My wish list sorted by percent change. It looks more like a sector rotation than a correction. Most down are high tech and some fast growers. Most up are retail and healthcare. NASDAQ down 1.27% but S&P 500 and DJI not much changed, down -0.04% and up 0.44%.
BRK-A is not on the list but up +1.59%
BTW, there were four new all time highs plus the DJI.
**Symbol Company Last Change Ch%**
NFLX Netflix, Inc. 188.15 -11.03 -5.54
FB Facebook, Inc. 175.13 -7.29 -4.00
XSD SPDR S&P Semiconductor ETF 70.81 -2.92 -3.96
MA MasterCard Inc. 148.35 -5.84 -3.79
TTD The Trade Desk, Inc. 48.41 -1.73 -3.45
V Visa Inc. 109.86 -3.50 -3.09
EXPE Expedia, Inc. 122.02 -3.66 -2.91
TREE [Tree.com](http://Tree.com), Inc. 297.80 -8.15 -2.66
FDN First Trust Dow Jones Internet ETF 108.58 -2.68 -2.41
PSCT PowerShares S&P SmallCap IT ETF 78.94 -1.89 -2.34
IRTC iRhythm Technologies, Inc. 55.83 -1.32 -2.31
ALGN Align Technology, Inc. 258.37 -5.86 -2.22
CNI Canadian National Railway Company 76.36 -1.68 -2.15
AAPL Apple Inc. 169.48 -3.59 -2.07
BOTZ Global X Robotics & AI ETF 24.19 -0.50 -2.03
ROBO Robo Global Robotics & Automation ETF 41.69 -0.85 -2.00
ISRG Intuitive Surgical, Inc. 394.30 -7.93 -1.97
^IXIC NASDAQ Composite 6824.39 -87.97 -1.27
NVO Novo Nordisk A/S 51.32 -0.60 -1.16
PCLN [priceline.com](http://priceline.com) Inc. 1734.45 -17.57 -1.00
MELI MercadoLibre, Inc. 267.70 -2.14 -0.79
MNST Monster Beverage Corp. 61.89 -0.20 -0.32
HCSG Healthcare Services Group, Inc. 51.14 -0.08 -0.16
^GSPC S&P 500 Index 2626.07 -0.97 -0.04
AOS A. O. Smith Corp. 62.50 0.24 0.39
SPR Spirit AeroSystems Holdings, Inc. 83.51 0.34 0.41
^DJI Dow Jones Industrial Average 23940.68 103.97 0.44
MIDD The Middleby Corp. 125.32 0.62 0.50
BCPC Balchem Corp. 87.71 0.60 0.69
TDG TransDigm Group Inc. 279.32 2.26 0.82
EXPO Exponent, Inc. 76.40 0.70 0.92
NEOG Neogen Corp. 84.03 0.78 0.94
MKTX MarketAxess Holdings Inc. 196.04 2.61 1.35
PAC Grupo Aeroportuario del Pacifico 98.29 1.39 1.43
ATRO Astronics Corp. 41.50 0.65 1.59
FIZZ National Beverage Corp. 107.31 1.92 1.82
AAON AAON, Inc. 36.75 0.88 2.45
NUVA NuVasive, Inc. 57.89 1.48 2.62
ULTA Ulta Salon, Cosmetics & Fragrance, Inc. 223.10 6.03 2.78
EW Edwards Lifesciences Corp. 116.37 3.16 2.79
ASR Grupo Aeroportuario del Sureste 178.78 5.65 3.26
ORLY O'Reilly Automotive, Inc. 236.32 7.85 3.44
ROST Ross Stores, Inc. 75.95 3.14 4.31
BEAT BioTelemetry, Inc. 26.85 1.25 4.88
BTCY Biotricity, Inc. 3.69 0.19 5.43
New all time highs:
^DJI Dow Jones Industrial Average
AOS A. O. Smith Corp.
EXPO Exponent, Inc.
ROST Ross Stores, Inc.
SPR Spirit AeroSystems Holdings, Inc.
Today I bought ANET, PAYC, ALGN. I had to bite my finger hard to not buy SHOP or more ANET. Kept some powder dry.
Plus there will be a January sell-off, there will be a correction … and who knows about political / foreign policy crisis.) But if I ignore that, did this rotation finish in just one trading session?
I also thought it was a weird coincidence today that Fidelity was down for a couple of hours for many users, and that google finance changed their look. Initially I thought the drop in the NASDAQ vs DOW was a flight to safety because weird, not understood things were happening. But the rotation did persist and deepen. Still, it was weird morning for me at least.
Access to my broker was perfectly normal all day. I don’t usually watch the indexes, I concentrate on my stocks. I did notice the sector rotation early on and getting deeper as the day went by.
There was so much red I figured I’d get a real beating but retail and healthcare did so well that it came out a wash.
There has been a lot of talk about the effect of ETFs and index funds on the market when it turns. Supposedly they magnify the drop. I don’t know if that is true or not. Drops tend to be sharp because stop loss orders kick in starting a kind of chain reaction, then nervous nellies sell. The drop continues until dip and value buyers start buying.
I think people worry too much about extraneous things like North Korea, tax cuts, the Fed, who is sexually harassing whom, the hair color of the POTUS, and other trivia.
It is worth being clear about why the market is nervous.
The Fed. is planning simultaneously to reverse not one, but both the two forms of liquidity that have juiced asset prices ever upwards in recent years. Worldwide, only the EU is still pumping more liquidity into their system.
