What caught my eye this week.
The speculative stock sell-off I flagged up  at the start of December has started to chip away at the markets more widely.
The US Nasdaq index is more than
10% 14% off its highs.
Several mega-cap tech shares – a big chunk of the US indices, and hence a meaningful stake in global tracker funds – are down about the same, too.
Microsoft and Meta (née Facebook) are 10-20% off their highs. The biggest, Apple, is getting there.
And ‘FANG’ stock Netflix1  plunged more than 20% overnight on earnings suggesting pandemics don’t last forever and growth is slowing hard.
Other former blue-sky high-fliers have already lost more than three-quarters of their value.
Look at price graphs of Peloton or Zoom2  for a taste of what happens to story stocks  when the story changes .
The first cut is the cheapest
So far the declines only amount to about a 6% drop in a global tracker fund , from a UK perspective.
Pretty piddling. Could it get worse though?
Who knows – but veteran investor Jeremy Grantham is sure it will.
The founder of GMO and a self-styled witcher  when it comes to bubble bursting, Grantham warns :
Today in the U.S. we are in the fourth superbubble of the last hundred years.
Previous equity superbubbles had a series of distinct features that individually are rare and collectively are unique to these events. In each case, these shared characteristics have already occurred in this cycle.
The checklist for a superbubble running through its phases is now complete and the wild rumpus can begin at any time.
Read Grantham’s entertaining note  for more, including graphs like these:
As Geralt Grantham sees it, the bottom-right corner is about to get… interesting.
Now, you should know that Grantham has been calling the US overvalued for years. In 2013 Grantham foresaw  the market going 20-30% higher before crashing. He’s been using the word ‘bubble’ since at least 2014 .
Timing is the perennial curse of those who’d oppose a runaway market – but eight years is still a long time to claim you weren’t wrong but early.
With that said, anyone who lived through the Dotcom bust  will recall the pattern of the frothiest stocks falling first.
We’ve seen sufficient crazy madness  over the past two years to tick Grantham’s ‘euphoric’ box, too.
Add rising yields (even in Germany ), expectations of rate hikes in the US – roiling growth stocks and government bonds alike – and a flattening yield curve, and Grantham might have all the ammo his bubble-bursting needs.
Steady as she goes
Naughty active investors (like me ) will act as we see fit, for good or ill.
Wiser passive investors shouldn’t panic. Not least because they’ll probably do better than most active types just by sticking with their plan.
Think how often our Slow & Steady portfolio updates  begin with The Accumulator shrugging off some brouhaha, then detailing further gains.
As Aswath Damodaran – dubbed Wall Street’s ‘Dean of Valuation’ – conceded this week  even as he calculated stocks were 10% overvalued:
If you look at history, it seems difficult to argue against the notion that market timing is the impossible dream…
The most important thing is to have a well-constructed, diverse portfolio.
You could have owned almost anything up until late 2021 and seen it go up.
Everyone is a genius in a bull market.
In a bear market we all feel like idiots. Crashes come with the territory of investing, but don’t make it harder on your future self than it needs to be.
Put yourself in a position to hold – and ideally buy more  – in a slump.
For now: have a great weekend!
Asset Allocation Quilt: winners and losers of the past ten years – Monevator 
From the archive-ator: How to maximise your ISAs and SIPPs to reach financial independence – Monevator 
Note: Some links are Google search results – in PC/desktop view you can click to read the piece without being a paid subscriber. Try privacy/incognito mode to avoid cookies. Consider subscribing if you read them a lot!3 
UK shoppers slash spending after Christmas spree, Omicron – Reuters 
Amazon pauses plan to block Visa credit cards in UK – Which 
House prices surge as fewer properties come to market – Yahoo Finance 
Britain has around 2,000 ISA millionaires – Independent 
UK State Pension system not fit for purpose, finds MP report – Guardian 
British firms start six-month trial of four-day working week – Metro 
By 2050, a quarter of the world’s population will be African – Guardian 
Products and services
Yorkshire BS has launched a lottery-style savings account – ThisIsMoney 
Probate fees set to rise on 26 January – Which 
Open a SIPP with Interactive Investor and pay no SIPP fee for six months. Terms apply – Interactive Investor 
Cash machine withdrawals fell another 6% in 2021 – ThisIsMoney 
Tesco Bank rolls out Clubcard Pay+ for all its customers – Which 
Homes for sale in ‘super’ villages, in pictures – Guardian 
Comment and opinion
Why indexing US small cap stocks hasn’t worked – Morningstar 
The Big Squeeze is on, and Rishi Sunak’s tax hikes add to it – David Smith 
A day to remember – Humble Dollar 
Don’t wait until your 70s to shelter from inheritance tax – ThisIsMoney 
Why everyone thinks the inflation numbers are wrong – AWOCS 
Create memories, not regrets – Spilled Coffee 
Assuage – Indeedably 
Why do investors buy the most expensive assets? – Behavioural Investment 
Joy vs meaning vs work vs money mini-special
Efficiency makes you happy – Joachim Klement 
The high cost of an easy job – Of Dollars and Data 
Reviewing The Sweet Spot  and 4,000 Weeks  – Ben Casnocha 
Crypt o’ crypto
Could blockchain speed up homebuying? [Search result] – FT 
FCA moves to reign in UK’s crypto boom – TechCrunch 
Coinbase to enable NFT purchases via Mastercard – Decrypt 
Naughty corner: Active antics
Selling out – Howard Marks 
The DIY investors that others pay thousands to copy – ThisIsMoney 
Peloton and the kiss(es) of death – Investment Talk 
Japan: entrenched perceptions ignore an improving reality – GMO 
An old interview with Peter Lynch and John Templeton – Novel Investor 
How likely are you to catch Covid multiple times? – Guardian 
WHO says Omicron won’t be the last Covid variant – CNBC 
Hamsters abandoned in the streets of Hong Kong on Covid fear – HKFP 
Kindle book bargains
How to Build a Memory Palace: Books 1&2 by Sjur Midttun – £0.99 on Kindle 
Scrum: The Art of Doing Twice the Work in Half the Time by Jeff Sutherland – £0.99 on Kindle 
The 5AM Club: Own Your Morning by Robin Sharma – £0.99 on Kindle 
Grit: The Power of Passion and Perseverance by Angela Duckworth – £0.99 on Kindle 
The best ways to buy an electric car… [Search result] – FT 
…and what it’s like to own one in the UK – Guardian 
A lot of online returns end up in landfill – NPR 
Pristine coral reef discovered off the coast of Tahiti – Guardian 
How the refrigerator became an agent of the climate crisis – New Yorker 
Off our beat
Tim Harford on the monopoly on Monopoly [Podcast] – The New Bazaar 
Microsoft’s $69bn purchase of Activision Blizzard encapsulates an industry in a deal – The Ringer 
“We are prone to overestimate how much we understand about the world and to underestimate the role of chance in events.”
– Daniel Kahneman, Thinking, Fast and Slow 
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- Disclosure: I hold. [↩ ]
- Disclosure: I also hold Zoom. Alas. [↩ ]
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