"One of the more Interesting Markets in a While!"
Below is a Post I shared on Twitter on April 6th 2025 where I quipped it was “One of the more Interesting Markets in a While” i.e. plenty of places to allocate money. It sums up how I was thinking about the market at the time.
Of note, the Friday before and the Monday after, is when I did some of the largest buys thus far in my investing career. Further, in the week from April 4th-April 11th I ran down my cash position from 25% to 0.1%.
Some thoughts on the market
Indices: S&P is at 5074.08. ~17.5% peak to trough decline. Below all key MA’s. RSI is 23.25. Trading at 21.85x trailing earnings and 19.98 forward (per WSJ)
Nasdaq Composite is at 15,587. ~23% peak to trough decline. Below all key MA’s. RSI is 24.49 14.6k would be 50SMA test on the monthly, has only traded down to that level 3 times in 15 years (see chart) Trading at 27.25 trailing earnings and 23.41 forward (per WSJ)
Lots of Fear in markets. Some evidence:
VIX is 45.31 >150% YTD (>30 considered elevated)
CPC Put to Call ratio 1.18 (>1 generally indicates Fear)
Fear and Greed 4.
Bonds Outperforming Stocks recently.
Thu/Friday largest two day drop in 50 years (~10%) Friday saw a >90% downside day, highest put volume on record and highest volume of shares traded on record... Capitulatory type behaviour? Remains to be seen
Both retail and Institutions were offloading stock on Friday whereas before that was primarily institutions. L/S positioning at record low
Many reasons to be concerned:
Tariff war will simultaneously create inflation (cost push) and later reduce demand when consumers can likely no longer afford to burden the tariffs. Recession risk is high.
Most likely Trumps IQ too low and ego too big to go back on his tariff plan.
PE of indices is still high albeit some companies like tesla inflate it.
Forward estimates will likely be revised down 10% or more. So all NTM PE est are too high until proven otherwise IMO.
Positioning:
Positioning wise could always have more cash but end of Jan was at ~25% cash after fully exiting Tesla 420.69, heavy trim (85% of shares) of $HIMS mid 50’s to 72.98 and scaled back a little AMZN trimmed some $BABA pop for >100% gain at 147’s. Got sloppy on few small trades like $FSLY $TDOC but nothing meaningful. Currently about 70% allo to US ~15% China, 7% UK and 3% Brazil.
I see myself being a net buyer of stocks. My game plan has always been to buy low sell high and I do not do as well “buying high selling higher” or shorting generally. Game plan will remain sell rips, if there are any!
Brazil positions are: $PAGS and $STNE both at 4/5x fwd earnings, PEG <1 and buying back stock. Both not impacted by tariffs directly. I expect Brazil to continue doing well given low starting valuations, benefit from weaker USD.
UK positions are: $TW.L $JD.L $GRG.L low multiples, PEG of <1, decent balance sheets. The NI policy hurt UK businesses. JD specifically likely to be hit hard by Tariffs if they proceed as planned but huge upside imo if manage this upcoming period well.
Some select US stocks I am watching for different reasons:
$AMZN below all key MA’s, RSI 27. Currently trading at 27x NTM earnings, lowest multiple in >16 years, only traded this low once in its history in December 08 briefly when was at 24.5x. 24.5x NTM earnings would be $155.33. I added most recently 165 premarket Friday. Maybe add $150-155.
$AMD below all key MA’s. RSI 27 18x earnings. Of note EPS growth projected 41%, 33% and 21% FY25,26 AND 27. Est could likely be too high however.
$GOOGL 16x earnings not including 96B cash. Below all key MA’s however. At 145 which was support previously but likely to break Monday.
$BABA PEG <1, above 200SMA, only sold heavily when China announced retaliatory tariffs. Holding.
$HIMS at 24x NTM earnings and 15x 2-year forwards earnings. (PEG 1). DTC and all customers US based. You would expect tariffs to not be a major issue. No longer 250% above 200SMA and has corrected a lot, removing much needed excess. Currently at 200SMA.
KWBP (KWEB equivalent) approaching 200SMA of 13.04. ~14x earnings.
$MSFT 29x trailing, 26x forward. Currently $359.85, ~345 was November 2021 high. Have said they are cutting back on data centre spend, a positive in my view.
$NVDA 32x trailing and 20.8x forward. RSI 28. In Stage 4 decline. Lots of uncertainty, either AI demand remains strong with NVDA at forefront maintaining their high growth and margins or both revenue growth will slow down and margins decline= a double whammy. At 90 think it is good value if had to guess but no position for me.
$PDD at 8x forward earnings but Temu is likely to be sig impacted by raised tariffs and the removal of the de minimis exemption (on May 2nd) for shipments under $800. Trump particularly targeting shipments from China and Hong Kong. (The de minimis threshold allows for the duty-free and tax-free entry of goods valued at or below a certain amount. In the U.S., that amount has been $800). High uncertainty but very cheap stock. Could test $90 if things get worse.
$PLTR somewhat insulated still from sell-off at 60x sales still. Think goes to 56-60 minimum which coincides with 200SMA and lower BB. Would still be >40x sales there however!! I remain short the stock but would exit on waterfall decline.
$PYPL PEG of sub 1. Heavy Ongoing buyback, 6B intended to be used this year which would retire >10% of shares at current levels.
$UBER PEG of <1. Core business should be less affected by Tariffs. Fundamentally PEG <1, PA wise is still green YTD so showing RS.
Other US listed names I am watching are: SE HOOD SNOW.
One of the more interesting markets in a while! As always avoid margin, leverage and options unless you are an expert.
Will be posting such updates at the end of each Month for subscribers. See you next time.