WHAT TO DO NOW: Do a little more selling. We’re seeing another round of selling in growth stocks, with some more abnormal action among a few names. To be fair, most of the action is mixed at this point, whether looking at the overall market (Tides on the fence, etc.) or individual stocks, but the increasing number of air pockets out there has us paring back a bit more today—we’re going to sell one-third of AppLovin (APP), which is our largest position, as well as cut bait on Toast (TOST), which is our biggest loser. Our cash position will now be around 36%.
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Growth stocks are again getting whacked, with many leaders coming under pressure. As of 11:15 am EST, the S&P 500 is off 0.6% but the Nasdaq is down 1.3% and growth measures are off even more.
The action of the past couple of days is concerning when it comes to individual growth stocks, a few of which are starting to flash some abnormal action. To be fair, the action is more mixed than negative, whether you’re looking at market timing indicators or leading names, but given the increase in potholes and the overall rally since the April lows running into trouble, we’re paring back a bit more today.
First, we’re going to take partial profits in AppLovin (APP), which is our largest position by a good amount—we’ll sell one-third and hold the cash. As usual, we’ll give the rest of our position room to maneuver given the strong overall trend and great story. SELL ONE THIRD, HOLD THE REST
Second, we’re going to cut bait with our half-sized position in Toast (TOST), which is our biggest percentage loser, albeit on a half position. We’ll sell and look to reinvest the proceeds in a stronger situation if/when the buyers reappear.
Those two moves will leave us with around 36% cash in the Model Portfolio, which seems appropriate given the action in growth stocks right now.
Don’t hesitate to email me directly at mike@cabotwealth.com with any questions.
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