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I read Charlie’s note on APT as a SELL. I do respect his opinion as almost a gospel truth and have followed his FMG success story. But from memory he also commented on CYB and now APT.
It us unsure what sort of holding Charlie asks us to hold or sell within ? APT has exponentially shot and gone up even after his comments to SELL. Do you still maintain a sell ? What price do you reckon the sale will be ? People who might have listened to your SELL call, have made loss (opportunity) compare who did not and made extra profit. Always good to see your comments /recommendations (not advise) with a chart and some more quantitative figures.
A: Thanks for your comments.
I have copied below what Charlie said about technology stocks, and 3 Australian stocks that he deemed to be expensive – WiseTech, Appen and Afterpay.
Hot air
My advice is it is time to take profits in global and local technology stocks that are priced on “hot air” and have very little valuation or earnings support. If the momentum cycle changes many of these stocks could lose 50% of their value and still be expensive. Australian stocks I would put in that list include WiseTech Global (WTC), Appen (APX), and Afterpay Touch Group (APT) – three very high flyers.
Remember in the short-term the equity market is a “voting machine”, in the long-term it is a “weighing machine”. Eventually all stocks are priced off their profitability, the cash they generate, and what percentage of that profitability they return to shareholders (dividends, buybacks etc).
I would strongly suggest that many of the most popular momentum stocks right now, most of which are in the technology sector, will never be able to deliver on the huge expectations their current share prices are discounting. On that basis, if you are being paid for decades of future earnings right now, you should accept the markets current generosity and take profits.
There’s nothing wrong with taking profits in wildly expensive stocks. Netflix is telling you to do that, in my opinion, and you should be either rotating to value or cash. There’s nothing wrong with having a little more cash as volatility picks up.
Important: This content has been prepared without taking account of the objectives, financial situation or needs of any particular individual. It does not constitute formal advice. Consider the appropriateness of the information in regard to your circumstances.
Regards
