Friday File: Stop Losses and Big Quarters
by Travis Johnson, Stock Gumshoe | September 7, 2018 4:49 pm
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Source URL: https://www.stockgumshoe.com/2018/09/friday-file-stop-losses-and-big-quarters/
Thanks for introducing FIVE and OKTA to us, Travis! Really enjoy your research and insights regarding them. Have a great weekend!
travis- re FB. Why not sell FB now and wait for up turn?
Or why not sell FB and buy Leaps. Much lower $ exposure on downside given the long bull run.
Also reasonable strategies, I’ve done similar things with other stocks on the past.
Love the author icon Travis.
Regards,
Frank
Rather than gamble on specific marijuana stocks, which I don’t trust at all, I purchased the ETF Alternative Harvest (MJ). In the short time I have had it it’s up over 13% and it pays a .07 dividend (2.05% yield).
you might also be interested in IIPR, an REIT that Mr. Gumshoe himself owns and talks about. Simply use Gumshoes search field to find some articles on IIPR, including most recently last weeks Friday File: Friday File: Diving into another Marijuana teaser, plus several add-on buys.
Not a bad idea, just keep in mind that almost all the stocks in there are highly volatile… and sometimes they will all move sharply together if sentiment shifts quickly.
More of a general question but how accurate do you find the zacks rankings when looking at whether to buy or sell stocks? Are they more short term? I only ask as they seem to correlate reasonably closely with your thoughts on a lot of stocks and I don’t know whether it would be a useful addition for my stocks.
I haven’t studied them, but my perception is that they tend to be similar to other momentum-driven systems (IBD, Cabot, Navellier, etc) — which would mean that they probably work well in a bull market that has a lot of momentum growth stocks and sectors, and less well at avoiding train wrecks if things turn south.
I think new investors can learn a lot from learning how Zack’s (and similar ratings firms) generate their ratings, and an investor could probably do well using them as a preliminary filter. If nothing else, you might avoid some costly mistakes, and that alone can make a huge difference. But you will notice that Zack’s ratings change with the weather because they do have a fairly heavy timeliness / short term trading component in their formula. That’s great for generating more ratings changes, which triggers more news feeds, which gives Zack’s more publicity, and because people recognize their brand and respect it well enough, brokerage firms will pay them a reasonable amount to keep doing what they do.
Personally, I find ValueLine a lot more useful (besides the SG, of course 😉 ). Their analysis is done by humans with the longer-term investor in mind who’s more concerned about fundamentals, business valuation, etc. Timeliness is important, but it’s a secondary component. Thus, their ratings change far less frequently. I also find it very helpful just to read their brief synopsis on companies just to quickly get to speed on whether I like a company enough to read their annual reports, etc. It also helps sharpen your own analytical thinking to read other serious analysts. Of course, it’s also expensive – great excuse to visit your local library where they likely have the paper version. However, some time back I learned a little secret (at least for US residents). Most (maybe all) public libraries offer membership to everyone in their state. Chances are there’s one public library in your state that has online access to VL, so by joining that library online you can check VL from home and start earning a return on those tax dollars 😉
After buying OKTA shares — thanks to our Gumshoe’s diligence — I noticed “okta” in the path name (URL) of my healthcare provider’s website. Reassuring validation …
Thanks Travis for all these precious information and sight from you.
I am actually shaving off my Tech position as I am now concerned (to not say worried) about a very important correction, the market is (or at least, should be) taking.
To that extent, I decided to further strengthen my exposure to gold (as I share your view on the gold price to rise in the future), as well as diversify a bit on 2 and 10 years US bonds.
I wanted to add an hedge position, similar to the one you took in december when you though things could turn a bit. And I was wondering which put option would you recommend me to take ? I was considering a put option on the Nasdaq as well as on the SP500 (the one that I currently have expires on December..)
I would appreciate your advice on which one to take and maybe on the exercising timing of the latter.
Thanks in advance Travis for this great article, always a pleasure to receive the notification of a new article on our mail 🙂
Travis,
Nice pick on OKTA. I didn’t see it until the run-up. Are there any other cloud-based stocks that are growing but still low in price? I remember TTD at 60s/70s but now it’s 140. I’m afraid OKTA might run like that.
Hi Travis,
I see that you talked about possibly letting Naspers trigger a stop loss.
What are your thoughts (recent thoughts) on Clean TeQ, Fairfax Holdings/Fairfax India? All are doing rather poorly right now (Clean TeQ worse off than the others, of course).
Clean TeQ triggered a stop loss a while back, as cobalt prices dropped and the capex numbers for sunrise climbed — I still think the project makes sense, so I elected to hold. So far that’s been a mistake, we’ll see.
Fairfax and Fairfax India are in much better shape than Clean TeQ. I’ll re-assess them of a stop loss trigger is hit, but I’m inclined to hold or buy more of both at current valuations. We may see some hurricane softness in the insurance stocks, which would not be a reason to sell in my book… and India is falling some on general emerging market weakness driven by trade fears, commodity prices, and currency collapse — but I’m still quite optimistic on India over the next decade, and I love some of Fairfax India’s assets.
Thanks for the clarification! You did discuss about Clean TeQ before, but I was initially unsure about Fairfax – whether you were holding it like Naspers or were more optimistic about them.
I do always look at and re-analyze a stock when it hits the TradeStops stop loss trigger, but yes, there are some stocks that I’m much less likely to sell than others — mostly because companies that have steady businesses and reasonable valuations are usually ones that I’m comfortable holding through volatility, but high-growth companies at very rich valuations lead me to keep risk at the top of my mind. Position size comes into play as well, since the way I think about risk is “how much money might I lose and never get back?”