Trade Alert: Markets Tanked On Cue, Here’s The Plan Now (And A New Nibble)
We are deep into the market pullback that I was expecting for the last couple weeks. It’s not quite panicky (yet?), but there are plenty of those formerly highflying speculative tech stocks that are down 30-50% or more since I started calling for the market to pullback like this. To update the data from the column I sent out the other day. The numbers from the prior post are in brackets:
In the (ten) fifteen days since I sent out the post called “Top 5 Reasons For A Market Sell-Off”, here’s an overview of the broader action in the markets and the updated numbers are in italics:
ARKK is down 17% (was 10% in the prior note from 5 days ago)
Bitcoin is down 12% (was 5%)
SMH is down 7% (was flat)
Nasdaq is down 4.5% (was up 1%)
S&P 500 and DJIA and Russell 2000 (small cap index) are down about 1.5% (they were up 2%).
So, things have gotten a bit ugly across the board now. That’s not a bad thing if we’re looking for opportunities to buy some more stocks. I’m far from pounding the table bullish after this still small-ish pullback but I am ready to put some money to work in both my personal account and in the hedge fund as prices come down here and I continue to work on new potential names. In the hedge fund, I’m trimming some puts and partially covering some shorts into this decline but am leaving some short exposure on still.
The top 5 names on my buying list are:
ROK
INTC
META
RKLB (especially below $5)
One new name I’m starting to nibble and would to buy more lower is:
SWAV
It’s trading at below 10x out five year’s profits, assuming a 50% growth rate (which isn’t a terribly aggressive assumption) and has 80%+ gross margins.
This stock isn’t cheap on near-term numbers and should be considered very speculative unless we can get the opportunity to buy it 30% lower or so and we’ll need to see the company execute on its fundamentals and business model as we’re, as always, going to disciplined.
I spoke about a lot of the themes in today’s column in a radio interview earlier today that you can listen to here:
Let’s do this week’s Live Q&A Chat at 3pm ET tomorrow (Wednesday) in the chat room or just hit reply to this email with your question.
I leave you with this picture of a hot rodding little rock star hitting puddles:
