Growth Stocks

[scott]

I have some HODL growth stocks I want to sell before we "back up our trucks", and then I'll go pure TI. AMZN, MDB, ROKU, SHOP, TEAM,TER, and TTD, to be specific. My simple plan would be to put in a sell limit order near their last high, kind of depending on retracement and the bulls. I'm not knowledgeable enough to devise a better plan, realize though there surely is a better, not so simple way. Any insight, advice, comments, etc. much appreciated.

[Yodean]

I have some HODL growth stocks I want to sell before we "back up our trucks", and then I'll go pure TI. AMZN, MDB, ROKU, SHOP, TEAM,TER, and TTD, to be specific.

The following does not constitute specific financial advice.

When I am sitting on large, unrealized gains, and am starting to think about selling a particular asset, I will often adopt some variation of the following approach:

-I will determine a mental trailing stop (MTS) where I will sell a percentage of that asset (say, 10% to 25%). If the asset in question continues to go up, I will periodically move the MTS up.

-this approach does not work well for highly volatile assets, since insiders may easily run your stops, etc.; so for extremely volatile assets like cryptocurrency, micro-cap metals miners, etc., a different approach is necessary - perhaps a story for another day;

-however, it could work quite well for stocks like AMZN (disclosure: I currently hold a significant position in AMZN), so I'll use it as an example;

-for myself, I've set a MTS at around $3,520 for AMZN - if this level breaks to the downside definitively on a weekly closing basis, I'll likely sell 10% to 20% of my current position (haven't decided on the exact amount);

-I came up with $3,520 because on both the 1-year daily and 5-year weekly charts, there's an open gap in that neighborhood; now, this gap may actually act as support if/when filled, so I want to see a clear break, before selling;

-if technical analysis (TA) isn't something you like to do, you could just use a percentage drop as your MTS; e.g. you could say, if AMZN drops 5% from it's all-time high (ATH) on a daily or weekly closing basis, I am going to sell 10% to 20% of my position;

-as a side note, on the 10-year monthly charts, AMZN, although overbought, appears to be in a consolidation pattern with the possibility of another leg higher, so there's that;

-naturally, there are advantages and disadvantages to this approach, just like for everything else, so you'll have to choose your poison;

[Jaz]

I have some HODL growth stocks I want to sell before we "back up our trucks", and then I'll go pure TI. AMZN, MDB, ROKU, SHOP, TEAM,TER, and TTD, to be specific.

The following does not constitute specific financial advice.

When I am sitting on large, unrealized gains, and am starting to think about selling a particular asset, I will often adopt some variation of the following approach:

-I will determine a mental trailing stop (MTS) where I will sell a percentage of that asset (say, 10% to 25%). If the asset in question continues to go up, I will periodically move the MTS up.

-this approach does not work well for highly volatile assets, since insiders may easily run your stops, etc.; so for extremely volatile assets like cryptocurrency, micro-cap metals miners, etc., a different approach is necessary - perhaps a story for another day;

-however, it could work quite well for stocks like AMZN (disclosure: I currently hold a significant position in AMZN), so I'll use it as an example;

-for myself, I've set a MTS at around $3,520 for AMZN - if this level breaks to the downside definitively on a weekly closing basis, I'll likely sell 10% to 20% of my current position (haven't decided on the exact amount);

-I came up with $3,520 because on both the 1-year daily and 5-year weekly charts, there's an open gap in that neighborhood; now, this gap may actually act as support if/when filled, so I want to see a clear break, before selling;

-if technical analysis (TA) isn't something you like to do, you could just use a percentage drop as your MTS; e.g. you could say, if AMZN drops 5% from it's all-time high (ATH) on a daily or weekly closing basis, I am going to sell 10% to 20% of my position;

-as a side note, on the 10-year monthly charts, AMZN, although overbought, appears to be in a consolidation pattern with the possibility of another leg higher, so there's that;

-naturally, there are advantages and disadvantages to this approach, just like for everything else, so you'll have to choose your poison;

AMZN has been consolidating and building energy for a move higher for a year now. Generally speaking, the longer the consolidation the bigger the move to the upside. I recognized this, and had not sold any of my holdings, rather the opposite.

As a side note, I am finding I spend more and more money on Amazon. I am noticing also, more of my companies workload is being offloaded to AWS and MS Azure.

What are you doing with your GOOGL holdings?. I have not sold any.

[Yodean]

What are you doing with your GOOGL holdings?. I have not sold any.

Yeh, I currently hold a significant GOOGL position. On the 10-year monthly charts, it's broken through the top of my Keltner channel for pretty much four to six months consecutively, so I do expect a significant retracement at some point. On my other monthly indicators, it's quite overbought, as well.

