Welcome to our newest subscribers!
In the last quarter we remained focused, didn't sell our positions, raised cash and also continued to add to our existing positions cautiously. Because we believe (data suggests too) over long term, solid investments can build unimaginable wealth.
Till last month the year remained tough for long term investors and since it made low in Jun, QQQ regained a lot of lost ground. Our Portfolio 2022 is catching up, and now it's showing positive.
I wrote the following in May: I would follow this for the rest of the year
Like a broken record i keep insisting on having a longer term perspective, think like a VC, who invest and keep tab on company fundamentals and growth quarter after quarter. Believe in the companies you hold and always remember why you bought them initially. Also build position gradually over many quarters, instead of dumping all of your money at once. This is a bear market and you will get more opportunities to buy best companies at attractive levels.
TTD after announcing earnings was up more than 35%
This is a great example of broken stock price, not a broken company. Adding to them and continue to hold best and growing companies is called Investing. If management and leaders are visionary, led by founders, growing at scale and well run, such companies tend to come back. Do not let the market scare you out of your positions from good companies. You will only regret.
Few major rallies would shift your holding from negative to towards positive.
Always remember to book 20% profit when you feel too good about your positions or portfolio.
QQQ Outlook for next month:
Blue boxes show bear markets, and the gray box shows the current bear market we are in now.
QQQ bottomed in Jun (hopefully!!), since then it's up 20% but still down 20% from all-time high. This could be just a bear rally, if you made profits in recent trades, I would book some profits in them and raise cash.
If this bear market is like anything we witnessed in 2008, we might see another leg down. But June low could also be a bottom, because it was the worst sell off since 2008. It doesn't change our investing strategy, we remain long term holders of quality stocks.
Stocks above 200 DMA
Following weekly chart of last 15 years, shows % of stocks that are above 200 DMA.
It helps us to figure out when to accumulate. It shows accumulation and buying zones.
1st Panel shows QQQ index
2nd Panel shows NDX % of stocks above 200 DMA. If it goes into Green Zone, that means very fewer stocks are above 200 moving average, which further means a lot of stocks are on SALE!!!
3rd Panel shows VIX, volatility in the market, If it goes above red box that means a massive sell off is under way, and we can get buying opportunity
In above chart:
Pink box in the 2nd Panel is accumulation zone where we add to our existing positions but in smaller quantity.
Green box in the 2nd Panel is Buying zone where we add to our existing positions as well as add new stocks to our portfolio. May and June this year was a buying opportunity.
As QQQ bottomed in June, our 2nd panel chart was giving signal that we should start buying when our indicator goes past below 20. This has happened only a handful of times in the last 15 years. You can also notice that once our indicator goes out of green buying zone, it rarely retraces back to the same territory in the next few months.
This indicates that we hit bottom in June.
Don't look for instant gratification (instant profits, right after you buy), but try to understand the long term satisfaction of building wealth gradually.