Top Gainers Today
In my intro post, I mentioned that I've only been an active investor since 2020. I did have a brief stint in 2013, where I debated buying this penny stock patent portfolio company (basically, they buy patents, litigate violators, collect royalties from winning cases, etc) and tesla. Yep, we all know which one I picked. The ironic part is it was part of my plan to pay off my student loans (I only needed to double my money 7x in a row, how hard could it be??). Had I invested in tsla and sold at ATH, I would have had enough to pay off those loans. I apologize for the length of this post in advance, but I get long winded and have made lots of mistakes 🤣
Now hindsight is 20/20, and I just as likely would have sold tesla up 100% since my plan was to keep doubling my initial $1k investment, but after losing $987 of my investment, I stuck to funding my 401k and pretending the stock market didn't exist, missing one of the best bull runs (if not THE best) of all time.
Having been scared out from penny stocks 7 years ago, you'd have thought I'd stick to safe investments this time around. Apple, Microsoft, etc, right? Nope. I invested my first dollars into $TTOO and $AYTU, two penny stock covid test kit plays. I knew nothing about either company, other than they claimed to be leading the pack on these test kits. Ironically enough, from what I can tell I actually made money on both of these stocks (could have made a LOT more on TTOO but held too long).
In anticipation of this post, I downloaded all of my transactions out of Webull since inception, filtered for all positions that had a net 0 shares and calculated my gains/losses. It shows my successes, but also forced me to confront my biggest failures with dollar figures associated. I'm going to break it up into a few different posts, because I believe there is enough content there, but from what I can tell, there are a few recurring themes and lessons that I've gotten over the past two years.
Let me know which ones resonate with you, or which ones you want to hear more about! I've got specific stocks and stories for each one of these to expand on later, but I want to know who else had made these, and which stories people would like to hear first.
1) Penny stocks - the thought of buying lots of shares for cheap and selling them higher (To the moon!) is too enticing to new investors. If I have 100 shares, and the price goes up $0.50, I made 50 bucks! Fifty cents is easy, apple goes up or down that amount every day! Silly me, the accountant, not factoring in percentage increases and only looking at dollar increases.
2) investing outside competencies - I'm a former auditor, I've worked in and audited manufacturing companies, local governments, insurance companies, etc, so I feel that I have a wide variety of businesses that I can conceptually understand. I'm also a techy, so I felt comfortable investing in that world as well. Knowing that, it's comical looking back at how many pharmaceutical companies I've owned (I think that's probably a rookie lesson in and of itself, the difficulties of that sector), and how badly I've been burned on them. I have no edge there, I'd have been better off buying Pfizer or an ETF.
3) Following the herd - this one's hard not to, right? Substacks, Fintwit, cnbc, everybody is shilling their book to anyone who will listen. Hell, even friends and family will tell you what to invest in. I mentioned in point 2 above, that I have owned a disproportionate amount of biotech for the amount of knowledge I have in that space. My former boss can be blamed for some of that, as he was a former biotech auditor and had grown his account to seven figures trading biotech. When he made a rec, I listened. But either I'm unlucky, or his edge was gone by the time he made his picks, because I lost more than I won, and the winners didn't pay for the losers 🤣
4) SPAC city - my investing almost perfectly begins with the great spac boom. If there was a popular spac you saw on Twitter, chance are I knew it or owned it (or in the case of $FSR, still own it). In fact, my biggest dollar loser is a former spac, which I averaged all the way down from its high of $13 into the $1s before I finally threw my hat in. I'm stubborn though, and have it still on my watchlist to potentially restart my position at a cost basis in the 1s once the wash sale period expires.. Stay tuned!
5) Water the Flowers - building off that last point about averaging down, I have a VERY bad habit of watering my weeds, watering the flowers and raising my cost basis gives me a lot of anxiety, and I actually convinced myself to do it with $PENN, and now I'm underwater in that one. I feel pretty good about a rebound, and I'll be buying more next week, but cutting losers to add to winners is something I need to get better at.
6) Team Neversell - I bought PENN for the first time in 2020 at around $22 bucks per share. It ran all the way to $140, basically in a straight line up. Having no context or experience, I thought this behavior was normal, and instead of locking in a 7x, I'm now holding some Gucci bags for them.
