Never Say ‘Never’, But...
Update on the Red Flag Alerts List. Among stocks mentioned: HIMS, OKLO, MP, GFL, ENPH, SEDG, MARA, QXO, NRG
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▶ I’ve been thinking a lot about my Red Flag Alerts list lately...
But mostly about how the stocks that make me look dumbest are generally the most senseless.
These are stocks whose soaring prices are based on hope and hype rather than logic and underlying fundamentals. Great trades, maybe, but likely lousy investments. You know which ones I’m talking about, because out of the full list of 36, there are only three – maybe four, depending on how you view it. But those three “problem children,” in particular, remind me why it never pays to try to point out the logical reason a stock appears to be primed to underperform... or maybe even plunge.
There are exceptions, of course, which are reminders that almost all of yesterday’s memes become today’s minefields. Like Enphase and SolarEdge, down 72% and 90%, respectively since I formally red-flagged them... and even one bitcoin miner, Mara Holdings, which has been on the list for a year-and-a-half and is down 44%. And that’s when anything remotely related to crypto is on a SpaceX to Mar, assuming it has cleared the launch pad. (Yeah, that’s how bad that one is!)
Things Change...
Some might even become bona-fide longs... Like Vail Resorts and Yeti, where activists showed up and may make a difference. (If the activists don’t or can’t make things happen, the stocks will undoubtedly wallow and most likely lag the market, which is why they were red-flagged in the first place.)
Regardless of how my formally red-flagged stocks have performed, however – good, bad or ugly – they remain on the Red Flag Alerts list. I do that for transparency plus... As a group, even as it has grown, the list has evolved into my personal quirky measure of fear and greed. (Hint: Currently no fear.)
For proof, just look at the full list’s performance at the bottom of the market’s correction in April – and now. And the three most senseless stocks – Hims & Hers, Oklo and MP Materials, with GFL thrown in for fun.