Irusha Peiris: Persistance, Planning And Consistency Pay Off

[Music] okay everybody welcome to investing with ibd podcast sponsored this week by vantagepoint it's wednesday july 28 2021. i'm your host justin nielsen and on today's show we are pleased to announce a new change to the format we are going to have a reoccurring special guest star you know him you love him it's the former host of investing with ibd arusha pearis who is an o'neill global advisors portfolio manager and analyst at william o'neill and company welcome back to the show arusha hey justin it's great to be back i i missed it it's good to see that you've kept the the place uh pretty nice and uh hey at least i wear a uh a jacket you know you've always you wore a jacket when you were the guest it's always been your goal to make me look bad since i like to wear polo shirts well in a way though i think you're going to be bringing a whole new level to the podcast or a whole new level back um the way that i look at it as your special guest star status you are the heather locklear of our melrose place here and it's it's going to be nice because you're going to get paid more you're gonna be bringing in all the drama and of course um you know boosting the rating so that's that's what you're here for so make sure you do your job at russia well i i can tell you for well maybe for the boost in the ratings uh maybe the special thing definitely not the pay the they're definitely i can't pay more for this but uh um okay so what we're going to cover today we're of course going to get into the markets we're going to talk a little bit about using persistence and preparation especially to handle a choppy market and then as always we are going to get into a few stock ideas that are on arusha's radar right now especially with that analyst status uh he's doing all these uh analyzing of stocks um i should also mention that you are a frequent panelist on ibd live so for people that just can't get enough of arusha which a lot of people can't that's another place that they can see regularly um so arusha let's go ahead and start with the nasdaq composite last week was really strong we had that reversal we just briefly went below the 21 day moving average line and then just snapped right back above it it certainly seems like buy on the dips is strong with this one yeah and it seems like every few weeks this market's going to test you and it's going to it's going to test you uh it pretty hard for maybe four or five hours and it's going to be a brutal four or five hours and and if you watch the market too closely like i've watched a few times when these markets have sold off uh you may get shaken out of some positions so it's gonna test you and then it just seems like it snaps back and you know justin i i maybe we're just becoming old fuddy-duddies here because we talk about these things that were called corrections right apparently exactly apparently never happened anymore uh because we've been doing this for a long time and whenever we would see the markets get hit so hard and our stocks get hit so hard we were trained years ago to slowly lighten up yeah and and and uh you know protect yourself defense is the most important thing but these markets they they almost have those corrections in four or five hours and now they've record recovered and so everyone else who's been learning this maybe the last 10 years they've really been conditioned to hey let's buy those dips and for the most part they've been rewarded uh while the old fuddy duddies have sometimes gotten uh at least me being the old fuddy duddy has sometimes gotten shaken out of some positions well and i guess when when whenever anyone says by on the dips to me it just makes me think back to when i first started in the late 90s that was the mantra you know all you have to do is buy on the dips and that worked great up until 2000 where the people that were buying and again what everyone was talking about at that time was cisco and yahoo and all you have to do is microsoft all you have to do is buy them on the dips and you'll be fine which worked until it didn't uh you know in 2000 people starting to buy those on the dips were really suffering uh i mean cisco was at 82 or something like that went down to one microsoft that did come back to new highs but it took what 15 years for it to do so um but i will say that one of the things more recently kind of as you mentioned for the newer crowd uh the buy on the dips does remind me of a little bit is 2017 and i'm going to go ahead and switch to a weekly chart and if you recall in 2017 we had this phenomenal run and during this during this time period the s p 500 if i remember correctly never corrected more than 3.4 for that entire year so it was just one of those things where uh it was it was strangely tough because there was all this rotation underneath the surface so while the indexes were continuing up it wasn't always the same stocks that were doing it or those stocks would have some fairly violent uh corrections but then they'd come right back so you had this kind of choice uh to you know decide am i going to be holding through these corrections because they end up being minor am i going to sell into strength uh am i going to sell into weakness and then potentially be selling at the lows and then be scrambling back to get into the positions that i lost um there's there's a lot of ways to mess it up so how do you how do you manage to get through this uh intact and actually making money and this is i mean that that's the question in many ways that's the million dollar