Story Stocks With Bad A Ending

Published on: 02/14/2023

In this edition of Chart Talk, Tony Ogorek and Jeff Viksjo discuss what story stocks are and the role they played with investments during the Pandemic.

 

TRANSCRIPT

 

TONY:

Welcome to another edition of Chart Talk.  I’m Tony Ogorek.  I’m here with Portfolio Manager, Jeff Viksjo.  And today, we are going to be talking about story stocks.  So Jeff, how would you describe story stocks for our audience?

 

JEFF:

I would describe it as the future potential sounds so amazing that you just have to partake in it.  You know, certainly, the dot com bubble was the greatest story of all.  That everything was going to go online, and those companies would have infinite value.

 

TONY:

Right.  And you know Jeff, we’ve come up with a moniker today, FOMO, right, which is Fear Of Missing Out. You know the only thing that makes people feel worse than taking a loss is finding out that their neighbor’s making more money, than they are, on their investments.

So, let’s take a look at some of the stories on this chart. Really sort of interesting.  There’s a sort of a temporal nature to them.  In terms of some of the big names did really well because they were, what we call, pandemic plays. Let’s go through the list. What do you like to talk about?

 

JEFF:

Yea, it’s a nice list of FOMO stocks.  They did really, really, well post-pandemic. We were all at home buying things online.  We weren’t able to go out into the real world. So, your Facebook, Netflix, Wayfair, Tesla, Coinbase – which is crypto, which did really well.  And so, everyone chased those returns. And we show you on the first column how far they fell. So, from their high to their low.  Take Carvana, which sells cars outside of dealerships, it’s down 95%.  And Tony, this year, since it hit bottom, it’s up 287%.  So, if you’re looking at you’re thinking, ‘wow I’m making money on it. Who cares if it fell 95%, I’m up 287’.  Tony, if you put those together, you’re still down 81%.  It just shows you, when something falls that much, it has to climb much higher, percentage, to get back to even.

 

TONY:

Yea, which is why if you’re going to be investing in things like this, it really is imperative that you have some sort of a stop-loss order on it.  You take a beating you’re never going to be able to recover on it.  So, interesting, some of these pandemic plays sounded great at the time, but momentum can change rather rapidly, and you see the results of that.

So, thank you, Jeff.  And thank you for joining us for this edition of Chart Talk.

Submit a comment below!

Your email address will not be published. Required fields are marked *


PLEASE SEE IMPORTANT DISCLOSURE INFORMATION HERE.