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written by reader PAUL MAMPILLY’S 100X – SEASON 3

By Sam, July 2, 2021

Hello Everyone I saw the text from Lazutinku , Hopefully everyone will see this thread and we get goin

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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calculatedrisk
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calculatedrisk
July 14, 2021 4:19 pm

I have officially entered the “F it, only numbers on a screen for now” mentality. Haha. In the past when my brain clicked to that things started going back up at some point shortly after. Maybe not this week or next, but SOON!

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SillyRabbit
July 14, 2021 4:32 pm
Reply to  calculatedrisk

Yes, its pretty darn frustrating. Hopefully this is just a healthy wave down before the next wave up. Hang tough.believe many of us here are feeling the same. I wished I had better advice, but try monitoring the Russells 2000 for support levels (SMA, fibonacci). I personally cut down some of my losses 3 weeks ago by about 50%, and adjusted my strategies a bit. I didn’t close out my loss positions, just cut position size.
I do still believe in the potentials of these companies and their industries, I think it will just take more time. Though I also think PM has been too diversified with his focus with crypto, america 2.0, and all his different subscription services. I keep an eye on his Twitter, and seems he’s all over the place. I mean him and his team has a lot of companies in which they need to keep due diligence on. Not sure if the focus is all there.

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SillyRabbit
July 14, 2021 4:50 pm
Reply to  SillyRabbit

As someone here pointed out before, he is not personally invested in these recommendations. Also, depends on when someone started their positions with PM, some may still be up 30% on their portfolio, YOY. I do miss DD132 and his positive mojo in this thread though.

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SIGCZR
Member
SIGCZR
July 14, 2021 5:09 pm

Paul is not allowed to invest in his own recommendations per his contract with Banyan Hill. I’m sure it’s the same for all his colleagues.

gun341
July 14, 2021 6:20 pm

In times when stocks that I’am invested in are going down and are in the red I look at the stocks in my protfolio that have the biggest upside most are the ones that I either bought in down market or cost average in a down market like Wayfair it Didn’t fell good buying Wayfair at $80.00 in Nov 2019 to see it drop below $30.00 in March 2020 so I did what at time seem hard I cost average down because I Still believed in the company. So if you still believe in the companies you own do some cost averaging or noting at all, but my experience with Pauls picks is that they are like flowers in your yard you now that they will eventually bloom but it is always a joyful surprise when they do.

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kapphx
July 15, 2021 1:53 pm
Reply to  gun341

Nothing but weeds in my PM flower garden.

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calculatedrisk
Member
calculatedrisk
July 15, 2021 2:11 pm
Reply to  kapphx

A flower is just a weed that someone decided to desire.

Tried to get poetic there, but I know exactly what you mean. Me too. Felt good at about 10am today for 30 min or so. Just to get crushed again.

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marissa
marissa
July 15, 2021 2:24 pm
Reply to  kapphx

The weeds are out of control here! I believe in PMs stocks but my husband has been telling me to sell. Considering the blood bath yesterday and today, I’m about to jump ship.

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Gonz
Member
Gonz
July 15, 2021 2:52 pm
Reply to  marissa

Marissa, I probably wouldn’t sell now. The second half of the year is predicted to be good for growth stocks.

I’m in the same boat. I got in all of the PM 100x stocks early this year so my timing was awful. And some are down as much as 40% while almost all are down 10 – 30%.

One thing I’m confused about – maybe someone can explain: PM says these are 100x potential stocks with 3-5 year holds. But doesn’t that mean over the 5 years, they are moving up and up throughout that time period?

I didn’t do any DD on these stocks, which maybe was dumb. Does anyone besides PM actually think these are good companies?

In any case my strategy for now is to just hold. I don’t want to sell at this big loss and I am expecting a turn around for the second half of the year. But once the turnaround happens, I’ll probably trim all my 100x positions, as I really am losing confidence.

Thoughts?

calculatedrisk
Member
calculatedrisk
July 15, 2021 3:10 pm
Reply to  Gonz

Hi Gonz, I second your suggestion to marissa. I would try not to sell here if possible.

I think it is important to understand that Paul is hoping for one 100x stock in all his picks. These are moonshots and the vast majority will not make it to 100x or even to 10x. Some will even go underwater to $0 over time, guaranteed with these types of companies. But, he feels each have that potential over time to go 100x, and the idea is if he gets one the whole portfolio can be supported by those gains.

