MONDAY, JUNE 19, 2017-TECH
What can I say…thank you Nvidia? Again? Let’s be honest, the huge selloff in tech a week or so ago was typical market bs. It’s the norm these days and if you cannot handle a selloff or a drop of 7-8% in any one holding (or all at once in this case) then you simply don’t need to be in the market. Period. This is my greatest lesson learned over the years – don’t panic! If I can provide any advice at all to beginner investors it is to always plan for disaster. Keep a lot in cash for those special moments such as the tech selloff I am talking about.
Today was a good day, tomorrow may be a bad day. It’s the way the market works and in order to succeed you must understand and accept this fact. Believe in the companies you are investing in and learn to hold strong when everyone else is spitting venom (as an old friend used to say). The masses love to follow each other. If the trend is to hate on Nvidia that’s what everybody will do. If the trend is to love Amazon, then yes, that’s what everyone will do. Honestly, you must learn to do the opposite or at least be able to see when it’s all crap.
AMAZON AND WHOLE FOODS
For example, let’s take the big news of the weekend: Amazon’s purchase (or pending purchase) of Whole Foods. What a bunch of noise and drama! It’s the death of grocery stores as we know them! People will never shop for food the same way again! Dear God sell Kroger! Poor Kroger…
The bottom line is many of these comments will probably come to fruition. This transaction could very well change how we shop for food forever. I am not arguing with any of this. What I want to do is get you to see the other side of the coin…Amazon has a huge mountain to climb. Grocery delivery will be the largest logistical problem ever solved and the idea of eating sushi delivered by drones may not sit well with most consumers. I sure won’t eat it.
Amazon could, theoretically, spend an absolute fortune trying to find the solution. It can do this because it lives on our Prime Membership dues and, unlike Kroger, doesn’t care about grocery margins. Hell, they’ll just run in the red for years while they figure it out and while they put all the other competition in the ground. Once they accomplish this they can charge whatever they want and shoot straight into the black. I’m sure Jeff Bezos sees this as a huge challenge and if I were him…I would love it.
Regardless, think strategically. Amazon will burn through cash trying to figure this out. This will indeed hit their bottom line in a negative way. I would not be jumping into Amazon right now thinking it’s going to shoot higher because of groceries. I don’t see that…at least not in the near future.
Everyone is talking about King Amazon and I’m with them I love Amazon, but while everyone else is running through the door to buy it up I will probably be watching from the sidelines. At least through a few more quarterly earnings. Nvidia is the ticket and everyone says it’s getting too overvalued. I call bs and say most don’t realize what’s happening in the background. I have a sneaky suspicion we will look back five (5) years from now and wish we had mortgaged the house to buy more. Yes, this can also be said for Amazon, but just be careful.
Listen to your gut. Don’t listen to the television or really anyone else and always be prepared for the inevitable pullback. Read the WSJ and think! When I read the article a few months ago in the WSJ about XPO Logistics [stock_quote symbol=xpo] and how they are going to provide the last mile for Amazon furniture and appliance delivery I immediately thought it was going higher. That was around a month ago when it was $50.00 per share. Yeah, $50.00! Wish I had gone with my gut on that one!
Keep cash on hand and remember one incredibly important rule: if a stock shoots up really hard (which one you own will do this eventually) do not go nuts and convince yourself it will continue higher. You sell it, take the gain, and wait. Every time I have ever seen anything shoot up hard it fell back down just as hard. Understand if it’s really going to go up it will do it gradually. When it shoots up you can sell it and just buy it back later after it falls back to Earth…
Below are my holdings as of today. I have trimmed some and added to others (mainly Nvidia). I have ignored the television and what everyone is blabbing about and concentrated on my gut and my gut alone. I love charts and I love analyzing them, but everything I do really comes down to my gut and how I feel about the trade. I am heavy into tech, but that’s my forte and I believe it is the best place to find growth. Amazon has proven this fact. They even made grocery stores part of the tech industry!
Autodesk [stock_quote symbol=adsk]
Cisco [stock_quote symbol=csco]
3D Systems [stock_quote symbol=ddd]
Denbury Resources [stock_quote symbol=dnr]
GE [stock_quote symbol=ge]
Intel [stock_quote symbol=intc]
Nvidia [stock_quote symbol=nvda]
Square Inc [stock_quote symbol=sq]
Take-Two Interactive [stock_quote symbol=ttwo]
Western Digital [stock_quote symbol=wdc]