The Quiet Before the Radiator Explodes
Written by: George from The Smartin Team
The sun is up, the coffee is bitter, and the futures are ghosting me. They aren’t even on the board. It’s like the market is playing hard to get, and I’m the guy standing outside its window with a boombox that’s running out of batteries.
I look at the overnight news and what do I see? Nothing. Australia was quiet. Israel was quiet. Europe? They’re probably all out for a long lunch. It’s too quiet. You know what happens when it’s quiet? That’s when the radiator in the corner starts making that clicking sound right before it sprays scalding steam all over your silk pajamas.
The VIX is sitting at 18.22. It’s down -2.93%. Everyone is relaxing. They’re exhaling. I don’t exhale. Exhaling is just a way for the air to leave your body so the market can punch you in the solar plexus without any resistance. People see a lower VIX and think “stability.” I see a lower VIX and think “the sharks are just swimming deeper so you can’t see the fins.”
The PayPal Paradox and the Big Blue Crater
Last week was a total circus. The QQQ dropped -2.31% and the SPY shed -0.78%. It was a haircut, but the kind of haircut where the barber slips and takes off half an ear. And yet, amidst the rubble, PYPL goes up 18.7%. Why? Because I didn’t buy it! That’s the only logical explanation. If I had put five dollars into PayPal, the company would have pivoted to selling carrier pigeons by Tuesday.
Then you have IBM. Down -26.7% in a week. Twenty-six point seven! A quarter of the company just evaporated. It’s like going to a buffet, paying full price, and finding out they’re out of everything but the decorative parsley. My gut—which is a traitor and a liar—is telling me “George, it’s a bargain! Buy the dip!” So, naturally, I’m doing the exact opposite. I’m treating IBM like a gift shop in a tourist trap. I’m looking, but I’m keeping my hands in my pockets.
Why My Gut is Under New Management
Peter Lynch says you should “buy what you know.” Well, I know my dry cleaner, and he lost my favorite pair of corduroys. Should I buy his business? No! I should probably short his ability to find a belt loop. The “know what you own” rule only works if you actually look at the numbers. If I followed my instincts, I’d be invested in a company that makes “New Car Scent” air fresheners because I like the smell.
This is why I’m obsessively checking a fundamental stock screener app every ten minutes. I need the math to tell my feelings to shut up. If the PEG ratio is bloated and the debt is piled high like my laundry, I don’t care how many people are using the app to buy cat sweaters—it’s a trap. Lynch would look at a -26.7% drop in IBM and ask about the earnings growth, whereas I just want to hide under the covers until Friday.
We’re heading into the open with no futures data and a VIX that’s pretending to be our friend. Last week, DJT was up 13.4% while Nokia was down -13.4%. It’s a madhouse. The inmates are running the asylum and they’re all trading on margin. I’m going to sit here, do the opposite of whatever my heart tells me, and wait for the radiator to blow.
If your instincts are as catastrophic as mine, you need a cold, hard second opinion before you set your brokerage account on fire. Run the ticker through this and let the math do the screaming for you.