Big tech losing to energy & financials
As Q4 starts, rates & inflation are causing a rebalance. But bitcoin & crypto don't seem to care.
The stock market at the start of October 2021, went through a bit of a pullback as traders left big-cap tech ($AAPL, $MSFT, $QQQ), bringing down the overall indices.
For the past two newsletters, August & September, I was expecting a pullback and we definitely got one in big-tech these past two weeks.
This month I’ll try a different format as it’s a holiday in China and I have a lot of links to cover. So I’ll group them by theme then try to write a TLDR (Too Long; Didn’t Read) sentence or two to summarize.
In this update:
Why did the market pullback?
TLDR; It’s probably a bit of everything but rates seem to be playing a role moving money from tech to energy, financials & recovery. That leads to two important questions.
Is that it?
Anything you’re eyeing to buy right now with this pullback? – TB
For the first question, ‘Is that it?’, I would have to say that I’m not sure. I’m being pretty cautious still as I think any wrong move from the Fed or Debt Ceiling or Inflation craziness could lead to another 5%+ drop.
For the second question, ‘What to buy?’, I did deploy about 30% of my sideline cash into a few names below because it seemed too juicy an opportunity since I have a long time horizon.
Here are the names that I like & bought more this week;
$AAPL – Apple was at 150+ sinks to 140, nothing negative, just traders following other stocks momentum. Others agree “Expert Says: Keep It Simple, Buy Apple Stock For 40% Upside“.
$MSFT – Microsoft was at 305+, sinks to 280, no problem, still a beast. “Jim Cramer sees a ‘huge buying opportunity’ in Microsoft“
$SQ – Square dropped fast from 270+ to 240 but it has a lot going for it even though it’s a high-multiple valuation company currently. It has fintech, reopening & crypto tailwinds.
$MARA & $HUT – Green-ish Bitcoin miners, see Crypto section below for more details.
Speaking of crypto, one thing to note about this recent pullback in the stock market is that it didn’t hit crypto the same way as it has in the past. We’re far away from non-correlated assets but it does make me think that what’s happening in stock is more rotation rather than real fear.
Other names that have held up surprisingly well that might be worth revisiting;
$DT (Dynatrace) & $NET (Cloudflare) – cyber security still is strong demand.
$CZR (Caesars) – Gambling as reopening + sports betting seem to be keeping it afloat.
$U (Unity) – A negative overreaction in previous quarters led to strong rebound, holding $120-$130 levels so far. Read a Deep dive Unity thread on Twitter.
What’s new in biotech & medicine
TLDR; Moderna ($MRNA) & BioNTech ($BNTX) have amazing drug pipelines but trade wildly based on vaccine news. It might be worth getting into these stocks on pullbacks. Merck & Pfizer though are also making gains.
Human trials for cancer & 3-in-1 respiratory vaccine
Moderna developing covid flu combo vaccine
Merck & Pfizer with promising data on covid antiviral pills
What Fintech stocks are hot right now?
TLDR: Affirm’s stock price is catching up to its initial potential with a big earnings beat, new products & new partnerships. It’s on its way to ‘Super app’ status along with other peers such as SoFi, Square & Paypal.
Why Affirm stock is going up
Affirm’s ($AFRM) core value proposition is buy-now-pay-later but it’s growing revenue & expanding their product offerings.
Affirm stock skyrockets after company reports 71% revenue growth and strong guidance
Affirm CEO Max Levchin explains how the company handled negotiations with Amazon on buy now, pay later deal
Affirm to Debut Crypto, Debit Products in Push Toward Super App
Affirm’s product announcement summary from @InvestiAnalyst on twitter.
Why SoFi stock is going up
SoFi $SOFI is an all-in-one loans, banking, credit, crypto & stock trading app with a lot of potential.
Jefferies Initiates Coverage On SoFi Technologies with Buy Rating, Announces Price Target of $25
And a SoFi thread, again from @InvestiAnalyst on Twitter
Which Fintech app is better – Paypal or Square
I only directly own Square ($SQ). I’ve never liked Paypal’s customer service nor enjoyed using their products. Square & Cash app both seem far better to me.
Deeper Square & Cash app integration; Why Square Stock Jumped and Fell Off Today
PayPal Stock Gains on $2.7B Deal for Japan’s ‘Buy Now, Pay Later‘ Group Paidy
Crypto stocks to invest in
TLDR: Crypto is going to rewrite finance & banking like how the internet rewrote the music & entertainment industries. Read the thread below to better understand Web 3.
It’s becoming mainstream and the longer you ignore it, the less you stand to gain from this massive disruption.
Traditional banking meets Crypto. This is just crazy.
Société Générale Applies for $20M MakerDAO Loan Using Bond Token Collateral
“One of the largest banks in France is working with one of the largest protocols in DeFi on a historic step toward institutional adoption.“
MKR is Maker’s governance token, similar to a stock in a way. DAI is Maker’s stable coin, similar to USDC.
Banks like J.P. Morgan Chase ($JPM) are starting to lose business to crypto & DeFi, according to Cathie Wood.
Podcast-Bankless: 82 – Investing in the Future | Cathie Wood, Chris Burniske, Yassine Elmandjra
More Crypto Podcast: 661 REPLAY: The Ownership Economy with Jesse Walden
What other institutions are getting into Crypto?
Ready For Takeoff? US Bank Launches Crypto Custody
Fidelity Pushes For Bitcoin ETF In Private SEC Meeting: Report
Mastercard makes a big bet on crypto, buying blockchain analytics start-up CipherTrace
Visa Announces Network For Stablecoin And CBDCs
Here Comes the NFL Version of NBA Top Shot NFTs
Twitter adds Bitcoin to Tips feature
And ‘kids these days’ might start skipping banks entirely, direct to Coinbase
Public market Bitcoin miner stocks to buy
$MARA – Marathon, uses BTC to secure $100 million revolving credit line, more evidence of crypto mixing with traditional finance & banking. And $MARA is still growing strong.
$HUT – Hut 8, is also holding BTC & borrowing against it or using it generate yield. Hut 8 is already ‘green‘, trying to play for a future day when their sustainably-mined bitcoin may be deemed ESG-investor compliant.
Here’s a Top Bitcoin Mining Stock to Buy Now (HUT)
How much crypto should be in a portfolio?
Since I’ve been getting more into crypto over the past year, I’ll be writing more about it with the perspective of a stock market investor rather than a crypto native.
Recently I answered some reader questions about crypto allocation as part of a portfolio that you can check out.
Sports betting boom in the U.S.
TLDR; stock prices are volatile but the trend is up and to the right. More and more states are legalizing it and the return of this football season is showing the enormous market potential – $180 billion by 2025?
Sports betting to surge as NFL season kicks off
More Americans will wager on the NFL than ever before as league embraces sports betting
Sports betting bubble? FanDuel CEO on where the industry is headed
$18 billion online retailer Fanatics shocked the sports world with its MLB trading card deal — Here’s what’s next ahead of its expected IPO
What sports betting stocks are worth it?
What caused the Draftkings Drop?
DraftKings Launches Online Sportsbook In Arizona
Which stocks are winning Michigan Sports Betting?
Which states have the highest volume of sports betting?
I own $DKNG, $PENN, $CZR and another couple of less well-known stocks in Sports Betting Genius Sports ($GENI) & Rush Street Interactive ($RSI).
That’s all for this month. If you got some value out of it, I’d really appreciate you sharing this newsletter with friends.
-B
I believe in Win & Help Win.
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