The 3-5 years only means this will take time (it is not a rule by any means), and is a longer timeframe than the stocks in PU, TM, EF, etc. From my experience, Paul is incredible. I am saying this even as I am getting crushed lately (portfolio down 40% from mid-Feb). They are truly good innovative small companies. I’ve done DD on all and am very impressed. I realize some will not be winners, but believe in his ideas. I would suggest you go to the websites investor pages and at least look through the Investor Presentation. If you prefer hands off investing, you can trust him – but by listening to that you are now listening to someone on a Stock Gumshoe board which is probably even ‘dumber’ than listening to Paul, haha.

I have followed him for 4 years and this is the roughest 4-5 months that I’ve experienced. Every year we had periods of time with large losses. COVID was the fastest fall, but it was also the largest and fastest springboard to new highs. Many new investors didn’t realize that the second half of 2020 into the first couple months of 2021 was extremely rare in how the market was just roaring.

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gonz
Member
gonz
July 15, 2021 3:33 pm
Reply to  calculatedrisk

Thanks Calculated Risk. That does help put things in perspective.

SillyRabbit
July 15, 2021 3:33 pm
Reply to  calculatedrisk

can you share your quick thoughts on SLGG, WWR and NNDM?

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calculatedrisk
Member
calculatedrisk
July 15, 2021 4:38 pm
Reply to  SillyRabbit

I really like and own all 3 of these.

For who knows what reason I decided to give WWR an astronomical weight of 6% of my portfolio (only BYND and AI are larger positions for me, and those are much bigger companies by market cap). My average cost is $5.46. I think EV is inevitable. I think graphite is going to be a part of batteries for at least the first generation of EVs. Realizing different technology might emerge over time, but those things don’t happen over night and current batteries use Lithium with Graphite nodes. And so for this reason it is hard for me to see how WWR would fail. The hyped headlines say that maybe graphite will be like a modern day gold rush. WWR just was approved and started a huge facility in Alabama. Dozens of other companies also applied to do so, but WWR is the leader. I don’t know if it’ll be a gold rush per se, but I certainly think it will be profitable.

NNDM is much smaller for me (<1%, which is normal for me for 100x) and is a very innovative company and I think they'll continue to innovate over time. I actually don't think they will reach 100x because I think they'll be bought out beforehand because of their intellectual property. Just my opinion. The biggest disadvantage in my opinion is that it is a 3D printing company. I don't say that because I dislike 3D printing, I agree with Paul that it could be the future of manufacturing. I say it because Wall Street seems to have a distaste for them. Every so often (years apart) 3D has a big run up that ends in a bubble. Large sustainable gains are probably only going to happen at some point when 3D printing really does take over manufacturing. When that will happen, I have no idea but I do constantly read about things switching to 3D printing.

Lastly, SLGG is a play on the gaming industry (also about 1% for me). I think without a doubt gaming will be bigger in 10 years from now than it is today. It'll also be more connected, which is important for SLGG. I play Call of Duty online and just recently I saw that they have leagues built into the interface in the game itself where you can see information about top teams (not sure if you can watch them play too). Back in the day when I played Halo, they had team events, but it was done by privately setting up matches or done in a centralized in-person environment. It is much more convenient now and keeps getting better. This will likely push E-sports to the next level at some time. I think the biggest risk with SLGG is whether it can establish itself as a leading gaming league. There will certainly be competition in this area and I don't yet know why a company like Facebook with Oculus Quest wouldn't just establish their own league in the future. For me, it is worth that risk for the chance that SLGG does differentiate.

I am no expert, but I've spent a lot of time reading about these companies. The disheartening thing is even with all this time my portfolio doesn't show it, haha. But I hope to continue to learn and maybe improve over time.

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SillyRabbit
July 15, 2021 5:29 pm
Reply to  calculatedrisk

Wow, that was much more in-depth than I expected. I too strangely have a large size position in WWR, it was my first 100x position, I didn’t take profit on the initial wave up and now ended up bag holding. I took a leap call position at the same time, which turned out to be a big loosing mistake.

SLGG was a slight better play for me, I took partial profit around $11 dollars and started buying back in on its way down, but my average is still in the red at the moment.

As Gonz says, hopefully the second half of the year turns out better for growth stocks. Looking at many of the 100x charts, most are support levels, they just need to bounce and make new highs compare to June.

One comforting sign (I convince myself this) is that its the entire sector of small cap companies., and not just individual companies that are being hammered, so a rotation back into smallcaps should be down the road.

Thanks “Bigly” for your feedback on those 3 companies. Have a wonderful weekend.

