OT – This is an update of my post from Oct 30. It is very OT for our board so please don’t respond on the board and get an OT thread started. If you feel you really want to tell me something, please respond directly, off-board.
I decided to take a look backward at the progress of my portfolio:
**Jun 15 up 60.2%, a top**
**Jun 29 up 44.3% a bottom**
**Jul 20 up 61.5%, a top**
**Jul 31 up 43.6% a 2nd bottom**
**Sep 11 up 96.2%, a top.**
**Oct 11 up 48.5% a 3rd bottom**
**Oct 16 up 65.2% a top.**
**Oct 19 up 49.7% a 4th bottom**
**Oct 22 up 54.4% a top**
**Oct 24 up 44.9% a 5th bottom**
**Oct 27 up 53.0% a top**
**Oct 29 up 47.2% a 6th bottom**
**Nov 07 up 85.0% a top**
**Nov 19 up 53.8% (today’s close)**
I usually pay little or no attention to technical indicators, but this one was staring me right in the face! So what do I see? I see that today was not the end of the world. I see a trading range for my stocks with an assortment of tops, but a lot of support for my stocks in the same range, six bottoms in about the same place, too bunched for coincidence, with bounces off them. Here they are in order of the size of the gain of my portfolio year to date:
43.6
44.3
44.9
47.7
48.5
49.7
Each time making a low and bouncing.
That doesn’t give any assurance that this time it won’t go right on through to 35%, 30%, 25% or whatever, but for now it sure looks like we are close to a turn-around place, where our stocks will bounce.
In the meanwhile, the three indexes I usually use (S&P, Russ 2000, IJS) average to minus 1.6% year-to-date. Throw in the Dow and the Nasdaq and we get minus 0.4%. In either case my basket of rapid growing companies, at up 53.8% beats the indexes, beats cash, beats dividend stocks, beats them all.
Note that I can’t read the future and don’t know what it will hold. I’m just talking about year-to-date.
May be a fool thing to do (lower case) but I am buying. I am going back to basics and systematically adding each month and doing nothing again after 2 months of becoming fickle. Even in the down market being fickle was the worse thing to do. Fortunately I was not fickle with MDB.
Will it work out in the end? I don’t know. I do know the market is not going to zero, never has, never will. I also know that the world is not ending. There could are hard times ahead, or it may be overdone. I have no where better to put the money other than to fix my swimming pool (and I really don’t like swimming).
I’d rather buy at $32 than $48 if I am buying the same exact thing that it was two weeks ago.
I still don’t understand why stocks move the way they do. If you look at the biggest one day losses inthe stock market most of them occurred on no significant news. For example we still don’t know what caused the 1987 October 19 stock market crash or the week leading up to it. Then it’s up to journalists to explain it and us as investors to interpret it, when there doesn’t seem to be any rationale to it, other than herd behavior.
I was heavy cash this entire year, about 58% heading into the fall.
Every big sell off I buy. Bought today.
I did sell out of FB at 152 after realizing their tough road ahead. Not a pretty picture.
I am expecting a much bigger move down, so emotionally I’m ready and willing to keep building out my portfolio as the market drops. Others think we have hit s bottom and heading back up.
The truth is always somewhere in the middle. So either way I’m ok.
Saul (and everyone else), as long as your investment thesis for a company is still good, buying when a stock gets cheaper is a sound policy, whatever meds Mr. Market is taking or not taking.
For example we still don’t know what caused the 1987 October 19 stock market crash or the week leading up to it
I’ll buy Cramer’s take on it since he was a hedge fund manager at the time and does have some years of wisdom. He said there were these new things called “futures” out there and they were being sold as insurance. Can’t miss, protect your positions. The week before was not good and Cramer got out of the market for his clients (and gained his “fame”) before it crashed. It just didn’t feel right to him. But Monday something went wrong in the futures and they broke the market. He literally says “the machines broke”. Same for some of our flash crashes - the market broke, the machines broke the market. These are not bad events as they can correct pretty fast. The bad events are where there are systemic problems, the housing bubble was one of these. Lots of leverage, lots of bad mortgages that were packaged as good and safe, counterparty insurance that was not big enough to pay claims. This time the machines did not break, the system broke, and it almost broke bad. Early in that process he said if anybody needs money in the next 5 years, TAKE IT OUT, otherwise you can think long term and ride it out. (The market went down another 40% after that if I recollect).
