Carl Icahn is on CNBC last night gloating that he’s making a killing shorting tech stocks.
And, here’s Harry Newton feeling like an idiot because he didn’t short them. Harry is giving new meaning to the old saw:
How do you get a small fortune?
Answer: Start with a large one.
There is some good news: My huge losses of recent days have only depleted my paper “profits,” not my real cash.
Second, I’ve stemmed the losses by selling stocks whose prospects changed. For example, I’ve sold Netflix, because too many companies now had competitive streaming services. Think Amazon Prime. Think Disney. Think Fubo. Think Peacock. Think Hulu. Think YouTubeTV.
I also got out of Chinese stocks like BABA because of my disdain for President Xi.
I got out of “Pandemic Plays” like Zoom, DocuSign and Peloton. (Peloton has too many new competitors. Check “exercise bike” on Amazon. There’s a perfectly fine one for $217.)
But, most importantly, I also dumped out of stocks that were down 15%+ from their highs or what I had bought them at. This is an inviolate rule. In a declining market like we have at present, it’s totally inviolate — no matter how much you love the company. It’s how much the market loves your stock. Right now it’s not very much.
And then there are the stocks that are just collapsing. The biggest collapser is Amazon. It was trading within a range that was sort of defined. Then suddenly. Look at this one-year chart. It’s down over 4% today alone. A Wall Street “analyst” wrote a report and said Amazon was suffering inflationary pressures, as well as elevated operational and labor costs. I’m sure he’s right. Yet….. The analyst reiterated his overweight (buy) rating, with a price target of $4,350 — which is about 47% above where it’s trading today.
The analyst, J.P. Morgan analyst Doug Anmuth, knocks the stock, but says buy it because it’s going up. Go figure. Is there a point?
Two days ago I detailed eight “strategies.” Here’s that list updated to nine:
+ Buy oil stocks, because oil is going over $100. I sold my CVX after I made a few bucks on it. I nibbled at XOM. It’s now down a few bucks. Stupid. Stay away from oil, for now. I know nothing about it. But when I do know something, everyone knows better. Hence, I’m often too late with “newly-hot.”
+ Buy financials, like banks, because interest rates are rising. I’ve never been able to time financials and, as a result, I have not done well with stocks like PayPal, SQ, Goldman Sachs, Morgan Stanley. In fact, I’m out of financials for the rest of my life. They join my list of “too hard.”
CNBC had an interview with the head of Sofi, which had just won the right to be a bank. CNBC asked him, So? So what’s the big deal about being a bank? The CEO bumbled, fumbled and stumbled through an answer. There are 4,374 commercial banks in the U.S. (as of 12/31/2020). I didn’t hear one thing he said that would make me want to open a bank account with him. Go to his web site — click here — see if you can find anything that appeals. Not even a toaster.
By contrast I did listen to an impressive interview with the head and founder of Airbnb. Smart fellow.
+ Buy the dip in stocks you like, e.g. Apple, Google, Nvidia and Ford. Add in Amazon. They’ll all be higher by the end of this year. This afternoon they’re getting cheaper. Wait till 3 PM.
+ Buy Microsoft because it’s doing everything right, including buying Activision. I don’t buy the idea that Microsoft bought Activision because of “the metaverse.” I do buy the idea that it bought Activision because of gaming — which is bigger than Hollywood — and has far fewer competitors. It’s much harder to make a popular game than a movie.
+ Cramer says buy companies that make things and earn a profit. My biggest winner that day was PANW (Palo Alto Networks), which is losing money. My biggest winner today is Apple, which makes things and is making money. Today PANW is losing a potful of money. Go figure.
+ Day trade a stock like Amazon. Look at its chart. It’s enormously predictable in the short-run. I don’t have trading skills. But friends who do, tell me it’s the best stock to trade because of its predictability. Or used to be before this downdraft. See chart above.
+ Eye your stocks that are down 15%+. They’re probably not worth holding any longer. Dump them. Remember hope is not a strategy. Time to sell GNRC.
+ Don’t think your salvation is in crypto or gold. Here’s a chart of a heavily advertised crypto play in the last year:
Gold doesn’t look much better in the last year.
Bitcoin is under $40,000 today, down 40% or so from its recent peak.
+ Do nothing — don’t sell or buy any stocks — on the basis that covid/omicron/supply constraints will be over soon. By summer we’ll be back to “normal.” And prices should be higher. Go play tennis. Read the book Winning Ugly by Brad Gilbert.
+ Talk to your bank. Do they, per chance, have any non-performing real estate loans they’d like to sell. A property that doesn’t pay its mortgage at $1 billion can pay its mortgage at $200 million. A residential multi-family might sell for a five cap. A perfectly fine multi-store retail might sell for a ten-cap. That’s because retail, today, is out of fashion. But people still gotta shop for food and booze. Amazon’s not good at that.
Dolly Parton said it all: “The way I see it, if you want the rainbow, you gotta put up with the rain.”
Enforced Isolation Gadgetry
Three gadgets to make your Zoom calls zoom. I use all three on all my Zoom calls.
+ Logitech C925-e webcam. Far better camera than any laptop or iPhone camera. Plugs directly into your laptop’s USB port.
$69.45. Click here.
+ Lume Cube Video Conference Light. Place it in front of you. They’ll see you. It’s TV-studio quality lighting in a tiny, portable package. It’s rechargeable via USB. Super convenient. I replaced the stick-on thing with a mini-tripod.
$69.25. Click here.
+ PowerDeWise lavalier microphone. Really good sound. You get all the cables to also connect a headphone. It’s much better sound than your laptop or iPhone.
A bargain. $35. Click here.
Wonderfully tasteless
The next one is serious.
The Pandemic is causing people to forget their manners. My cardinal rule: If you haven’t anything nice (or flattering) to say, shut up.
Lovely standup. Toby The Devil.
If you can’t play these two videos, go to your browser and click here.
Cute candle trick. Try this on the kids
I went to breakfast this morning at my favorite local coffee house, Main Street Goodness in Chatham, NY.
It was minus 2. Even the birds dressed for the cold.
This afternoon, I will exercise on my non-Peloton bike, listening to fun podcasts.
These stocks are doing well –UNH, TXN, LOW, COST and TSCO.
See you soon — Harry Newton