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calculatedrisk
Member
calculatedrisk
July 15, 2021 5:54 pm
Reply to  SillyRabbit

Yes, sometimes I struggle with “quick thoughts” haha. I’ve made both call and long-term leap call mistakes in the past, as well as margin mistakes. Now I try to stay away from all that and would advise anyone who asked me to do the same. Hoping WWR will turn around. It won’t take much to push it up if it starts drawing a bid.

And you are right. Small caps, as well as high growth has all been down. It just happens all PM stocks are right in the pain point as of late. You’re welcome and have a wonderful weekend too!

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gonz
Member
gonz
July 15, 2021 5:44 pm
Reply to  calculatedrisk

Calc Risk – Thanks for the additional input. Besides WWR, are there any others from the 100x that you are particularly bullish on – or did you put all of the others at 1% each of your portfolio? Also are there any from 100x that you didn’t invest in at all?

Just curious to hear perspective from someone who did more DD than I did.

Thanks!

calculatedrisk
Member
calculatedrisk
July 15, 2021 6:16 pm
Reply to  gonz

I was going to try to pick my top 5 but it is too difficult and would be too random, haha. I have about 1% in each, though some I missed for whatever reason (like no cash at the time). Funny thing is all the picks I didn’t get are doing well: LTBR, HYRE, IDXG are the 3 I never owned.

I like almost all the picks. A lot of different industries which is good for diversity. Each have their own unrelated catalysts.

I was a big fan of RVP and SMED but have trimmed those 2 recently. I saw them primarily as COVID plays, or at least the attention would be drawn to them by COVID. With no Devildog on here anymore, we don’t know when or if he’s going to sell and my opinion is these might be first to go. I kept half of RVP because I think it can develop into a good long-term hold too, while selling all my SMED around $11. I also sold my MARA around $30 in May to take profits. I own bitcoin and BITF so have other similar exposure.

If you are looking to buy in, I would say just by a small amount of all. If you can’t go with all, go with his latest. PSTI, WISA, BOXL, etc.

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Gonz
Member
Gonz
July 15, 2021 7:10 pm
Reply to  calculatedrisk

Calc Risk – Thanks for the additional input. I think you are our new Devil Dog. …

Speaking of which does anyone have a direct contact for Devil Dog to let him know we moved over here? My guess would be he is still holding as well. He believes in Paul and understands the 100x philosophy (as you recently reminded us as well).

I’m actually looking to trim some of my 100x at some point — I think I went in too big — but I won’t trim them until they go back to or above my buy points (which as mentioned I do think (based on what various experts including Kathy Wood are saying) will happen for the second half of the year.

Luckily this year, while mistakenly going in too big on smaller growth stocks, I also took my largest positions in Google, Apple, Amazon, and Microsoft. As big as the latter are, they seem like The Blob, they just get bigger and bigger. Still I worry about those too due to possible anti-trust laws that could be passed. I’m also concerned about how the removal of Cookies from the Internet will affect Google and Amazon in particular (Do they generate a lot of sales based on cookies-based advertising — I haven’t been able to get an answer to this question online — Anyone know)?

You mentioned PSTI might be a good pick. That one I’m leery of because Kathy Wood has been selling it lately. Her selling doesn’t make it bad, but some people tend to follow what Kathy does (which I think is partly why Palantir has been going down lately too). I think Paul also recommended SRPT recently, while Kathy started selling it.

In general I’ve been not going in as much on PM’s biotech stocks — I understand this area is part of PM’s background and claim to fame — but I just feel like it’s an area so hard to predict.

Gonz

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Doc
Irregular
Doc
July 16, 2021 2:42 pm
Reply to  calculatedrisk

I didn’t get into IDXG either. I’m waiting for it to go down. It’s 14% down today! Is it a good price to get in?

stockedup
July 18, 2021 4:12 pm
Reply to  calculatedrisk

I think Paul is not so interested in the graphite for batteries but for the graphene the company is making. For coatings and for strong sheet materials.

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SillyRabbit
July 18, 2021 5:25 pm
Reply to  stockedup

Was there a report on this? is this a fair size market? graphite use in batteries I would assume is a much larger market?

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calculatedrisk
Member
calculatedrisk
July 19, 2021 11:29 am
Reply to  stockedup

I’m not sure stockedup. I know he is a big fan of graphene, but that industry is much earlier on in its lifecycle. Graphene companies are more focused on the refining process vs. the mining of the raw material. A pick of his I like a lot for that is NNXPF. I thought WWR was more of an EV play because batteries are the focus of their website, but do not have 100x to know exactly what Paul’s angle was.

