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Strategies & Market Trends : Trader J's Inner Circle
NVDA 1,038+9.3%3:59 PM EDT

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Fast Eddie
Zen Dollar Round
To: Trader J who wrote (54541)4/4/2022 12:51:17 PM
From: Trader J2 Recommendations  Read Replies (3) of 56202
Market thoughts & position thoughts: 4/4/22 - Market is firmly in a wait and see mode while it digests a lot of information as the war in Ukraine rages on.

Analysts continue to trip over themselves to call a bottom in the stock market to generate confidence for retail investors that the water is safe. I have a friend who is my primary market gut-check and strategy partner and he and I are the ones who can stay on the phone for hours to talk about market minutia, hidden opportunities and the "what is" of the markets that talking heads aren't talking about. He is the one that we were pounding our fist in unison on the topic of inflation, the Fed being politicized into doing nothing while Rome burned (not raising rates) and that we would see historic inflation increases. Basically, handing out new sheet music to the string quartet on the Titanic following the striking of the iceberg. In our view the word "transient" as it related to inflation was ridiculous, based on what we were seeing and tracking. This was in April/May of 2021.

Now, analysts are saying "the bottom is in!" Factor this as it relates to that statement. If the "bottom is in" then that means all the current events shaping current market conditions have been factored in as we will not go lower. So if Putin touches off a low-megaton nuke to quell resistance, if the housing market softens dramatically due to higher rates, inflation, etc. or if we enter recession or worse due to higher rates, energy prices, unemployment, etc, then the market will not move lower.

Ridiculous. All things remaining the same, the bottom may be in, but we have far too many tumblers in motion for the bottom to be in with any confidence. We're dealing with instability in Europe with dire long term potential if things don't go well, historic hyper inflation which won't be tamed with current .25 bps moves and there is every chance that a recession, or worse, globally, could be on the horizon. If you want to say the "bottom is in" have at it, but there's no way I can and I tend to be an optimist.

But I'm enjoying see the bounce and have every hope that the bottom is truly in, meaning that we've seen the worst of all the negative catalysts. If we have, then it's off to the races.

Stocks - What is working and what isn't from my portfolio:

Things have roared back and I've been rewarded for some of play that initially looked early. In fact, many WERE early but this is why I hold to a strategy of determining the length of the play and, if it's a long term hold, then a place of breaking up my purchases into 3-5 smaller purchases to average in if given the opportunity. Here is what has worked.

In the primary account that makes up most, if not labeled otherwise (Income, Trading, etc.) the top five positions are now:

BRK/B - Takes over first due to small % sell in ABBV
DE - Backed off recently from 52WH
ABBV - Solid income + growth
NVDA - Has roared back to #4 overall due to recent rally
JPM - War and other factors have taken down the banks. I'm fine holding with much lower cost bsis

How about a look at my bottom 5 positions making up the least % weight:

- ROKU - Holding. I also hold a lot more in a taxable account with a $27 cost basis
- TDOC - Still one of my favorite long term growth plays
- AMZN - Recent addition bought for split. Should have bought more
- MTTR - Long term spec on metaverse.
-TWLO - One of my top long term favorites from non profitable (but soon) names. Other is SNOW

Other names which have been working of late:

SQ - Bad first two purchases but lowered cost with a purchase at $101
LULU - Bad first purchase at $341 and almost doubled sub $300 but held off. Roared back
SNOW - Perhaps my favorite up and comer tech play. Two purchases at $194 and $170.
TWLO - Waiting for my next entry. Want to double up. FIrst purchase $178, missed recent opp.
GOOGL - Purchased on breakdown of rally following split announcement. $2890 and $2634
RBLX/DKNG/CRSP - All rallying back off bottom. Not adding more here but holding
AEP - Well, yeah, that sector has worked well.

Names not working well:

C/JPM/BAC - Banks aren't working but environment should favor them longer term. Holding for yield
ETSY - Really ping-ponging but still one of my favorite profitable names.
DKS - This name is a conviction buy for me right now. Too low and will be rewarded again. 1.9% div
PYPL - Finally separation between SQ and PYPL. PYPL has been toxic and will take time.

Items on the sell list if I need to raise cash:

LULU - The big rally in this name on earnings has been great. Really wish I had been convicted in my desire to purchase more below $290. Based on the move and the fact that I don't want too much retail, I still flirt with trading out of this name and taking the 10.5% gain following a bad first purchase.

REGN - Really love this name and hoping for a split. Has roared back nicely and is a premium name. I'll likely continue to hold. Currently #16 in overall weight in the primary portfolio.

KMB - Good solid div earner without a lot sizzle. Just doesn't fit much in this portfolio but I like the 3.75% yield.

I still have 10% in cash in the primary portfolio, more than I'd like but also am in no hurry to deploy it. If I truly thought the bottom was in and that there weren't enough negative catalysts to send us lower, I'd be buying with both hands. But I'm not. I'm playing the long game here and looking for conviction upside and growth models but with some tangible basis of fundamental valuation .... meaning that if they aren't profitable, they will be soon based on cash flow and market potential. But as can be seen from my top holdings, I still prioritize names I can trust. But, the recent rally has started to making my other more speculative/growth names percolate up the list, most notably SQ, SNOW and ABNB.

We're in a period of significant Fed tightening, continuing inflation that won't be significantly tamed for some time + the ongoing obvious geopoli events playing out. Lots of reasons to remain on the sidelines or keep a healthy amount of cash. I'm not a sideline dweller and prefer the latter.

Overall, when I look at all my individual portfolios, I'm very pleased with the balance and mix represented. So important to be able to sleep at night and objectively view your portfolio for, now what you want to see, but what you have. There's a big difference.

Cheers all, stay safe out there.


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