The effect on the valuation of world markets is unknown but logic would dictate a correlating reversal.
The effect of recession, if it came, would, in some cases dramatically, be to lower the growth rates which are critical and inseparable to the ratios by which we decide that a highly-rated company is actually cheap, even though the PE, PS or P/FCF may be very high, or that a company without earnings may be a good prospect.
At the moment, ‘rotation’ is going on; de-risking. People still reckon there is no alternative to stocks but now they are looking for greater safety in blue chips and banks. That does not alter the fact that the S&P valuation itself is at an extreme. They are exchanging the greater risk for the lesser risk. Where else to go?
What is the plan? The plan is, if it all goes pear-shaped, negative interest-rates and bring back QE. Yay! The party then goes on.
It is worth being clear about why the market is nervous.
. . .
At the moment, ‘rotation’ is going on; de-risking. People still reckon there is no alternative to stocks but now they are looking for greater safety in blue chips and banks. That does not alter the fact that the S&P valuation itself is at an extreme. They are exchanging the greater risk for the lesser risk. Where else to go?
Great analysis and the reason for sector diversification – or sector rotation for the nimble.
I don’t have a Saul type portfolio. My high tech is all in ETFs which I plan to hold and to add to when the high tech bottoms. In the longer term high tech should continue to outperform the market as a whole so it’s a good sector to be in. The two reasons for choosing ETFs are that 1) I no longer can understand in full what the heck they are doing, and 2) it’s a great way to be diversified in the sector. Well chosen high tech ETFs should return between 15% and 20% which is a very respectable return for a low risk strategy. Currently I have BOTZ (robots and AI), FDN (Internet), ROBO (robots and automation), and XSD (semiconductors). Between the four they cover some 150 companies in a large number of countries. The indexes they rely on make sure to get rid of the dogs and add the gods.
My largest sector is healthcare, the second fastest growing sector after high tech, but mostly on the edges of the sector. I have some positions that overlap high tech and medicine like ALGN, BEAT, and BTCY.
Agreeing with Raptor Dan I have gotten rid of my more speculative stocks which were a real drag on performance.
My high tech is all in ETFs which I plan to hold and to add to when the high tech bottoms. In the longer term high tech should continue to outperform the market as a whole so it’s a good sector to be in. The two reasons for choosing ETFs are that 1) I no longer can understand in full what the heck they are doing, and 2) it’s a great way to be diversified in the sector. Well chosen high tech ETFs should return between 15% and 20% which is a very respectable return for a low risk strategy. Currently I have BOTZ (robots and AI), FDN (Internet), ROBO (robots and automation), and XSD (semiconductors). Between the four they cover some 150 companies in a large number of countries. The indexes they rely on make sure to get rid of the dogs and add the gods.
Hi Denny,
That’s a very interesting way to play it. I like your reasoning. My only caveat would be with the point about no longer knowing what the tech companies are doing. I presume you mean tech-wise. I almost never know what tech companies are doing tech-wise. I try to focus on what the company is doing business-wise.
To simplify what I mean, you didn’t have to understand the tech behind an iPhone, or how to build it, to buy Apple. Or understand how the robots work in an Amazon distribution center, or how the cloud works in AWS, to buy Amazon. I don’t have to know how to set up a business website to invest in Shopify. In all these cases you look how the business is doing. Same with any of these tech companies. And with biopharmas. I certainly didn’t understand most of the words they were using in describing what Kite was doing, but I could see that they were going to get FDA approval for one of the first in a new class of anticancer drugs, and they were best prepared for getting it accepted into hospitals, and it went up a couple of hundred percent in six months.
Best
Saul
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And with biopharmas. I certainly didn’t understand most of the words they were using in describing what Kite was doing, but I could see that they were going to get FDA approval for one of the first in a new class of anticancer drugs, and they were best prepared for getting it accepted into hospitals, and it went up a couple of hundred percent in six months.
But you are a very unique talent Saul - we can all see that. Whether from your life experiences, your intelligence, or your very interesting way of looking at things, you’ve got a gift. In many ways you remind me of a more flexible Cramer (who I watch almost every night) because you are both fearless and gifted, but you are far more laser focused. Granted, the market is gonna sock you from time to time, but what I want to learn from you more than anything else is the absolute steel in your veins. Most of us - speaking of me - are often frozen in place when opportunity knocks - you keep the faith AND act - that is much harder than it looks.
A.J. - the answer to your question is that I am comfortable with a big cash balance, currently about 20%. For my investments, I have a generous ‘desk-top’ trailing stop-loss on most technology holdings. For all companies, I like to see cash on the balance sheet and all the fundamentals and I am suspicious of growth forecasts which may face untimely interruptions. If I could find any consumer staples that were cheap I might buy them. I do health via ETFs. I do overseas via closed-end funds. I own no bonds.
No health ETFs. I looked and found nothing I liked. Excepting Novo Nordisk (NVO) my healthcare stocks are rather peripheral like HCSG and NEOG. I also have health and high-tech convergent stocks like ALGN, BEAT, and BTCY.
“…How do you plan to deal with a serious downturn?”
How about taking it on the chin and live with it? Isn’t that what most people do?
except for the concentrators…they will have to watch each one of their stocks like a hawk…and see what? I don’t think much but they have to rev up their nerve and watch them to feel good about it.
