Investing Update: Where Do We Go From Here?
Investing Update: Where Do We Go From Here?
What I'm buying, selling & watching
A lot of fear is running through the stock market right now. We know investor sentiment is the lowest since 1992. The bears are in charge of the market. At some point things will turn green and back up we go. But when does that happen? How long does this bear market last?
We’re in the midst of the fourth worst start to the year in history for the S&P 500.
The damage in the Nasdaq can be characterized as crash like. It’s had five straight weeks of losses.
Where things stand right now.
S&P 500 -14% YTD
Nasdaq -23% YTD
Home price at all-time highs
Mortgage rates at 13 year highs
Inflation highest since the early 80s
Apple (AAPL) -14% YTD
Google (GOOGL) -20% YTD
Microsoft (MSFT) -18% YTD
Facebook (FB) -40% YTD
Netflix (NFLX) -70% YTD
Disney (DIS) -30% YTD
Amazon (AMZN) -33% YTD
Tesla (TSLA) -28% YTD
Nvidia (NVDA) -38% YTD
Home Depot (HD) -28% YTD
Let’s check in on bonds. Had the year ended today, it would be the worst year in history for bonds.
Like everything, this too shall pass. With a longer time horizon I view a lot of this in one word, opportunity.
Warren & Elon
This past weekend at the Berkshire Hathaway’s annual shareholders meeting, Warren Buffett shared the following;
We haven’t the faintest idea what the stock market is gonna do when it opens Monday - we never have.
We haven’t ever timed anything. We’ve never figured out insights and the economy.
If the greatest investor of our time admits to not being able to time the market or invest based off what the economy is going to do, why then do so many think they can?
Then on Monday the richest person in the world, Elon Musk gave his view on investing.
Why do we make investing so hard? Yes it isn’t easy. It isn’t supposed to be easy. It hasn’t been easy for Warren or Elon either. But there are consistent messages and trends from the legendary and successful investors. We almost think it’s too easy. We try to make it harder.
I wrote about an investor’s mentality earlier this week in my post, It’s 90% Mental. Stay the course and continue to buy. Make sure you’re buying something.
A Question Answered
If you were ready to buy your first stock to hold for multiple years, what would it be?
Had I answered this question over a week ago I would have said Nvidia (NVDA). But after this past week I would say Amazon (AMZN). I have actually added to my positions in both of these this past week as you’ll read below.
Where Amazon is now priced you’re basically getting the e-commerce part of the business for nothing. This is the cheapest I have seen Amazon in many years. AWS, which is the cloud part of the company is operating at a $74 billion annual run rate. Plus AWS is growing at almost 40% a year. To put this into context, here is a good tweet from Michael Batnick.
Moves I’ve Made
All the cash that I had on the sidelines has now been deployed and I’m fully invested. This was a point where I felt comfortable going all in. If we go lower from here that’s fine. I’m comfortable being fully invested for the ride ahead.
Amazon (AMZN) Once Amazon hit the $2,300 level I added more shares. It has been years since I’ve added to this stock. It’s one of my longest held and largest positions. It’s been one of my biggest winners. So when a stock like Amazon is down 40%, I have to add to it.
Tesla (TSLA) After the blowout quarter Tesla had it has been stalled from going higher by the broader market selloff. Another of my favorite stocks down over 30% I had to buy more. Bought at $880.
Nvidia (NVDA) It seems every Investing Update I write how I added more to Nvidia. Down about 40% I just keep buying more. This is now becoming one of my largest holdings. Bought at $185.
Uber (UBER) Another name that has been taken to the woodshed is Uber. Down almost 45% it seems to be distancing itself now from Lyft. If Uber takes the clear lead the future of Uber is really bullish in my opinion. I added at $25.
Shopify (SHOP) This stock hit my stop loss and sold at $425. That happened after a terrible earnings call. They missed on everything this past quarter. All their metrics disappointed. I also don’t like the purchase they made of Deliverr. Had it not hit my stop loss I would have sold it regardless. Their story is changing and I’m taking my loss and moving on.
Goldman Sachs (GS) Yes I did just buy Goldman but when these other higher conviction companies fell to where they did, I wanted to add more to my highest conviction names. I did sell for a small profit and I usually don’t sell a new position this quick. But in a market like this where companies can easily double from these levels, I have to do things like this. I still believe this is best in class for banks and may come back to this name in the future.
What I’m Watching
Wednesday we have the CPI (Consumer Pricing Index) report for April. The expectation is a number of 8.2%. If inflation can come in less than that I believe the market will shoot higher. If it comes in less, there will be more pain ahead for the overall market.
At this range we’ve been bouncing around in during this bear market it seems the market is looking for direction higher or lower. This inflation number I think will steer it in one direction or another. My opinion is we’ve peaked in inflation. I’d expect to see that in the CPI number this month or next. It will remain elevated but I feel the worst is behind us. Showing a peak in inflation would be a great sign not just for the market but the overall economy and consumers.
Thank you for reading! If you enjoyed Spilled Coffee, please subscribe and/or give a gift subscription for others.
Spilled Coffee grows through word of mouth. Please consider sharing this post with someone who might appreciate it.
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.