question right there justin multimillion yes exactly and i i think we all have to answer that for ourselves because we're all going to react to stock movements differently we're all going to be able to handle the volatility a little differently what the kind of the conclusion that i have come to multiple times and then i and i seem to forget in those those kind of moments where i'll panic just for that brief second and all of a sudden i've sold too much stock is try to give give these stocks even when they get when they're selling off till the end of the day at least yeah and and so what i what i've been trying to condition myself is especially these gap downs when when the market is gapping down hard your stocks are starting to break and the problem is is that especially if you're studying our system and you're in our stocks all of our stocks will go down at the same time it's it's amazing i mean how how tied everything is together doesn't matter a lot of times doesn't even matter what industry groups they're in they're all going to come down and so it's not just one stock that's down four or five percent you could have five six stocks down four or five percent so your portfolio is getting hit really hard so what i've been trying to tell myself especially in that that morning when i when i look i'm like oh my god it's getting worse and worse and worse is i'm just telling myself that i'm already i'm already in trouble at this point it's like i might as well try to just give it to the end of the day i'm already i'm already done let's try to walk away from the screen and and see how it closes and so we had that we had that type of day yesterday where it wasn't right at the morning but probably like an hour an hour and a half i think into into the open market really started selling off it's like whoa what's going on here uh and a lot of times usually what i'll do is i'll just start watching the screen way too closely right and the more you watch the screen the more you're right at your your platform the more reasons you're gonna find a trade and do something and a lot of times it's do something unnecessary uh so what i did this time to try to do something just for the sake of doing something exactly because you feel like you do exactly you have to do something yeah yeah um but what what i what i try to do this time because a lot of this is you just almost got going like kind of an automated response where it's almost unconscious right you don't even realize sometimes what you're doing it's like a lot of things you know you that's why people eat out of control you know start snacking all this kind of stuff without thinking about it autopilot exactly the autopilot you get triggered and you go on autopilot and you just start doing those actions to resolve you know resolve that you know that pain or whatever that you're feeling at that time and then you jump on your peloton afterwards if i did that if that was the case i'd probably be 100 pounds lighter justin with all the pain i have this what the market has created over the years but uh so what i did this time is i try to break that kind of autopilot response and i went to work i i mean i left my place and i went to the office and i said okay you're gonna go to the office go to a completely different change of scenery they change the scenery kind of get away from those triggers that can get you in that autopilot and also i had a number of people you know there are a number of people i knew who were at work uh at the office and so i could distract myself by you know bothering them and and it helped it actually helped because i didn't do anything the whole day i didn't watch the market until the very end and a number of those stocks actually came back because all the people who were trained to buy the dips apparently started buying the dips right so and to that point though i mean i just want to point out because what we were looking at on last week on the 19th what was interesting about that is again you had that brutal gap down in the in the morning and it seemed like midday you started to see some reversals in individual stocks even before the market did so this is why sometimes you know just being aware of where the movement is um is is useful you know and at least in this case we at least had a few days down in the nasdaq so it wasn't just like uh what you're referring to yesterday was just one day down and then that's it we're we're back we're mine but it's even that day you highlighted because i fell into the trap there because it was kept getting worse worse and then that gap down i was like i can't take the pen anymore and i sold too too many things uh and then i had a you know i felt like an idiot by the end of the day because i had to go back and buy a number of those things back uh but with but thank goodness you did because that's something a lot of people refuse to do they say well i can't buy it back now it's at a higher price and it's almost like this psychological thing where i'm going to look stupid nobody's looking at you you know nobody's nobody's watching you that closely so well for you they might be watching us because because you're a portfolio manager so someone's looking at your sheet but for the most part it's one of those things you don't have to worry about uh you just you just do what's right and what your rules tell you to do now and which is absolutely true i i think one thing that everyone can do and i'm keep telling myself this too is so not only not watch your screens just don't watch the screens that much right remember you plan