What Happened in the Market (and the World) This Week?
S&P 500 return this week: 1.23%
S&P 500 return YTD: 4.94%
The market just keeps going up. It’s incredible how much positive momentum there is right now given the low interest rate environment and the Fed printing money plus $1.9 T in stimulus up for grabs. There have been days where the market dipped intra-day only to bounce back. This happened on Friday where it seems tech stocks were hurting a little after DataDog and Cloudflare’s earnings reports didn’t seem to impress though they were pretty good reports, but the market just seemed to shake it off and finished on a very strong note going into the 3-day weekend.
GameStop continues to be in the headlines and it looks like there will be a House panel where Robinhood, Melvin Capital and Citadel Securities are expected to testify. The next meme / reddit stock play this week apparently were weed stocks and Tilray, Canopy Growth, Aphria, etc, all shot up mid-week only to come crashing down leaving a bunch of bagholders, again.
I’ll admit, after actively being involved in the GameStop/AMC saga and then witnessing weed stocks go flying high before coming crashing down, it does make me worry about newer retail investors who are eager to jump on the next “hot” idea. It kinda reminds me of the movie Boiler Room where there were all of these pump and dump plays. While “loss porn” is entertaining to read about, you don’t want to be the one experiencing it, especially if you committed serious dollars to something.
Bitcoin hit a record of $48k earlier this week because there was news that Tesla had bought $1.5 billion in bitcoin and would accept it as a form of payment. I personally think it makes a sense for any sizable balance sheet flush with cash to have some bitcoin allocation. I think Tesla is likely one of the first huge corporations to do this and I wouldn’t be surprised if other companies follow in the coming months/years. Bitcoin $100k is likely not a matter of if, but when.
Portfolio Update & Trades
My portfolio continues to go up and has continued to outperform the S&P 500. YTD I’m up 41.2% which is simply amazing since we’re only 44 days into 2021.
I made a few adjustments to my portfolio this week. Specifically, I started buying some small caps and micro caps that have had some good company news that had resulted in some massive increases. I won’t mention the ticker symbols since I think they’re highly speculative positions that I don’t think will be long-term investments. I will say that I did allocate some dollars to bitcoin related companies and some healthcare micro caps.
There were a lot of earnings releases this week and unfortunately the market didn’t really love the results. Alteryx ($AYX), Corsair ($CRSR), DataDog ($DDOG), Cloudflare ($NET) and Yeti ($YETI) all took a dip after earnings, but I think their reports were all pretty good to even quite solid with the exception of Alteryx. I did not choose to buy the dip on any of these positions, in fact I actually trimmed my Corsair and Cloudflare positions which I explain more in my earnings recap write-up.
Fiverr ($FVRR) had a huge run up this week after the Motley Fool made a recommendation. It’s crazy how much Fiverr has increased since early 2020. While it definitely made my best stocks to buy in 2021 list, I was actually tentative on how much it could run up given its already then high valuation. Its valuation now is basically absurd, similar to that of Cloudflare and DataDog, and I’m sure that when they release their earnings in the coming weeks, they will have to beat it handedly or face a dip like aforementioned did.
There was also news that Microsoft approached Pinterest as a potential acquisition target a few months ago which caused Pinterest’s stock to spike.
Here are my biggest positions that make up over 70% of my portfolio:
Zoom Video Communications ($ZM)
Enphase Energy ($ENPH)
Mercado Libre ($MELI)
Next Week’s Plan
Some big earnings releases are scheduled for next week:
Tuesday, February 16: SolarEdge ($SEDG)
Wednesday, February 17: Twilio ($TWLO), Shopify ($SHOP), Fastly ($FSLY)
Thursday, February 18: Roku ($ROKU), Walmart ($WMT)
SolarEdge is another solar company that I own, I don’t own a big position, but offer a similar solution as Enphase Energy. I think solar will have a good run since President Biden seems to be an advocate for clean energy.
I will definitely be carefully reviewing Twilio and Fastly’s releases since either one is large enough where a bad report could cause a major tech selloff. In the past 6 months, Fastly has had two disappointing reports that resulted in 15%+ declines and caused a correction in software stocks for a period of time. Twilio has run up a ton in recent weeks, so it will be interesting to see if this increased valuation is justified.
I really hope Shopify crushes earnings since that will likely help Etsy shareholders since they’re both huge ecommerce players. Also, if Shopify grows about 10% more, I will officially have my first 50 bagger stock. My initial cost basis was $32.15 and Shopify stock needs to close around $1,607 for me to achieve this huge milestone. Granted, I only own a pittance of the shares I used to have.
Roku and The Trade Desk both announce next week and it will be interesting to see what they have to say about their Connected TV advertising growth. Both stocks have grown tremendously due to the secular shifts to connected television from linear TV. In addition, it seems everyone and their mom is looking for the next The Trade Desk since Magnite, Acuity Ads and Pubmatic have also been on fire recently. Personally, I think Magnite and Acuity Ads are both totally overrated, but it is what it is.
Finally, I don’t own Walmart shares, but Walmart is a huge company and its always interesting to see what they have to say. A strong report could be a nice tailwind for retailers like The Container Store ($TCS).