Our Biggest Gainers & Losers of the Day in the $100,000 Build Portfolio

For the 19th September 2024:

Close your eyes & pick a stock. Any stock. It’s probably in the green today.

The biggest winners are what I called out yesterday - Tech & discretionary consumer. Do I have crystal ball? Am I distant relative of Einstein?

Probably neither of those. But what I can do is breakdown the winners from today’s session. Let’s figure out if there’s still enough runway to scale in, hold what we have or dump them while we’re ahead.

PayPal, Disney, and Nike recently dropped 50-80%.

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Listen. It still comes under “tech” in my eyes, ok? 😅 First place gainer goes to Solana, a cryptocurrency.

I’d love you tell you they’ve had a breakthrough in the network or a huge development that’s about to send them to the moon but I’d be lying. The rise is mostly coming from a wave of optimism in the crypto market as a whole thanks to the rate cut.

Don’t believe me? Spot the red on this crypto heatmap. 🤣

Sucks to be a Leo investor today….

Now there are some reasons to be excited about Solana specifically.

1/ Solana’s Futures Funding Rate - It’s just a hit a two month high. That tells us that more traders are going long on Solana & the overall sentiment in more bullish right now. You wouldn’t want to ride a bull while you’re facing the wrong way & the same goes for the market. The trend is your friend.

2/ Solana ETF’s Getting Traction - Solana’s been making moves in the institutional space AKA the guy’s with buckets of cash. Brazil has led the way with approval of a spot ETF this week. Canada’s getting the paperwork together for a Solana ETF & there’s rumours of a few firms in the US targeting one too. We’ll see what the SEC has to say about the one in the US but approvals in other countries usually set the stage for a string of rubber stamps. Institutional money tends to raise prices & stabilise them so good news all around.

3/ Leading the Pack- Solana’s the strongest competitor to ethereum & leading the way with decentralised apps (DApps) & NFTs. They’ve got faster transaction speeds & lower fees so developers & users love it. A strong ecosystem is the foundation to a long term value proposition in crypto & should be high up on your checklist if you’re looking for coins to invest in.

From a technical perspective, price has just moved from a support level at $120ish. Once price finds momentum here, which it has done, it’ll usually find $160. $180 & above’s been found on a few occasions & with lower rates & a dash of investor confidence I wonder be shocked to see it again.

That gives me a 13% - 27% upside from current price.

If you’re looking to try your hand at crypto, or already holding some but no Solana, I think this is a pretty solid bet. Upside is there to be had & the downside can be managed if your position sizing is small. It currently makes up around 0.3% of my total portfolio.

The strongest bear case for Solana would be if they can’t get a handle on network stability where they’ve had a few network outages in the past. If they’re going to be used for DeFi you have to be a reliable network. And if Eth 2.0 smashes it out the park & takes away Solana’s biggest advantages - speed & lower costs - then the need for Solana falls away. Ethereum has a stronger brand so if it delivers on that front it’d take back the market share, in my opinion.

Not immediate concerns but something you have to be aware if you’re putting your hard earned cash here.

The Nasdaq’s pretty sexy. Compound Annual Growth rate just shy of 17% for the last 17 years.

But what if I told you you could copy the Nasdaq & make triple the returns?!

Interested? Say hello to TQQQ!

It’s an ETF that does exactly that. It tracks the Nasdaq (ETF QQQ) with the aim to 3x the returns. So on a day like today where QQQ spikes 2.53%….

Our TQQQ positions is up 7.56% for the day 🥳

Now I have to say TQQQ is not all sunshine & rainbows. TQQQ is like the 10/10 girlfriend you can’t believe you’ve bagged only to find out she’s a little crazy a few weeks later.

So it’s great for short term holds but not something you want to get married to for the long term.

That’s because not only does the 3x multiplier go the other way (you get 3x the losses on a red day) but you also suffer from decay if you hold it for the long term.

Decay? What does that mean? And how does it happen?

Because TQQQ re-balances at the end of every session you’ll end up losing money even if the market trades sideways. Let me show you an extreme example:

Day 1 - $100 - Market up 10% = $110

Day 2 - $110 Market Down 10% = $99

Day 3 - $99 Market up 10% = $108.90

Day 4 - $108.90 Market Down 10% = $98.01

You see how the market was flat but you’re still down 2% in the end? That’s the decay.

Now were all up to speed on the risks, why buy TQQQ now?

Firstly, good news, it also compounds in a positive way so you end up with more than 3x in market that’s trending up.

And that’s where I think we’re headed. At least for the next few months leading up to Christmas.

From a technical perspective, we’re trading above the 200 & 15 period moving average & the RSI is above 50 without being overextended. Both solid signs a rally is on the way.

Add to that the Nasdaq is already off it’s highs & filled with those tech stocks that love rate cuts. I think we’ll see it reclaim all time highs. I wouldn’t be shocked if it was this side of Christmas, especially if rate cuts keep coming without inflation rearing it’s head again.

So for that reason I’m about 3.7% of the portfolio into TQQQ!

My average entry price is $65. I’m targeting $85 for my exit which would give me a 30% return on the position.

I honestly wouldn’t be shocked if it were able to push beyond $85 but because of the nature of leveraged ETFs it’s important to not get greedy & have a plan in place.

A phrase that’s helped me with trading & investing goes a little something like “Bears make money, bulls make money & pigs get slaughtered”

So don’t be a greedy pig! 🐷

Tesla is in a win-win from the rate cuts.

They fall into two out of the three sectors that benefit most from cuts - tech & consumer discretionary. It makes sense they were my best performing single stock.

I had a closer look at Tesla a few weeks ago & it’s rallied 15% since then.

The points made all still ring true so if you’re interested, take a look at it here.

If you don’t want to take a look the TL:DR is there’s still power left in this battery. Tesla makes up 2% of my portfolio. Happy to scale into that & looking for an initial price target of $275 - $300 which is still a potential 22% gain.

That’s all! See you same time tomorrow 👋

P.S Hit reply & let me know what you thought of today’s newsletter. All feedback is welcomed ❤️