The search for growth
We often use sector rotation for our reasons to enter trades in the right areas of the market and this is a good way of keeping up-to-date with where the money inflow and outflow is taking place.
However, sometimes we just need to use common sense and see what is happening around us.
I know we have been incessantly referring to TSLA and even NIO but it has been for good reason.
There is an astonishing 150 different electric car companies in China.
The two mentioned above stand out and have the biggest share of EVs in China, with NIO bringing cars to Europe soon.
Over 500,000 EVs were registered in Europe in the last 6 months so it’s an obviously growing market.
It doesn't matter if you are a fan of petrol V8 engines (perhaps EVs are bringing those to an end) or if you have never driven an EV so do not know what all the fuss is about.
The fact is, as traders we need to find these areas of interest, growth and momentum and this area is an obvious one for growth long term.
NIO has doubled our profits in a month and based on their trend and projections, it is likely to continue moving on up over the coming years.
TSLA speaks for itself. This is currently our largest position.
Where else can the market grow?
Another good area is cybersecurity.
Companies now have more people working from home than ever before.
Network security is paramount and this is where companies like CRWD and NET amongst others are well-positioned.
NET is our second-largest position.
What could be next?
Anne recently mentioned travel and tourism.
Most of the world has been cooped up at home during 2020.
If a vaccine promises to overcome COVID-19, there will be plenty of the world gasping to do some form of travelling next year, be it within their own country or abroad.
We will inevitably see growth in this area so this could be next on the horizon.
As with most industries, they are awaiting a vaccine - but none more so than travel and tourism which has really suffered during this pandemic.
Airlines may still have a while to go, depending on how comfortable families are to pop on a plane, what offers airlines use to entice passengers and how effective the vaccines are.
FOMO
Fear of missing out is what most traders suffer from and then end up buying at the top of a speeding driver move (when markets move up, or down, very fast).
Being proactive takes away FOMO and provides good entries while accumulation is taking place but still remaining under the radar.
Entering trades
Enter early and light.
Test your positions - then compound on the ones outperforming.
As you will recall from recent declines, January 2019 we entered early after the deep pullback but just missing the bear market.
March 2020 we entered early after a swift decline and bear market.
If we start to come out of this pandemic, we should look to do the same again.
Entering late makes it harder to withstand tree shaking.
As Anne said - be prepared, the next move is coming!
We discussed a possible rally prior to the election outcome which we have now seen.
Many times we have seen an end-of-year rally and, if that occurs, we want to capitalise on that.
In addition, if we see growth in other areas due to a vaccine, we certainly want to take advantage of that too.
Let's go trade!