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Robert
Member
Robert
July 15, 2021 4:04 pm
Reply to  calculatedrisk

Thank you calculatedrisk. My experience mirrors yours.

I have found it best to take my time entering his new picks and buying in at less than my full position. I am prepared to average down and do my best to end up with a cost “Well Below” the recorded entry price.

Then I have to be patient. My best winners are the result of this method. Sometimes they just get away from me and I miss what might be a really good pick. So be it. FOMO is a killer and I know that many of the ones that get away eventually come back to me.

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calculatedrisk
Member
calculatedrisk
July 15, 2021 4:55 pm
Reply to  Robert

That tends to be a good strategy! I learned that when I start to get FOMO about dozens of stocks that I wish I knew about 1-3 months ago, it is usually the time I should be selling. It is a killer for sure.

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kapphx
July 27, 2021 12:22 pm
Reply to  kapphx

Even the weeds are now starting to wilt.

sean m
Member
sean m
July 16, 2021 4:39 pm
Reply to  gun341

just sell puts on stock you want.

Emma
Member
Emma
July 15, 2021 2:32 pm

Action to Take: Sell CA Healthcare Acquisition Corp. (Nasdaq: CAHCU) for no less than $10.00. By King

Holy Moly
Member
Holy Moly
July 15, 2021 3:01 pm

New future report – Action to Take: Sell half of CTSDF at the market price.

Mitel
Guest
Mitel
July 15, 2021 5:08 pm
Reply to  Sam

I set my buy point at $36, watched it go to 38, then got in at $36, and now I’m down 6.5%. LOL.

prakad
July 15, 2021 11:45 pm

IO – 21.57% up post market today.
Q2-2021 Preliminary revenue 20M, 40% increase.

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Arvi
Member
Arvi
July 16, 2021 3:45 am

Anyone know about the latest teaser from BH ? The content goes like

Charles Mizrahi just revealed an extraordinary breakthrough … and it could be the stock of a lifetime.
You see, one tiny tech company — still nearly unknown to Wall Street — is setting up to be a bigger story than Tesla, Zoom or PayPal have been in the last year.

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calculatedrisk
Member
calculatedrisk
July 16, 2021 10:33 am
Reply to  Arvi

I watched the teaser and he gave enough clues for me to figure out this is XONE. Paul also recommended that one in EF and I owned it already, but I added a little to my position yesterday based on Charles Mizrahi liking it too.

Last edited 2 years ago by calculatedrisk
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Arvi
Member
Arvi
July 16, 2021 2:08 pm
Reply to  calculatedrisk

thanks calculatedrisk ! Seems to be in 3D print space and i already have exposure with PRLB and 3DSys. Will do my due dilgnce too. Appreciate your respose.

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garagedoor
July 16, 2021 9:48 am

IWM -iShares Russell 2000 ETF opened up this morning. At yesterday’s close the RSI2 was 7.17. This morning the small cap ETF RSI is 40.77. Keep an eye on this ETF and lets hope the small caps make a run

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calculatedrisk
Member
calculatedrisk
July 16, 2021 11:35 am
Reply to  Sam

Thank you Sam! Really do appreciate your alerts!

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SillyRabbit
July 16, 2021 11:56 am

Curious if DevilDog132 is still on this thread, or is anyone else updating 100x recs?

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SillyRabbit
July 16, 2021 11:58 am
Reply to  Sam

Who’s their target?

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SillyRabbit
July 16, 2021 12:03 pm
Reply to  Sam

Just found it, sorry, comments are not working correctly for me, everytime I post a comment, it would take about 3 minutes to refresh and update the page.

Crypto Fintech Circle Unveils $4.5 Billion NYSE SPAC Listing Via Concord

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SillyRabbit
July 16, 2021 12:09 pm

Also, is anyone on this thread still updating 100x portfolio stocks?

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Doc
Irregular
Doc
July 16, 2021 2:33 pm

I bought shares of TSLA at $221/share before the split. I also accumulated DDD shares at $8.2/ share. Today these two positions account for about 18% of my portfolio.I never sold any share because I want to cash in when I turn 65 (8 more years hahaha). I know it’s risky! I have to re-balance my portfolio. Should I trim down my positions? What do you think? I would appreciate your thoughts on this one.

