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Ghost Stocks Of FinTwit (Cestrian Stocks Bulletin #14)

Ghost Stocks Of FinTwit (Cestrian Stocks Bulletin #14)
By Cestrian Capital Research, Inc • Issue #14 • View online
DISCLAIMER: This note is intended for US recipients only and in particular is not directed at, nor intended to be relied upon by any UK recipients. Any information or analysis in this note is not an offer to sell or the solicitation of an offer to buy any securities. Nothing in this note is intended to be investment advice and nor should it be relied upon to make investment decisions. Cestrian Capital Research, Inc., its employees, agents or affiliates, including the author of this note, or related persons, may have a position in any stocks, security or financial instrument referenced in this note. Any opinions, analyses, or probabilities expressed in this note are those of the author as of the note’s date of publication and are subject to change without notice. Companies referenced in this note or their employees or affiliates may be customers of Cestrian Capital Research, Inc. Cestrian Capital Research, Inc. values both its independence and transparency and does not believe that this presents a material potential conflict of interest or impacts the content of its research or publications.

Opposite Day
In stocks as in life, you have to decide whether you are a momentum player or a stand-back-from-the-crowd player. Both can be winning games but most people don’t excel at both.
Momentum players in life wait to see what color everybody is starting to paint their kitchen these days, then paint their own that color. Let’s call it French Gray. Then wait two years. Then, once there’s the whiff of change in the air, when the most chi-chi house in the neighborhood goes all-in on Sulking Room Pink, your momentum folks, they be whipping out the paintbrushes double quick. And this is how to make money with the momentum method. Stocks moving up, buy. Stocks moving down, sell. Works if you know what you are doing. Like all things investing, it works best if you have robot-level emotional intelligence. Pure chart play. You only mess up if you start having feelings or opinions on the stock. As a momentum player, your opinions and feelings don’t matter. Only the current direction of the chart matters. You need to be light on your feet, nimble, and, ideally, welded to your screen. And before you say, what do you mean, stocks up, buy, stocks down, sell, that’s all the wrong way round - try it. Really try it. It works if you’re good at it.
Now, the other approach can also be found in home decor, or fashion, or whatnot. If you are a true bot and you do not care one fig what the neighbors think of your kitchen, you might decide one day, hmph, everyone has a gray kitchen now. I plan on selling my house soon, you say. And it needs to look different. Sulking Room Pink? In the kitchen? Are you kidding me? Pass the tin of Down Pipe and turn up the radio whilst I get to work on the corners.
We don’t know what you call this sort of person. Contrarian? Lone wolf? Low boredom threshold? Attention seeker? Poorly socialized as a child? Anyway, if you fall into this category as an investor, when everyone is buying growth stocks you are probably layering a little Verizon into your portfolio. And when everyone is plying the reflation trade with your Chevrons and your Deltas and so on? You be mainlining the Fastly. This approach too can work. It also requires you to be cool as a cucumber. Ideally work out when the market is approaching a singularity - that point where absolutely everybody agrees that, for instance, growth is just so over - and then start buying those fallen growth angels. The key is not too soon. Wait for consensus to set in (against you, not with you). Wait till your favorite growth experts are posting in real-time on Twitter atoning for their sins and saying how much they really did love REITs all along and yea verily have they repented from the Cathie-love they have practised this last year or so which hath Rotted Their Souls From The Inside.
We don’t know when the bloodbath in growth names will halt. It might have reversed Tuesday but our guess is not quite yet. We think there’s another episode of everyone’s favorite TV show, Margin Call, still to come. Tuesday’s session opened with most all stocks digging for cover in the basement. Until, you know, everyone decided that it was going to be alright and this was just a trick being played by hackers. Whereupon, phew, some growth names went up even as the market at large went down. These crazy gyrations aren’t bullish, they’re bearish, they show the skittishness of market participants around growth names right now.
We do however smell more than a little fear in the streets, and we see 2020 growth genius after 2020 growth genius taking to Twitter declaring that they are So Short Cathie Right Now and how they let everyone down when they joined the Cult Of Unity - their family, their friends, yes, but most of all how they let themselves down. And we take this as a signal that perhaps, just perhaps, it is time to revisit the Ghost Stocks Of Fintwit.
You know who they are; Cloudflare (NET), Sea Limited (SE), Teladoc (TDOC), Fastly (FSLY), CrowdStrike (CRWD) and so on. Once firm favorites that are now on the verboten list in polite society. Now, it’s not for this newsletter to tell you what to do here. To be successful at the investment game you have to develop your own style and strategies, those which suit your own psychology. But we will say that in our experience, playing the Opposite Day game can work well. The best exposition we have heard of this recently is in this YouTube video from an excitable fellow going by the Twitter handle of Puppy_Trades. No junior doge this though, instead a rather skilled technical analyst. If you have the time, watch the video. You can skip the stuff on inflation if you like. It’s good but you probably already know it. If you’re in a hurry, just fast forward to the end when he talks about Fastly as an indicator of possible growth stock capitulation (he posted the video before FSLY jumped 10% yesterday). We are no lover of FSLY particularly, though we own a small stake in staff personal accounts. What we liked a lot was the walk through of “which group of investors is everyone laughing at”. Q4 2020 - precious metal bulls. Hilarious. Oops. Now they look smart. Q1 2021 - boomer stock bulls. Seriously - AT&T??? Oops. Also now looking prescient. Q2 2021? Not only is everyone laughing at growth stock investors, but many of those investors themselves are administering self-flagellation live in your feed. So go figure. Is it Opposite Day yet for growth?
Big News!
The Stripe/Twitter border dispute that has been holding up the next great step in online investment research, the Premium Edition of this newsletter, has been resolved. Representatives from the two sides met on a bridge to nowhere at midnight, talks followed, detente ensued and lo, we can now process the $9/month fee.
If you read and like our work, this is the lowest-cost way to access our subscriber-only content which is naturally higher quality and more actionable than our free-to-air ramblings. Premium Edition brings you our best idea of the week, every week. We published a free sample recently - you can check that out here. It’s a monthly subscription so if you sign up and hate it, you can just cancel anytime.
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Cestrian Capital Research, Inc - 12 May 2021.
DISCLOSURE: Cestrian Capital Research, Inc staff personal account(s) hold long position(s) in CRWD, DAL, FSLY, NET, TDOC, U.
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