Still, it seems to be all about momentum these days, so I am going to try to ride this gravy train a bit longer.

Sifu Sol's (SS) profit-taking range for GOOGL starts at around $2600, and I think this is pretty reasonable. If/when GOOGL definitively breaks $2,600, I'll probably take profits on 10% to 20% of my current position, depending on my sentiment analysis of the Nasdaq at that time, a few other personalized indicators I use, etc. The rest of the position I will let ride, with MTS. So that's the "Offense" side of things, as I like to call it.

On the "Defense" side of things, if GOOGL doesn't hit $2,600 before going down, I will likely sell 10% to 15% of my current position if Baby Skynet closes below $2,430 on a weekly basis. If it keeps going down, I'll sell another 10% to 15% or so if GOOGL closes below $2,290, also on a weekly basis. The remaining 70% to 80% of the position or so I will let ride at that point, i.e. HODL.

You sound like you have a competent grasp of technical analysis, so I am pretty sure you can figure out how I came up with the aforementioned levels.

Ironically, if GOOGL breaks $2,100 to the downside, I will look to start adding to my current position in tranches.

I don't like to bet too much against Baby Skynet . . .

[SOL]

I have some HODL growth stocks I want to sell before we "back up our trucks", and then I'll go pure TI. AMZN, MDB, ROKU, SHOP, TEAM,TER, and TTD, to be specific. My simple plan would be to put in a sell limit order near their last high, kind of depending on retracement and the bulls. I'm not knowledgeable enough to devise a better plan, realize though there surely is a better, not so simple way. Any insight, advice, comments, etc. much appreciated.

TTD is consolidating, it could test the 48 to 55 ranges. AMZN is consolidating to some degree but there is also the MP side of things which shows that too many people think it will trend significantly higher over the short term. From a risk to reward perspective it is maybe okay to hold if you got in at a lower price. GOOGL will most likely test the 2600 ranges, but the higher it trends past 2600, the harder the ensuing correction will be.

On the others, I will post monthly charts that will provide insights into whether the stock is trading in the oversold or overbought ranges.

TEAM



AMZN



MDB



ROKU




In general, we have now seen some very clear long term patterns over some of the big players and we will open more positions in them but only after they let out some way. It is the tactical Investor way, we never chase no matter how hot the stock looks

[jlhooter]

TTD is consolidating, it could test the 48 to 55 ranges.

Sol I set a trigger some time ago to get into some TTD @ $51. Is this a bad idea at this time?

[SOL]

From a long term entry basis that is not a bad entry point. However if we were playing that stock we would only deploy one lot at a time.

[jlhooter]

From a long term entry basis that is not a bad entry point. However if we were playing that stock we would only deploy one lot at a time.

Sol thanks. I am dabbling outside TI stocks with a goal for long term holdings and of course I will do in lots based on your teachings.

[Jaz]

In general, we have now seen some very clear long term patterns over some of the big players and we will open more positions in them but only after they let out some way. It is the tactical Investor way, we never chase no matter how hot the stock looks

Hey Sol, could you repost the AMZN chart, please?. It's missing what looks like the MACD. Also, GOOGL, FB, MSFT if you have them!

BTW, do you use the same technical settings for all stocks, or do you find via trial and error which settings for each stock gives the most optimal settings?

I think there might have been a thread on this, somewhere?

Many thanks,

[SOL]

AMZN



Don't have charts of the others right now. But the other indicators are just as good.

[Jaz]

What are you doing with your GOOGL holdings?. I have not sold any.

Yeh, I currently hold a significant GOOGL position. On the 10-year monthly charts, it's broken through the top of my Keltner channel for pretty much four to six months consecutively, so I do expect a significant retracement at some point. On my other monthly indicators, it's quite overbought, as well.

I find myself not knowing what to do with GOOGL.

Sol's indicators say $2600 range is significantly overbrought.

Our 'other' friend has already sold half.

Yet, GOOGL is only trading at 29x this years earnings of $87.33 (Consensus Average of Analysts estimates).

This is not an excessive valuation. Especially when you consider next years Revenue Growth is forecast @ 18.5%, and they have $135Bn in Cash/T-Bills, and minimal LT Debt.

It still looks cheap in comparison to MSFT and AAPL.

Same goes for FB!

If the trend exhausts in the $2600 range, I am not expecting a significant correction, unless Liquidity is pulled from the system!

More likely a sideways trading range for perhaps a year.

I am from the UK too, so also have to consider what GBPUSD will do, and FX Commission (Can't hold FX in an ISA).

