Everything Is Falling Off a Cliff! | The Acquirer's Multiple®

During their latest episode of the VALUE: After Hours Podcast, Taylor, Carlisle, and Mowery discussed Everything Is Falling Off a Cliff!. Here’s an excerpt from the episode:

Tobias: Everything I look at, every single data series that I look at, it looks like it’s falling off a cliff. IWM, I’m less interested in– That’s the market’s interpretation of what’s going to happen. Although, there’s a lot of weakness in those IW– All the underlying of the IWM, they’re all carrying a lot of debt, they’re cyclical, they’re looking weak. Like, the prices coming down there don’t surprise me really coming into this. Where are you going to hide? Magnificent Seven are fully valued rich to fully valued the rest of the market. Somebody tweeted out yesterday that, “If you back out the Magnificent Seven out of the 3,000, you got 2,993 stocks that are down.” It’s not quite as dire as that, but it’s pretty close. It’s like 86% of stocks are down on that top 3,000.

Jake: Wow.

Tobias: Something like that. There’s 14% that are up that are carrying the whole market.

Jake: Year to date.

Tobias: I think that’s year to date. Yeah.

Jake: Okay. That’s impressive. That is not much breadth, is it?

Tobias: But we are then close to the bottom of it. Not close to the bottom of a drawdown, but we’ve been drawing down quite a lot. Like, we’re coming up on where we were about 12 months ago in October last year, which was the low for the last 12 months. So, I don’t know. Fear & Greed gets to extreme fear, which becomes like a short-term bounce because everything’s oversold, whatever that means. Or, you blast through it and you get a 2007, 2008, 2009 type scenario. But I don’t know. I’m not predicting anything. I’m just looking at this stuff.

Tobias: The other side of the coin, Bill Wabuffo would say, “The consumer looks really good. The inflation reduction act is massively stimulatory.” Those deficits are gigantic. The deficits that we’re running now look like 2009 at the very bottom.

Kyle: Yeah.

Tobias: That clearly has to show up. When you back out the government stimulus, the economy is on pretty shaky legs, where is I don’t know what happens if you actually take that out. It looks pretty nasty.

Kyle: But the 24 numbers, they’ve come down a lot for many of the businesses we track, but they haven’t come down nearly as much as the price. It’s a really interesting world.

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