The S&P 500 dropped 5.1 percent, and the assets I predicted would do worse actually lost to the market. That was correct. In 24 of the last 34 weeks, I was correct.

Where should I go next? This week, I’m avoiding Oracle (ORCL 10.41%), Beyond Air (XAIR -1.36%), and other businesses in this space. Let’s look at my near-term concerns with both of these investments in detail.

Oracle

One of the industry’s top enterprises software titans has fallen on hard times. It appears that there is a scarcity of the lofty expansion and Larry Ellison’s hubris these days, and we won’t have to wait long for new financials. Oracle releases its fourth-quarter financial results on Monday immediately following the market close.

Oracle’s growth has slowed. For the quarter, analysts predict revenue will rise 4% and 5% for the whole year. It’s not a fluke. Revenue should have increased by at least 5% in 11 consecutive years. And that’s not all; Oracle appears to be lacking in other areas, as well. The same company that was previously able to consistently satisfy expectations with market-shattering bottom-line results proved mortal last time around. It failed to meet Wall Street’s profit goal, and analysts are expecting a yearly decline in this week’s report.

Beyond Air

The much smaller but still somewhat problematic company reporting its earnings this week is Beyond Air. The clinical-stage medical device firm is hoping for a successful rollout of its LungFit, a treatment device made for persistent pulmonary hypertension of newborns (or PPHN, for short). Last year, it encountered some regulatory delays, missing its target of an on-sale date in 2021.

Clinical trials have been largely successful, but Beyond Air is confronting a few issues. It established a chief medical officer position six months ago and has already had two executives in that post. Beyond Air has also had larger-than-predicted losses in its last three quarters, an ill omen for Thursday’s financial report. Despite having a cash-rich balance sheet, Beyond Air may have to raise more money at the worst possible time as the market weakens.

Despite your experience on Wall Street, 2022 has been a difficult year. Since the beginning of January, when the Dow Jones Industrial Avg. and S&P 500 reached record highs, both indexes have fallen into correction territory with their losses exceeding 10%.

Meanwhile, the Nasdaq Composite (^IXIC -4.41%), which is weighted heavily toward technology stocks, has fared even worse. After soaring to a new high in November, it’s dropped over 31%. The Nasdaq is now firmly in a bear market.

If you consider the increased unpredictability and volatility that generally accompanies bear markets and substantial corrections in the major U.S. indexes, the main question on trader’s minds is this: How far will the stock market fall?

This indicator indicate the stock market might have a lot further to fall

There is no simple answer to that question. We will never know exactly when a correction will begin, how long it will last, or how severe the drop will be ahead of time. In fact, in many situations, we won’t even be able to identify the anticipated cause of a fall until after it has already occurred. However, we can look at economic data to get ideas on how large a drop the Dow Jones and S&P 500 could face, as well as the Nasdaq Composite.

One indicator, in particular, may be quite beneficial in predicting how far the market might drop: margin debt.

The amount of cash that investors are borrowing, with added interest, to bet against or invest in securities is known as margin debt. While using margin may increase your profits if you correctly predict a security’s direction, it can also quickly magnify losses if you are wrong. A poor gamble utilizing margin might result in a margin call, which is when your broker requests additional collateral or will liquidate your position at a loss.

As the value of publicly listed firms has increased with time, so too has the amount of margin debt. This is entirely natural. What’s unusual is seeing outstanding margin debt rise swiftly in a short period of time. In the few instances since 1985 when outstanding margin debt rose 60% or more in a single year, the S&P 500 subsequently fell.

Margin debt, for example, increased 80% between March of 1999 and March of 2000. The benchmark S&P 500 lost around half its value during the subsequent bubble-bursting event, with the growth-focused Nasdaq collapsing by over 75%.

It all came crashing down seven years later, when margin debt increased by a factor of 62 between June of 2006 and June of 2007. This was only months prior to the financial crisis and the Great Recession, which caused the S&P 500 to drop by 57%.

Finally, margin debt increased 72% between March of 2020 and March of 2021. The S&P 500 may drop around half of its value over time, judging by history.

Technology has never advanced at the rate that it is now throughout history. It’s getting more difficult than ever for investors to keep track of the many innovative technology firms in the public markets, each with its own unique future vision.

Artificial intelligence (AI) has already been used to complete highly complicated jobs in a fraction of the time that people can, according to one estimate. By 2030, up to 70% of businesses worldwide will utilize AI in some capacity, adding $13 trillion more output to the global economy.

With roughly two decades to go, the sector will provide a plethora of options, but these two stocks may be a fantastic place to begin since they’re trading at significant discounts to their all-time high amid the broader tech sell-off.

