Stocks crushed again this morning. Here’s what I’m going to do. With the Nasdaq down another 2.5% this morning, I’m going to sell about 1/3 of my SPY and QQQ puts. And that’s it for now. Lots of great Q&A from our live chat this morning including these two:
Q. I remember Cisco in 2001 and 2002 and it just sat there for years. Is the potential for that to happen to AMZN and FB and other names now? Is FAANG broken for ten years? A. When Cisco hit $80 in the year 2000, it had a $500 billion market cap. It was going to need to double revenues every year for the next five years if it were going to grow into and justify that half a trillion dollar market cap. That kind of valuation is exactly what I laid out for TLRY yesterday. AMZN and FAANG don’t have those kind of wacky valuation metrics like CSCO did in 2000 and TLRY and CGC and other pot stocks do right now. I would think that there’s better odds that TLRY and CGC are dead for years than AMZN FAANG. Heck, FB is trading at 16x next year’s earnings estimates. So the answer is no, I don’t think FAANG will be dead for the next ten years.
Q. Cody – a year from now are we looking at this moment as a good time to have bought stocks like Apple and Amazon or as a signal that a recession was coming? A. Nobody can answer that question for sure until this time next year, but it doesn’t have to be either/or. I do think that GOOG at $1000 and AAPL at $178 and AMZN at $1435 are very good entry points, even if there’s going to be a recession. Doesn’t mean that these levels are the bottom for those stocks, but from a long-term, three to ten or longer year time horizon, I would think these are good prices to buy not sell.