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No. of Recommendations: 15
The last couple of market days can be nerve wracking but they have to be seen as part of the BIG picture. Let's see how good a painter I am!

Growth stocks are expected to be volatile and we get used to "normal" volatility but the last couple of days have seen volatility on steroids. Upside volatility makes people ecstatic but downside volatility is cause for despair. I "jumped" into Cathie stocks recently without trying to time the buys by looking at the charts of the individual stocks hoping for better entry points. How did that work out? On average I've held these stocks for 14 calendar days and in the aggregate they are up 3.8%. Multiplying by 24 that's over 90% annually! That's part of the BIG picture!

The other BIG question, why the sell-off? The end of the bull run? The coming of the expected collapse? Or just temporary supply and demand? I don't know but this morning I watched a talk about the GameStop short squeeze which brought the BIG picture into better focus.

Extraordinary market gains bring short sellers to the market. What happens when the shorted stocks, like TSLA, keep on going up? Most explanations stop at the plight of the short sellers but that sells the story short (sorry, could not help myself! ;). Let's look at the BIGGER picture.

Suppose a short seller has a $100,000 brokerage account held in long (Cathie?) stocks. He decides to short TSLA selling 100 shares at $700. The short borrows the shares, sells them, and keeps the $70,000 in the account. TSLA doubles to $1400. So far it's an unrealized loss.

Now the account does not have the margin power to support the short position so the short gets a margin call. If the short does not have additional resources the broker will close the short position which takes $140,000. There are $70,000 cash in the account. Where does the other $70,000 come from? The broker sells enough shares, of his choosing, to cover the $70,000 shortfall. "Of his choosing" has implications! The account holder has no say, the broker probably sells the riskiest shares, the Cathie shares?

That's the butterfly effect in action, an unknown GameStop short seller in China makes your stocks go down!

GameStop saga is about 'working class vs hedge funds': Reddit WSB user

Denny Schlesinger
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No. of Recommendations: 3
Thanks Denny yes I agree that the butterfly effect may be at work here. Just rumors from Chamanth in his tweet below, but they support the hypothesis that some hedge funds got hit quite hard (and I think are probably forced to sell off other shares to cover, which I suspect could be high growth stocks like some of ours). Also interesting that he is saying retail investors are buying.

In any case, it's never fun to lose money even if it's paper losses, but I do find Saul's posts on perspective have been helpful to sooth my overactive tendency to want to sell.

I do find it troubling that Apple could have such an incredible quarter and still be down after hours though. Not sure how to digest that one.
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No. of Recommendations: 2
By the look of pre market the sell=off might continue today. Not nice. :(

Denny Schlesinger
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No. of Recommendations: 0
Didn't really pay attention to GME yesterday until Elon tweeted. Put it on my watch list this morning. My god I thought TSLA was crazy. Loved the Tesla report. Price action today means nothing.
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No. of Recommendations: 4
Tesla has released its earnings report for the 4th quarter of 2020 as well for the fiscal year 2020. Among the amazing records the company has achieved is another one for sustainability and energy storage. In the report, Tesla noted that its energy storage deployments grew from 2019 to 2020. “For the first time, our total battery deployments surpassed 3GWh in a single year, which is an 83% increase compared to the prior year,” Tesla’s report stated.

The source of this increase comes from demand for Tesla’s Megapack, which is its utility-scale storage product. Powerwall demand has also increased and is continuing to grow. “While we have made progress on production, we should see even further increases in supply in the next few months,” Tesla said. Due to backlog, its energy storage business has been supply constrained, yet Tesla is aiming to increase capacity for both its manufacturing of the equipment as well as the supply chain. This will enable Tesla to grow at a similar pace for the upcoming year.
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No. of Recommendations: 1
Looks like supply and demand are back "in whack." The Cathie portfolio did what it was supposed to do, up 2.6% for the day. Three positions down and twelve up.

Denny Schlesinger
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