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Q. I am literally in 90% cash and looking to get it back to work. Looking for a bit of a plan to start that. Things have been so messy that I am a bit gun shy?
A. Sometimes being gun shy means it’s probably a good time to pull the trigger. With 90% cash to work with and some very good bargains and risk/reward valuations in the markets in a time of high volatility, you probably can start slowly and scale in at like 10% tranches over the next few weeks til you’ve gotten more of that cash deployed. Now, it’s very important to remember that your “cash levels” are relative to your other forms of income, how much upward mobility you have in your career/income, how old you are and so on…If you’re interested in having me sit down over a few phone calls to do a Deep Dive analysis on your portfolio doing sort of an holistic take on it and coming up with an personalized playbook for you, let us know.
- Q. Thank you. I will take you up on your offer for a Deep Dive Analysis in early October if that works? It is making money time.
- A. That’s good by me, thanks. I’ll have Cathy make a note to reach out to you in a couple weeks.
Q. Can you provide me your first 5 stocks you think are worthy of 10% deployment at this point.
A. I’d consider starting by building up a bit in the core holdings with a small tranche in $FB, $AAPL, $GOOG and then maybe some $AMBA and $SIMO and/or $FIT. I’ll do an updated Latest Positions (https://twc.scutify.com/latest-position…..) early next week and you can use the highest-rated stocks as a guide too.
Q. Do you think it is time one could start scaling into $AMBA, $SYNA, $SWKS and $NFLX.
A. I usually tell someone that if you don’t own any (or if you just own a small starter position) that you can start by buying a 1/5th position in the stock and then add to that over a few days/weeks or even months’ time. I like and own $AMBA and it’s cheap right now at 17x next year’s earnings estimates which I think will out to be too low. It sells to Chinese vendors and all stocks with Chinese-based revenues have been punished in the last couple months along with China’s stock market crash. $SYNA‘s trading at 8x next year’s earnings estimates on worries that its markets are saturated and smartphone growth will fade. $SWKS is at about 15x next year’s earnings estimates on 12% revenue growth, making it more expensive than $SYNA though both sell into the same smartphone end markets. $NFLX trades at 300x next year’s earnings estimates (I’m serious) on 25% expected growth. It’s obviously a dominant App Revolution company and I’m always sick to my stomach that I didn’t buy any when I was writing and telling the $WSJ it would be a 10-bagger….back when it was at $10 or so. Anyway, I’ve been thinking of finally getting some it into the portfolio.
Q. I am quite comfortable adding through options with maturities out to about 6 months and beyond. Am planning to add AMBA on this basis (c. 25% of final exposure). Would appreciate your comments.
A. Using some call options along with some common stock isn’t the worst idea in the world if: You’re very comfortable with how options work and the fact that you are limiting yourself to a certain time frame on the trade and that for all you know that the markets will be down 20% that month when your options are going to expire.
Q. I was looking into 3d printing stocks after seeing a gigablast commercial from Cox. It seems DDD is the 3d food printer they talk about in the commercial. It also brought up HPQ as potential big up and coming player in the end of 2016. How do you view that as an investment? Will windows 10 potentially help their sales and be a brIdge into the 3d printer sales? I assume a company of their stature would be able to scale into that industry and make some headway. I know thats an “old tech” but I was wondering your thoughts and if we should consider looking at HPQ outside the printer box they are in?
A. I got uncomfortable with 3-D Systems management and how promotional they always are in their press releases and earnings reports. I like $SSYS better and I think industrial 3-D Printing, where Stratasys is focused vs the more consumer-focused $DDD is a better company with better management. I might nibble on some $SSYS sometime soon too, but I want to see a strong quarter or too first.