The case for Upstart

Artificial intelligence can be found in numerous sectors, including financial services, health care, and education. Here’s a look at how it’s being used to enhance decades-old procedures with Startups like Upstart (UPST -11.18%). Its AI-powered technology is meant to take over Fair Isaac’s FICO credit score system, which is the conventional technique of measuring creditworthiness for potential borrowers. Upstart can analyze up to 1,600 data elements about an applicant and make loan decisions almost instantly 74% of the time, which may take human assessors weeks to accomplish.

Fifty-seven lenders and credit unions have adopted Upstart’s algorithm, with one bank in particular jettisoning FICO scores in favor of Upstart. This is significant because Upstart isn’t a lender; it provides banks on which it partners with funding for a fee. However, the firm was compelled to modify its plan somewhat throughout the recent first quarter of 2022 due to tumultuous credit market circumstances. Upstart used its own balance sheet to accept $345 million worth of new loans.

It’s also partly a result of Upstart’s rapid expansion, which is helped by its entry into the auto loan origination sector. Since debuting its automobile sales and financing software in 2021 which is called Upstart Auto Retail, 35 car manufacturers have used the platform with over 525 dealerships, up from 162 dealerships in Q1 last year. That’s an increase of 224% over Q1 last year when 162 dealers were on board.

During 2021, Upstart produced $849 million in revenue, a staggering 264 percent increase over the previous year. The firm believes revenue may reach $1.25 billion this year, which is a decline in growth, but consumers are dealing with increased interest rates and more difficult economic circumstances, both of which might dampen demand for credit.

However, the firm is continuing to enter what it considers a $6 trillion addressable market. It may be an excellent opportunity to make a long-term investment in what could become the future of credit evaluations considering its stock price has plummeted 90% from its all-time high.

With the recent inflation news sending investors into a tailspin, they’re once again concerned about the future. After all, high inflation implies that the Federal Reserve will be forced to raise interest rates in order to keep prices stable, making bonds a more attractive investment. Higher interest rates also make it more expensive to borrow; as a result, companies are less able to invest in expansion and put demand and growth at risk.

From an historical viewpoint, it’s not hard to make the case that the stock market will collapse again. Also, history shows that the market does drop from time to time. As a result, the question of whether the stock market will fall again is answered simply: Yes, it is almost certainly going to do so. When will it happen, though?

Are we there yet?

Despite all of this, the fact is that the S&P 500 has already fallen about 20%. That’s a sizable decline as of yet, and it does provide a glimmer of optimism that the most challenging portion of the current market cycle may be over.

Even when a stock’s price has appreciated significantly, it remains to be important to remember that the market attempts to value equities on the basis of their future value-generating potential, not on what their past price changes were. When recent inflation statistics were released, they were far worse than expected, which is one reason why stocks plummeted so severely.

When the market experiences severe negative shocks, it typically prices assets lower to reflect higher perceived risk and/or poorer expected future returns. As a result, how many more terrible surprises we have ahead of us will determine whether the market crashes again soon.

What can you do about it?

With so much uncertainty in the economy and near-term future, it’s tempting to become immobilized into doing nothing at all. While keeping the course is typically a good approach to participate in any recovery that follows a recession, you’ll need the correct financial foundation in place to make sure it happens.

As a result, now is an excellent time to check up on your financial foundation and do what you can to strengthen it. That way, when the market inevitably drops again — as unpredictable as the markets are these days in any event – you’ll be better prepared to take advantage of it. On the other hand, if the market does not fall again during your investing career, having a solid financial base will still provide you great peace of mind even in today’s standard market volatility.

To build your financial foundation, you must have control of your debts. The only reasonable debts to have when investing are those in which all three of the following are true:

• The interest rate is low, with single-digit percentages or no interest at all.
• The fee is low enough that it doesn’t prevent you from meeting your essential expenses.
• Your debt is beneficial in the long run.

If your debt does not meet all three of these standards, you may be able to improve your financial position by paying it off or getting it in line with the criteria.

There’s no disputing that Meta Platforms (META -6.43%) — formerly known as Facebook — has been an excellent company. Even with its near-50% drop in stock value just since September of last year, shares are still about 1,000 percent above their IPO low set in 2012.

However, past success does not guarantee future performance. The next ten years may be significantly different than the previous ten. Given that Facebook’s main social networking site is beginning to show indications of slowing growth, it’s likely the next ten years for Meta will be unspectacular. It’s probably time to look for names with more verifiable growth potentials rather than continuing to invest in companies on the defensive.

With that in mind, here’s a closer look at two stocks that can truly respond to the question “What have you done for me lately?” They could all be worth more than Meta in 2032.

