The Lemon Fool

Not sure if we're technically in a market correction territory but for those holding US and China tech stocks, there's been a big sell-off.

How do you feel about it? And do you plan to change strategy? Is this paring back valuations of high flyers? Or something bigger?

If you've got a diversified balanced portfolio or UK HYP, this time it's lucky you

Answering my own questions. I feel irritated by it, but plan to stick with same strategy. I think this is neither a bull or bear market, but more of a bunny. Using this analogy hoping up and down but going sideways. Perhaps I'll check my portfolio in another few weeks

Possible interpretation: the market had become two-speed, with techs on very high valuations and the rest of the market on much lower valuations. The elastic between these two could only stretch so far before the two parts of the market were pulled back closer together. So: tech valuations come down somewhat, rest of the market goes up somewhat.

Others could express the thought much more intelligently, but you get the idea. Markets eventually arbitrage away differences.

ATT and SMT make up a sizeable chunk of my portfolio so i've noticed the drop. On the other hand I think some of the recent tech stocks have been vastly overvalued and i'm still up something like 70%+ on these for the last year so cant have too many complaints. I'm sure it'll be noise in the long term.

Darn, I bought the SMT cool aid close to its ATH. Nursing a sizeable 4 figure loss now, the decision is to sell and take the hit or ride it out. Looks like the stock has some support around 950, but it could just as easily go lower. I think I need to stick with it, but I think I am in for the long term now a few years at least. Stock recovered a little to 970, so maybe we are at the bottom of the rout?

FWIW a few timeless quotes never go amiss...

Humphrey Neill (author "Art of Contrary Thinking") writing in the 1940s/50s:

"Do not confuse brains with a bull market"

&

"When everybody thinks alike, everyone is likely to be wrong"

Helen Meisler (trader), 2016:

"Nothing like price to change sentiment"

I trade little nowadays, but still like to lean against sentiment from time to time. So I cut risk in January (after adding it last April) see here: viewtopic.php?p=375813#p375813

...and have used this recent sell-off to begin buying a new long-term position* funded from the cash raised a couple of months back when sentiment appeared uniform. NB this isn't "buying the dip" in pre-revenue speculative guff or tech stuff on sky-high multiples for whom the future planets must perfectly align, but instead highly profitable / well-stewarded / proven and reasonably priced, yet caught up in the down-draft. Will the timing of these purchases be "perfect"? Nope. Will I be happy in 10 years having bought at the prices I'm paying today? That's the goal.

*Only tangentially tech-related

frunk wrote:Darn, I bought the SMT cool aid close to its ATH. Nursing a sizeable 4 figure loss now, the decision is to sell and take the hit or ride it out. Looks like the stock has some support around 950, but it could just as easily go lower. I think I need to stick with it, but I think I am in for the long term now a few years at least. Stock recovered a little to 970, so maybe we are at the bottom of the rout?

Me too a bit - I am trying to move away from individual shares but fancied the racier exposure so I too bought SMT.

I'm holding tight although not only do I have an actual 15%loss at the moment I also have the opportunity loss that my LLOY shares which I top sliced to release funds have done very nicely. So overall up but as you say a good 4 figure delta to the bad.

I see LLOY as part of the value bunny that is means reverting, so when that has seen the good news from the lockdown ending (I think it has another 10-20p to go) I will sell that and SMT will still be on the list - and hopefully not run ahead of itself too much

mark88man wrote:

frunk wrote:Darn, I bought the SMT cool aid close to its ATH. Nursing a sizeable 4 figure loss now, the decision is to sell and take the hit or ride it out. Looks like the stock has some support around 950, but it could just as easily go lower. I think I need to stick with it, but I think I am in for the long term now a few years at least. Stock recovered a little to 970, so maybe we are at the bottom of the rout?

Me too a bit - I am trying to move away from individual shares but fancied the racier exposure so I too bought SMT.

I'm holding tight although not only do I have an actual 15%loss at the moment I also have the opportunity loss that my LLOY shares which I top sliced to release funds have done very nicely. So overall up but as you say a good 4 figure delta to the bad.