Gonz
Member
Gonz
July 16, 2021 3:17 pm
Reply to  Doc

My husband bought Tesla stock at a similar price (before split) and he is planning to hold for many years to come. He is a big believer in the company – he owns a Tesla Model 3 and follows the news on all things Tesla (from the technology to stock opinions) on a daily basis. He is extremely bullish on it both in the short and long term. So anyway, that’s one opinion.

Doc
Irregular
Doc
July 17, 2021 11:13 am
Reply to  Gonz

Me too! I’m BOP on TSLA so, I have not sold any share. It’s like ‘come hell or high water, I’ll keep holding!’ hahahaha

calculatedrisk
Member
calculatedrisk
July 16, 2021 3:37 pm
Reply to  Doc

That’s really great Doc – one of my biggest mistakes of my young investing experience is being way too trigger happy on taking profits and frequently missing out on the largest gains. I tend to sell winners to fund stocks that are down thinking that those are now ‘bargains’. And then I watch the winners that I sold rocket up 100-200% more. I’ve learned that is not a good strategy because the stocks I then fund do not do as well OR take a long time to go up vs. the winners I trim.

With that said, there are also companies like XONE for example that I was up a lot on and held. Now I am about even where at a time I was up 300%.

It really is a tough call and there is no easy answer. If you trim 20% of each that would put about 3.6% cash back in your portfolio. That might be an option to give you peace of mind, and you’ll still have strong exposure to those 2 companies. Selling the first time often leads me to selling a little more and a little more etc. until I have very little or nothing left, so just make sure you have that discipline to cut 20% and that is it.

Congrats on holding those both as long as you have! I’m right there with you on DDD, while TSLA I sold around $900 pre-split after buying below $300 (another story of a winner that would be a lot higher if I had held).

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Doc
Irregular
Doc
July 17, 2021 11:34 am
Reply to  calculatedrisk

I enjoy reading all your posts, informative and practical! Thank you!

Generally, I don’t sell even when the stock goes down unless PM says so. I have a tendency to buy, buy and buy a few more shares when I like the company. I don’t have spare cash to buy new recs. I wait for pay day to get in.

Arvi
Member
Arvi
July 16, 2021 3:47 pm
Reply to  Doc

Hey Doc ! Firstly congratulations on your gains and i wish you have a wealthy retirement. I have a friend who is around 10 years away from retirement and he started trimming down and says he simply cannot take a risk of one more recession cycle at this stage and he may not have time to regain the losses. But it all depends on one’s risk appetite. My 2 cents 🙂 good luck

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Doc
Irregular
Doc
July 17, 2021 2:41 pm
Reply to  Arvi

To a happy wealthy retirement for all of us! Cheers! (SShhhhh I try to not look at my sea of reds this year!)

Mitel
Guest
Mitel
July 16, 2021 4:51 pm

“Taking some profits along the way”…. I know it’s a silly way to look at it, but when I see some of my biggest winners start to ‘level off’, I’ll take my initial investment off the table, so that what is left is “Free Stock” ./ If it goes down after, I congratulate myself for being smart enough to get out during a peak. And I don’t feel so bad because I got my investment out and still hold a long term position. If it goes up after, I console myself by remembering I still have a good bit of the stock, and I was able to re-allocate the cash to other (potential) winning stock picks.

SillyRabbit
July 17, 2021 12:05 am
Reply to  Mitel

Agreed, taking partial profits along the way seems logical when a stock goes up 30-50%, nothing goes up in a straight line.
During pullbacks of 15%-50%, use your winnings and buy back in (in stages) if you believe there is more room to run.
This way, a portion of your holding remain in play if the stock keeps going up, and if the stock pulls back. You are buying back in cheaper.
Wish I’d done so in February instead of being greedy.

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Time to Roll
Time to Roll
July 16, 2021 8:02 pm

What a rough week, stocks and crypto down, down….. hard to stay BOP but holding strong and hopefully we’ll turn the corner soon.
Waiting to get the next crypto pick. GLTA

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Doc
Irregular
Doc
July 17, 2021 5:14 pm
Reply to  Time to Roll

Rough week indeed! I lost all my YTD gains again! Still BOP when I look at my three-year old portfolio. Strong hands!

Doc
Irregular
Doc
July 17, 2021 11:56 am

After reading all your ideas, I decided to trim 15% of my TSLA & DDD positions. It’s always good to take profits. I could use the money to buy new recs or buy some other EV-related stocks.

Thank you, everyone!