7) Serial Acquirers and Turnaround plays - these are two special situations that require a lot of patience, a lot of research, and extremely competent management teams. Why did I choose to put investing dollars in there, rather than my core competencies? Idk, you'd have to ask 2021 me that question, but it's something I'm trying to recognize and improve on.
8) Buying Options - getting the stock pick right is hard enough; nailing the timing of the move is a different beast altogether, and to make matters worse, I liked to play options on quarterly earnings!! Here I am, a novice investor, trading derivatives on a gut feeling with no experience in the market. What could go wrong?
There are others, and I'll get in to them as I expand on the points above in future posts, but the themes that keep showing up are:
- Need to get rich quick
- Not knowing when to hold em and when to fold em
- Investing in shiny objects without fully understanding
- Investing without a plan
The last theme, impatience, has actually been the biggest psychological effect on my portfolio. I have the stomach for volatility, which is great, but I also have the stubbornness to refuse admitting mistakes at time, and the impatience to let a turnaround story play out tells me I shouldn't be investing in them.
Take $PTON for example, a stock I lost some money on in my IRA. They are now a turnaround play, and it could take years to turn around, if they don't run out of cash first. While this type of investment satisfies my craving for volatility and getting rich quick, I have learned that I don't have the patience to hold such a position, at least not at a meaningful enough size that it would generate enough reward to make the risk worth it.
I look forward to exploring my rookie lessons, your rookie lessons, and the psychology behind all of these (as well as how to develop guardrails to prevent repeat mistakes). I'm never gonna bat 1.000; hell, I probably won't bat Ted Williams' .406 either, but if I can be right 3 out of 10 times instead of 2 out of 10 times, I should have enough alpha there to retire someday, and I'll have this journal of all the things I did wrong to share my son, and perhaps give him a head start in this journey.
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Nice post! I appreciate the transparency and sharing your mistakes. Acknowledging your failures in the past is a huge step forward. I think all of us have had similar experiences - I know I have.
I am a big proponent of having a plan and continuing to execute. I am interested to see your thoughts on your Investing Plan in coming posts!
What to watch for the week of 5/2/22.
Are you prepared to take on the markets this week? Here’s a watchlist that I created of some potential catalysts I’ll be keeping an eye on and looking to trade for the week beginning May 2nd. Feel free to save it for reference, share it in your trade groups and repost it on your social media page. Also be sure to follow me. Let me know what you’ll be watching in the comments.
If oil goes to $200, here's what I'm bullish & bearish on
Oil companies today have pricing power like never before. Automakers have pricing power like never before. Solar companies, they'll soon start jacking up their prices as demand for solar energy systems surges during the summer.
Meanwhile, fewer people are gonna use their vehicles to offer ridesharing services and food delivery services because already, fuel costs are eating up a majority of their earnings. Also, airlines will have to balance between finding ways to attract passengers to fly with them (through lower prices) and not deterring them through higher prices (since they want to pass down the higher fuel costs to customers).
Trucking companies have it the worst. The industry has been commoditized as all truckers are essentially independent contractors with their own trucks and they do their own deliveries. The smaller companies are more vulnerable to high oil prices. Meanwhile, the larger trucking companies will have to bump pay for truckers to justify them making deliveries amid the high fuel costs.
These times are unprecedented. We need to drill more oil. Bring back the fracking revolution. The OPEC cartel members have an incentive to produce a lot more oil than their current production target.
Reactivating nuclear power plants takes months or even a few years. Quadrupling down on renewables requires heavy investment and a lot more raw materials, which we are currently struggling to import. Plus, transitioning to a green energy economy takes a very long time. The green energy solutions we currently have aren't dependable. The wind doesn't blow all the time. The sun doesn't shine all the time and it doesn't shine every day and every month. Geothermal plants and hydroelectric plants can only be built in certain places. Biomass may seem viable but we don't want to cause food prices to rise because we're now removing food supply for the sake of energy production.
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I don't argue that higher oil prices are good for ALL EV makers, but I can't rationalize the valuations of $RIVN $LCID $FSR and others. While I do believe $TSLA is wildly undervalued (watch their EPS growth this year), too much unearned credit has been given to others trying to follow in tesla's footsteps. These new players have a long way to go before justifying their current valuations, let alone any future growth.
