this stock’s going higher!’ But do you know that? Because I sure don’t—no one does. I might have a position in my portfolio that’s shot up an extraordinary amount. I still love the company, think it’s a great business with solid growth ahead, but you don’t know what’s lurking around the corner. That’s why you take some money off the table. That’s why you reallocate those gains into other parts of your portfolio that aren’t so frothy—safer bets, less bubbly sectors. You see these pundits on TV, strutting around with their arrogance, acting like they’ve got the future all figured out? They don’t know squat. Nobody does. The best you can do is make an educated guess, and a good portfolio manager hedges their bets.So, if your positions—like maybe in that frothy tech sector—are getting a little too hot, too bubbly, do yourself a favor: take some money off the table, reallocate, and move on. Don’t gamble with your future. www.watchdogonwallstreet.com

Episode Transcript

Speaker 1 (00:00):
The Watchdog on Wall Street podcast explaining the news coming
out of the complex worlds of finance, economics, and politics
and the impact that we'll have on everyday Americans. Author,
investment banker, consumer advocate, analyst, and trader Chris Markowski.

Speaker 2 (00:16):
Ew the stock market in cappuccino mode. Yeah, cappuccino mode.
Is there a lot of froth? A lot of people
worried about this, stories in the Wall Street Journal talking
about how individual investors are bearish and are you got
looking for signs to spot market froth? The reality of

(00:41):
the situation is, more often than not, there's going to
be froth somewhere. Things get sometimes get ahead of themselves.
One of the things that we've been trying to teach
people here is quite frankly, you are not going to
go poor taking a profit. So folks out there that

(01:06):
are afraid, they're they're afraid that I can. I can
make more. I can, I can make so much more.
I think it's going higher, you think, do you know?

Speaker 1 (01:20):
Do you know?

Speaker 2 (01:20):
Because let me tell you something, I don't know. What
I do know is that you know I've got a
position in my portfolio that's up an extraordinary amount. I
still like the company. I think it's a great business.
I think it's going to continue to grow and do well.
But you don't know what you don't know. This is

(01:42):
why you take some money off the table. This is
why you go ahead and you reallocate assets elsewhere to
areas in your portfolio that are not as frothy. Listen, anybody, body,
anybody who claims to know anything, since you watch these

(02:07):
these various different pundits on TV and they're arrogance sounding
like that they know what's gonna happen. They don't know.
Do sure, you can make an educated guess. And what
a good portfolio manager does is hedge. And everyone's situation
is unique and different. Everyone's risk tolerance is unique and

(02:30):
different and needs to be handled as such. But when
I take a profit in a company and that we own,
and we reallocate assets, I'm not looking back. If the
thing goes up the next week another four or five points,
A damn it, I so stupid. No, wasn't stupid, Okay,

(02:53):
it was risk management. It was calculated, just as much
as if I love a company and we purchase it
and then next week it goes down a few points
for whatever reason it may be fundamentals haven't changed still
like the company, it doesn't matter. You follow these principles

(03:15):
and these rules, you will be successful again. If you
think that you're smarter than everyone else and you know
what's going to happen next, and you can time it
perfectly well, you're going to lose. Eventually. You essentially are
turning the markets into a casino. And what do we

(03:39):
know about casinos? The house wins, The house is going
to eventually win. Don't gamble head your positions. Positions get frothy,
as you know, if they like to call it AH
tech sector frothy. Okay, okay, take some money off the

(04:00):
table and move on. Watchdog on Wall Street dot Com