Investing Update
What I'm buying, selling & watching.
It’s been a busy week on Wall St with the five major tech companies or as many refer to them as FAAMG Facebook (FB), Amazon (AMZN), Apple (AAPL), Microsoft (MSFT) and Google (GOOGL) all reporting earnings. These five companies make up 22% of the S&P 500. Each of them reported monster quarters with increases in revenue all across the board. They just continue to grow at jaw dropping levels.
This makes for a very interesting point in the market. With these five hitting on all cylinders and the S&P 500 continuing to set record highs, where does the market go from here? We’ve been hearing for quite some time we’re at the top of the mountain and the only way from here is a pullback downward. But the market keeps shrugging that off and continues climbing higher.
For there to be a selloff it almost has to be among this group of FAAMG. At least you would sure think. But with the type quarters they just put up, that seems awfully far fetched. Is there a catalyst that lead us lower, pulling them all down? Or do they take the market another leg higher?
Clearly nobody knows the answer to these questions. It’s another reason why you continue to be invested for the long term. Here are the charts for the past five years on FAAMG. Hard to not be invested in some or all of these five companies for the long term.
Also of high importance recently, is what China has done with their crackdown on U.S.-listed Chinese stocks. This really makes China stocks uninvestable. It’s just not worth the risk. And judging by this steep selloff that continues, it’s a consensus among many investors.
This leads us to the question where all the money invested in China stocks goes. The large institutional and hedge fund money will need to be invested somewhere. With this size of a selloff and extremely high risk, that money won’t be back in China stocks anytime soon. How much ends up in FAAMG?
Many of my readers have asked my thoughts on the Robinhood (HOOD) IPO. I did not get any shares. I’m just not interested. The business model, how they make money and what they stand for isn’t for me. The gamification of investing is against my view on investing. I know the app is very popular and you’ve told me how quick, easy and simple the app is but I still can’t get interested in the company and the product.
It’s quite possible that they eventually move into the gambling sector. It wouldn’t surprise me because it fits their model. The key for Robinhood is if they can keep their users sticky to the platform and continuing to make trades at the high frequency as their PFOF (payment for order flow) accounts for 81% of the company's revenue.
Moves I’ve Made
Oshkosh (OSK) I closed this position for a small profit after only being in it for a brief time. Still like the long term outlook of the company and will continue to watch it closely. I just didn’t feel strongly enough about my position relative to some of my buy points I have on my other existing holdings. So I want to deploy that capital into more of my conviction buys.
Square (SQ) This stock is one of my conviction buys. After doing more research and speaking to people whose opinions I value, I’ve decided to increase my stake during the recent pullback. Square is really growing their reach with both their business customers and overall consumers. I’ve said and continue to believe this is the new bank and banking of the future. There is a lot being built here.
What I’m Watching
FAAMG (FB, AMZN, APPL, MSFT, GOOGL) Like I said above these five stocks are very important to the overall market. After all reporting earnings it will be interesting to see how their stocks react and where they lead the market moving forward. I believe that there is going to be a buying opportunity in some of these names in the near future.
Disclaimer: This is not investment advice. You should not treat any opinion expressed as a specific inducement to make a particular purchase, investment or follow a particular strategy, but only as an expression of an opinion.