I bought a bunch of brokerage stocks in 2014.
When I bought them, their P/Es were generally over 100.
A few months later,
their share prices took off.
But the higher they went, the lower their P/Es got.
Because the bull market had arrived,
retail trading volumes surged,
and brokerages were making money hand over fist.
Their P/Es dropped into the single digits.
By then, quite a few stocks had already risen tenfold.
In other words,
in just those few months, brokerages made as much as they had in the previous several years.
About a year later,
the stock market crashed in the second half of 2015.
These stocks fell by at least 50%,
and some dropped 80–90%.
Their P/Es were back up in the high double digits.
That was my first impression of cyclical stocks.
Luckily, I was young back then
and didn't have much money.
I took my profits and went off to buy a house and a car.
Those who kept believing in the myth that cyclical stocks would always hit new highs
might still be waiting to break even this year.
Some industries
make no money for ten years,
then earn ten years' worth in one!$SOL
When I bought them, their P/Es were generally over 100.
A few months later,
their share prices took off.
But the higher they went, the lower their P/Es got.
Because the bull market had arrived,
retail trading volumes surged,
and brokerages were making money hand over fist.
Their P/Es dropped into the single digits.
By then, quite a few stocks had already risen tenfold.
In other words,
in just those few months, brokerages made as much as they had in the previous several years.
About a year later,
the stock market crashed in the second half of 2015.
These stocks fell by at least 50%,
and some dropped 80–90%.
Their P/Es were back up in the high double digits.
That was my first impression of cyclical stocks.
Luckily, I was young back then
and didn't have much money.
I took my profits and went off to buy a house and a car.
Those who kept believing in the myth that cyclical stocks would always hit new highs
might still be waiting to break even this year.
Some industries
make no money for ten years,
then earn ten years' worth in one!$SOL
