Since reaching their all-time highs in February 2025, the Dow Jones Industrial Average is down 7%, the S&P 500 has lost 9%, and the 15-51i Strength Indicator dropped 12%.
That kind of anomaly always grabs my attention.
First, swift corrections that don’t discriminate by industry or market segment are often the result of institutional profit taking and portfolio rebalancing efforts – which makes total sense in today’s market.
Second, we can all appreciate how overvalued the stock market is right now. Toppy markets are jittery and experience increased volatility. Transitional periods breed uncertainty and fuel speculation about future valuation. And like anything else, economic cycles and inflationary bubbles never last forever. Corrections are a part of life.
And third, it’s helpful to note that all stocks don’t correct the same way or on the same timeline. Reality just doesn’t work that way. Every stock has its own story; a portfolio’s behavior is simply a function of its collection.
When my portfolio underperforms “the market” I want to know who caused the weakness and why, and how much. Making sense of that is what portfolio management is all about.
And just for the record, long-term index trends still hold true: with my 15-51i strength indicator outperforming the market averages in every long-term interval one year or greater. The performances mentioned above are just a short-term anomaly worth noting.
However, a handful of my 15-51i stocks have performed much worse than the market averages, including Broadcom (-31%), Cummins (-19%), and Amazon.com (-20%). Even Deckers Outdoor showed heavy weakness (-50%). Despite that, I’m not worried about them.
Here’s how I see it: as with most 15-51i stocks not mentioned herein, Broadcom and Cummins are simply price deflation, a correction to bring them closer to fair value (P/E v. growth rate) and perhaps a tariff adjustment; amazon.com is a “market indicator” signaling recession; and Deckers is the combination of the two: corrective price deflation (and it had a lot to give up) along with further deductions for being a higher priced player (i.e. Hoka and Teva) in challenging market conditions that include tariffs.
Their stock movements make sense. And because I still like those companies, want exposure to their industries and market segments, and am comfortable with my rankings and allocations – there’s nothing more to do. It’s a correction. It happens.
But Google, down 25% since its February 2025 high, for the first time has me concerned.
Why the unease?
I just upgraded to X premium, which comes along with an embedded version of Grok (Elon Musk’s AI offering) and omg, not only did I cancel my ChatGPT subscription but Grok also replaced 90% of what I used Google for.
And there was the future – the combination of uncensored news and free speech (via X) and sophisticated search (via Grok) along with a free-speaking public square – all baked into one app called, X.
Then who needs Google?
Musk is so smart and so ahead of the game it’s scary. Have you seen his robots yet?
To think that Musk is too distracted with DOGE to be effective in business is to miss headline news: Elon Musk’s AI start-up (X.ai) recently acquired his social network X, as he builds an enterprise to take-on tech-titans like Google while simultaneously bringing home stranded astronauts from outer space.
Can you imagine the X.ai versions of Docs and Excel?
You know they’re coming. Microsoft better beware too.
Tesla (down 45% since its February high) is a buy now and any time because it’s the only way to buy into Elon Musk – and because it’s only a matter of time until X.ai gets folded into Tesla like SpaceX did.
Musk would have to fail at something before I could begin to sour on him. Whether you love his politics or not, investors must appreciate the genius he is. And it’s not every day you can own a piece of someone like that. Only Tesla makes it possible.
But sell your Tesla stock if you don’t like Musk’s politics. That’s totally legit. Heck, I did it with Nike. Not appreciating the CEO is a most justified reason for liquidation. Besides, markets need buyers and sellers to conduct business. It’s what makes the world go round.
As for Google investors, no reason to panic now but antennas should remain high. Sooner or later Musk will fold X.ai into Tesla and that’s when Google becomes expendable.
Two more quick things… 1) it’s easy to forget just how much good has come from the NASA program (like flame retardant materials and strong lightweight materials like cardon fiber) – and Elon Musk owns his own space program. 2) if stocks like Tesla are down so significantly right now imagine how cheap they’ll be when recession triggers further correction.
And that’s where the easy money is: because when the world is falling apart it’s easy to buy into a guy like Musk and a stock like Tesla – who have the uncanny ability to announce good news (like Tesla’s acquisition of X.ai) during another Wall Street catastrophe.
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Until then,
Stay tuned…