your trade trade your plan so when you buy those stocks before you buy the stocks you need to you already should know where your exit strategies are especially the downside right so the best thing you could do is if you once once you get into the stocks you have those exit strategies the downside set some alerts in place even set some stops and don't watch it that much right and those alerts will let you know if those stocks are getting in trouble or when you should start looking at them again if you need to stop your distractions and start paying attention and i i think yeah and and that almost goes to you know what where you will run you know there are plenty of people out there who've held tesla right for the last eight ten years you know they're up absurds amounts and they rolled through every little wiggle and wobble and all that kind of stuff simply because they just didn't watch it right they they're looking at it kind of like i'm holding for the long term and stuff like that and and yes that can work at times that can definitely work when you pick the right stocks but there is there is looking at charts is almost a blessing and a curse because it helps you really time your spies it helps you manage your risk but once you learn how to read charts you have a tendency to watch them too much right and this is also where the time frames can make a big difference if you're looking at an intraday chart man it looks like it's cratering you step back to a daily a weekly or a monthly and it's just a blip exactly yeah so it is time frames it's put in perspective and it's also realizing that if the more you watch charts and the more you look for a reason to to buy or sell a stock you're gonna find that reason in the chart uh because there are infinite ways to get in and out of stocks absolutely so um any any last thoughts on the market i mean one of the things that we have been talking about is this this hasn't been the broadest market there still seems to be a lot of stocks out there that are working that are setting up but you know for a long time it's really been about the trillion dollar club and market cap uh the microsoft's the googles that have been really driving the nasdaq higher and and the s p 500 to a degree as well because of their heavy weights due to their market cap um is that something you see improving a little bit i yeah i think not only the obviously not only the the fang stocks these trillion dollar company stocks i have been acting well i i think underneath the surface even though it is it's been so far a narrow rally it seems like a number of the stocks are kind of stocks are more tech related growthy type of stocks they're they've been setting up over the last few weeks over the last month or so and there are a number of bases and a number of stocks that are starting to merge at a basis and so the way i look at it is over the last month the market has given me more reasons to get more exposure to the market right to to get more invested in this market and and so that is giving me optimism so it's been very tricky uh but i am optimistic i and i'm still optimistic for kind of us getting through august well it could still be choppy at that point but setting ourselves up for a nice fall rally with our our type of traditional growth stocks so just with all the with the number of the bases and more bases kind of forming and now it's getting through earnings season and we'll talk more about earnings season uh i'm getting more optimistic and so i'm trying to do my best not to not to get shaken out right so some positions that i have right now sometimes the summer is just something you get through to hopefully get to the fall which again seasonally does tend to be one of the best time for your periods for our growth style of investing so we're going to get into a lot more of that specifically what we were talking about some of this persistence and preparation that you need to do you were talking about having to trade your plan arusha so when we come back from the break let's get into how you come up with that plan how you deal with earning season and what kind of persistence you need to be successful at this game so stay tuned we'll be right back do you feel like you're always late to the best trades you don't have to kick yourself for those missed opportunities any longer today is your day vantagepoint's artificial intelligence has helped traders of all experience levels with its predictive analysis forecasting visit www.freestock.com and find out how their ai automatically recognizes global market patterns well ahead of the news to help you pick the best trade go to www.freestockcoaching.com to join a free live training session today vantagepoint's patented artificial intelligence can give you a massive edge don't hesitate save your seat now trading involves financial risk and is not suitable for all investors past results not guarantee future performance welcome back to investing with ibd sponsored by vantagepoint i'm your host justin nielsen and it's great to have arusha paris back in the house uh arusha we were talking a little bit about this idea of plan your trade trade your plan uh what kind of things do you do to plan ahead so that you are not reacting emotionally but more using your rules yeah this is this is something that we we've spoken about a bunch if you've watched mark smith webinars over the years or even listen to podcasts or ibd live uh the planning the trade and this was this was really a breakthrough for me because i was i was a customer for plenty of years you know i mean there