Investigating Investing Theory #714


As everyone knows, or perhaps should, might, oughta know, there are a seemingly infinite number of investing strategies. In fact, I suppose you might say that there could be as many investing strategies as there are investors or maybe not but that is entirely beside the point. This post is about Investing Theory #714 which I thunk up this morning. I have not changed any of the company names or altered in any way the facts:…

So what is Investing Theory 714, exactly. Well…as near as I can make out, its a very old but short-lived investing theory that revolves around selecting the best investments based solely on how a company bounces back from adversity. And wow - has the market had adversity this year. This post is about that.

I started my research calmly enough with a predominantly and nagging pre-conceived determination that nothing whatsoever would come from my time. And I didn’t have a lot of it. Holiday weekend - family and friends visiting - the All-Too-Lovely’s multi-page, legal pad, much dreaded Honey-Do list. So I had to work fast.

My first step was to take advantage of this past weeks dramatic market plummet followed by the furious end of the week rebound. Perfect for my purposes: Which individual companies showed the highest level of resilience. And…was the key to unlocking the best investments going forward actually somehow related, if not specifically correlated, to this end of the week rally. Time would tell, but as a cautionary flag and gentle reminder - it is critical to understand that correlation and causation may not be the same exact thing and perhaps much more so in the complicated world of high growth investing which is overwhelmingly powered by programmed algorithms.

Here are last week’s rebound rally results for a number of familiar names:

1.) AFRM +25.72%

2.) DOCN +22.62

3.) ZS… +20.68

4.) UPST +20.06

5.) NVDA +15.72

6.) NARI +15.62

7.) INMD +15.47

8.) FVRR +15.36

9.) NCNO +14.22

  1. DOCU +13.62

  2. CRWD +12.50

  3. CFLT +12.30

  4. LSPD +11.97

  5. TDOC +11.36

  6. AI… +10.59

  7. TWLO +10.47

  8. BILL +9.56

  9. ESTC +8.91

  10. MGNI +8.05

  11. FIVN +7.88

  12. NET. +7.83

  13. GLBE +7.64

  14. HOOD +7.79

  15. MELI +7.11

  16. SE… +7.11

  17. ROKU +6.56

  18. SHOP +6.43

  19. ABNB +6.79

  20. APPS +6.43

  21. DDOG +6.25

  22. ZI… +5.85

  23. COUP +4.61

  24. U… +3.35

  25. TTD. +3.33

  26. MDB. +2.75

  27. APP. +2.47

  28. PATH +2.25

  29. MNDY +0.21

  30. SNOW -5.20

  31. PINS -7.80

So after listing these results, they raise more questions than they answer and in the end you could just blow the results off as a weekly blip on a long-term radar. So there’s that to contend with. But what if we add in Market Caps? Would that make things more clear? How about FCF Margins? Revenue Growth? YTD Momentum? And on and on. Sounds like a lot of work to me and being creatively lazy by nature - the All Too-Lovely says it is a gift - I’ll have to somehow figure out how to gain meaningful insight into this Investing Theory 714 which could - but most likely won’t, provide immeasurable and genuine significance - or, spectacular wholesale insignificance. Until Part Two:…

All the Best,