Random Observation/Comment #779: Buy the dip (but probably closer to Q2 2023)!
Why this List?
We’re probably (most definitely) about to go into a recession or world war in the next 3-9 months where equities usually bottoms first. While I normally buy ETF and indices, I like thinking about single stock trades and like macro musings on how earnings could be impacted by current market conditions.
This is definitely not investment advice. I’ll write the upside and downside risks.
- AAPL (Apple) – They own the whole stack and a full end-to-end luxury brand. From the hardware to the operating system to the app store to the software used by everyone. All they need to do is announce a car or AR headset and they’ll get millions of registrations. They could open a bank and I’d be signing up. Take my money. Downside: Supply chain reliance on China means any World War could lead to chip shortages and delays of launch with weaker earnings forecasting.
- GOOG (Alphabet / Google) – Search is still the core of accessing all the things of the interwebs. YouTube by itself is reason enough to be bullish. There’s definitely a Google suite for businesses because slides is far superior to pptx and gdrive makes every sharing so much easier. There’s so many secret projects that at least one of them might hit. Downside: For some reason, I just feel like there’s a lot of expensive overhead costs with headcount and locations. With all the good work Google does with services, it’s just terrible at platforms. There are fewer lifers and I’m much more interested in the ex-Google led companies.
- AMZN (Amazon) – Another full stack including optimizations on the retail side with last mile. The search of anything delivered to my door for elite convenience will be connected. AWS itself is a profitable enough reason to love what the company does. Downside: Inflation will lead to much less spending by volume on goods.
- TSLA (Tesla) – I’ve already written a blogpost on the 30 Elon Musk businesses he’s created. The release of full self driving for semis to solve for the last mile delivery problem or just selling their licensed software for other auto businesses could be a game changer by itself. Downside: While I love Elon and his hard work as a chief engineer, I am a little uneasy with the Twitter acquisition and what it means for his need to sell shares to float a sinking company. I’m expecting both Twitter and Tesla to be choppy in the short term.
- MSFT (Microsoft) – What used to be a vanilla enterprise vendor lock-in company with tools and OS has now made some amazing acquisitions into a diversified company of creatives. There’s enough here with gaming and tooling that makes me comfortable they’ll weather the storm. Downside: I could see a reduced usage of Windows by enterprises if everything turns towards phones and tablets, but I’m not sure what percentage of their earnings are based on OS software.
- DIS (Disney) – The IP itself is worth so much. Marvel spinoffs will continue to create incredible content. Especially for kids, I would cut a Netflix subscription before not having pj masks and Encanto. Downside: There’s over reactions to parks closing with possible risk of additional variants. This is a downside for any business.
- ABNB (Airbnb) – I use Airbnb for all my travel searching. Maybe now there’s some competitors like VRBO so I can split a big house with some families, but listings are usually on both. The brand and the future of travel/remote nomad working will lead to higher usage. Dabbling into experiences as a marketplace around travel is also pretty cool. They can probably activate some short term rentals or long term investments and be super successful. Downside: Inflation or a real estate crash may lead to fewer travel excess cash and foreclosures if they can’t keep up with mortgages.
- U (Unity) – I love games and gaming tools enabling mobile. It seems like a very lean company with software being licensed for a large variety of applications. Downside: Games are super saturated for attention and the bigger players may be the only profitable ones.
- COIN (Coinbase) – I personally wouldn’t heavily put funds here because of its correlation to crypto trading and my existing exposure to digital assets. I do think the tech and maturity of the company is impressive. Downside: Crypto trading on the retail side will likely be reduced if people exit the market. Institutional still seems strong if certain countries are diversifying from their own currencies feeling hyperinflation.
- UBER (Uber) – The OG of creating a gig economy of workers will likely have some great partnerships in the pipeline. Uber eats is also killing it. I think I wrote a “Uber for x” brainstorming blogpost. Downside: There’s some competition from Doordash and Lyft where it becomes a commodities game of best price.
- BX (Blackstone) – Never a bad idea to follow the smart money from institutions. Downside: Highly correlated to the first investment to drop if there’s any choppiness.
- GS (Goldman Sachs) – I would never go against Goldman. They’ve got the smartest people doing the most innovative things. Downside: Financial sector is overall super risky during a recession, but they will likely be bailed out.
- RNR (RenaissanceRe) – The investment methods and returns of this company has always out performed the market. I love data driven decisions and the fact the whole staff is 80% PhDs. Downside: It’s hard to protect against a macro black swan event.
- CRWD (Crowdstrike) – Security software for enterprises has a huge TAM. I think the short term bump is passed, but it’s still a necessary component against foreign attacks (especially if these security protocols are recommended during a war). Downside: It might take some time for this to surface again as an important investment if there’s reduced costs in the short term.
