FOBO (Not FOMO) Hits Tech Heavy Portfolios Hard; Tech Stocks Adobe, Salesforce Beaten By Walmart, Hershey

Tech Heavy Portfolios Hit

Please click here for an enlarged chart comparing Walmart Inc (NASDAQ:WMT), Hershey Co (NYSE:HSY), Adobe Inc (NASDAQ:ADBE), and Salesforce Inc (NYSE:CRM) stocks.

Note the following:

• The chart shows year to date, stocks of retailer Walmart and chocolate maker Hershey have beaten popular tech stocks Adobe and Salesforce by a wide margin.
  • HSY has beaten ADBE by 46.31%.
  • WMT has beaten ADBE by 33.91%.
  • HSY has beaten CRM by 49.89%.
  • WMT has beaten CRM by 37.49%.
• Momo crowd portfolios are highly concentrated in speculative tech because the momo crowd is driven by hype that often surrounds speculative tech.
• The chart shows big gains in WMT and HSY stocks, but there is not much hype about Walmart and Hershey.
• As full disclosure, Walmart And HSY are in our portfolios. We are long WMT from $19.25. 
• FOBO (Fear Of Becoming Obsolete) and not FOMO (Fear Of Missing Out) has hit many software stocks hard.   Many momo crowd portfolios are as much as 60% in SaaS stocks that have been especially hard hit.
• Here are important lessons for investors:
  • In the long run, what stocks and ETFs you do not own is as important as which stocks and ETFs you own. 
  • It is very important to systematically take partial profits when stocks and ETFs you own become overextended.  
  • Using the technique of trade around positions dramatically increases rewards and reduces risks.
  • Diversification is important.   Momo crowd portfolios concentrated in speculative tech lost 95% -100% in 2000, 70% – 90% in 2008, and 70% – 90% in 2022.  
  • Portfolios need to be properly structured.  Our portfolios are tech heavy but very light on software.  
  • Investors need to look ahead and see how various stocks and sectors may perform and not get carried away by today's hype. 
• Prudent investors closely watch retail sales data as the U.S. economy is 70% consumer based.  Retail sales are weaker than expected.  Here is the latest retail sales data.
  • October headline retail sales came at 0.0% vs. 0.4% consensus.
  • October retail sales ex-auto came at 0.0% vs. 0.4% consensus.
• ADP data shows that the private sector added an average of 6,500 jobs per week over the four weeks ending January 24.
• Important economic data is ahead.  The official jobs report will be released tomorrow at 8:30am ET.  Initial jobless claims will be released on Thursday at 8:30am ET.  Consumer Price Index (CPI) data will be released Friday at 8:30am ET.
• In important news Taiwan Semiconductor Manufacturing Co Ltd (NYSE:TSM) had its highest monthly revenue ever in January with an increase of 37%.  Revenue data from Taiwan Semiconductor Manufacturing is important for the AI trade because Taiwan Semiconductor Manufacturing manufactures advanced chips for NVIDIA Corp (NASDAQ:NVDA), Advanced Micro Devices Inc (NASDAQ:AMD), and Apple Inc (NASDAQ:AAPL).
• In a sign of the times, with so much exuberance about AI, Google Alphabet Inc Class A (NASDAQ:GOOGL) is issuing a 100 year bond.  The last time a company issued a 100 year bond, it was Motorola in 1997.  Tech stocks crashed in 2000.  Prudent investors should note that not a single company that was in the Dow Jones Industrial Average (DJIA) in 1926 is still in DJIA today.  The takeaway for investors from this observation is to not be overly aggressive with the amount of strategic positions held at this time.  The time to be aggressive with strategic positions is when valuations are low, there is a bear market, investors hate stocks, or the momo crowd is disheartened – none of these are occurring today – this is the key to building extraordinary wealth in the stock market.  

Magnificent Seven Money Flows

Most portfolios are now heavily concentrated in the Mag 7 stocks.  For this reason, it is important to rise above the noise of daily news on the Mag 7 stocks. 

In the early trade, money flows are positive in Amazon.com, Inc. (NASDAQ:AMZN), Microsoft Corp (NASDAQ:MSFT), Nvidia (NVDA), and Tesla Inc (NASDAQ:TSLA).

In the early trade, money flows are neutral in Meta Platforms Inc (NASDAQ:META).

In the early trade, money flows are negative in Apple (AAPL) and Alphabet Inc Class C (NASDAQ:GOOG).

In the early trade, money flows are mixed in SPDR S&P 500 ETF Trust (NYSE:SPY) and Invesco QQQ Trust Series 1 (NASDAQ:QQQ).

Momo Crowd And Smart Money In Stocks

Investors can gain an edge by knowing money flows in SPY and QQQ.  Investors can get a bigger edge by knowing when smart money is buying stocks, gold, and oil.  The most popular ETF for gold is SPDR Gold Trust (NYSE:GLD).  The most popular ETF for silver is iShares Silver Trust (NYSE:SLV).  The most popular ETF for oil is United States Oil ETF (USO).

Gold

The momo crowd is buying gold in the early trade and is especially aggressive in gold ETF (GLD), silver ETF (SLV), VanEck Gold Miners ETF (NYSE:GDX), and Global X Silver Miners ETF (NYSE:SIL).  Smart money is inactive in the early trade.

Bitcoin

Bitcoin (CRYPTO: BTC) is range bound but trading below $70,000 as of this writing. This is disappointing to bitcoin bulls because they were expecting the psychological support at $70,000 to hold.

What To Do Now

Consider continuing to hold good, very long term, existing positions and add tactical positions based on signals. 

The Arora Report is known for its accurate calls. The Arora Report correctly called the big artificial intelligence rally before anyone else, the new bull market of 2023, the bear market of 2022, new stock market highs right after the virus low in 2020, the virus drop in 2020, the DJIA rally to 30,000 when it was trading at 16,000, the start of a mega bull market in 2009, and the financial crash of 2008. Please click here to sign up for a free forever Generate Wealth Newsletter.

Benzinga Disclaimer: This article is from an unpaid external contributor. It does not represent Benzinga’s reporting and has not been edited for content or accuracy.