The hardest trade to make right now is… (and Trade Alert: Trimming CPB)
Earlier this week, I asked both my Trading With Cody subscribers and my Twitter followers to take a poll:
“The hardest trade to make right now is:
- Buying more stocks
- Trimming stocks/reducing exposure
- Sitting tight”
As I’d noted at the time, if the hardest trade to make is usually the right one, then we might want to see if there’s a consensus about whether it’s much harder to buy or sell right now. And since the stock market has sold off to start December after a strong year for stocks, I’d noted that It’s probably harder to buy than sell right now.
Money managers who are judged at year’s ends are probably wondering if they should sell now to protect what has probably been a pretty good year for many of the longs. Now let’s not take this theory too seriously with our hard-earned money, especially since the results were not terribly lopsided towards either buying or selling, but here are the results:
Among the Trading With Cody subscribers who answered the poll, 40% said the hardest trade to make right now is buying more. 37% said trimming some is the hardest trade to might right now. And 23% said sitting tight.
On Twitter, the breakdown was as follows: 42% said the hardest trade to make right now is buying more. 26% said trimming some is the hardest trade to might right now. And 31% said sitting tight.
The much higher percentage of people who voted for “trimming” on Trading With Cody vs Twitter is probably a reflection of how my subscribers and I have been holding onto so many 10-100 -baggers over the years and it can be hard to trim stocks that have gone up so much for so long.
I was a bit surprised that the Twitter voters in particular were not more skewed towards the idea that buying more would be the hardest trade to make.
One other thing that sticks out is the idea that it’s usually when stocks are getting crushed and people are in fear of losing big money in further sell-offs that we’ll see the majority of people vote that it’s harder to buy than to sell stocks. The fact that people are still finding it hard to buy stocks even as they are at/near all-time highs underscores how unloved this longstanding Bubble-Blowing Bull Market that we’ve been profiting from for a decade now still is.
Be cautious, be careful, and be willing to do the hardest trade.
Speaking of trading, I’m going to trim about 5-10% of my CPB, just to be disciplined as it’s up 60% from where we bought it earlier this year, and it’s not exactly supposed to be a wild momentum stock, even if I do consider it to be a Revolutionary tech company in its own way. As I’d explained when we bought it a few months ago:
“CPB offers compelling value and it’s actually a lot more Revolutionary than most people realize. Why? Because of the incredible distribution network that the company has built up over the decades. And just like it’s entirely too expensive for other content companies to go back in time and get their apps inside of all the TVs and smartphones and tablets and dongles that have been sold which feature Netflix, so too is it that food companies can’t magically get bodegas in the Bronx and hotel lobby desks to stock their soup, their juice, their snacks.
That’s why I’ve always wanted to own some of these great consumer brand food companies — not for their food, but for their proprietary, highly scaled distribution networks that have hit critical mass over the years.”
I still think CPB is a core holding. Just trimming a little.
My favorite buys right now are probably FB, QCOM, DIS, TSLA, WORK and TWTR. Mostly sitting tight though.