- OKTA (Okta) – When Bring Your Own Device (BYOD) became a trend for enterprise work, I always wondered how you could create better single sign-on security and experiences without creating a separate secluded app running on a subset part of the phone. The early Citrix model just seemed so clunky. With Okta, I think the access point through online multi-factor authentication is pretty seamless. Downside: It might be expensive for larger companies to adopt so they’ll keep their old processes.
- AMD (AMD) – With a shift towards creating more domestic creation of microchips and further acceleration of chips in every appliance, I would predict a lot of longer term investment into the top manufacturers and designers. There’s a high demand for faster and more energy efficient processors. Downside: Inflation may lead to reduced consumer demand and fewer B2B orders.
- PYPL (PayPal) – I think the younger generation just sends Venmo payments back and forth. The payment focused company has the easiest usage and highest integration. Downside: An introduction of a CBDC or further pressure from China’s digital yuan may create some friction with payment integration
- RBLX (Roblox) – I’m not just adding this because Nancy Pelosi has it in her portfolio. I see the younger generation of 7-10-year-olds obsessed with this game. The private metaverse already exists with a lot of user-generated content.
- MRNA (Moderna) – Any of the vaccine creators experimenting with mRNA methods will likely do well in the future. It seems like we’re combining flu and covid shots now and just living with the morphing symptoms of this disease as a new normal. Downside: Pharma is fickle and there was already a huge overpriced push for Moderna throughout the pandemic. Unless there’s a new variant, we’ll see these returns forecasted accurately.
- CRSP (Crispr) – I’m still fascinated from 10 years ago at biotech advancements. It seems to be the building blocks to delivering the creativity and variations from applied AI techniques for curing diseases. Downside: Biotech always starts in small trials and takes a long time for broader adoption as standard treatment.
- COST (Costco) – Who doesn’t like Costco? I was just in Maui and the gas station was literally $1 cheaper than anywhere else on the island. The locals and stores shop at the Costco to support the tourist economy. I think Costco is winning the war with Walmart and Target because of its larger quantities for suburban homes. So many new deserters of the city areas are embracing that Costco bulk. Downside: The stock has soared since the pandemic and might be at a peak. There might be supply chain concerns, but I still a solid long term investment here.
- TDOC (Teledoc) – The technology for remote healthcare has definitely improved and created a new class of work-from-home doctors/nurses while they’re on-call. I find this especially useful for mental health. The software play for teledoc might be the most intriguing. Downside: There’s a lot of competitors in this space and the tech advantage is getting squashed by new funding to fragmented software signups.
- DOCU (Docusign) – I’ve been bullish on adoption of digital signatures for a long time and I still think there’s a lot of inefficiencies in legal space that could benefit from just adding these digital signatures across enterprises. Downside: This prediction has been around for decades and we probably won’t see large uptick of adoption or changes through turbulent times.
- GOLD (Barrick Gold) – Buffett loves the gold diversification for long term volatility and turmoil. There’s definitely a short term commodities boost that will lead to a longer term safe play. Downside: Slightly moderate returns if the market rebounds quickly because of the stronger dollar.
- ZM (Zoom) – I think remote work is here to stay. While Microsoft teams and webex is inching into the market, I still think Zoom has the talent to change the game. Downside: As a growth tech company, the sales team is probably sweating to get enterprises off of competitors in order to keep the pace of growth projected through the pandemic.
- WORK (Slack) – Most startups lean into using slack for everything. It truly replaces email and is essential for remote working. Downside: Recessions are usually a great time to start a business, but you might lose a lot of subscriptions.
- SHOP (Shopify) – I’m always surprised and impressed by the number of shopify integrations there are for the non-tech businesses out there. If you want to sell something with a small inventory, your website probably has some shopify components integrated with payment checkouts. Downside: Slower sales leading to stinted growth numbers for earnings.
- BABA (Alibaba) – Based on the usage of Alipay and market share of China, Alibaba is completely under valued. Downside: The biggest one here is the relationship with China. China is a surveillance economy with full control of data across all tech companies, so it may see a lot of investor scrutiny. We’re also likely going into a world war with China, so exposure to these stocks may immediately plummet.
- META (Meta / Facebook) – Why is this on the watch list if it’s down 80% from all time highs and having burned $12B (or 24% of its total revenue) into VR with a 10,000 person team? Well, I really like VR. I think it’s super fun and the exercise component makes me go back to my Quest 2 device daily. Downside: Facebook usage stats are probably getting killed by Tik Tok. Any banning of tik tok would lead to a huge stock jump.
- Wallstreetbets meme stocks – This includes $GME, $BBBY, $AMC, $PLTR, etc. I’d only look at these for short term trades every 3 months. Downside: All these meme stocks are basically ponzi schemes and the curve path for pump into dump is getting much shorter.
~See Lemons Buy Stonks