Posted on August 19, 2022 by Scott Shuda
Eric Jackson, EMJ Capital founder made a great call in mid-June saying it’s the market low. Is the market now ahead of itself?
Speaking on CNBC, “Weeks ago we kept hearing ‘It’s short covering,’ and ‘it’s a bear market rally,’ and ‘We haven’t seen capitulation yet.’ If I had a nickel for every time I heard that for two months…yet the market keeps going.
“ARKK bottomed on May 12, growth tech. XBI, biotech, also bottomed on May 12. Other growth stock bottomed June 16th. I believe those were the bottoms. These growth stocks were the first down in the downturn. They are the most sensitive to rates and recession. Volatility is the name of the game. Are people going to come back to these stocks? Yes, because they have the growth rates. People always want growth. This sector will rise again.
“The best performing tech stocks of all time…Google, Amazon, the FANG names, they all became huge cash flow producers. You have to get to cash flow positivity eventually. But Amazon didn’t get there from 1996 until 2002,.
“If ARK had been around in the Dot Com era everyone would have said, ‘Oh my god, what is Cathie Wood thinking? Amazon is one of these profitless tech companies. What is she smoking?’ So you have to think ahead. Which ones are about to turn the corner? These are the ones with the best upside.
“In 1990 which is a good comparison to today, Oracle dropped 80% due to recession fears. Adobe dropped 65%. What’s interesting is the market bottomed in October of 1990 three months ahead of when the Fed started easing. In three months will the Fed ease? I think so. Remember Adobe then shot back up are regained its losses over the next six months. Oracle 10x over the next three years.
“The returns will be from Tech. You’re not going to get mega returns from Consumer Discretionary.
“Think to yourself….What stocks are losing money now but could be free cash flow GUSHERS?” Remember Amazon in 2001 suddenly flipped to free cash flow positive and never looked back. .TSLA in 2019 and it then had a major upswing. So today I would put Uber at the top of the list. They have firmly moved towards making commitments to cash flow. “
*BOARDWALKTECH REPORTS FIRST QUARTER FISCAL 2023 FINANCIAL RESULTS. Revenue grows 48% Y/Y, Adjusted EBITDA Improves 53% Y/Y, and Positive Cash Inflow from Operations
*Avi Gilburt posted a new outlook on Seeking Alpha. “it is a good time to de-risk, and allow the market to provide us with the set up that will point to 5500SPX. For if we do not get that set up, then we could very well see another significant decline take us down to the 3200-3500SPX region. Unfortunately, I do not have enough information yet to determine between these two paths, so it is an opportune time to de-risk. However, at least for now, I am leaning towards the more immediate bullish outcome. But, without having a 5-wave rally off the low in place, I cannot state so confidently.”
*The excellent The Technology Letter said, “Cisco’s report contained no trace of weakness among small businesses, which is important given that Cisco has always been a kind of mood ring of the broader economy. The results are a good sign for … tech and for the economy broadly speaking.”
*Barry Bannister of Stifel says the bearish consensus is a positive for the market. He thinks inflation will slow sharply, and he doesn’t see a “typical” recession in the second half of 2022.
*Bradley Steveson provides a nice work up, “BWLKF Share Count & Model.” Check it out, lots of pretty colors and 15 comments (Elite Subscription).
*Florian Buschek makes it easy for us by highlighting BWLKF Earnings Call Transcript with his expert knowledge of BoardwalkTech. Great read.
*Fortune 50 Oil and Gas Industry Leader Adopts CIM Platform To Progress Digital Transformation for Its Pipeline Operations – OneSoft Solutions Inc. (OSSIF) posted by GoTiges AFL who adds, “OneSoft Solutions Inc. Reports Financial and Operational Results for Q2 2022. Revenue Grows 26.6% Quarter-Over-Quarter and Year-To-Date Revenue Up 30.2% over Last Year.” Nice.
*Scott Shuda gives us the Pick of the Litter. He points out that Chamath Palihapitiya’s poor SPAC track record had one exception – the one adopted by Breakout Investors, MP Materials (MP). We know how to pick’em.
“The problem with the world is that the intelligent people are full of doubts, while the stupid ones are full of confidence.” – CHARLES BUKOWSKI
Good luck to all – Chris
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