Chop

I assume majority of people, investors, traders, have all seen the movie "The Wolf of Wall Street". One of my favorite scenes is when they are on the boat and they have to go to Switzerland to deal with the banker because of the Aunt dying and Belfort has $20m in that Swiss account. The captain of the ship said there was a storm brewing and they could experience some chop, and Belfort says we can handle chop right?!


Well guess what, we can handle chop as investors because that is what the market is doing right now, just chopping around. Many high growth names are fluctuating 3-5% a day to the upside and downside, some head fakes, and well off highs with some by 40%. This makes it difficult to trade, but makes it easy to invest. This is why I always emphasize investing over trading, our trades may take longer to work and that is OK.


The market has had a busy week, we have Federal Reserve speakers testifying on the hill so my assumption is every word they say makes its way into the market and we get "chop". The re-open trade and rotation is in full force, while I think they make great trades, I am not sold on them as LT investments so I am not deviating from my strategy. I would much rather own Cloudflare over Carnival Cruise lines --> https://www.barrons.com/articles/buy-cloudflare-zscaler-stock-security-spending-51616602177?mod=bol-social-tw security and cloud spending is going no where, but up.


Valuations may have been stretched, and when a rubber band stretches too far it snaps back and hurts your fingers, right? You can do one of two things, cry and dwell on not selling at highs, or continue to buy and build conviction in your businesses you own (assuming you actually did due diligence on your name and understand it).


I am doing the latter, because these are important businesses and spending is only increasing on their products --> https://www.accenture.com/us-en/insights/technology/technology-trends-2021


My advice to people is, unless you are a day trader, you have no reason to check your portfolio everyday. Sit back and buy your businesses, relax. The weather seems to be getting nicer. Markets experience chop from time to time and it is ok.


Digital transformation is happening across the board at large enterprises. There is no leadership without technology leadership, and I am investing in technology leaders. Please read the two linked articles above, and you will see where my mindset is!


Under $70 on Cloudflare is a gift, Anaplan is a gift here, SharpSpring feels like a gift here, as does BlackLine! If your time horizon is 5+ years I see no reason to not nibble.


Let us look at a few charts in the market. I have been watching $IGV way more closely, given I think they are my relative benchmark for performance the ETF owns NET (.63% weight), BL (.27%), and PLAN (.36%). When the trend here starts to reverse, I expect the same to my portfolio.

We can see the ETF riding along the 150 day moving average, so far it is constructive. To be honest, if I did not look at individual securities I think I would own $IGV as a core ETF holding. Broad exposure to tech software. Now let us look at the QQQ:

We can see the chop! We are off the lows of the "correction", which just happened to be a nice 150dma bounce as well. We have been trading sideways for a little over 2 weeks (10 trading days), and I can even tell by my account balances that have been fluctuating and flat. This is so healthy, I cannot even describe it. Yes some options are burning, but for our long-term holdings I think this is very healthy.


Honestly, we have actually traded sideways for much longer depending on what time frame you want to look at. Charts can tell us a lot.


I remain bullish in 2021. That has not changed.


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