There’s a major difference between KLAR and HOOD/SOFI. HOOD and SOFI were in clear states of accumulation after their post-IPO selloff, meaning if they found profitability, their next moves were up into markup. This is the most profitable time to hold a stock where the largest gains are made in the shortest amount of time. The accumulation period, however, often takes a couple years (see PLTR).
KLAR is still in its post-IPO sell-off. It hasn’t bottomed. It hasn’t stabilized. Even if the knife stops falling today, you still have several years of opportunity cost while you lock up your money in a stock that needs to accumulate.
Instead, just watch earnings and set alert for breaks of new highs on strong volume driven by a change in profitability. This saves the wait and still collects all the gains.
I don't see it as that complicated. A valuable asset has been overly and extremely discounted. It's a good time to go long I think which I did late Feb/early March. The shorts are the primary anchor as I see it. They won't go away easily however. Even there though, there are very interesting dynamics unfolding with the shorts.
Same language I just disagree.. I get it, lots of others are in the "it'll take a year or two or more" to pan out. But, for example, Klarna's March 6th PR indicating most of the insiders' shares are still effectively locked up as well as recent purchase by Moritz seem to be pretty clear messages to the market that they've crazy-overblown this selloff. No idea if any of that will make a difference but the market can go pretty crazy both ways and it may well do so in a lot less that two years.
I understand what you’re getting at, but an operative word in your take is “seems to suggest”. That’s the advantage to learning how to read tape; there’s no interpretation, no guessing. Price is price. You might get lucky buying a falling knife because it “seems” like a good time to buy, but the truly explosive moves like PLTR happen on a schedule and a structure that has repeated for decades. Learn that, and you won’t have to guess and hold forever.
Your approach as much or more about trading than investing. If one bought PLTR in early '22, at $15, as it was crashing you would have to say the same thing; that they were catching a falling knife. And I would hardly call holding it 2 years as holding it forever. Is Moritz catching a falling knife throwing $50 million into Klarna stock? No, because he knows the value of KLAR probably more than anyone. So he does his purchase knowing full well the share price could halve again. He's a wealth builder.
I understand that 2 years doesn’t seem like a long time to hold for PLTR-like gains. What I’m saying, though, is that if you see a deep value play, there are tried and true (literally decades old) methods that can show you when it’s time to pay attention. Why hold a stock that’s asleep for 2 years when you could set an alarm and catch it as it’s waking up?
Great article, and the contrarian-consensus matrix is very insightful.
As you said: "The only way to generate outsized returns in the market is to be a contrarian and be right." My investment thinking exactly for my high risk/high return bucket.
It reminds me of Mark Twain: "Whenever you find yourself on the side of the majority, it is time to pause and reflect," and legendary investor Rick Rule: "I’ve made most of the money I’ve made in my life by being a contrarian, by buying hate."
Good analysis.
There’s a major difference between KLAR and HOOD/SOFI. HOOD and SOFI were in clear states of accumulation after their post-IPO selloff, meaning if they found profitability, their next moves were up into markup. This is the most profitable time to hold a stock where the largest gains are made in the shortest amount of time. The accumulation period, however, often takes a couple years (see PLTR).
KLAR is still in its post-IPO sell-off. It hasn’t bottomed. It hasn’t stabilized. Even if the knife stops falling today, you still have several years of opportunity cost while you lock up your money in a stock that needs to accumulate.
Instead, just watch earnings and set alert for breaks of new highs on strong volume driven by a change in profitability. This saves the wait and still collects all the gains.
I don't see it as that complicated. A valuable asset has been overly and extremely discounted. It's a good time to go long I think which I did late Feb/early March. The shorts are the primary anchor as I see it. They won't go away easily however. Even there though, there are very interesting dynamics unfolding with the shorts.
We’re speaking two different languages. I’m talking opportunity cost. You’re talking…well I’m not sure tbh.
Same language I just disagree.. I get it, lots of others are in the "it'll take a year or two or more" to pan out. But, for example, Klarna's March 6th PR indicating most of the insiders' shares are still effectively locked up as well as recent purchase by Moritz seem to be pretty clear messages to the market that they've crazy-overblown this selloff. No idea if any of that will make a difference but the market can go pretty crazy both ways and it may well do so in a lot less that two years.
I understand what you’re getting at, but an operative word in your take is “seems to suggest”. That’s the advantage to learning how to read tape; there’s no interpretation, no guessing. Price is price. You might get lucky buying a falling knife because it “seems” like a good time to buy, but the truly explosive moves like PLTR happen on a schedule and a structure that has repeated for decades. Learn that, and you won’t have to guess and hold forever.
Your approach as much or more about trading than investing. If one bought PLTR in early '22, at $15, as it was crashing you would have to say the same thing; that they were catching a falling knife. And I would hardly call holding it 2 years as holding it forever. Is Moritz catching a falling knife throwing $50 million into Klarna stock? No, because he knows the value of KLAR probably more than anyone. So he does his purchase knowing full well the share price could halve again. He's a wealth builder.
I understand that 2 years doesn’t seem like a long time to hold for PLTR-like gains. What I’m saying, though, is that if you see a deep value play, there are tried and true (literally decades old) methods that can show you when it’s time to pay attention. Why hold a stock that’s asleep for 2 years when you could set an alarm and catch it as it’s waking up?
Great article, and the contrarian-consensus matrix is very insightful.
As you said: "The only way to generate outsized returns in the market is to be a contrarian and be right." My investment thinking exactly for my high risk/high return bucket.
It reminds me of Mark Twain: "Whenever you find yourself on the side of the majority, it is time to pause and reflect," and legendary investor Rick Rule: "I’ve made most of the money I’ve made in my life by being a contrarian, by buying hate."
Wow such an unexpected and welcome follow-up on Klarna. And for your confidence building leadership of such an interesting seminar/colloquy.