Commercial viability is hitting EV stocks hard
$RIVN has been on the front pages of newspapers over the past couple of days as journalists report the production issues that the company faces in building out their vehicles.
At the same time, other companies like $ARVL $LCID, and so on have also experienced growing pains and investors are getting pessimistic with them as well.
$FSR and $NKLA stand out because their business model mostly relies on outsourcing the capex heavy activities to other manufacturers like $MGA and $CNHI. Plus, Nikola Motors already delivered the first-ever electric truck.
$GGPI had their SuperBowl commercial and I wouldn't be surprised if many people ordered a Polestar vehicle (or at least considered buying one) after watching the big game.
I do have confidence that Rivian and Lucid will make it through the growing pains because there's already immense demand for their vehicles from wealthy individuals. As for both Rivian and Arrival, they both have a ton of orders from B2B customers.
With the abundance of capital in this market, many investors have more tolerance for growing pains. Also, many on Wall St. are willing to inject more capital into these startups as a way to get them ready to capitalize on the high car prices ASAP. The chip shortage does stand in the way of commercialization, and I have confidence that things will get better on that end.
I've never been more bullish on $GM
Forget the dividend, General Motors continues to report record earnings amid a chip shortage and has stated that they have received immense interest for electric vehicles.
- 110,000 for the electric Silverado
- 59,000 for the Hummer EV (both pickup and SUV)
- 25,000 for their BrightDrop electric cargo van
With an ambitious goal of selling 1 million electric vehicles, some will laugh at it while others (like me) find it attainable. General Motors has many factories and has many resources to invest in newer factories. At the same time, they have a large dealership network and are also investing heavily in opening more factories.
General Motors was once the No. 1 automaker in terms of sales volume for a long time, until Toyota took that spot in 2021. As CNN Money writes, General Motors held that position " for nearly a century through the Great Depression, wars, numerous recessions and its own 2009 bankruptcy and federal bailout."
Many think that $TSLA will remain the largest automaker for the foreseeable future. The issue with those views is that Tesla has 4 models and those models are starting to lose their appeal as competition comes in. The only reason why competition among EVs wasn't as fierce as what many of the bears predicted was because Tesla has better supply chains suited for EVs while the rest had supply chains that were most suited for ICE vehicles.
Once the supply chain issues ease, Tesla's competitors can ramp up production and start flooding the market with more vehicles. $LCID $F and $RIVN are in their early stages of delivering their electric vehicles and from seeing them and talking to the owners of those vehicles personally, the competition is more threatening than many realize. For Lucid specifically, I hear more about how they give consumers more bang per buck as the cars come with leather seats and other luxury features that Tesla lags in and for now, they allow people to stand out in their wealthy neighborhoods.
It will be exciting to see $FSR and $STLA start delivering their first electric vehicles soon. If you want to learn more about Fisker, check out my write-up.
To conclude, the future is very bright for General Motors. EVs will position the company to benefit from a bigger sales cycle for the auto industry as many look forward to switching their gas vehicles for electric. I'm highly optimistic that they can meet their aggressive sales goals.
Earnings this week
📞Which calls are you most excited about?
Monday, August 2nd
$ZI ZoomInfo Technologies
Tuesday, August 3rd
$APRN Blue Apron
$BHG Bright Health Group
$CWH Camping World
$CRSR Corsair Gaming
Wednesday, August 4th
$WYNN Wynn Resorts
Thursday, August 5th
$HEAR Turtle Beach
$MNST Monster Beverage
$CWK Cushman & Wakefield
$SPCE Virgin Galactic
Friday, August 6th
$TWST Twist Biosciences
$CRON Cronos Group
Sources: Business Insider, Google Finance, Yahoo Finance
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Portfolio as of Today and Plan Going Forward
Since I can't get my brokerage to sync correctly, I'm just posting my portfolio as of today. Very nice day, today, as of this writing. Up about 5.26% I'm still down from highs of early February.
