Seems bullish, eh?
I am sure it will be fine.
Just fine.
Dreamer
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Buy the dip.
O.k., with just a modicum of seriousness, I bought smidgeons of the biggest losers in my port, AFRM, UPST, AND PGY. Also bought the tiniest nibble of PERI, which reported well and was a lone set of green characters. Oh, and a couple of shares on ENVX.
NASDQ is hovering on 14,000 after making a double top the last week or two–for whatever that might mean. I am skeptical of Fitch’s downgrade. I mean, it could be the little thing that starts a chaotic landslide. If so, I have that cash awaiting the event.
Strangely, VFC turned green after a missed report. The earnings call must have been upbeat enough to send it up as the market elevator pressed the down button.
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keyboard acting up< no commas< periods< no caps< no numbers< so i won"t brag about my pulse rate and blood pressure today>
kc
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SMCI on HUUUUUUUUUUUUUGE discount today. Back up the truck! Whoooo!
Probably at least another 500% upside in the next month or two.
Dreamer
ps…yes, sarcasm.
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I like PERI also, have just under 2% position…
I think it’s a nice sleeper, will make it’s move some day…
Like my GPN that I’ve been very patient with.
Good Luck all !
JT 
this all seems bullish.
Buy the dip!
I am sure it will all be fine.
Just fine.
Dreamer
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I know your being sarcastic but the only dip I’m currently nibling today into TLT 20 year treasury bond ETF. Obviously, it could fall further but if you’re a long-term investor betting that interest rates will fall at some point seems reasonable.
These articles about what billionaires are doing with their money always seem to come when we get a little volatility in the market.
I suspect it’s just a way for them to squeeze out a little more profit before quickly closing out the trade. They aren’t providing their trades out of the goodness of their hearts.
Sold another 1/3 of upstart at 71. This trade made 440%. Is that the perfect trade? No, I should have bought more. I have to constantly battle myself that there isn’t a perfect entry, exit points and amounts. Must repeat to myself there is no perfect trade!
Upstart seems surprisingly resilient the last week. I have learned in the past that it’s resilient until it isn’t.
Still have a 1/3 left so I hope it continues to do well.
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it is pretty awesome, if not perfect.
But is their business any better now, then when it was at $12?
This move makes no sense to me. Sure they could have been oversold, too, but they aren’t the “cheaper rate” company, they are the “will the clients pay back the loan based on our data” company.
And with rates so high, whether for new cars or used, that seems like a tough buyers market. In general, I would think their loan growth is challenged at moment, no?
Haven’t really looked at their ER’s lately, so just taking macro view there.
Dreamer
Why interest rate sensitive companies may be doing well/OK:
The Fed is forecasting four to six rate decreases next year and another four in 2025. The market is forward-looking.
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everyone wants their cake and to eat it, too…
Being told market is forward-looking, and because rates will drop, market will go up.
Yet…sure seems like Market has been going up well in advance of this, if recent bottom was Oct or so. We had many increases since Oct.
And…people point to yield curve or past recessions and say “well - you know the market really doesn’t drop UNTIL the Fed drops rates, bc that signals the economy is not well”. And in 2000/2002, 2008/2009, and 2020 (or even 2018 mini tantrum) when the market dropped due to recession, all stocks dropped too.
So which is it?
Dreamer
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My Upstart thesis:
I used to work for a credit rating agency, but it’s been a couple of years, so I don’t have proper knowledge of how they operate today. But at the time, there was a relentless search for next-generation assessment tools to evaluate credit risk. FICO scores (which are proprietary to Fair Isaac) and other tools are used to determine a lot more than just loan approvals. These credit rating agencies have vast amounts of data on everyone that is used for everything from simple loans to background checks and health care risks, etc. The bottom line is, if they can crack the code on loans, maybe they can add additional risk approval tools much further down the line.
So I think Upstart at $12 was because everyone thought they were going to run out of money at some point if a recession happened. They began providing their own money to fund the loans as opposed to third parties doing that and owning that risk.
The big change for me was the announcement that they found someone to fund loans again. They could go back to just being the loan officer that approves loans and not own the risk of holding them.
At some point, it was heavily shorted (maybe still is), but I think we’re just getting a short squeeze at the moment.
Earnings are next week (8/8), and my opinion is this is also a buy-the-rumor and sell-on-the-news rally. Another concern is, even if earnings are good, analysts posting valuation concerns. It’s part of the game, so their clients can get in when it drops.
