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When Kogan’s stock was plummeting in mid-March through $4, who knew where it was going to go? It might just as likely have gone to $2 or as high as $6 in the short-term. You just have to look at the changing moves in substantial shareholders to know that fund managers didn’t.
We advised subscribers to buy stock in the online retailer in small bites. Taking a trading mentality, you have to make sure you can handle the former and not go bankrupt or worse, put yourself in a bad mood (don’t borrow whatever you do).
In the eye of the COVID-19 induced storm we included Kogan (KGN) among a number of stocks that we put spec buys on and as it happened, our recommendation picked some up at its absolute post-COVID-19 low at $3.50.
The fact that we got the price right was complete luck. The fact that we got the timing right was not.
Who knows at any point where the price will go, but everyone knows when there is market panic.
We put a take profits rating on the stock at $7.21 and as you would be aware, this has proven to be too early with the stock trading well over $10.
The market has gone on a bull run since central banks around the world started pumping record amounts of stimulus into securities. The crowding out effect it’s had on fixed interest markets has caused zero to negative interest rates causing investors to rush flor risk assets, the most popular and easiest to buy being listed stocks.
The value that we were finding in mid-March is now much harder to find. What do you do? For one thing, we remain interested in putting valuation at the centre of our portfolio decisions. Flying under the radar means there are routinely small cap opportunities that have been ignored. On the other hand, we’re not averse to taking advantage of the big moves on the market on stocks like Kogan as investors rush in and out of stocks as if they were ATMs. Which, to some extent they are. In the depths of the financial crisis, one of the only sources of cash was the stock market. This is an important point, which I’ll go into in a second.
Amid this volatility there are stocks like Kogan that represent trading opportunities. I’ll talk about why they are and what buy and sell signals to look for. It’s a high risk, momentum based game, but the rewards are there for those brave enough to handle the associated pain.