Doc
Irregular
Doc
July 17, 2021 10:36 pm
Reply to  Doc

Oooops DDD is down big time! I don’t want to trim my positions at this time!

calculatedrisk
Member
calculatedrisk
July 19, 2021 10:06 am
Reply to  Doc

I agree, don’t trim at these low prices!

Another option you have after this bounces a little is to sell calls on your position for the amount that you want to sell. So for example, if you would be happy getting $35 for 100 shares of DDD, sell one of the DDD $35 calls and go out a couple months. If the stock rises to that level you’ll get the $35 (for example), as well as the premium on the option you sell. If it doesn’t reach $35 by that day you get to keep the option premium and your shares and then you can write another one against those same shares.

Like I said, I would just hang on at this time, but that could be a really smart way of earning money through options. It is kind of like being the casino of the options market rather than the gambler.

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Erin
Member
Erin
July 19, 2021 1:08 pm
Reply to  calculatedrisk

Thank you for sharing that Calculated risk! I have a lot of DDD shares, and I really like that strategy! You explained it so clearly!

Arvi
Member
Arvi
July 18, 2021 8:08 pm

Has anyone access to IK’s Top3 NE windfall opportunities ? He talks about a solar powered EV charging company, an IT technology company and a life sciences and and AI firm. All seem to be small cap stocks but i dont see them in Venkatesan’s spreadsheet from july 10. Probably these are new recommendations ?

-BR

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Doc
Irregular
Doc
July 18, 2021 11:54 pm
Reply to  Arvi

For sure BEEMis the solar powered EV charging company
It seems like CTSDF is the IT technology company, and BLFS is the life sciences

Arvi
Member
Arvi
July 19, 2021 5:38 pm
Reply to  Doc

Thank you Doc ! I kind of narrowed to Envision but dint figure out it was rebranded as BEEM. I liked CTSDF and added small position today.

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calculatedrisk
Member
calculatedrisk
July 19, 2021 11:22 am

Ouch, tough way to start the week again for the Bulls. Like a gut punch! There are a few really interesting things about today’s action so far. And I am feeling more confident despite showing losses today (again).

1) Major averages are all getting clobbered, so this is a market wide selloff going on. Red today is only associated with that, not our PM picks. Unlike the recent past when major averages tick up and our stocks are red, that is not the case today. Our stocks are actually seeing some relative strength, bouncing hard off of lows. This is a pretty strong signal of a reversal in the high growth names. We may have found our bottom! Even the Russell and the NASDAQ were both deep red and there were some PM stocks green or even (instead of down by multiple magnitudes of the averages).

2) I keep an eye on the CNN Fear and Greed Index, it seems to be a really good indicator pointing out good times to buy (in times of fear) and good times to take profits (in times of greed). If I was smart and discipline enough I would only buy stocks in times of Extreme Fear, build cash when we are neutral and Sell/Trim when in Greed. In the future I’m going to let it guide me more. We hit Extreme Fear today for the first time since the COVID crash in 2020. Rating of 17 (less than 20 on a 100 scale is Extreme Fear), but this is interesting because when you step back and look at the major averages, many are only a few % from all time highs. So much fear when so close to the top makes me think that all time highs are still in play and we will get back to making them soon.

Combining point #1 (our stocks catching a bid again) with #2 (new all time highs on the horizon), paints a very favorable outlook. Of course this is only my opinion and by no means am I an expert, just a hobbyist.

3) A couple sub points, the VIX and VVIX spiked today. Hopefully this spike was the top (as I’m sure we can all use a little less volatility. And lastly, COVID plays like RVP in 100x and FLGT seem to be catching a bid because of Delta variant concerns. Those stocks should have some short term staying power.

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CraneC
CraneC
July 19, 2021 12:34 pm

I am prefacing this with saying that I want to see the overall market uptrend continue. Regardless of the sideways or small cap hits we have seen lately, we are still in an overall market uptrend that has been continuing since the last market sell off (and arguably even a continuation of the pre-covid bull market).

However, I am very bearish overall from a fundamental and technical perspective. Fundamentally, this “transitory” inflation talk we are seeing from the fed is (in my opinion) merely an exercise in denial and/or an exercise in giving the large players an opportunity to slowly move to commodities instead of causing a significant market sell-off shock.

We will soon see a significant increase in interest rates. This will wreck small caps. The slower the increase, the less immediate the collapse, but I think we are past the point of being able to move slowly. As of last month, I predicted October would be when the real rate increases and bear market will begin, but before then, we would see a continued run-up. Today’s sell off has me concerned that the real sell off is starting now. This is more from a technical standpoint. If you draw a trend line on the daily chart, today is the first day we have seen a real fall below the trend.

