Don't Follow the Herd
Sam Walton on Innovation
"Swim upstream. Go the other way. Ignore the conventional wisdom"
Sam Walton, Walmart Founder
Wednesday January 6th is a day of infamy that most of us will remember for the rest of our lives. Most of us in US as well as the rest of the world were glued to the tv news coverage that afternoon. Market was open and trading continued as usual until 4.00 pm. It would be a nerve wrecking experience to witness what was happening that day with the mob attacking our institution of the House of Representatives and the Senate. The last time that happened was in 1812 when the British attacked us and assaulted our institutions and burned the White House down. One would have thought that perhaps the market would take a deep dive that day.
None of that happened.
Best thing that retail traders and investors should have been doing that day was to ignore the tv news coverage and all the chatter on social media. I know a lot of traders took off some risk off the table and closed out some winning positions. They allowed the events unfolding live on the tv screen affect their decisions with the stocks.
Market is apolitical
It is non religious
It really does not care for your opinion
That would be contrary to what most retail traders were doing and thinking that day. $SPY was +0.6% with trading volume 20% higher than average daily trading volume that day. My largest position $RH (read my blog post of October 22nd) was +4.46% that day. All my other large stock positions $NIO (read my blog post of October 22nd), $PTON and $PYPL did not budge much that day. They all remained above the 21 day sma (simple moving average).
2021 Will Be A Positive Year
January of 2021 has started off with a big bang and lots of Growth Stocks are getting extended. Market has certainty with the confirmations from the electoral college votes with Mr. Biden taking office on January 20th. My portfolio is concentrated to just 4 stocks and 2 Growth Stock Indexes (use that to park my profits from harvesting partial profits from my other 4 stocks). They all had a stellar performance this week as shown below:
- $FFTY ... +4.58%
- $NIO ... +21.17%
- $PTON ... +4.02%
- $PYPL ... +4.07%
- $RH ... +8.60%
- $QQQ ... +1.75%
We are heading into the earnings season this week. Stocks tend to react violently - up or down - during earnings report. This would be a good time to lock in some profits if any of the stocks have gained +20% to +25% or more. Have CASH available to scale up winning stock positions if and when they bounce off the 50 day sma or gap up during the earnings report. I did just that with $NIO initiated at $42.47 on Dec 4th. Stock broke out past $57.30 buy point in volume that was +40% higher than daily average trading volume. Partial position was closed at $58.15 for +36.92% gain in 5 weeks. Earnings is not due for another 5 weeks.
Happy Trading!
Amin
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