Lui’s Lowdown on the Stock Market: Speculative momentum assets getting crushed…dividend stocks holding steady
CWM stock
By John Lui - Managing Director and Chief Investment Strategist
When overcrowded price momentum assets collapse, fear replaces fear of missing out (FOMO).
FOMOs chasing price momentum destroyed their wealth as Bitcoin collapsed…
Source: LSEG via markets.ft.com
Extreme FOMOs that speculated in MicroStrategy/Strategy, a database tech firm that borrowed to invest into Bitcoin, did far worse than Bitcoin…
Source: Google
Silver, another overcrowded and leveraged FOMO trade implodes…
Source: Refinitiv
FOMO is not a way to invest and retirees need income to pay the bills and long term appreciation to hedge against inflation. As FOMO turns to fear, the market is returning back to prudent investments such as dividend stocks.
Dividend stocks lack the hype, but does the job…
Source: Google
Dividend stocks provide competitive long term wealth creation with a better risk/reward profile…
Source: Financial Times
Retirees can’t afford to chase speculative momentum FOMO “investments” as losing a chunk of your wealth is hard to overcome with no wage income. A 50% drop in your investments means you will need to sell out at a loss to pay your bills and require a 100% return to get back to breakeven.
Live long and prosper. Invest into dividend stocks.
John Lui
Chief Investment Strategist
Disclosure
Chatham Wealth Management is registered as an investment adviser with the SEC. SEC registration does not constitute an endorsement of the firm by the Commission, nor does it indicate that the adviser has attained a particular level of skill or ability.
Past performance may not be indicative of future results. All investment strategies have the potential for profit or loss. Different types of investments involve varying degrees of risk, and there can be no assurance that any specific investment or strategy will be profitable for a client's portfolio.