Weekly thoughts 12-16-2021

stlplace
Reading Time: 2 minutes
  1. Looking at the 5, 10, and 20 years chart of $CAT, $LUV and $SPY, then $MA. It seems in 5 and 20 years, $CAT beats $LUV and $SPY, while the 10 year performance was the opposite. Note I haven’t counted the dividend (or dividend re-investing in all cases). Then when I put the $MA in play (note it only has about 15 year history in the market), the above 8,000% performance since its IPO dwarfs all the others. So in other words picking the winner over a long period of time still matters. Note $MA along with other high flyers such as $TSLA, $NVDA, $MSFT, $NFLX, and $MAZN are all doing very well in last 15 years. Note I used the chart functionality inside TD Ameritrade website.
  2. HSA may be a sleeper that a lot of people did not pay enough attention. I am going to be prepared when the S&P 500 index goes down, and switch some of my cash in HSA to the index fund.

3. $BRK.B break out $300 barrier the first time, and reached its all time high. One share of BRK b share is worth 1/1,500 of the A share, btw.

4. What’s the proper valuation for high growth saas stock. Recently I saw someone mentioned the PS ratio (price to sales, or market cap to revenue ratio) to be 1/2 of the revenue growth (year over year). So for example, if $ZM is growing at 20% year over year, we are willing to pay about $40 billion market cap (about $4 b revenue x 10).

5. #FinTwit. I found on twitter, that some people are just too emotional or personally attached to one specific stock or one sector (for example, saas). We need to be open minded if we want to be successful in investing. A good example again is Warren Buffett, a few years ago, he was probably 85, and he piled into Apple stock as he saw the opportunity there (he observed many iPhone is essential part of many people’s lives).

6. Robinhood or meme (or mean) stocks. I had a small position of $HOOD, and this past week the market was brutal to $HOOD, as it dipped below $20 the first time. I noticed that $AMC and other meme stocks rebounded on Friday, as did $HOOD. It sort of confirmed my speculation or hypothesis that $HOOD is a barometer of meme stocks ($GME, $AMC etc #stonks). I also noticed it benefited from the Dogecoin, but the Dogecoin faded away recently. Re: the crypto wallet and technology overall though, I believe $HOOD is much more sophisticated compared to $BKKT, which had rollercoaster ride in last 2 months. Bakkt holdings rewards and crypto wallet solution reminded me the cash app by $SQ (Square Inc, now Block), as I used the offer to get about $10 worth of Bitcoin so far. I am not a believer of Bitcoin or crypto btw.

7. Last but not least, the recent sharp down trend of Nasdaq high flyers, from the $DOCU medium cap #saas high growth to the big tech such as $TSLA, $FB, $GOOGL or $AMZN. I think once a stock in a downward cycle (the right side of the curve, if I may), and the trend is confirmed, the down cycle could continue for a while. The recent examples include 2000 dot.com crash and 2008 financial crisis (great recession). I understand right now we don’t know/. As the old saying does the hindsight is 20/20: we only know when we look backward.

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