1. Nvidia

Nvidia is a name that most gamers are familiar with, and it’s often used to market computer graphics cards appreciated by video gamers. Its technology may be found in conventional PCs and laptops as well, although you’ll recognize it more as a brand name for computer graphics cards loved by video gamers. And its grasp on the sector is quite solid. The larger growth engine you might be overlooking with Nvidia, however, is its data center processing sector. Nvidia’s data center revenue for the past quarter was just over $8.3 billion, with around $3.7 billion coming from data center operators seeking for more advanced technology. In reality, data centers are Nvidia’s most lucrative sector, with year-over-year growth of 83%.

This is only the beginning. In fact, the same technology architecture that helps power graphics cards may also be utilized in artificial intelligence (AI) apps, which is an ever-growing market. Polaris forecasts that the AI infrastructure market will expand at a compound annual growth rate of more than 27% between now and 2030.

Nvidia is well-positioned to take advantage of this expansion. Its DGX A100 systems, for example, are created and tailored specifically for the AI market. Enterprises like what it could do for their AI development efforts, ranging from medical imaging to energy management to preventing future epidemics, just to name a few.

2. Adobe

Adobe (ADBE -0.56%) is another technology firm that’s much more than it used to be, despite the fact that few investors are aware of it.

Adobe is a brand that many people are familiar with, since it’s the software that allows web users to manage PDFs (portables document files). Adobe’s Photoshop program arguably created the digital image and creation software industry, while others may be aware of Adobe as the company behind Photoshop. And both are still in operation.

Adobe has expanded its expertise considerably beyond online document management and graphics software in recent years. It’s now involved in businesses that assist companies with web presence optimization on every level. The company’s Experience Cloud, which is based on the cloud, provides tools for customizing a website specifically for each individual visitor. Adobe’s platform manages content creation, e-commerce, and marketing efforts. This technology provides a wide range of services, including site construction and management as well as creative planning and design. In fact, it’s likely you’ve visited a website that was subsequently modified using Adobe’s technologies without even realizing it.

Creative Cloud and Experience Cloud are both subscription services, which is notably interesting. While their monthly charge may appear modest, Adobe doesn’t have to come up with new versions of its software, rebox them, and then hope that consumers pay for an update because of its recurring income model. This changing business paradigm is one of the key reasons why revenue is continuously growing at double-digit rates. The top line is anticipated to improve by around 13% this year before it accelerates to early 15% growth in the next year, illustrating the fact that there’s still a lot of money left to be made.

Bitcoin, like many fast-growing stocks, has tumbled hard this year. Bitcoin’s value has plummeted over 50% from its peak just last fall as investors have fled from risk assets while the cryptocurrency failed to live up to its name as an inflation hedge.

While some investors appear to believe that the cryptocurrency has dropped too far, relative to its previous high, this claim seems dubious when examined more closely. After all, there is no simple solution for valuing Bitcoin.

The value of Bitcoin as a cryptocurrency is difficult to determine because it lacks the fundamentals that investors use to value productive assets like equities, bonds, and real estate. Over its history, Bitcoin has fluctuated violently like a speculative asset like a penny stock. Even today, much of the worth behind it seems speculative.

Bitcoiners frequently make the case that gold is the most appropriate comparison for a cryptocurrency’s entire value. Because all of the world’s gold is valued at approximately $12 trillion, many anticipate that Bitcoin’s market capitalization will one day reach that level, from $580 billion today.

If we can’t evaluate Bitcoin based on figures, perhaps its real-world impact in comparison to other comparable firms, especially large tech companies, as crypto is essentially a technology.

At the time, Bitcoin still appeared to be more of an idea instead of a reality, and its value was linked more to its potential than what it was currently accomplishing. It’s inefficient and costly to use as a currency, and it has barely scratched the surface of the payment market.

Bitcoin, as a means of exchange, appears to be attempting to solve an issue that doesn’t exist, as fiat currencies and credit card purchases are more efficient than cryptocurrencies at processing payments. Despite the fact that it’s “digital gold,” Bitcoin’s recent decline in value indicates that it’s a poor investment, according to some experts.

Around 114 million Bitcoin accounts exist across the world, so even compared to other companies like Facebook, Google, and Apple, ownership of Bitcoin is miniscule. The majority of those who own Bitcoin are investors rather than users of the currency. Just 0.01 percent of all accounts own nearly a third of global Bitcoin.

Bitcoin’s supporters will say that the cryptocurrency has a long way to go before it can completely disrupt conventional money. Projects such as the Lightning Network are in development to speed up transactions and add more usefulness. It’s still a mistake to believe Bitcoin is a fresh innovation.