written by reader Travis -Oh great cynical leader

By rlevine99, December 2, 2020

My day job had really cut into my investment fantasy world these past few months but the first thing i did after 4 months of 60:hour weeks and being way too close to the virus was re-up my scrip with the Gumshoe and start reading fervishly. 4 months away had me forgetting how brilliant and cynical you are as you seem to be capable of taking anything that sounds like an amazing innovation or investment opportunity and making it sound like snake oil or pet rocks.
Your analysis is exceptional and i suppose it is necessary to counter our unbridled optimism and fomo and lack of fixed-income opportunities with your cold-as-ice, been there, done that, keep it moving, “nothing to see here try the veal next time” approach and writing style. With all that pleasantry and hyperbole out of the way, would you be kind enough to answer 2 questions for me.
A) Would you be able to name the the last 3 stocks/pitches that you were essentially all-in on.
B) Are you ever tempted to re-calibrate your settings in light of the liquidity splashing around the markets and the suspension even by many long-time market mavens of any sense of appropriate multiples pertaining to growth and valuation?
As always , time away creates perspective and it took only 2 days of reading through the last few months pitches to recognize how great this site is and how unique it is in the investment world, both in terms of value as well as entertainment. Thank you, Richard Levine

This is a discussion topic or guest posting submitted by a Stock Gumshoe reader. The content has not been edited or reviewed by Stock Gumshoe, and any opinions expressed are those of the author alone.

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Travis Johnson, Stock Gumshoe
December 3, 2020 10:59 am

Thanks… and welcome back!

A) I don’t like the idea of being “all in” on a stock — the world is not so binary as the teaser pitches would have us believe. But I have invested in several stocks that have also been actively teased over the past year or so, generally because I thought the future growth potential was higher than is commonly believed or because the business model is really well-positioned for scalability (meaning it can compound on itself and become more profitable as it goes, preferably within a market or niche that itself is growing rapidly). Of the investments I’ve made this year my first thought would be to put Roku (ROKU), Fastly (FSLY), Chewy (CHWY), and Goosehead Insurance (GSHD) in those categories. Others are more “what if” speculative but still fairly compelling over a longer term if their market leadership hits a larger marketplace, like Unity Software (U) or Teladoc (TDOC). I think all of those have been teased at one point or another this year by a few of the big newsletter pundits, sometimes I owned them before that and sometimes I bought after researching a teaser pitch for them.

B) I don’t know what you mean by “recalibrate your settings” in a general sense — I’m actually fairly optimistic about the world and the stock market in general, despite the crazy valuations at which a lot of stocks trade right now (including many I own), and that is largely because I think government stimulus and spending will be substantial next year and interest rates will remain at or near zero in most of the world. Eventually that should create inflation problems, but probably not soon. I do generally trend toward skepticism when it comes to pitches because that’s the very least that’s necessary to help me (and readers) reset our expectations — we often dont’ realize how much the first impression we get of a company has a strong subliminal impact on our analysis, and if the first thing you learn about a company is that someone you think is an expert thinks it will go up 10,000%, then you’re kind of screwed… I like to try to reset that. Sometimes the companies that are pitched are fine investments, but they are oversold to such a degree that it’s hard to analyze them rationally if you start out by being wildly bullish before you even learn the stock ticker.

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wendlefly
Irregular
December 4, 2020 6:41 am

Hi,

Not sure if you guys were around in 1999-2000, but I was and I can tell you, back before it popped valuations simply did not matter at all. It was all about the pitch and story. I am not sure we are quite at that point, but damn we are really close.

This market to me is starting to get that flavor. I am horrible at calling markets and tops, but if you asked me what will the next 12 months be like, it could setup like back then, a quick violent correction of 10%-20% then, off to the blow-off top, similar to 2000. With no overhead resistance, where might that top be? Lord know, but it is coming IMHO.

When it does the punishment will be surreal. Amazon was trading @ 115 and bottomed @ 5. That kind of punishment. I see similar punishment for most of the “high flyers” of today. There will be winners, but few of them. Sorting it out will be difficult.

The powers that be understand “Fear and Greed”. They have used it countless times in the past. For the same reason many are bullish because the Fed will support the market, is the same reason I believe the next Bear market will be vicious. The Fed is the market. Period.

For the same reason it has come up to these heights over the past 12 years or so, is the same reason it could drop 80%. If the Feds hands are forced and it has to defend the dollar, will it?I think yes and when it does. Game over for stocks.

That point could be months, or years away. Who knows, but it is coming. It always has in the past, because human nature never changes. I’m not trying to be bearish, just a realist. A lot of today’s traders never went through 2007-2008 let alone dot com. Many have forgotten those lessons. They will be taught again. The “WHEN” is the tricky part IMO. Good luck!!!

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