WHAT WOULD DARWIN DO? SHOULD WE STAY OR SHOULD WE GO? VALUE’S ABOUND. THEY’RE PILING UP EVERYWHERE LIKE LINT. MANY HAVE BEEN SLAUGHTERED WHILE GETTING OUT. FLAK FILLS THE AIR. THIS DANGER IS REAL. BARGAINS ARE BEING CREATED BY THE HOUR–TTWO -11% AFTER JUST REPORTING A TERRA-STOMPING QUARTER. FACT. SMART MONEY IS SELECTIVELY BUYING. LONG-TERM THINKERS ARE OVERCOMING THAT SOUR UNCERTAINTY CHURNING THE PITS OF STOMACHS. SOMETIMES YOUR BEST MOVE IS TO SIMPLY PUKE OVER THE SIDE AND KEEP ROLLING. NOW IS ONE OF THOSE TIMES.
T h i s is unpredictable. You know that. We know. This is not being viewed, nor should it be, as systemic risk. It’s market mechanics, with mitigating factors. Loses are real. Stockjaw hs dropped 6.5% since late last week. Valuations are reforming moments at a time, intriquing moments at a time. The market as a whole is in fact de-risking. Let it come down. there’s nothing we can do to stop it anyway. Did you love your companies a week ago? They haven’t changed, except that they now are more affordable.
Stockjaw bought Alibaba and Take-wo Interactive yesterday. The day before we bought At&t. We also bought BABA at $174.40. Yes we know it’s now lower: UPDATE: Alibaba(NYSE:BABA) $173.70, 8:09EST. UPDATE END. That’s why we only bought part.
Take-Two Interactive(NYSE:TTWO) is the roaring 3rd party video game maker behind the leading NBA franchise. Alibaba is the Chinese counterpart to Amazon. TTWO reported a monster beat $1.37EPS, a 33% premium Y/Y, and a slaughter of consensus expectation of $0.98. Obviously, we feel the 9.6% drop is a price-break, not a revaluation. Yet it happened on heavy volume. We see volume here as emotionally reactive, rather than data-driven.
STOCKjAW trimmed four of our positions prior to the decline. That’s not luck. It’s prudence. We’ve seen this story. We were there in ’08. Gains are only gains once realized. We realized profits in all four of our trim and cuts. Here are the numbers:
1. Amazon(AMZN) Trim–25%.
2. GOOG/GOOGL. Trim–16.6%.
3. Facebook(FB) Cut–41.3%.
4. Alibaba(BABA) Cut–50%.
Let’s be very clear here. We had zero idea concerning the timing of this correction–it’s a correction. What we did was rule-driven. We never want to sell any AMZN. We hated doing it and immediately regretted having done so. But our position had appreciated by more than 100% and we had realized none of that gain. Gain is only profit once you sell.
Raging back at market fury. Yeah, we make faces at the market. Makes us feel better. Were investing pain-free, it wouldn’t be profitable, because everyone would invest.
If investing was easy we wouldn’t get paid for it. Brute fear is part of the price. Fact. Fear causes volatility as the freaked dump and run–like Iraq. Investors are the people who remain behind to gather big bargains. Really. But don’t buy dividend plays in this mess, and amid rising rates. Our T move was stupid and we’ll be unwinding it today. Dumb. A 5.4% dividend is worthless against a 4.5% drop within hours of our purchase. T is not a fast grower. How long back up to $37.25 for T? Too long for us. Quickly admit mistakes, correct, learn, move on.
Top fuel drivers are paid just like you, for taking the heat, specifically when the pressure’s on. We’re convinced that’s now.
The action has been furious since Friday. Now is not the time to exit. This market fury is algo-driven, not some divine read on super-stretched valuations. Look for high quality you know, and price-shop. We are. Fact. If you can’t buy against the grain you might not be in the right business. These are the times where we truly get to know ourselves.
Don’t violate your cost basis on long-term positions. Don’t buy all at once. Look for stories you know. Buy only quality. Think MMM, BA, NOC, UTX, RTN, AMZN, JPM, GS, DIS. Every one of thses companies, and their stocks, will emerge from this ugly rage intact, and positioned to go higher. Goog deals rarely present themselves under pristine blue skies. The best deals come when it appears the world is about to end. We’re watching like hawks.
Thanks for reading. Keep looking.
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