Additionally, while there are historical counterpoints here (inflation data, rate levels, VXX correlations, etc.), I encourage everyone to pull a weekly or monthly candle chart for the DJI. If anyone here has studied charts long enough, they can see a correction is coming. There is a significant bearish divergence in the RSI as well. Putting RSI aside though, compare the pre-great depression (1924-1929) DJI chart to the current one. As Twain says, history does not repeat itself, but it often rhymes. (I would share my charts, but I do not see an option to upload an image).

Just so you do not think I am some crazed bear (see my preface), I will say I’m not the only one with this mindset. Specifically, Michael Burry (notably of Big Short fame) and Cathy Wood (ARKK), both have said similar statements. Burry has a significant overall market short position that was revealed in his last quarter’s filing. It is mainly inflation focused. He also said that we are in the “greatest speculative bubble of all time.” For the person asking about taking Tesla profits, I would note that Burry’s largest position is a put position in Tesla.

Cathy said that hypergrowth is going to get hammered when rates spike. Also, of less notoriety (Mark Minervini of Market Wizards and winner of the International Investing Competition) said over the weekend that he is overall net short in the market and has very tight stop losses on any long positions.

I sincerely hope that in weeks, months, and years that all of you can point back at this comment and laugh and say, “what a moron,” but for now, I am taking the Minervini approach of being overall net short. With anything I am long, I am keeping a very tight stop loss. If you have gains over the past year, I recommend taking some profits off the table.

P.S. It’s my belief that the economic advisors in the White House are aware of this inflationary dynamic and that a market correction is coming. From a political perspective, Democrats cannot afford to allow a market correction to occur immediately after taking such drastic economic action (exponentially more dollars printed this year than decades combined before). It’s a major gamble on Modern Monetary Theory (“MMT” – See Deficit Myth book recently released). Because of this, we’re going to see alternate explanations prepared (covid variants, cybersecurity, blaming China, etc.). The best way to unite and the best way to recover economically is to go to war (see result of all great recessions).

P.S.S. I am a democrat. I check this thread every few weeks. I might check back in sooner. Good luck to all.

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calculatedrisk
Member
calculatedrisk
July 19, 2021 1:49 pm
Reply to  Sam

I tend to agree, however I think FAANG will flatten out and consolidate (range bound) for a while instead of head higher.

We had a massive rotation out of growth (down 30-40% in a lot of names), and even though the DJI is showing weakness, I struggle with selling growth at these levels. Counter to that, I would be a seller of most of the DJI stocks right now.

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aggiemey05
Member
aggiemey05
July 19, 2021 3:10 pm
Reply to  Sam

PM’s recommendation on Moderna is keeping me afloat. I’m glad I trusted him and didn’t sell. I bought last year at $26 and haven’t sold any, but even if you had bought on his rec you’d have nearly doubled your money in 3 months! Just wanted to point that out and to stay BOP!!

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CraneC
CraneC
July 19, 2021 3:18 pm
Reply to  aggiemey05

Wow. That’s an amazing ROI on Moderna. It went from $240-$316 in less than a week. It’s a great stock to own right now. Depending on how many shares you own, you could probably reduce your cost basis to $0 or better by selling options right now. Just an idea. Either way, awesome!

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aggiemey05
Member
aggiemey05
July 19, 2021 3:38 pm
Reply to  CraneC

Great idea CraneC. Thank you. I hadn’t really checked until today since I’ve been trying to not look due to all the red lately. I was just thinking I needed more cash for more recs and to buy at these lower prices for both stocks and crypto. PM seems like he’ll definitely be recommending Robinhood which I just saw has its IPO on the 29th. I have a little bit on my Robinhood account so I’ll try to get in on the ones set aside for RH users like PM said in his video last week.

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Time to Roll
Time to Roll
July 19, 2021 6:51 pm
Reply to  Sam

I agree Sam, whenever we see an uptick in Covid cases and now the variant the market retracts. I too remain optimistic, even in this sea of red.

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calculatedrisk
Member
calculatedrisk
July 19, 2021 1:24 pm
Reply to  CraneC

Really enjoyed reading this post. Thank you CraneC!

It is helpful to have other perspectives, especially informed ones as yours clearly is. When posting, at the lower right corner of the box you type in there is an icon for images if you ever want to share in the future.

