Does anyone know why APPN has been getting crushed recently?
No. I asked this question on the APPN board which is surprisingly quiet. However, it has company: two of my other punts, ZS and APPF, are similarly down over the last month or two while NEWR is slightly worse.
The reason I treat smallcap business subscription software holdings as altogether deserving of no more than 10% (I know, a lot) of my pf is that I am forced to abandon some good habits owing to their arbitrary valuation, lack of fundamentals and volatility (price really matters; existence of historical figures really matters, run your profits, cut your losses etc.).
As for time, I brook no alteration: nearly all of it goes on looking for companies with the fundamentals I seek which, so far as I know, remains the only way to beat the market over 20 years. (Both ADBE and MSFT once came through and therefore at the time warranted serious investments for the long term.)
But there are no companies currently none to be found at a reasonable price! (well, in fact there is one biotech but I leave that sector to an ETF.
So that might be the reason for nervousness in the frothier parts of the market. Alternatively, there may be a specific reason for APPN’s particular fall but as of yet, I haven’t seen it.
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This is, so far, the biggest problem I have in this growth oriented investing (in the mere two months I’ve been doing it), is the lack of timely information when a stock swings wildly up or down. Some of these names aren’t followed closely by the financial press and it can be hard to figure out just what is going on sometimes.
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Yes, looking at the charts of FFTY vs. INTC and ANET vs. CSCO, looks like the search for safer pastures owing to the well-known geopol. concerns which come and still go. But APPN has certainly taken an unusually hard drubbing.
the biggest problem I have … is the lack of timely information when a stock swings wildly up or down.
Some brokers let you set alerts for your stocks, I believe Ameritrade is one of them but I haven’t worked with them for years. Your broker’s trading platform is the first place I’d check. I’ve been building a Portfolio web-app over the years and such an alert system has eluded me so far, it’s not easy to program. My tracking does not include real-time alerts yet. I do keep a list of around 50 stocks on my wish list which I update with the closing price every day. More below.
One fact of market life is that stock prices are volatile and growth stocks are more volatile than stodgy old blue chips. Whether you realize it or not, this is kind of a Faustian bargain you made when you chose a growth portfolio. Two of the brightest 20th century mathematicians came up with Modern Portfolio Theory (MPT) in an attempt to tame volatility which, somehow, they equated with risk proper. The idea is to have stocks that go down when others go up, that way you steady the overall portfolio value. Mathematically speaking, the portfolio should be made up of non-correlated assets. A bunch of Ph.Ds. with Nobel Prizes took the idea a step further and created “portfolio insurance” based on the safety of non-correlated assets. Except one day their assets changed their mind, they became correlated, the firm went bankrupt and almost crashed the market.
Long-Term Capital Management Hedge Fund Crisis
How a 1998 Bailout Led to the 2008 Financial Crisis
TCM’s success was due to the stellar reputation of its owners. Its founder was a Salomon Brothers trader, John Meriwether. The principal shareholders were Nobel Prize-winning economists Myron Scholes and Robert Merton. These were all experts in investing in derivatives to make above-average returns and outperform the market.
Investors paid $10 million to get into the fund. They were not allowed to take the money out for three years, or even ask about the types of LTCM investments LTCM. Despite these restrictions, investors clamored to invest. LTCM boasted spectacular annual returns of 42.8 percent in 1995 and 40.8 percent in 1996.
https://www.thebalance.com/long-term-capital-crisis-3306240
There simply is no safe space in the market but one can improve either the safety or the performance of one’s portfolio but not both at the same time – risk/reward are inversely correlated!
At the NPI board there is a thread about “Sector Rotation” happening in the market now. I posted a relevant list showing how far down from all time high some of the stocks on my wish list are. Of the 22 stocks that made all time highs in September and October up until October 1 only two are down more than 10%, the average down is 4% and the mean only 1.5%. The wish list has only fast growers but it is quite diversified sector wise, not just XaaS stocks. The one stock that is down 27% is more than likely a great buying opportunity, it will be after it stops falling.
https://invest.kleinnet.com/bmw1/stats25/NEOG.html
https://discussion.fool.com/neogen-corporation-is-the-leader-in-…
The list:
https://discussion.fool.com/september-and-october-all-time-highs…
About APPN, I don’t follow the stock and it would not make my wish list, many Saul stocks don’t. It’s nothing against the stock, it just does not meet my selection criteria. But I took a quick peek.
http://softwaretimes.com/pics/appn-10-03-2018.gif
A recent IPO
Small CAP
Doubled in one month (Dec-Jan)
Down 35% from the all time high
Up 89% since IPO – CAGR 60%
Crazy volatility.
If nothing is broken it looks like a buying opportunity after it stops falling. Did something break?
Denny Schlesinger
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Denny: There simply is no safe space in the market but one can improve either the safety or the performance of one’s portfolio but not both at the same time – risk/reward are inversely correlated!
Question: Did you actually NOT mean ‘inversely’?
i.e. If one accepts higher risk, the reward can likewise be higher? With the opposite case of low risk, the reward will likewise be lower?
Just asking…
Question: Did you actually NOT mean ‘inversely’?
i.e. If one accepts higher risk, the reward can likewise be higher? With the opposite case of low risk, the reward will likewise be lower?
Just asking…
Good asking! You are right but… only on average. It applies to well diversified portfolios, MPT portfolios. Suppose you have a one stock porfolio that doubles every year but then goes bankrupt. High risk, zero reward! There are several risks associated with investing, market risk, stock risk, portfolio managemet risk.
Market risk is entirey out of your hand. Portfolio managemet risk is entirely in your hand. Stock risk can be mitigated by picking sturdier stocks. Saul type portfolios are concentrated, high portfolio managemet risk. Mine also. That to me means no speculative stocks in the portfolio to compensate.
I guess what I meant to say was that at the limit – when the world ends – risk/reward are inversely correlated because no amount of extra risk brings any reward. One of the world’s most famous speculators, Jesse Livermore, knew this well. He always kept enough cash out of the market to be able to start again should he crash, which he did more than once.
I guess we are both right! Thanks for asking! This is a good example of the complexity of markets, much more complicated than Newtonian physics. Investors should stop expecting direct cause/effect relations.
Denny Schlesinger
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I do keep a list of around 50 stocks on my wish list which I update with the closing price every day. More below.
Which tool and data source are you using for this update? I used to have an Excel tool which used Yahoo Finance but that went dark and I have yet to find a replacement which really fits the need. I suppose yours might be a PHP solution that won’t do me any good.
Any substantive response should probably occur on the Spreadsheet Advice board, unless it is all PHP and thus end of conversation.
LTCM was also heavily leveraged, which made a big difference. There is a time when leverage works if you design the hedging right in a calculated combination of long/short holdings, but that’s not what LTCM was doing.
Edward Thorp was a much more successful quant, and a while back I read his book “A Man For All Markets.” His funds had an amazing record of positive returns. The other extremely successful quant I know of is Jim Simons. Thorp is retired, and I think his funds are all closed. I think Simons is still active; I know his fund Renaissance Technologies is still active.