You are correct that there is a big risk of a recession still, which would definitely impact Upstart as we found out it has a highly cyclical business. Hence, I’m taking some profits
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I guess my point is: what if 2022 was a correction on the excesses of 2020/2021? Let’s all admit the meme stocks, crypto nonsense, TSLA/ZM/UPST and their brethren all got a bit out of hand and was momentum run amok thanks to massive injections of stimmy monopoly money into the economy.
Corrections go both too high and too low.
So if 2022 was a correction too low, perhaps 2023 ytd is the bounce.
But a correction is not = to a recession.
July 2019 or so had a tech stock correction. Feb/Mar 2020 was a recessionary drop.
Because, otherwise, what the heck was the market “predicting” when it had the stocks plummet in 2022? Raising of rates? Again…rates were still being raised as recently as a couple weeks ago. So seems the last 10 months market was predicting…what?
World According to Dreamer:
GFC occurs. Breaks the world.
Rates get historically low.
Inflation gets low, stays low.
Stock market goes on a tear for a decade.
2020 is an artificial bear due to pandemic, although ironically many were calling for eventual bear in late 2019.
2020 also becomes an artificial bull due to pandemic-induced stimmy funds.
Market overshoots to the upside dramatically…not based on fundamentals.
2021 the momentum of the cruise ship continues but they hit an iceberg and no one noticed until Nov.
2022 correction.
2023 bounce.
2H23/1H24…recession?
The outlier here is covid. I think people try to elicit patterns from what was a black-swan completely-unique artificial economy-crushing one-off.
If the economy was a person:
2000 - cocky, uses bad form in gym, believes they are indestructible.
2001-2003 - ruptured MCL/ACL, ruptured achilles, torn pec, tennis elbow.
2004-2006 - uses better form, feels better…slowly gets cocky again.
2007 - takes a ton of risks, starts buying houses w no money down to flip for quick buck
2008-2009 - moves back in with parents, works bagging groceries, side census worker gig.
2010 - 2015 - gets a decent job again…vows to walk straight and narrow. just LTBH in indexes.
2016-2019 - takes several MENSA exams to validate their investing genius
2020 - Covid hits. Buys masks, and a monitor for home office. Starts bookmarking all the delivery sites. Thinks to self “hey…this is just the future…I am, like, totally more efficient now in every way!”
2020/2021 - gets stimmy checks, yet never got laid off. Buys stupid stuff and/or buys more meme stocks and crypto.
2022 - questions everything about their existence and way of life.
2023 YTD - ignores 2022, pretends they never had any self-doubt. Starts dressing in favorite outfits from 2020/2021 again. But ignores the delivery stuff. Still won’t go to office though.
Seems healthy and well-adjusted.
Dreamer
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China stocks, pot stocks, and FSLY up bigly today.
Totally seems like the kind of crew you want leading the charge on a red day.
Ha.
Dreamer
ps…still appreciate you $IQ, and always will!
Folks buying less chicken and beef, cause of inflation.
But inflation slowing, Batman!
Well…ok. But those higher costs have been piling on for a few years now, and consumers without stimmy funds, with student loan repayments on horizon, with corporations trimming the fat (pun intended) I guess maybe the consumer isn’t doing quite as good as the market rally YTD would lead many to believe.
I will always contend that more well-to-do folks just are oblivious to what the truly average income folks are dealing with.
But I am sure this is all extremely bullish. Market up today…chase…chase!!!
#FOMO
Dreamer
Yeah. It’s bleak. Except at Wingstop. I guess everyone was too busy Doordashing wings to stop in the frozen food aisle
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notice though that the earnings beats are higher than revenue beats.
This is inflation being a positive for some companies.
but that only lasts as long as discretionary consumer income lasts, and it is falling.
- student loan repayments starting
- stimmy funds have long dried up
- “excess” savings depleted
- higher gas and inflation in general eating away at budgets and savings
- defaults on the rise (bought some time with credit - that time running out)
Wingstop is tasty, but all those places are way overpriced compared to just a couple years ago. As a father of 3 teenage boys, I can personally attest that the fast food and fast casual restaurant bills are all SOOOOO much higher than I think every time we go lately.
We are talking dropping $50-60 easily on essentially chicken tenders and fries or burgers.
Keep in mind that I don’t eat. That is 3 boys. (can’t put garbage into a Ferrari, ya know?)
Dreamer
I get the impression that some folks are upset with me.
“Why can’t you just be positive?!”
“Why can’t you just be optimistic?!”
