Investing Update: Putting Cash to Work
What I'm buying, selling & watching
The stock market technicals have shown that more stocks are going down than up in the last 10 days versus any other 10-day period in the past 20 years.
Stocks are way off their highs. Many popular stocks of the past two years are now seeing 70-80% drawdowns. We now have the high quality names also participating in this selloff. Is it overdone or an overreaction? Is this the bottom?
This could be the bottom or we could take another leg lower. Nobody knows. What we are witnessing is some massive selloffs in some great companies. Below is how far some companies have fallen from their 52-week highs.
Apple (APPL) -7%
Amazon (AMZN) -24%
Coinbase (COIN) -59%
Disney (DIS) -32%
Facebook (FB) -32%
General Motors (GM) -25%
Google (GOOGL) -12%
Lululemon (LULU) -33%
Microsoft (MSFT) -12%
Moderna (MRNA) -68%
Netflix (NFLX) -45%
Nike (NKE) -19%
Nvidia (NVDA) -34%
Robinhood (HOOD) -85%
Shopify (SHOP) -51%
Starbucks (SBUX) -23%
Target (TGT) -19%
Tesla (TSLA) -32%
Uber (UBER) -45%
Zoom (ZM) -68%
What I’ve been watching has made me feel comfortable deploying some cash this week. I’ve put almost half of my cash to work. I do expect the market to go down another notch. But I feel these recent lows are really doing some bottom bouncing. In my opinion, some stocks have hit their short term bottoms providing great entry points.
The next few months are going to be choppy and carry a lot of volatility. But I expect that to flush out and the market to start grinding higher come spring. That is how I’m positioning right now, still keeping some dry powder to do some buying as more opportunities come up.
Moves I’ve Made
I had a number of buy orders in on some of my current positions. To my surprise, during Monday’s large intraday drop all of my orders were filled.
Nvidia (NVDA) I’ve added to my Nvidia position at $210 a share.
Google (GOOGL) I added to my Google position at $2,500 a share.
Disney (DIS) I added to my Disney position at $130 a share.
Airbnb (ABNB) My stop loss for Airbnb was triggered. It took a huge tumble this week. Still a good long term play in my opinion but for the time being it’s going to be in the penalty box and will continue to tick lower with the newer and high multiple growth stocks.
Shopify (SHOP) I’m back in Shopify after its deep selloff. It filled a buy order that I had at $790 a share. It’s an over 30% drop from where I had sold out of it recently. This was the level I would get back in the stock. It hit that price on Monday.
Facebook (FB) I bought back into Facebook. I’d had my eye on this for a while because of how cheap it is versus all the other mega cap tech stocks on a price to earnings basis. I had sold Facebook last year at $310 a share. I bought it back at $292 a share and at that time was almost 25% off its highs.
With its new focus on the Metaverse, hence why they’ve changed their name to Meta, I like where the company is headed. Its valuation is very cheap and when you add in the continued growth it should experience I had to get back in. They own four of the ten most downloaded apps in 2021 with Instagram, Messenger, Facebook and WhatsApp.
Tesla (TSLA) When I said last week in my Investing Update that there were some stocks that came down which I had kind of written off. Tesla was one of them. I’ve missed this stock so many times on its historic run up. I started a position at $850 a share. I’m anticipating it to dip a bit more in which I will add more.
It’s earnings call this week in my opinion was excellent. But the stock still sold off. With Tesla you’re not just investing in the company itself, you’re also investing in Elon Musk. Elon is the most forward looking and innovative company leader in the world. First it was Tesla. Then it was SpaceX and Starlink. Next it’s going to be Optimus, a Tesla robot.
I’ve been watching to see when a company will try and develop robots to help with the worker shortage and replace certain job duties. It would be a huge benefit to Tesla’s car making process but imagine what other companies would pay to have these as a part of their business? Clearly this is in the early stages but I’m not going to bet against Elon.
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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.