- $PINS - 9.9% - hodl in the puke traded a little to reduce basis
- $SKLZ - 7.3% - added bigtime in the puke
- $PLTR - 6.4% - added bigtime in the puke
- $FSLY - 5.9% - re-entered in the puke, bad timing, about even today.
- $TMDX - 5.7% - reduced just before puke and regret it. Long.
- $ADYEY - 5.0% - hodl
- $ONDS - 5.0% - added bigtime in the puke
- $FSRV - 4.8% - reduced a little at beginning of puke, and regret, trying to add under basis
- $DMTK - 4.7% - added 1/3 in puke just above basis.
- $SE (have Mar 2023 75 Calls)- 4.7%
- $GHVI - 3.6% - added too early, in puke.
- $CURI - 3.5% - added aggressively in puke. Have puts I hope I get!
- $U - 3.2% - got back in this just before puke and doubled in puke. I over 2x'd this position last year. (70's -> 160). Fun to see at reasonable price again!
- $ZYXI - 2.7% - new position during puke!
- $MWK - 2.7% - new position during puke!
- $JMIA - 2.4% - new position during puke! AWFUL timing, green position.
- $UPST - 2.4% - new position during puke! AWFUL timing, red position.
- $OZON - 2.2% - hodl
- $CCIV - 2.2% - new position during puke! Added on Friday via Puts.
- $PRCH - 2.0% - added to position during puke. Great timing.
- $LFMD - 1.9% - hodl, green position as of today.
- $FTOC - 1.9% - added in puke.
- $TSIA - 1.5% - added in puke.
- $SFTW - 1.4% - added in puke
- $IPOE - 1.3% - hodl
- $APPH - 1.2% - added back in the puke. Great timing at $18
- $MGNI - 1.1% - re-entered in the puke! Great timing at $37
- $FSR - 0.9% - I don't know why I bought this. Selling calls on it LOL.
- $SBG - 0.8% - reduced in the puke to buy other stonks. Bad deal.
- $IPOF (have Dec 17 2021 7.5 Calls) - 0.8% - traded a little to reduce basis in puke, I think this is low risk here.
- $TBA - 0.5% - just bought this last week. I like the IronSource deal.
- $VRM (have Jan 20 2023 30/25 Calls) - 0.5% - I reduced before earnings and then after hours when awful earnings came through. I traded mostly at profit, but these calls are red.
I am holding these options which I sold earlier, expiring on Friday (they are all profitable as of today):
- $SKLZ Mar 19 2021 30 Put (ok to increase position here)
- $FSR Mar 19 2021 25 Call (ok to lose position)
- $U Mar 19 2021 105 Put (ok to increase position here)
- $LFMD Mar 19 2021 20 Put (ok to increase position here)
- $CURI Mar 19 2021 17.5 Put (ok to increase position here)
- I added $FSRV, $CCIV (was happily put stock at $28.50 on Friday), $MWK
- I exited my small $LOTS position today at an 8% loss, I just don't have enough conviction in it when I go to the site, haha, despite having some pretty good numbers on paper. I was sucked in because it seemed so beaten down. Not sure why anyone would go with them over $CVNA or $VRM. I guarantee it goes straight up from here :)--you are welcome.
I am bullish in 2021, especially on these holdings. I plan to reduce many of my lower conviction holdings in the short/medium term. I am not planning to hold all of my SPACs over the longterm. I think that many of these names will further rally from where we are. There is just so much money in the system and increasing, and the selling on many of the quality names I've entered were very extreme IMHO. I did most of my buying during the puke in late Feb, early march. I didn't time much perfecty, but it looks like I was approximately correct in being a net buyer.
Many of you that know me well, know that I have a business in the Information Security space. I intend to focus on that, as I've been growing the team, and it's not just me by myself anymore. I sincerely hope commonstock can get the automated tracking down. I don't want to spend any time updating this.
I will update probably one more time when my Looooooong portfolio is done. It is likely going to be aligned with my top positions, 3% and greater. But, I change my mind a lot!
Commonstock is a social network that amplifies the knowledge of the best investors, verified by actual track records for signal over noise. Community members can link their existing brokerage accounts and share their real time portfolio, performance and trades (by percent only, dollar amounts never shared). Commonstock is not a brokerage, but a social layer on top of existing brokerages helping to create more engaged and informed investors.