The Times Are Changing...

In 1964 Robert Zimerman, aka Bob Dylan wrote these lines: 

The line it is drawn
The curse it is cast
The slow one now
Will later be fast
As the present now
Will later be past
The order is rapidly fadin'
And the first one now
Will later be last
For the times they are a-changin'

This text is taken out of iconic song, The Times They Are a-Changin' and now in 2023 they seem more relevant than ever. 

Since the end of 2008, the U.S. was in a decade and a half of "easy money" with interest rates ranging from 0% to 2.5% at the peak. With that, growth companies stocks flourished and became increasingly popular with retail investors. While some were generating profits and cash flow, most were not actually making any profits, but still getting love from the market nevertheless. 

Well, the tables have definitely turned. As the Fed crossed 4.5% interest almost over night in macro economic terms, and as it continues to chase inflation with further rate hikes down the road, all the way to 2% inflation, which can take a couple of year, things are definitely a lot different now and we should not ignore it. 

I have been warning about this for a year now, and while some YouTubers make fun of these warnings for ad clicks and ad revenue (Sasha Yanshin unfortunately has gone down that path recently as well - less views to go around in the finance niche caused many creators to turn on each other for views lol) those funny videos not only offer 0 value, they are actually very dangerous since they encourage retail investors to keep their head in the sand and ignore the macro economic environment, hoping for the best. I refuse to sell out to this low risk bs for cheap views, and I demand from myself to offer you real value and analysis to help you prepare and adjust as things around you change. 

What does it mean for my strategy going forward? 

Well, first of all its time to get rid of empty non cash producing pure growth stocks (Lucid is a great example but there are plenty of others). If it don't make no dollars it makes no sense. 

Second of all, as far as crypto, the last year proved that everything except bitcoin on the crypto scene is a waste of time. The days of BS crypto projects are long gone and should be forgotten. Never played that game personally but if you did, its time to stop. 

And most importantly, as of 2023, every stock in your portfolio must check 5 important boxes: 

1) High Liquidity (High cash / Low debt) 

2) Positive Cashflow (cash bleeders = dilution or more expensive debt)

3) Reasonably Valued (sub 15 price to sales)

4) Double Digit Revenue Growth (realistically 10% -30% annual growth)

5) Balance Sheet Strength (2:1 assets to liabilities minimum)

Will this make you a billionaire? probably not, but its a good methodology to clean up your portfolio and fortify it against the big bad wolf lurking outside. 

Ask me any questions about this article in the comments below. 

Tom