A couple quick questions in case you have an opinion and time to answer. Do you think the interest rate risk to small caps is already built in? I feel that at this point everyone knows interest will ultimately head higher over the coming months and years. But we are still at historic lows. The idea of 1-3% interest would have almost been laughable at times in history. And while small caps and growth will have to pay more for borrowing, won’t inflation (more dollars flying around) in part offset that as a percentage?

Also, Cathy has been pouring money into these companies in the ARKK funds. Trying to figure out how her angle or how she is hedging if she feels they are going to get hammered.

Thanks again for your contribution to this thread – I feel like sometimes my only direction is bullish, which is not always a winning strategy.

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CraneC
CraneC
July 19, 2021 3:06 pm
Reply to  calculatedrisk

Thanks for the response. I’ve enjoyed reading your contributions to this thread. Your insight on the fear/greed index is on-point. As Buffett says, be fearful when others are greedy and greedy when others are fearful. I think the metric we will need stay in a level of “fearfulness” for a while longer before I become a buyer again. It’s certainly something not to ignore though. Here’s hoping the buyers are rewarded. I like seeing people rewarded when betting long a lot more than I like seeing people rewarded when betting short.

As for your question about interest rate hikes being already built in to small caps, my opinion is that small caps were the first to be targeted by the under the surface rotation into commodities. This rotation was motivated by the impending rate hikes, so I think it’s fair to say there’s a fair amount of the hike already built in. As for whether enough of the expectation is built in, that is going to be the million dollar question. It’s my opinion that the hikes are going to be substantially more than anticipated. Your mention of inflation (“more dollars flying around”) is interesting to me and something I think of a lot. Naturally, I would love to think that these dollars flying around will result in a boost into the economy because those dollars will be either invested or put in the pockets of consumers. That’s the big tenet of Modern Monetary Theory. If this turns out to be more accurate than the traditional rate/inflation dynamic, the bulls right now should be well-rewarded.

As for Cathy, she’s a bit of a pariah. I wish I could better understand her ideas. My assumption is that she believes bitcoin is the proper hedge to her hypergrowth stock investments. Gosh, I sure hope that she is accurate because I love the idea of Bitcoin trading like an inflation-hedge, but Bitcoin trades more like a tech stock than an inflation-hedge like gold. I fear that her idea of a hedge is just more doubling down into speculation/growth risks.

One central idea behind some of my bearishness this year is what happened with Archego’s Capital in their margin call. As a very brief synopsis, a hedge fund was given a significant amount of overleverage that resulted in an enormous margin call. I fear that our some of the numbers we’re seeing in the market might be a paper tiger. There’s murmerings that regulators are looking deeper into what happened into Archegos and are in between a rock and a hard spot on how to address it with other firms that are doing the same thing.

Don’t get me wrong… I love leverage, but on days like today, margin calls cause a vicious cycle of selling.

Thanks for your contribution to the thread as well. Always enjoy engaged and informed discussion on such hot topics.

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calculatedrisk
Member
calculatedrisk
July 19, 2021 4:18 pm
Reply to  CraneC

Cool! Fully understand what you are saying here. That quote from Buffett is why I started following that index. Like you said, the big question is whether or not enough of the interest rate knock on high growth and small caps is already built in. Like you, I do worry that some may not be, but at the same time I’m hoping that a slow rise will allow the digestion better than the volatile times we’ve had lately. Also, I think small caps were undervalued going back a year, so there is that I am considering too. (So many factors!) I would probably scale down my investments a little bit if we get a rally in the second half of 2021. Only because I’ve realized that I am in too deep, but also have a steady income etc. so no reason to sell right here, right now.

Interesting re Cathy’s bitcoin hedge. Just because it is called the next gold standard does not mean like it acts that way yet. I like bitcoin long-term but don’t see it as a hedge for stocks (esp. the kind in ARKK). Very familiar with the whole Archego’s Capital situation with Mr. Bill Hwang, what a disaster, haha. I am sure more of this is going on, but I hope not to the same extent.

I guess we’ll see what the next days bring. At some point looking in hindsight the decisions will look really clear.

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CraneC
Guest
CraneC
July 20, 2021 8:53 pm
Reply to  calculatedrisk

I pulled this chart from an analyst I follow pretty regularly. He made the point that the Russell 2000 oversold substantially compared to the overall market. The chart reflects the Russell 2000 vs. S&P500. It’s at an inflection point currently, but if we see a bounce at this trendline, growth stocks might be safe from any overall correction that might be seen in the larger indices. Another perspective, but I like the chart.

IMG_7250.JPG

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