Hyper Growth Stocks Take a Breather: Rigatoni Capital State of the Union Rant:
$QQQ $DIA $HIMS
Today is a good reminder to tell you all that I was right... well, I'm half joking. But my main theme has been:
Don't chase these hyper growth stocks that have been having tremendous and historic gains YTD or since November 2024. Stocks that spike this much in a short period of time are going to see extreme volatility. This includes names like HIMS, CVNA, APP, BROS, RDDT, HOOD, PLTR, DOCS, TWLO, HUBS, NET, DASH, RBLX, just to name a few. We also got the AI Infrastructure theme stocks whacked like CEG and VST.
To make things even juicier today, you had UNH and WMT whacking the Dow Jones. You also have a nice sell-off in the MAG7 and the QQQ.
So now, three days later after I said the markets (in particular Tech and QQQ) were still hovering near all-time highs, we do see a visual sell-off from all-time highs or resistance but still above its 50-day.
We had a shortened week with Monday being a holiday. We had a lot going on, with earnings, and the usual uncertainty and headline risks. And sadly, we had USA lose to Canada in the 4 Nations Finals in OT. So everyone is tired and cranky today, including myself. My point is that we're due for a two-day weekend to get our lives together, hug our children (or dogs in my case), and just relax a bit.
Economic Data and 2025 Guidance Showing Signs of a Growth Slowdown:
Even if true, I don't care. Sorry, I don't mean to be short or pissy. But as a long-term investor, we are on a pendulum swing where, for a few weeks, asset prices just need to take breathers.
Let's say worst-case scenario, this is the beginning of the end, meaning we are going into a serious downturn in macro, earnings, and the US consumer. That still would not be a reason to panic if you're a long-term investor in businesses.
Can we all agree that if you're reading this blog that you're a long-term investor like me and not worried about cyclical downturns? That if you're invested in stocks or Bitcoin, that you have a long enough time horizon that you're not trying to time an economic downturn or a recession or a bear market, or something worse?
Now, I get that some investors want to have cash in case we have a bear market, and that is because their plan is to buy assets at cheaper levels. Everyone has different goals, different investing strategies, different ways of risk managing their portfolio.
I'm just here to tell you what I'm doing. I'm 40 years old, and selling some positions to free up cash is never on my mind. I’m still in the accumulation phase of my investing journey. I would accept my asset prices (on paper) selling off and would survive in the long run. And IF I had cash to deploy during downturns, I would be happy to put money to work.
But to try and time something, free up cash—you’re reading the wrong blog. This blog is pretty contrarian. We don’t worry about risk management like most investors/traders do. The only risk management we have is potentially being diversified and portfolio management in the array of sectors and businesses we own at a low cost-basis.
We are tech-heavy, growth-heavy, but still own value boring dividend stocks. We buy best of breed. We buy Bitcoin. We aren’t afraid to buy long-duration risk assets at good prices.
Every one of us is a speculator in some sense, but we aren’t speculators in that we're forced to buy meme coins or meme stocks. We are not speculators in the sense that we're gambling our money away day in and day out. We are long-term investors that have serious conviction before we start a position in an asset.
Like we say about Bitcoin—its volatility is a function, not a bug. The same goes for long-duration stocks, hyper-growth stocks, and the Nasdaq 100 QQQ. Volatility in stocks is a function, not a bug. Now say it with me!
If we didn’t have froth sometimes, shaking out weak hands, crazy volatility, speculators/gamblers, crazy unheard-of returns, talks of bubbles or stock market crashes—there would be no reason for the media to cover the stock market. CNBC would go out of business. People wouldn’t subscribe to the Wall Street Journal or tune into Bloomberg at night. The media would be STARVING for attention.
Thank you for reading my rant for the day. If you want me to cover certain stocks or sectors, please let me know, and I’m happy to.
Disclaimer: This blog is for informational purposes only and does not constitute financial advice. All opinions are my own, and I am not a financial advisor. The information provided reflects my personal views and is intended to encourage discussion and thought among readers. Investments involve risk, including the loss of principal, and past performance is not indicative of future results. Always conduct your own research or consult with a qualified professional before making any financial decisions.