was once upon a time justin that i would look at justin nielsen and say you know i want to be like justin nielsen one day when i grow up i want to be like justin nielsen then you got to know me and yeah it's kind of like when you meet [Laughter] so one of the breakthroughs when i was a customer was that a lot of times what i would try to do and i think a lot a lot of people when starting us aft after you go to work after work you're like oh let me look at stocks but the reality is during the weekdays you're exhausted you don't want to look at stocks you want to just you know watch tv and and things like that but uh so i it became it was very hard for me to do it consistently trying to stay on top of the market and i i would notice the next day when i look at get the ibd paper and stuff like that oh my god i missed another break and another break another breakout uh so eventually and and this was a huge kind of breakthrough and it took years for me to realize this is hey do most of the work on the weekend right come up come up with a game plan on the weekend identify where the entry points are set the alerts on the weekend and let the alerts tell you when those stocks are ready to move and this way during the weekdays you don't have to do that much you just have to monitor the stocks monitor your alerts and maybe just you know 10 15 minutes a day just just try to get an update on the market you can watch stock market today or something like that or read the big picture and you really are still pretty much on top of the market uh so that that uh planning ahead thinking about what i'm gonna do when the markets are not open right because now i'm getting the emotions effectively aren't in there exactly right exactly uh and eventually you know um just trying to anticipate you know i'm not buying ahead of the time but trying to anticipate hey this could be building the right-hand side of a base this could break out a few weeks from now uh that really helped me get a little bit ahead of the game and so when the stocks broke out once i had that plan in place i knew exactly what what to buy how many shares to buy when to buy and then i just had to put the the plan into a place yeah i was the same way i mean i remember when i first started out and again this was before investors.com was what it is today so of course you know you were looking at the paper a lot of times and it was stocks on the move uh which was called where the big money's flowing back then it was the bane of my existence because it was basically here's a list of everything you missed um you know these were the things that are moving on heavy volume these were the things that you should have been in and it was it was you know it always made me feel bad so the next day i'd be like well let me buy some of these and it was invariably i was buying extended and you know after a while you as long as you're doing a post analysis and figuring out what your mistakes are you realize oh okay i i just i wasn't doing my homework i wasn't looking i was able to identify the breakouts after the fact but you need to look for the setups you need to look for this you need to look for the stocks that are in the handle not the ones that have broken out of the handle so it definitely has a very different mindset and once you have that then you're absolutely right then it's just a matter of drawing the lines in the sand of hey it's either going to cross this point or it's not yeah and i i would say for those who are starting out right now don't feel like you have to do like 10 hours a day right and i've run across plenty of people who who feel like that and and diminishing returns after a certain point exactly it you're going to burn yourself out if you do an hour on the weekends and then 10 minutes a day you're going to stand out of the market and you'll probably outlast those who are doing starting out doing 10 hours a day because the reality is is you're slowly building a habit to do work on the weekends and you're building the consistency and as we saw from especially last year you don't have to be a genius to do well in the markets you just got to be there at the right time right and you know this consistency thing is i think something a lot of people miss uh one of the things that scott o'neill would frequently say about his dad bill o'neil the founder of investors business daily is how consistent he was with his routine every saturday morning the books would be delivered to his house and he would be going through charts you know and that's just what he did it was something that scott could uh you know just remember being at the breakfast table uh and you you saw that discipline you know kind of come out in everything that bill did you know it was just he that was his routine so he was never surprised by something it was never like oh where did this come from that's not something i was even aware of it was oh yeah i remember looking at that this weekend uh you know so that there was never the surprises uh it seems like because he did that preparation and that consistency uh what you find too by being consistent is you're gonna you're gonna be just aware of everything that's kind of moving you know and maybe at first there's a learning curve because you're starting off maybe you don't know all the names but then you start seeing the same names over and over as week after week their setup continues and then you get a little bit quicker because oh i already know that one i know the story on that one oh yeah i i can move on a little bit quicker because i don't have to do as