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You know what I love about Goldman Sachs? Their timing. |
They just called the bottom on software after we saw a trillion-dollar wipeout. Perfect. Absolutely perfect timing, guys. |
While Goldman's telling everyone the worst is over, I'm sitting here looking at the math and seeing something completely different. |
We just got a dead cat bounce, and if I'm right, we're about to see another 30% drop in software names. |
Yeah, I said 30%. And I'm going to show you exactly why. |
We're at 8 Times Sales (That's Insane) |
Software companies are trading at 8 times sales right now. Eight times revenue. The bottom of liquidity cycles? About 5.5 times. |
Do the math with me here. Think $80 down to $55. That's the type of range we're talking about. Another 30% from current levels. |
And this isn't some wild prediction. This is how liquidity cycles work. We've seen this movie before. |
Back in 2000, it was companies like McDonald's - fell 75%. Meta has fallen 75% in liquidity cycles. Netflix, Amazon - we've seen these massive pullbacks in popular names during every major cycle. These aren't exceptions. This is the pattern. The very popular names, the ones everyone loves, they draw down 70 to 75% when the music stops. |
We're not even close to those levels yet on most software names. |
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The 'Oh Crap' Moment Is Just Starting |
Here's what's really got me convinced this crash isn't over: people are finally realizing these new versions of ChatGPT, these Claude engines that are going to get twice as strong in the next six months - they're not just coming for software companies. |
They're coming for everything. |
Financial managers? That's why Schwab and Raymond James took big hits in the last couple days. |
Think about it: Why pay a human 1% to manage your portfolio when AI can do it for 0.1%? Or free? |
The market's finally waking up to that reality. |
You want to short something? Short Schwab. Short Raymond James. This AI disruption is expanding way beyond software. |
We're seeing exactly what I expected after Goldman called the bottom. Short positions are building back up. Hedge funds are pouring money into the short side on tech, particularly software. |
This recent pop we just saw? Classic dead cat bounce behavior. Spike up after the initial crash, everyone thinks the worst is over, then the real move down begins. |
Our momentum signal turned negative during this whole mess. And we're in the early innings of the real move down. |
But here's the play: we're NOT shorting aggressively yet. |
Later this year, we'll get a "hated rally." The S&P will rip higher, everyone will be confused, and that's when sentiment gets complacent again. |
THAT'S when you get aggressive on the short side. |
Right now? We're just watching. Building our list. Waiting for the setup. |
Goldman's Got Their Reasons |
Look, Goldman's got their reasons for calling a bottom. They've probably got positions they need to unload, clients they need to keep happy. |
But I'm not trying to manage anyone's feelings here. I'm trying to make money. |
The reality is simple: software valuations are still ridiculous, the disruption catalyst is accelerating, and we haven't seen the type of drawdown that historically marks real bottoms. |
When software names are trading at 5.5 times sales instead of 8 times... when we see 75% declines from peaks... THEN we can talk about bottoms. |
Until then? Every bounce is a selling opportunity. |
The smart money isn't buying this dip. The smart money is using this bounce to position for the next leg down. |
Goldman can call all the bottoms they want. I'll be over here waiting for the real one. |
Stay Positive, |
Garrett Baldwin |
P.S. - This isn't over. And when our broader market signals flip negative later this year, that's when software gets really ugly. Mark it down. |
P.P.S. - I break down these setups live every day in the TheoTrade Chatroom. When these momentum signals flip and we get that squeeze higher, you'll want to know exactly which software names to target and when. That's the kind of timing you get when you're watching the signals with me in real-time. |
If you want in on the daily breakdowns join today! |
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