DISCLAIMER: I am not an Investment Advisor. The information provided in this article is not investment advice and should not be taken as one. Only use for educational purposes. Please do your own DUE DILIGENCE before making any investment decision.
If you are new here, welcome. If you are not, welcome back :).
Here’s an update on the market and on some of my positions.
Market Behaviour
The market has been more than treacherous since January 2022 but the real carnage started gradually in February 2021. As of Thursday morning at market open, the S&P 500 and Nasdaq lost almost 20% and 30% of their value respectively from all time highs. I remain invested and buying opportunistically on the way down. Friday brought about a face ripping rally across the board.
On Thursday, the CNN market indicator flashed extreme fear at a score of 6, out of 100. 0 is the lowest the gauge could go and the last time I saw 0 on the indicator was March 23, 2020. Other market indicators also suggested that the market was due for a bounce. There are positive signs that a near term bottom is near or has been reached. Bad news stopped influencing the market negatively on Thursday and Friday. Jay Powell on Thursday, expressed doubt about a soft landing on monetary policy adjustment. The market did not react negatively to this. On Friday, Fed's Mester also noted that a 75 basis point could be necessary if inflation does not show easing signs. Granted, these doubtful and hawkish comments were seemingly blunted by dovish comments by Kashkari who indicated that the Fed might not need to bring down demand by much if supply chain issues resolve.
Terra Luna ($LUNA and $UST)
UST, meant to be pegged to a dollar got “unpegged”, causing rapid collapse in the token price of Terra Luna. A month ago, the token was a top 10 crypto with over $40B market cap but has since lost $99.9% of its value. I personally took a $70 position when the coin hit a price of $0.05. Had a quick 200% gain but did not take profits. The 200% gain has since turned to a 99% loss as Luna now trades at $0.00025 [as at the time of publishing]. Yikes!
Lesson 1: When you think it can't go lower, it can.
Lesson 2: Take your profits when you have it.
Teladoc Health ($TDOC)
Teladoc showed signs of recovery with the broader market. Since the last time I wrote about Teladoc, I had reduced my portfolio allocation by 65%,, taking at a significant loss after the last quarterly report. This was due to Q1 results that suggested that management could be lying to investors about the state of the business. Projections made during Investors Day in November seem to have completely fallen apart, just in Q1. I retained 35% of original position because of the underlying fundamentals relating to its data infrastructure. I'll give this more time but I had to size the position more appropriately.
Invitae ($NVTA) and Personalis ($PSNL)
I previously wrote about both companies and why I was long. I still hold full positions in both and momentarily wearing the bag holder emblem. I correctly anticipated Personalis and Invitae growth trajectory for 2022 but could not have anticipated the heavy beating these two have taken. $PSNL and $NVTA 52 week lows were 3.97 and $3.38 respectively, with Personalis presently trading below cash.
Of course both companies are still burning cash. Invitae management indicated they will have cash runway until 2023 or beyond. By guiding to the bottom line specifically, Invitae management seems to be taking a serious stance towards positive free cash flow by 2025. Again, it's important to be cautious in believing what management says. Instead, believe what they do. I'm still long and cautiously optimistic, given the positive long term trends around genomics.
Week Ahead.
I listened and read some great technical traders they all seem to suggest the rally that started on Thursday afternoon still has about a 5% upside move in the indexes. Hope that materialises. Use the opportunity to position into quality companies.
Godspeed!