My watchlist has been moving towards smaller cap growth companies. Big tech has stalled a bit, and the excitement has been coming from the IPO market and new names. Besides stocks, I’ve also added ARK ETFs to my watchlist.
I don’t have a long watchlist as I have most of what I want. The below represents good potential stocks that I will strike when the iron is hot (e.g. 10% decline in share price). But presently, they are trading high than what I feel comfortable with, and I have limited ammunition. My standard for deploying new cash is much higher than what it was.
I have been cautious about adding into the stock market and I’ve been considering selling down some stocks. There is a lot of speculation going on, and the IPO market and Bitcoin is red-hot. The Fear and Greed index is currently at a high, and many measures (e.g. Buffett Indicator) are breaching their historical highs. It would not take much to spark off another crash. A reason might not even be necessary.
That said, the thing with manias is that they can keep going much longer than what anyone can imagine. I would not exit the market, but just pare down some risks and keep cash.
I’m not including a bond list right now, as I’m not watching the bond market. Fixed income isn’t attractive. It is not worth investing because the return is too low for the risks. Smart money in bonds has moved into equities, and will continue to flow there. What most people don’t realise is that the bond market is far larger than the stock market. Money moving from there to the stock market can be huge.
That said, I’m happy to move back into bonds once the environment is conducive for it again. I like having the knowledge and flexibility to invest in both stocks and bonds, and by this time, I can recognise what is a good deal and what isn’t.
|Airbnb (ABNB)||While the market price of IPO was ridiculous, Airbnb is still worth watching. I’ll pick it up if it falls, but otherwise I would stay out of the mania.|
|Adobe (ADBE)||I’ve been using Adobe for years and never thought about it as an investment. Their cash flow and margin is crazy good, and its trading at a reasonable valuation. This is quite likely to be my next pick-up.|
|C3.AI (AI)||Similar to Airbnb, this launched at mad prices. Still watching it, and happy to pick it up in the event of a crash.|
|ARK Innovation ETF||I listen to Cathie Wood’s podcasts, and I just find her to be a really smart woman. I’ve been waiting for a decent entry price forever, but it has been going up relentlessly. However, I’ve been able to sidestep the 0.75% annual fee by buying directly into holdings ARK has. This avoids stocks which I’m not sure about like Roku, but adds welcome ideas like Square, Paypal, and Palantir. They publish their transactions daily.|
|Crowdstrike (CRWD)||The only thing I know about cybersecurity is that its high in demand. Other than that, I don’t really know a lot about Crowdstrike and whats their moat. Will be reading up more about it.|
|Lemonade (LMND)||It’s an insurance company with a focus towards customers. I’m fairly familiar with the insurance industry and how it works. Insurers and customers have directly conflicting interests. One wants to receive as much money as possible, another wants to pay out as little as possible. These interests hardly ever converge. LMND seems to do things differently and has really good reviews among customers, something that really attracts my interest. However, the price now is a bit nuts for me.|