WHAT TO DO NOW: The growth stock meltdown continues, with the major indexes and individual names under heavy pressure again today. Already with nearly 80% in cash, we’re not eager to sell wholesale in the Model Portfolio, but we also won’t just hold and hope. Today, we’re going to sell half our position in Flutter (FLUT), which has fallen sharply this week. We’ll hold the rest of our names as well as our 84% cash hoard.
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The major indexes are imploding again today, with the S&P 500 off more than 2.5% and the Nasdaq down 4% around 2 pm EST.
There’s not much new to say about the market, where buyers are nowhere to be found and former leading stocks are continuing to get pummeled—in effect, what we’ve seen is a rolling three-week crash in growth stocks, with most growth funds off 20% to 30% during that time.
Of course, we’ve been carrying a lot of cash, but with nowhere to hide in growth stocks, even our remaining names are being hit hard. The question is what to do about it—when you’re already 80% on the sideline, part of the decision is portfolio management, as we rarely, if ever, get to 100% cash (which can have you chasing your tail if/when the market starts to bounce).
That said, simply holding and hoping is never a good strategy either, and with so much weakness out there, we are going to trim a bit further today—we’ll sell half of our position in Flutter (FLUT), which has completely broken down along with everything else out there … though there should be some support in this area from many months ago.
The move will hike our cash position into the mid-80% range. As always, we could trim further if need be (On Holding and our remaining Flutter are our weakest names), but we’ll hold the rest for now and take it day-to-day from here.
Don’t hesitate to email me directly (mike@cabotwealth.com) if you have any questions.
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