What happens if people actually get interested in this market? What happens if the average investor actually comes back and starts buying individual stocks? Where can this thing actually go?
I know there are plenty of statistics that show an inexorable decline in interest and trading in the stock market as a whole. We know there are entire outfits that try to scare you out of picking stocks, saying you are basically a chowderhead if you even try to select winners and you put your life in your hands if you buy an individual stock because of the dreaded "single stock risk." Yep, they say they are concerned that you could buy a total loser and it would destroy your nest egg. So much better to buy their diversified ETF so you can own winners and losers!
But there's something afoot after nine straight days where the Nasdaq has just rallied and the year's proving to be a good one. There's something going on, at least anecdotally, because these days when I am stopped on the street or when I talk to random folk or good friends, I am beginning to be asked quite a bit about my view on stocks and, more important, I am getting a lot of thanks and a lot of questions about stocks we've recommended that have worked well for people.
Understand, the wise guys out there will say forget it, nothing defines a top more than when a random person who usually just wants a selfie with me is now asking about stocks. You can hear the catcalls, can't you? This analysis is damningly reminiscent of the proverbial shoeshine boy in 1929 buying RCA at $400 or the cabdriver bragging about his Worldcom in 1999, a company that ultimately proved to be a giant fraud.
That kind of dismissal, though, would be wrong. It would be wrong because the phenomenon is just starting. You don't start betting against the market in the first weeks of when individuals are chatting me up about stocks, even as I do admit that I am merely a dollar sign represented by a man.
Let me give you some examples, ones that make you think, hmm, single-stock risk, I don't know if it's that much of a risk factor if you get the darned thing right.
Last week I had lunch with a man known for his fabulous charitable works after being a leader of a great institution over multiple decades. The conversation turned to the stock market and how amazing it's been.
"You know, one of my kids talked me into buying some Amazon a while back," he said. "So I bought $100,000 worth. You know, I looked at it the other day. And it's worth $8 million. Pretty good for listening to your kids."
I'd say so.
I'd also say it was one of the most gettable gains in history given its endless dominance and the wonders of Amazon Prime. Oh, and it's still not too late to buy.
You know Nvidia (NVDA) has been a real winner here. The chipmaker's stock traded at $54 this time last year. It's now at $166. Whenever I had a winner of a stock like that in the old days when I managed money, I always named my pets after them. We adopted a stray brown cat in the early 1990s and I called it Flo, after a monster trade I had with Flowers Industries, the bakery stock. When a stray black cat found her way to us, I named her Bessie, the old nickname of the late, lamented Bethlehem Steel, which we had shorted from $25 to zero.
We even had a cat we called Komag. She was named for the stock of a disk drive component that gave us a five-bagger. Komag, sadly, was hit by an 18-wheeler -- and yes indeed, she did bounce after that unfortunate incident, and that was pretty much the end of mongrel moniker naming era.
But lately, with this newfound enthusiasm for stocks, I renamed Everest, our rescue mutt, Nvidia, literally to draw attention to the stock. I post pictures of Nvidia on Twitter regularly chowing down on stuffed animals I give him named for Nvidia competitors.
I have since had not one, not two, but three patrons at Bar San Miguel tell me they had bought Nvidia after they heard me rename that mongrel for the red-hot chipmaker.
Now, I am not a total bozo about this stuff. In each case, typically over a Pacifico or maybe a Wahaka or an El Buhol mescal, I say, wait a second, did you do any homework whatsoever before you pulled the trigger? Again, I got a mouthful in each case, all three ticking off the litany of what makes Nvidia tick: chips for artificial intelligence, chips for self-driving cars, chips for data centers. They knew the story, not just the dog. One day maybe they will just know the dog, and it will be time to skedaddle, but when you can go toe-to-toe with random drinkers at a local tavern, about a stock that you think the world of, that's a real good sign.
Oh, and yes, I will keep posting pictures of Nvidia as he's enjoying all of the attention and now answers not just to Everest but to Nvidia, even as he's not that bright, before I became Gandhi-like I would have called him stupid -- and I am surprised he answers to anything other than the dinner bell.
The other day, walking out of Starbucks, a guy asks me if Alibaba's (BABA) still good. I shot back, why did you buy it? He said he watched the show, when I profiled it, said it made a ton of sense to buy the Amazon of China and he simply wanted to know if I had changed my mind after it had run so much. Was it too expensive? Again, totally rational. I said hold on.
Oh, and needless to say, I am thanked pretty much every day for a Facebook (FB) or an Apple (AAPL) or a Netflix (NFLX) , not because I discovered them, so to speak, but because I popularized them in a way that made these people hold on even as they had made excellent gains.
Once again, always the vigilant skeptic about the vox populi component, I ask them what they know about the companies and I am pleasantly surprised that they know a lot. One person stopped me in the elevator and asked me if the stock of Universal Display (OLED) is still a good play on the upcoming Apple iPhone iteration even though it's been roaring.
Another quoted Warren Buffett about Apple being a consumer-product stock that's cheaper than the others. Needless to say, people bought Facebook and Netflix because they love the companies, although I always ask those who own the former what they think of Instagram, just to be sure they know Facebook owns that company.
They always know.
Then at the beach last week, a gentlemen questioned me about how high Broadcom (AVGO) could go and was it overdone, or should it be held because it has so much Apple iPhone content. I felt like asking him what he thought was right to do. (Facebook, Apple and Broadcom are part of TheStreet's Action Alerts PLUS portfolio.
Finally, the father of a young kid I know had bought some of the gaming stocks because he was wise to the e-sports rage and to the stay-at-home entertainment concept. Smart call.
It's not just the hottest of the hot. Someone stopped me the other day and said he had researched furniture maker Herman Miller (MLHR) and liked its consistency. Another had bought some Costco (COST) stock down here, theorizing that it's a good-enough operator that it can coexist with Amazon. Have to say, tempted to agree with him.
Now, this whole theory of mine has less to do with these winners than it does with the concept that people are beginning to wake up to the idea that owning the stocks of companies they use every day to make calls, to be entertained, to buy merchandise or to show everyone how great they look can make you money.
If that's the case, despite the incredible run, and certainly in spite of the vast incompetence and rancor in Washington, there could be some real firepower that could come off the sidelines and into this market.
You know what? Until I bump into someone who has bought the stock of Nvidia because my dog answers to the name, and not because he knows what it does, I am tempted to let things ride. Why not? Finding the next Amazon and buying $10,000 worth could have made you $800,000. Not as good as $8 million, but a heck of a lot better than a sharp stick in the eye.