It wouldn’t shock me to see the markets pull back 2-3% or so here, if only to re-embolden the shorts but not quite give the underinvested longs a chance to get long. Then we rally right on into new all-time highs in the $DJIA and $SPX? Or, another thought — whatever happened to sideways market action? Maybe a long churn around these levels to exhaust both longs and shorts is in the cards? I use question marks at the end of those prior two sentences because I just don’t think there’s an easy read to the path of least resistance for this stock market for the near-term here.
I’ve been preaching sitting-on-our-hands and letting our longs do the work for us for the last few weeks and it’s been a very good strategy as many of our largest positions have been in big-time rally mode. I’m certainly not bailing on our Revolution Investments and I’m still not terribly bearish. But doing a little more trimming now and raising a little more cash gives us even more flexibility to navigate any near-term swings in the market.
So I’m going a little trimming of some of at least one of our longs that have been straight up for the last few weeks. I’m going to sell about 10% of my Amazon long. The stock is up $150 or almost 30% since it bottomed on February 9th, and even after this trim, it will be a pretty big position in my personal portfolio, but I’m going to just take a little bit off of each here now.
While I think they Amazon will head much higher in the next decade, I’m less sure it will head higher in the very near-term after its huge move ups recently. Recall that I’d actually bought call options in Amazon and a few other names back on February 8th sending out this Trade Alert, within a day of these stocks bottoming before they rallied through the roof:
Those are the types of pitches we are looking for and you can be sure that I will be on here sending out Trade Alerts when it’s time to swing our bats again.
Let’s talk some Netflix.
$NFLX down 10% on this: The company guided for 2 million net member additions in international markets in Q2. This figure was more than a million lower than most analysts’ estimates — and lower than any quarter’s international net additions in 2015. In the grand scheme of things, that adding 2 million or adding 3 million international subscribers in the next 90 days isn’t why I own this company.
Netflix CEO Reed Hastings repeated his commentary that Internet TV was the future.
$LVLT, $SNE, $GOOG, $AAPL and Amazon are some other Internet TV plays that come to mind as plays on the Internet Video concept, which is something I first started writing about and investing for more than a decade ago.
Back in 2006, in an article called “Buy into the Internet Video Revolution while you still can” in the Financial Times, I wrote: “The internet video revolution is a growth business. Ignore the shortsighted player haters and buy in while it’s still early.”