in-depth research and then you're kind of that consistency has built you almost like your own little database for that current market cycle yeah and and your knowledge and expertise within that cycle starts a compound right and and so it just builds on itself like you were talking about and eventually as you start putting it together then your money starts to compound too right and there's nothing like a little bit of success to really get you addicted to things i mean i have to say that again i was a little lucky in the time that i started it was late 90s and that made it so hey i i immediately had some pretty good success the problem was i thought that it was always that easy and so i i had some bad habits that i i had tested to my own uh brilliance that were really just the fact that it was late 90s and everything was going up so i guess it's it's that other part the humility part that you eventually learn you know if you don't come in with it the market will make sure you leave with it uh it has a way of humbling you so have there been any of those times that you've kind of uh felt like okay this this has kind of taught me that i still have work to do oh i i feel like almost every week it teaches me right it's it's ridiculous i mean the mark the market is the ultimate humbling uh place i mean i mean there's that saying that you know the market's a very expensive uh expensive way to find out who you are right because it's going to um more expensive than therapy huh you're going to need a lot of therapy you don't control your losses in the market for sure but uh it's going to expose your weaknesses if you are stubborn if you think you're right all the time you're going to ride some of these stocks down big time and not listen in the market and you're gonna take huge losses uh and so if you're not if you're not preparing enough you're not doing uh you're not doing the work you're gonna miss out on a lot of great stocks right so though the market is gonna unveil those weaknesses and it's up to you to kind of realize that you got to learn from your mistakes you're going to make a lot of mistakes that's probably i think that's one of the reasons why a lot of really smart people have trouble in the markets at least trying to do what follow our system i guess you know is a lot of smart people they're used to being right all the time right because i mean if you're uh if you're a mathematician and or stuff like that a lot if it's black and white right yeah there's a right answer there's a wrong answer exactly but in the market there isn't a black and white answer there's just gray and it's you did all the work and you think it's the right answer but statistically guess what there was this chance it wasn't yeah i mean you could be you really could have identified the greatest stock in the greatest market coming out at the greatest base in the greatest industry group and still be wrong in the market right so colvid could hit just like last year right where something out of the blue could just completely wipe you out that you did not anticipate so always realizing that the market's right that you're gonna make mistakes and it's important for you to learn mistakes uh will keep you getting better at this and i i i as like you said before justin it's it becomes more fun yeah you become more obsessed with it uh and and it really makes you appreciate all of the new companies that are coming out and changing the world and and and things like that because it it the world is this country especially is changing all the time right it's hard not to be excited about it exactly stories right now i want to get back to this idea of persistence because we were talking about how how great it is when you do have a little bit of success but sometimes it can be a while before that success comes and especially uh you know for those that maybe started in 2020 you know as the shutdown happened and people were at home and they're like hey you know i got some time on my hands i can you know learn about investing uh now they've gotten an example of what really has been a pretty choppy market the last few months and it hasn't been easy so can you talk a little bit about what you've learned about persistence uh and how that's helped you know sometimes you know get you through uh tougher periods yeah it the way i look at it and this gets back to the consistency part where if you just hang around long enough if you survive long enough and you tread water long enough your the markets are eventually going to turn around and you can make those losses back uh and and recover from those mistakes as long as you keep those losses small of course right you don't want to be riding these stocks down and hoping that these companies come back because some of them might not but what happens you really have to get through a couple of cycles i think where you have to be persistent enough to get through through a couple cycles where you start to see it and start to build experience on it once you have that experience you can kind of lean on that experience and say you know what i've gone through this before i've had to pick myself up and honestly i mean there's been i mean countless times where i wanted to quit this i i just questioned question everything uh but it's like why am i doing this well especially like and i've i've been here you know where it's you look at the s p 500 and you're like i did all of this work and i just matched the s p 500 or maybe i didn't even match the s p 500 and you're like what was all that work for yeah yeah it's well and and you go through