They have had a great run but one has to wonder whether the good times are over. Some of the darlings of 2103 have come down hard in 2014 including TSLA, AMZN, DDD, TWTR, FB, NFLX, and CMG. For months, these stocks have defied gravity and made value investors scratch their heads and shake their fingers. No matter what the overall market did, these companies seemed to be bullet proof.
But in February – March 2014 they started dropping and this time there hasn’t been any bounce back. Prior to now, the downturns have never been big and the stock shares have always seemed to recover and shoot back up. Investors were willing to buy at every downturn. Is this time finally different?
It seems high growth traders / investors have been playing a game of musical chairs with high flying stocks. The key is, get in when the stock is rising and make sure to get out with a profit. Some investors even just use charts to invest. Nothing else. They hope to hitch a ride on any stock that shows an uptrend and ride it till the line breaks. They couldn’t care less what the company does or how solid it is. Investors like these have to be ever vigilant and keep a daily tab on share prices. High growth can be very rewarding but if you stay in a stock too long, it can be very costly as well.
Amazon’s stock particularly, has the most people wondering how long the charade can go on. The “charade” that is, of having little to no profits and yet having the stock price continue to rise week after week. Jeff Bezos has been able to convince investors that sacrifice now will lead to big wins in the future and up until a couple of months ago investors bought it. But lately the stock has shown a lot of weakness with many more down days than up days.
Conflicting views are everywhere on the market’s direction as we reach a point in history that most people agree has never been seen before. Record levels of debt along with world markets equally on ice has economists wondering whether the stock market has slowly reached its tipping point. There are valid arguments on both sides with many believing it has further to run. But even if the market does continue higher, there is no guarantee the high growth stocks will run with it. Investors have clearly been willing to pour money into high growth and disregard most everything else about them.