User Comment: All of our SaaS stocks were hit hard today, do you think this is just a correction after an overzealous run up?
Victor:
Here is a little different colored chart for a change. Yes, quite a turnaround from the past 3 weeks of up days and last 3 years in most of these company’s stocks. The last two sector rotations this year have lasted two or three days each and then resumed their upward trend. Hard to say what will happen with this one. There is still endless (trillions) fed stimulus still coming and all of these growth companies are benefiting from the WFH phenomena and the digital transformation and they have their next earnings release starting at the end of July and over the next six weeks. But there is also significantly worsening coronavirus infections and deaths being announced on the macro level. I am slightly reducing some of my oversized positions like AYX, but only because they’ve ballooned above 20% again, are oversized and have run up so much. The reductions are only in my retirement accounts to limit the tax hit on the gains. I still will hold at least a 15% position in AYX. If I was not yet in these stocks , it would be an opportunity to start dipping my toe, but I have been in some of them two years already.
Will there continue to be a rotation out of SaaS and will we see the sector continue to correct… I can’t know; but it would be healthy and let off some steam to allow it to push higher later this year. I personally haven’t margin stocks and very little option leverage right now, as well as about 10% cash, as I have indicated. I will maintain that to see where this goes and make decisions over the next two or three days whether to put some of it back to work or sit out for a few weeks. That said, I firmly believe in the fundamentals of each one of these companies and that they will continue to execute and grow at a fierce pace. What the stock price does on any given day is less of a concern to me. Today is one of those days that reaffirms that you are still alive! For me, today was the biggest one day dollar and percentage loss in about 13 years. But lest you want to lament a single day drop, the portfolio is still up over 100% year to date.
Cheers!
This is what makes a market… the other side.
This is Nuts… Again. Reducing Risk As Tech Goes 1999
https://seekingalpha.com/article/4357982-this-is-nuts-again-reducing-risk-tech-goes-1999
