A Fair Criticism Deserves a Response

Subscriber jryan (below) delivered some reasonable comments and criticism yesterday in the Comments Section. 

Basically he said he is “getting sick of reading about cannabis and Fin TV commentary” — and he wants more (long) stock suggestions, etc.  

I wanted to respond in the first column of the day. 

* Few longs have represented value to me as I have been unduly negative for a lengthy period of time. I take ownership of that.

* The stocks that I have owned have recently been Staples ($KO, $PEP, $PG and $KMB), selected cannabis names and some others. The consumer nondurable stocks have been fine recently (and I have taken profits in them). We shall see about cannabis — a speculative sector and my focus has been intermediate-term based on the improved likelihood of rescheduling and other factors clearly delineated in my Diary.

*As to the CNBC constructive criticism. I point these out not only as an advocate of the retail viewer that should see timestamps (panelists taking ownership) and observe better company interviews, but so they can evaluate the merits and process of the panelists’ recommendations and become better-informed investors through more hard-hitting interviews (that serve more than as a marketing tool of companies). 

* But the criticism directed to Fin TV also is intended to highlight investment recommendations from panelists and guests that I strongly disagree with. Choosing stocks to avoid (in that FIN TV criticism) can be as valuable or even more valuable than choosing stocks to buy. Consider my negative comments towards $BA, $BABA, $META, $UBER, $NFLX, $RDDT, $TTAN, $DIS, $CLF, $MRNA and $UNH (a few years back) etc. that were mostly confidently and strenuously recommended on CNBC. 

* My “More Tales From Nvidia” series is intended to deliver the idea that the functionality, productivity and ROIC on the enormous capital spend may disappoint the many and multitude of optimists on AI. I have felt that my contrarian and non herd-like observations were valuable in a backdrop of near-universal bullishness (that is readily and frequently available from the buy/sell sides, panelists and guests). My view was that dwelling on “More Tales” had statistical value in that over 40% of the S&P is comprised of large-cap tech.   

* As to specific AI beneficiaries, I have admitted (often) of missing $MSFT and $GOOGL. The valuation on $AAPL seems foolish to me — the shares have prospered and I have been wrong.  But the others ($META, $AMZN and even $NVDA) have not set the world on fire this year. As to memory and chip stocks, they have been “the world’s fair” up until the summer but awful since late June. Not only do I think these companies are “overearning,” but the volatility is not for me and not consistent and doesn’t conform with my appetite for risk. 

*  The financial stocks were quite strong until early summer. I repeatedly cautioned not to embrace banks, brokers and private equity shares (I successfully shorted $BX, $KKR and $APOL since then). Viewed by panelists as perhaps the best “value play,” financials have been dismal over the last four months.  We avoided this decline (in $C, $JPM, $BAC, $GS, $MS et al).

* The stocks that I have been short in the AI sphere have been terrific (to the downside) — $ORCL and $CRWV. (Avoiding them as longs has also been a valuable contribution.) My recent foray into shorting NVDA was profitable also. 

* As to my preoccupation with CNBC I suggest taking the number of words written about FIN TV and divide it by the number of words written on other subjects daily. You will find my criticism is dwarfed by my other columns. In the scheme of things my criticism is de minimis. 

* Finally, to jryan I say there are many other contributors that actively recommend longs and provide a valuable service.

All this said I am imperfect.

I take ownership of my mistakes.

The transparency of my Diary exposes my blemishes. 

I believe jryan has some good points and I will purposefully look for more long ideas in the future. 

I truly appreciate jryan’s comments and I have tried to respond to his concerns:

jryan

Just a thought. There used to be a lot of different investment ideas, stock suggestions etc., but all it seems to be now is cannabis and CNBC commentary, which I don’t watch anyway. Kind of getting sick of it, especially the cannabis info, is it ever going to pay off? Likely, but it will be quite a while from today, if ever. But at least it’s easier to scroll through the commentary and use less time.

Position: Long KO (VS), PG (VS), KMB (VS), MSOS common (VL) and calls (VS), VRNO (VS), GLAS (S), GTBIF (S), TRLV (VS), CURLF (VS); Short AAPL (S)

Staples Are UnStable Today

*  This week I warned that it was ‘too much too fast’…

I further reduced my staples exposure recently — today we are seeing a lot more pressure on consumer non-durables (($PG) -$1,  ($PEP) -$3, ($KMB) -$1 and ($KO) -$1.25 (I warned about a sell off after the guide up).

From last week:

Staples Slammed

Staples (consumer non-durables) are getting hit over the last few hours.

A reminder, I am down to VS on KMB, PG and KO.

I sold out my entire PEP holdings.

I would be a buyer of the space on weakness — but not at current prices.

Position: Long KMB (VS), PG (VS), KO (VS)

Position: LONG KMB (VS), PG (VS) KO (VS)

Those Machines and Algos

I have spoken to several institutional desks.

The buying/strength is being exacerbated by machines and algos — in a changed market structure.

And I am using them as a source of liquidity — reducing $PG, $KO and $KMB.

Position: Long PG (VS), KO (VS), KMB (VS) 

Breadth Is Positive? How Is That Even Possible?

Even in this carnage of selling there are some green shoots if you’re looking at places other than tech. Homebuilders are strong but so are Staples following some strong earnings out of Procter & Gamble ($PG). Perhaps a rotation to more safe and sound names but without the strong growth prospects is now in order.

Volatility is on the rise, but the biggest hits are in the Nasdaq, down nearly 2.6% at this point. Software names are well-bid and showing some strength; the Industrials actually went green for a moment.

Rotation is something we have seen quite often recently as money leaks from the former leaders into new groups. That is usually pretty healthy but certainly makes it feel worse if you’re in the most loved names that are being distributed.

Things I Did Today

Here are today’s things:

* I covered all of my $SPY short at $764.96.

* I covered most of my $TSLA at $369.55.

* I added to $GLAS at $2.21, $GTBIF at $6.53 and $MSOS at $4.09.

* I sold more of my $PG long at $165.70.

Position: Long MSOS common (VL) and calls (VS), PG (VS), GLAS (S), GTBIF (S); Short TSLA (VS)

PG Plan

$PG is +$9 this morning, I am reducing my holding in this name.

Positions: Long PG VS