I see LLOY as part of the value bunny that is means reverting, so when that has seen the good news from the lockdown ending (I think it has another 10-20p to go) I will sell that and SMT will still be on the list - and hopefully not run ahead of itself too much

If there's been a tech correction then I've missed it. YTD performance in my US tech holdings:

Intel: +19.8%
Cisco Systems: +4.6%
Microsoft: +5.5%
Facebook: -2.7%
Apple: -8%

Nothing to get stressed about IMHO. Of course, if you hold loads of the pre-revenue type tech rubbish, I suspect it still has much further to fall.

All the best, Si

frunk wrote:Looks like the stock has some support around 950, but it could just as easily go lower.

Do things like 'technical support' apply to ITs? While discounts/premiums can change (a bit), surely the NAV at least is subject to forces beyond the buyers and sellers of an IT?

NotSure wrote:While discounts/premiums can change (a bit), surely the NAV at least is subject to forces beyond the buyers and sellers of an IT?

SMT's discount has widened more than a bit, BG are quoting an 11.3% discount for Friday's price. AIC are currently showing 11.2%. Pretty sure it was above zero at the start of the year. That could mean the price will recover fairy quickly when the run stops, but might mean big reductions in the value of the unlisted assets are anticipated when next revalued.

Just noticed that City Wire are suggesting the discount is now 17%

Adamski wrote:Not sure if we're technically in a market correction territory but for those holding US and China tech stocks, there's been a big sell-off.

How do you feel about it? And do you plan to change strategy? Is this paring back valuations of high flyers? Or something bigger?

If you've got a diversified balanced portfolio or UK HYP, this time it's lucky you

Well, I won't say that I am happy about the falls, but 'masterly inactivity' is my plan. So I have some risky holdings. I knew that, and rely upon diversification to shield me from the worst.

Much depends on when one bought these things.

Shares showing a significant loss for me recently (GE 15% YTD) are ATT, EWI, JCGI, PHI (actually only 14.85%).

I am still comfortably ahead on all 4. Partly because I have held them for long enough and partly because I top-slice on highs.

Little worse than ULVR in fact.

frunk wrote:Darn, I bought the SMT cool aid close to its ATH. Nursing a sizeable 4 figure loss now, the decision is to sell and take the hit or ride it out. Looks like the stock has some support around 950, but it could just as easily go lower. I think I need to stick with it, but I think I am in for the long term now a few years at least. Stock recovered a little to 970, so maybe we are at the bottom of the rout?

If you bought at £14 plus shouldn't you be delighted to buy some more at below £10 ?

If I hold something with a 5 to 10 year view and the price falls I buy some more, given the underlying facts have not changed.

(I am aware of the threat of higher interest rates because business conditions look unexpectedly favourable...the latter is more important than the former imho, given the guys who control the money printing are not keen on higher interest rates because they owe a lot of money)

I just look to buy at least 5% below the lowest price I have paid, ditto Edinburgh Worldwide..

Volatile price movements are your friend.

I have offered a few musings on this over at the Portfolio Management and Review sub-forum: viewtopic.php?f=56&p=393684#p393684

NotSure wrote:

frunk wrote:Looks like the stock has some support around 950, but it could just as easily go lower.

Do things like 'technical support' apply to ITs? While discounts/premiums can change (a bit), surely the NAV at least is subject to forces beyond the buyers and sellers of an IT?

See my post earlier today.

Dod

tikunetih wrote:...and have used this recent sell-off to begin buying a new long-term position*

*Only tangentially tech-related

OK, so now you have got me curious.........
What have you got stuck into?
tuk020

Some pull back in the Nasdaq today (2.64%). Do you think this is a hiccup, a continuation of the rotation of growth to value, or start of something else?

Thought to be a reaction to the possibility of higher US interest rates: https://www.nasdaq.com/articles/u.s.-st ... 2021-05-04

Definately in tech correction territory today. Smt down 6.2% yesterday, 4.3% today.

As well as inflation worries, also got sell off of China tech with anti trust crackdown. Looks like tech/growth not a happy place this year so far.

Adamski wrote:Definately in tech correction territory today. Smt down 6.2% yesterday, 4.3% today.

Somebody call AC12, I've got a lead for them...