Our Stocks Plummeting Today

Our stocks went down quite a lot altogether. To list a few:

Alteryx down 9.43%
Crowdstrike down 8.95%
Datadog down 10.11%
Fastly down 12.34%
Livongo down 7.85%
Okta down 8.52%

Although there is no real issue with our companies, this dip was somewhat expected given that our stocks were very hot past few weeks. I believe speculation played a big role in our past rally. I’ve seen many people who bought ZM and FSLY, not because they liked the company, but because their prices were going up. And these people now want to move away from these “WFH” stocks, as the economy re-opens and they believe these companies would lose all their customers

After seeing my portfolio dropped by 10% today, I was very uneasy but soon realized that the drop made these companies more attractive in terms of their share prices. I ended up adding CRWD and DDOG and deleted Yahoo Finance app from my phone. I used to be the kind of person who panic sells stocks and lost many great opportunities. I hope everyone stay strong and confident with their investments! :slight_smile:

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I lost a lot of money today but my whole portfolio (which includes a good bit of cash) only gave up July gains, it is back where it was at the end of June.
All of my Stocks were down, this is a sector rotation having nothing to do with the outlook for individual companies. I suspect it is mostly institutional sector selling. Markets go up, markets go down. But they go down with more speed and drama. Nothing new.

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Today, SaaS stocks and other stocks that had been surging recently plummeting across the board.
This was somewhat predictable, but the geopolitical news seems to have triggered a sharp drop.
In response to China’s claim to the South China Sea, the U.S. formally dismissed it and issued a statement saying that what China is doing is illegal.

Many SaaS-related stocks are performing well, so I’ll continue to hold on to them. The next earnings announcement should be good for “Great” anyway. Don’t panic.

Yes, a sharp drop. Even with today’s plunge I’m still ahead of where I was July 1…thank goodness for a sanity-restoring, panic-curbing spreadsheet! Perhaps the previous 7 trading days were anomalous, some kind of strange crescendo that would ultimately need to resolve. Good reminder to not get too caught up in day to day to movements.

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And here I was thinking that after the pullback on Friday, it would be a good time to add a little more to my positions this morning. Oh well. I’ll stay in for the companies and not the hype around them.

I am thankful for the regulars on this board and the wisdom that is found here. I have never posted before here because there are so many others with more knowledge and experience around here. I have been a lurker here for a couple of months. I have already learned a lot and put in place a lot of the sound advice found here. If I had seen an 8% loss before finding the wisdom here, I am confident all my money would be rushed back into an index fund. Today was the first huge loss day since I’ve tried to employ Saul’s advice. I do not feel any urge to panic sell. I am confident in the companies I’ve invested in. Thank you to everyone who contributes to this board!

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After seeing my portfolio dropped by 10% today, I was very uneasy but soon realized that the drop made these companies more attractive in terms of their share prices. I ended up adding CRWD and DDOG and deleted Yahoo Finance app from my phone. I used to be the kind of person who panic sells stocks and lost many great opportunities. I hope everyone stay strong and confident with their investments! :slight_smile:

replying to the above

I had the same response. There was a long thread recently about when to buy - well…they could drop further, but your getting a much better price today than yesterday. I too added more CRWD today. I have a large position, but I would love for it to drop another 10% tomorrow so I can buy some more in the $90s.

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To someone who waited for such a dip: If you are adding now, why didn’t you buy a week ago at their All Time Highs?

CRWD now at $106.21 is the same price as it was about 8 days ago.
DDOG now at $86.66 is the same price as it was 8 days ago.
FSLY now at $83.20 is the same price as it was 5 days ago.

Because our mind loves discounts. When looking at a chart it is much easier to buy if the price has already “proven” that it can be higher. This is the crux with our mind.

In my opinion, success on the stock market is based on 70% having the right mindset and 30% picking the right stocks. If your mind prevents you from various things like holding the best stocks through volatile times, or adding to them at All Time Highs (in fact, great companies continuously gain new All Time Highs), you end up losing money. Be it in terms of opportunity costs (which our mind doesn’t see clearly, because it is disguised) or real money because you sold in the worst moments. It can be comparable to losing weight. It’s 70% about eating healthy and 30% about doing sports. Still most people try it the other way around. They won’t have success.

Yes, it can be tough to buy at All Time Highs. I plead guilty to hesitate as well. But by writing this, I am trying to learn and improve on that.

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In line with what mooo said
https://www.fool.com/investing/general/2013/12/16/stop-your-…
Excellent quick article worth a read.

price anchoring can hurt returns. If we don’t do it then we would not hesitate to buy@ATH

Thanks,
Praveen

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“To someone who waited for such a dip: If you are adding now, why didn’t you buy a week ago at their All Time Highs?”

Because I do not see the choice as binary. I can have a high conviction holding and feel comfortable “Adding to My Winners and Letting My Winners Run”. However, with a small amount of “dry powder” I can also be appreciative when Mr. Market gets a bit fickle and provides me with an opportunity to add to Winners when they are on sale.

No stock that I am aware of has ever gone up and to the right without periodic pullbacks. As a patient LTBH investor, I think that having the right investor temperament and being both prepared and able to run towards the fire when others are going to cash, has worked very well for me and I am sure many others.

With FSLY nearly -30%, CRWD approx. -16% and LVGO approx. -18% of their 52-Week Highs…those were my adds this morning. These are high conviction holdings of mine that I also recently added to last week into the momentum.

FWIW…

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To someone who waited for such a dip: If you are adding now, why didn’t you buy a week ago at their All Time Highs?