We don’t have either of those this time…yet. If China implodes, that is systemic, but I think they have enough duct tape to prevent that. Brexit? no. Greece? no. Major trade war, yes, but not in the cards.
The market has been in a marathon bull run, you have to rest. “Fast Money” gets out, people freak, it compounds. But this is not the end of the world.
Saul, I appreciate your message, your steady voice and guidance. Moreover, I’m grateful for your MF board.
I’m glad your portfolio is doing well, and you share that with all of us. What you buy, what you sell, your relative positions, your analysis of each company you consider. You’re a teacher and mentor, among likely other roles.
My portfolio is not doing as well, and I know sharing my positions is a bit OT unless I commit to a consolidated portfolio and monthly updates, published here on your board. I’m not there yet, a work in progress if you will. I’m even for the year after today’s market. I expect more losses tomorrow, and this week, and next month, and next year. At the same time, I expect to reap out-sized returns in the future by applying the lessons and analysis tools I’m learning here.
It’s OK to be OT at times like this. We all need to take a deep breath together.
Again, thank you for the board, for your leadership.
I consistently rank my stocks according to conviction which seems to constantly evolve
and change with the wind. Sigh. But if you are going to have a strategy for such days
as today then the conviction analysis and ranking becomes a beacon for action. Whether
that action is successful or not is to be determined.
So…I sold out of lower conviction stocks and rolled the funds into my highest conviction
companies. Instead of the Nine companies I started the month with I am down to only five.
Still fully invested but highly concentrated. Bad strategy? Good Strategy? Dunno - but
at this point there is nothing left to do. I won’t liquidate the port regardless and I take
comfort in still having a YTD gain of 56% after today. So…the only thing to do is Hunker Down
and take whatever punches the market throws. The port companies are:
To prevent an echo-chamber of self-validation, let me present an alternative view.
Yes, everyone is correct in saying this downturn is not the end of the world … however there is a little too much commentary around the companies discussed here as being ‘cheaper’ or ‘cheap’.
This is not accurate. Many of these companies, even after today’s shocker, show valuation metrics that are well beyond the usual norms. That means they are still expensive.
Now you can talk about growth rates etc, however the reality is the stock price will represent the models that institutional investors use and as interest rates rise and debt becomes more expensive, the changes to those calculations will cut the price these investors are willing to pay for our stocks.
This could last months or several years, perhaps even prices will get to a point where valuation metrics are below the norm for high growth stocks.
So while, yes, we have some absolutely cracking companies we’re following just be careful of the price you pay if buying more (or holding on). 50% - 70% pullbacks are not unusual as both NVDA and FB currently are validating.
Personally I’m licking my chops at buying more, but I’ll wait until the recovery in prices is underway. I’m happy to miss finding a bargain at the bottom, knowing that I won’t be buying falling knives.
ALGN, PVTL, PSTG, TLND, NVDA or even FB, NFLX and MU, when are these stocks going to hit new highs again?
Buying the dips might be a good thing to do, but of course that it depends on your buying power, your patience and the direction the market will go in the next weeks/months. I have a short watchlist,some cash and a lot of patience. And I am much calmer than I was a couple of days ago.
I wonder if those who bought NVDA at 236$, 199$ and 164$ bought also today. If they think that a future rebound is worth waiting for some months…maybe for a lot of months!
There are a lot of falling knives out there and making the right choice, might be a little tough in the new environment. Some stocks might rebound very fast, some not.
Time will tell if “this time is different”.
And Saul will probably find the right direction.
