Stock Notes for 1/2/21

Happy New Year!

Good riddance, 2020!

2020 was a bitter sweet year given all the terrible events that happened in 2020, but it was also a sweet year because of the stock market gains. Majority of the stocks that I followed and invested in at the beginning of 2020 were stay at home technology stocks, so it was a positive year for me financially. 🙏🏼

In this post, I’ll be doing a retrospective on the stocks that I followed in 2020.

Tesla (TSLA)

If there’s one thing that I learned about Tesla is that no matter what you hear about this stock, you hold onto it like your life depends on it. Tesla had a breakout year and it had the mother of all returns in 2020.

A few things to note about TSLA were the months long consolidation and bases that were formed in the 200, 300, and 400 price ranges. It provided a clear entry point that was used as a launching pad 🚀 to the next hundred price range. We did not get that between November and December due to the S&P 500 inclusion, but I would expect the same type of formation to occur as the market starts to price in autonomous (robo) taxi and other lines of businesses in 2021.

I am extremely grateful for a friend who persistently pushed me to revisit Tesla. I wrote off Tesla a while back when they were on the verge of bankruptcy, but Elon is resilient to say the least. Your inner circle of friends really does have an impact on your financial well-being, and I’m so grateful to have awesome friends I can count on. 😊

Cloudflare (NET)

Cloudflare is a company I’ve long admired since it was a private company, so it was a treat when it IPO’d in late 2019.

One of the mistakes I made early in 2020 was trading in/out of NET between $20 and $35/share. It wasn’t until it hit $40/share that I decided to quit playing games and hold onto my position for the long term. Similar to TSLA, bases were formed in the 30, 40, and 50 price ranges before the year-end November/December rally.

The Cloudflare story will continue to mature into 2021 as large fortune companies begin to migrate their corporate networks over to Cloudflare. The SolarWinds attack in Q4 2020 was a fortunate catalyst that accelerated the migration to zero-trust edge services, which is at the core of the Cloudflare One suite. The opportunity evaluation, supplier contract negotiation, and other bureaucratic corporate processes takes about a year, so I would expect to see growth from enterprise customers in Q3/Q4 2021.

Square (SQ)

Square is a company I will hold until every single man, woman, and child on Earth uses CashApp. 😅

Square’s economic empowerment mission showed its strength in a time when the US government failed at providing economic relief to Americans. Whether it was distributing loans to small businesses, providing weekly Cash App boosts, or cash giveaways to Cash App users, Square was true to its mission. As an investor, this is the type of company I want to invest in as I believe capital should be used for the socioeconomic good of everyone, not just the top 1%. 💚

As the economy recovers 🤞🏼 in 2021, Square’s ecosystem will continue to thrive as small businesses begin to open again. 2020 accelerated the transition to contactless payments and I believe Square will rollout experimental features like Cash by Cash App QR code payments to its sellers ecosystem. On the consumer side of the business, I look forward to the tax preparation business it acquired from Credit Karma and additional banking features. I would also like to see cross border payments as it expands as a global banking platform.

Teladoc (TDOC)

I’ve been on the fence with Teladoc since it started to ride the 200-day SMA, but every time I think I should sell TDOC, Cathie Wood buys.

Teladoc benefited from stay at home and introduced telehealth to the world. TDOC was a highly volatile stock in 2020 given the large short-term moving average swings. But I am more concerned about the last two months as it rides the longer term 200-day simple moving average line. If it crosses below the 200-day, I will be inclined to sell my position and lock in my gains.

While Teladoc’s merger with Livongo should have been a catalyst, the market is not convinced about the story. I believe that Cathie’s story revolves around health data being captured from Livongo coupled with AI and how Teladoc stands to benefit from the genomics revolution. Time will tell.

ARK Innovation ETF (ARKK)

I am so grateful to have come across ARK Innovation in 2020. 🙏🏼

When I think of the technology product lifecycle, a lot of the companies that Cathie invests in are mostly in the innovators (e.g. CRISPR) and early adopters (e.g. Tesla, Teladoc) phases. The biggest hurdle is crossing the chasm, the moment the market adoption crosses between early adopters and early majority. And that’s the biggest opportunity for ARK Innovation (ARKK) and all other ARK ETFs that Cathie manages.

Cathie has an awesome track record and is on her way to being one of the great chief investment officers of this decade. She will create a ton of wealth for retail investors and I am happy to go along for the ride. 😊