[Jaz]

Also, consider GOOGL had actually UNDERPERFORMED the NASDAQ from 2016 to late 2020.

It seems it is now in catch up mode.

[SOL]

In general, we have now seen some very clear long term patterns over some of the big players and we will open more positions in them but only after they let out some way. It is the tactical Investor way, we never chase no matter how hot the stock looks

Hey Sol, could you repost the AMZN chart, please?. It's missing what looks like the MACD. Also, GOOGL, FB, MSFT if you have them!

BTW, do you use the same technical settings for all stocks, or do you find via trial and error which settings for each stock gives the most optimal settings?

I think there might have been a thread on this, somewhere?

Many thanks,

I am always playing around with the settings, but when I find something I like I don't change them for each stock, that would be almost akin to curve fitting and too much of a headache.

When I refer to overbought I am talking from a technical and not fundamental perspective. Every stock will eventually correct strongly. So our goal is to take profits when things start to look a bit sketchy in terms of its technical pattern and psychology governing that sector or stock. Let's assume GOOGL pulls back after hitting 2900 and then drops to 2600 but we got out at 2600. We would not care, if it is now trading in the oversold ranges we would jump in.

[Yodean]

I find myself not knowing what to do with GOOGL.

Our 'other' friend has already sold half.

Yet, GOOGL is only trading at 29x this years earnings of $87.33 (Consensus Average of Analysts estimates).

Same goes for FB!

(1) Re:"Our 'other' friend has already sold half":

You have to consider the context of his selling. From readily available information, I believe he is in his mid- to late fifties, has four dependents (3 children, 1 wife), and may or may not still have a small mortgage left to pay on his Sheffield home. He is sitting on huge profits on his main A.I. stocks, and is starting to look at buying more small-cap stocks and even crypto. assets, so it may make sense for him to take profits and free up some cash to deploy elsewhere, as well as de-risking his overall portfolio a bit.

You, also from readily available information, are in your early thirties or so, have no dependents, and are also gainfully employed, likely in the financial sector, with likely no mortgage. So your risk tolerance will likely be quite different, which may affect your decision to sell, hold, or buy even more.

(2) Taking profits:

You don't have to sell perfectly "right." It's really hard for anyone to do that consistently. Instead, you could "dollar cost average" out of a position over time - kind of like the T.I. methodology of buying three to six lots of a particular asset at different price and time points, except in reverse, when taking profits.

(3) Fundamentals:

I have a different view of fundamentals than most. My current view, subject to change at any time, is that fundamentals don't really matter in the short or intermediate time frame; they may matter in the long-term. The trend is what matters, and fundamentals only start to show up in the price action when the mainstream trend/narrative "unlocks" the fundamentals, in a sense.

For example, Stock A may have great fundamentals, yet demonstrate persistent depressed price action for months to even years on end. However, if and when the mainstream narrative begins to support Stock A's fundamentals - i.e. mainstream financial pundits start talking publicly about how great Stock A's fundamentals look, etc., that's when the stock's fundamentals get "unlocked" by the narrative and price action goes quickly to the upside, especially if the stock in question is supportive of a particular mainstream trend that is in favour at the moment (e.g. ESG-compliant, Green energy, the WFH trend leading to more recreational real estate buying, automation, A.I. taking over, etc.).

This phenomenon may also work in reverse: an example is Tesla. Tesla's price basically went parabolic for quite some time despite extremely poor fundamentals, likely on the back of the EV-"Elon is a Super-Genius" narrative. Now, the price has gone down quite a bit on the narrative that Tesla has poor fundamentals, is only making money because of government subsidies and holding some BTC, and will get crushed in the EV market in the future once all the other major car companies who have been around a lot longer than Tesla start getting into the EV market in a serious way.

(4) FB, GOOGL, AMZN, BTC, etc.

In the mainstream financial press, for the past year or so, mostly all you hear is how these type of stocks are "fundamentally way overvalued," due to crash, etc. Well, if you keep making these predictions, at some point, you are going to be right - even a broken clock is right twice a day. For the most part, these type of predictions on these type of stocks have been wrong.

One major factor, in my mind, for these mostly wrong predictions is that analysts do not know how to incorporate the power of "network effects" into their analysis of stocks that have the exponential power of network effects underlying their price action.

Briefly, "network effects" may be defined as being in operation "when each additional member to a network adds exponential value to the network." Assets like FB, GOOGL, AMZN, and BTC demonstrate strong network effects, so generally surprise to the upside when it comes to price action.

If network effects are strongly in operation, the asset in question may only be disrupted in one of three ways: 1) significant government interference; 2) some fundamental, technical weakness in the network that is exposed; or 3) a competitor that is at least 10x better.