Growthies Priced For Perfection Yet Perfection Comes And Goes

In the good ole days, IBM was like a religious artifact. If wealthy, it lay in your vault, untouched for decades. Management initiatives progressed from the electric typewriter. The Watsons bet their company on its personal computer and they won. Years later, they pressed for full operational control, but failed. Competitors were more agile in such a fast changing business.

Today, operators like Microsoft, Amazon and Apple seem unassailable franchises. But, should they sell in the clouds, at 2 times the S&P 500 valuation?

I keep writing covered sell options on my positions but keep losing money. So I’ve stopped with calls for now but suffer with 3% down days in my pretties.

The oldest position in my portfolio is the New York Times Class B shares. This dates back to when Saul Steinberg failed in his takeover attempt. Mike Milken sold me Saul’s position.

If you haven’t noticed, recent trading days show notable drops in Microsoft, Amazon and Meta. Meanwhile, my American Airlines has elevated. I sense a new trend here.

The S&P 500 Index sells at 20 times forward 12-month earnings power. This spells danger unless there’s more momentum coming. The FRB can’t be antsy in the interim.

Iconic art works seem flabby today, certainly more selective. Oil futures act like there’s too much supply at hand. No good reason to own energy majors like Exxon Mobil and Occidental Petroleum. Microsoft and its ilk are over-owned. How does Warren Buffett justify his Apple position if tech paper continues to correct?

I owned Apple when it was a pure spec as Steve Jobs struggled to build and field its personal computer. This was long before the iPhone came to market. It’s saturation level far exceeded expectations. We’re over 100% saturated now and need constant phone upgrades to grow.

Let someone else own GM, GE, Exxon Mobil and Citigroup. My bullishness doesn’t extend to all old cyclicals. The value index is set to outperform the S&P 500 and NASDAQ 100, a big call. What happened to Ali Baba, trading in low seventies after peaking over 300 couple of years ago? A typical growthie wipeout after its stumble.

Growth stock troubles are best expressed in this chart on their limited longevity. Average longevity is just 5 years. They last somewhat longer than a thoroughbred racer competing over the country's major courses.

Net, net. I’ve halved back my growth stock weighting. Got my toes wet with Macy’s and American Airlines. Wish me luck and pesetas.