As if my posting the actual news, and not my whimsical hopes and dreams, will somehow single-handedly bring about an end to their lucky FOMO/MOMO-based YTD “bull” run.
Literally, a couple months ago Saul dropped non-profitable SaaS and rediscovered how he picked stocks for the previous few decades successfully - namely that valuation and PE and mattered again.
Fast-forward a couple months and we are right back into the late 2020 and pre-Nov 2021 mindset.
I am actually an optimist.
My friggin username is “Dreamer” for a reason. I love technology and the benefits it can bring, and has brought, into the world. I do think AI, AV, and EV technologies will all continue to change the world. I always thought digitally targeted advertising that caters to the things I am actually interested in would always be a better outcome.
But I also want to have more money for my family and my retirement, than I do today.
To that end, I want to buy stuff at an entry price and sell it at a higher exit price.
I don’t want to gamble.
I don’t really want to trade. I am not good at it, nor do I have time and patience to get better at it while still full-time employed.
Ideally I want to enter stocks and hold for at least a year for tax purposes or at least until it hits the exit price…sometimes whichever comes first depending on a host of personal financial factors.
Most of the stuff everyone around here was buying in 2018 hasn’t panned out over 5 years in a meaningful way: SQ, AYX, TWLO, OKTA, etc…
How about just 2 years ago?
Saul port two years back:
his positions were:
Crowdstrike 18.4%
Cloudflare 16.5%
Datadog 16.5%
Upstart 14.5%
Snowflake 10.0%
Lightspeed 7.8%
Zscaler 7.8%
Docusign 5.1%
ZoomInfo 3.8%
I don’t think he is in any of those.
All should be much lower now, than at that time.
Yet if I said anything about those valuations, I was “being negative”.
Ok.
You do you.
I will do what I am going to do.
Here is what is going on out in the real world.
https://www.cnn.com/2023/08/08/economy/401k-hardship-withdrawals/index.html
people taking out money…cause they need it.
people charging stuff to credit cards…cause they have to.
Don’t mind me. Just a negative Nancy.
I am sure it will all be just fine.
Dreamer
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People are charging on credit cards because it’s the easiest and preferred method of payment now.
20 years ago most people paid with cash, and I had a safe in each office and we had to do bank runs almost every day. Now we hardly have cash in the restaurants. No one uses cash. Close to 100% credit card sales now. Of course credit card debt is goin to go up if we live in a cashless society. I haven’t paid for anything with cash in maybe 5 years? Maybe a tip at the car wash, or valet parkers.
We can point to UPST or DDOG, and say the economy is wobbling, falling apart. Yep, I get it.
Or we can look at individual names like MTCH, UBER, PGNY, all three I added to today, that had stellar reports and guidance.
Look at another three that just reported this afternoon. TOST, CELH, DUOL. Beats and raises, all three moving up big AH.
Plenty of great companies that are doing very well right now. Loving this market and the opportunities to invest in so many great names.
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KBRA has a weekly podcast, Three Things in Credit
Might require registration.
This week, our 3 Things are:
- Consumer spending. Brookings has a provocative perspective.
- Airline reality. Watch margins as demand normalizes and costs remain elevated.
- Pricing power. The pendulum is beginning to swing back.
Consumers are “trading down” as they run out of excess savings. Of course, lower income are cutting back, not having the luxury of trading down. Airline business travel softening, and perhaps counter intuitive, international travel generally holding up better than domestic. Smaller businesses in particular are losing ability to raise prices.
For me, this indicates further reduction in fashion (VFC and PVH), I think SPG is o.k. on the mall side, but need lower prices to add. OLED might need a trim although the upper end organic LED screens might be less impacted. I am already out of Stanley and Scott’s Miracle Grow. But maybe consumer will stay home and eat medicinal brownies.
Point is, the effects of all the rate hikes are still working their way through the economy. This leaves us with the question of whether Mr. Market trades based on recession or the end of tightening. I suspect that for the next few quarters, deteriorating quarterly results and forecasts will outweigh the glorious spring prospects of lower interest rates.
KC
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I subscribe to a significant number of MF services. And, from time to time, I actually comb through the recommendations. I am not finding anything that makes me want to convert cash to shares. For example, the #5 current recommendation of one premium service is trading at about its IPO price from mid-2019. It currently trades at p/e of 252. Forecasted eps in 3 years would drop the p/e to 52, and in 4 years to 22. This based on forecasted CAGR revenue of 13%.
I guess I’ll check out #4.
KC
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