CRWD now at $106.21 is the same price as it was about 8 days ago.
DDOG now at $86.66 is the same price as it was 8 days ago.
FSLY now at $83.20 is the same price as it was 5 days ago.

Because our mind loves discounts. When looking at a chart it is much easier to buy if the price has already “proven” that it can be higher. This is the crux with our mind.

I actually did add some CRWD at $116, DOCU at $211, and AYX at $179 last Thursday and Friday, so I just missed the ATH so far, but came close. Obviously, I’m expecting that the difference in what I paid last week versus what I could have paid yesterday or today won’t matter in the next few years.

I’ve been evaluating and analyzing my portfolio and selling some old holdings to raise funds to invest in companies discussed on this board, so I had made the decision to sell some holdings on Thursday and reinvest over the next few days. I wanted to consider whether to add to current SaaS positions or also start one new positions with FSLY and LVGO. I did open a small position with LVGO at $101 and $104.

I was supposed to kayak on Friday, but my buddy decided it was too hot, so I stayed in that afternoon and made several of the purchases mentioned above.

Late Monday morning, I thought “I should have gone kayaking Friday.” I would have preferred buying at Monday’s prices, but there is no way I could have predicted the best price point last week.

Because I was still evaluating FSLY and whether to add to several other companies, I was able to make some investments this morning at better prices. So I added more CRWD, AYX, DDOG, LVGO, and OKTA and started a small position in FSLY.

So currently, I feel a little better about what I bought today than what I bought last week; however, I remind myself that if the CRWD shares bought at $100 are profitable in the future, but the shares bought at $116 aren’t profitable, then my evaluation of the company was wrong to begin with.

As mooo and Praveen both note, price anchoring can hurt returns.

So, even though LVGO’s price had gone up last week, after re-reading the following threads and other articles, I decided to open a LVGO position.

https://discussion.fool.com/lvgo-question-34551465.aspx

https://discussion.fool.com/lvgo-34474046.aspx

https://discussion.fool.com/lvgo-prelim-q2-update-34553616.aspx

In addition to the numbers, I am impressed with Livongo Health’s mission to dramatically change the health care market by helping people with chronic conditions live better lives. Although its early focus has been on diabetes and weight management, it has the potential to expand in other areas as well. However, if it is successful in these two areas alone, it has excellent growth potential and the ability to help millions. As the Covid crisis has shown, these two conditions have numerous negative impacts both on individuals and on society.

It seems to have network effects that will attract more members and keep existing ones.

In addition to price anchoring, another thing that hurts returns is confirmation bias. After buying LVGO, I was pleased to read this thread:

https://discussion.fool.com/lvgo-my-new-top-holding-34555683.asp…

But then over the weekend, I saw:

“Calling Shenanigans on Livongo”
https://discussion.fool.com/calling-shenanigans-on-livongo-34560…

Note: There have been a number of comments on this LVGO thread, so there is no need to add more or start a new one until there is more news, such as the next earnings report.

I appreciated the concerns and questions raised about LVGO and the answers provided. My point in bringing this up is that after reading the thread and seeing a price drop on Monday, I decided to add a bit more to the position. It’s still a small position, and I will be watching to see how some of the concerns are dealt with in the future and to see what the next earnings report shows.

Then I will decide whether to increase the position or not and try to ignore the price anchoring of what I could have bought it for last week or this morning. Reading this board has helped me make better decisions along these lines.

I hadn’t been following Fastly, but decided to look more closely last week. The following threads were useful:

https://discussion.fool.com/why-i-bought-fsly-34514084.aspx

https://discussion.fool.com/net-vs-fsly-which-is-better-34517311…

https://discussion.fool.com/fsly-thoughts-34527927.aspx?sort=who…

The company intrigued me, so, after seeing the price drop, it seemed like a good time to start a position and follow it more closely.

Shortly after doing so, I came across a Seeking Alpha article comparing FSLY and Cloudfare (NET). It mentioned some of the same issues raised in the “which is better” post, but decided that FSLY is a hold for now, while NET is a buy.

The article notes that Cloudflare offers a turn-key solution, which powers many small businesses. On the other hand, Fastly targets nearly exclusively large medium sized businesses and up.

It states that NET has grown faster with revenues up ~48% y/y from a higher base while Fastly’s revenues were up ~37% y/y from a lower base.

This is likely the result of Cloudflare’s age (founded two years before Fastly) coupled with its “land and expand” and “masses not classes” strategy.

However, FSLY is projected to grow at ~32.2% CAGR versus N at ~30.9% over the next three years.

It discusses a higher TAM for NET ($47 billion) than for FSLY ($35 billion), partly due to Cloudflare’s wider array of offerings for its users.

And although the Net Retention Rates favor FSLY at 130% vs NET at 115%, the author thinks that this is partly explained by the churn of NET having more small customers “the masses.”

Obviously, I would have preferred to see an article calling FSLY a buy (due to confirmation bias), but the article raised several good issues for me to watch as I decided whether to add to my small position and whether to look more closely at NET.

All the best,

Raymond

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If anyone needs some more visual perspective just look at a chart of Amazon. You could’ve bought it at its high in 2001 for 110. From there it plummeted to about 10. Even if you didn’t add you would obviously be happy with your investment if you held long enough.

Don’t want to wait 20 years? What if you bought at the top in 2018? From there it was almost cut in half from about 2000 to 1300. If you didn’t add when it was down you’d still be up 50% today had you held.

Selecting the right company and holding through volatile times is key, as is having a strong enough conviction in your investments to keep you in and adding when the market presents such opportunities.

Adding after a stock has run up is hard, too, but when you look at charts like that you realize 50% of the current stock price in either direction isn’t much compared to the potential a rapidly growing company has years down the road.

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