these periods where you are wrong everything you touch you're wrong i remember gosh this is like a few months ago i bought eli lilly at the end of the day like maybe five minutes before it closed the next day it gapped down like 10 percent yeah it was not an earnings or anything it was just randomly just some bad news came out yeah it gapped down and that was like that was a string after a few other string of stocks uh falling apart but that was kind of just like the last straw you're like i'm snake bitten right now anything i touch is is just blowing up is there an opposite to the midas touch the arusha [Laughter] it's and i but i remembered in 2018 i went through a period like that too where i had netflix i was like i'm going to hold netflix into earnings it gapped down like 15 or some absurd amount it's like how how could the netflix gap down that much and then i helped facebook i'll hold facebook it gapped down 10 15 it's just like and it took me like a year it took me probably a year to recover fr from that it just because the market was choppy i couldn't get the sink and i just had to survive long enough for the markets to trend well enough that i could uh you know hack some stocks that were trending well again and so uh so with those experiences and experiences in the past where i've really gotten myself into trouble i've i've been able to dig myself out of the hole before and so i you can kind of lean on that experience and say okay so this time around when i when i especially eli live okay i'm snake bitten right now don't trade that much right or play a lot smaller and let's survive and so probably those next few months because of the previous experiences i didn't lose as much i was still losing but i was playing with smaller amounts so my equity curve was going down a little bit slower and it wasn't just uh because that was pretty that was a pretty tough time and you can lose a lot of money it's pretty amazing even though the s p is still going up and you're good at cutting your losses you know it's again you had some gap downs and again or what's even worse sometimes is you can kind of get this death by a thousand cuts yes yeah i cut my losses small but i had 50 of them in a row so it didn't matter that i cut them small um so yeah and and that that does bring up a good point there justin it's if you a lot of times if i'm like five six in a row wrong i i just have to stop trading for a while or just just really okay i'm just going to try one position and see if i can get that one to work right and it's only maybe a five percent position right so just to it now it's not to make the money back make the losses back it's can i get back in sync with the market right yeah you don't want to be doing revenge trades it's uh it's more about as you said getting back in sync with the market but i think there's also that element that you're talking about is you're not giving up you're still doing something you're still being engaged a lot of times you know there's a tendency for people to say look i'm taking my toys and i'm going home i'm not going to play this game anymore and then that unfortunately is a lot of times right at the bottom or right when things are about to turn and so here again it's that persistence sometimes i mean you look at some of the greatest traders uh i mean warren buffett bill o'neil i mean one thing that they had going for them was time right they were able to build these fortunes because they just kept at it for so long uh and you know had great returns but over a long period of time i mean that's where the compounding just really works in your favor yeah and justin i remember hearing a story uh back uh with the with some of the portfolio managers like 10 plus years ago uh and even longer like that but it and it helped me out when i when i would hear these stories of uh even bill you know but but portfolio managers struggling oh yeah it's like oh you know that at least they're also struggling too you know they're they're human too they're making mistakes but why don't you tell that why don't you tell a story about uh one because you used to be very closely involved oh yeah i would see the sheets i was you know the assistant to bill o'neil and i would see the sheets coming and i remember in 2007 it was a struggle for most of the year and uh in february you had the shanghai surprise boom the you know the hong sang index i think was down like seven percent in one day and it just it felt like it came out of nowhere and then you know as soon as you started getting your bearings a few months later boom just another you know seemingly out of nowhere hit to the nasdaq composite and so again a lot of the a lot of the portfolio managers they were you know getting their bearings they were starting to make progress and then it would get all taken away so a lot of them were flat but then again they were they still were keeping at it i mean that was their job and in august things started to turn and september and october were so strong i think the market kind of topped i want to say mid november but just those two and a half months i saw some of the portfolio managers go from basically flat to 100 gains and again it's not to say that every market is like that just like every market is not like 2020 that was a phenomenal time but it just kind of goes to show you that that persistence really can help you out being there at the right time because that time does eventually come you just have to kind of wait it out and then know well enough that hey the market is giving me this feedback that now i am in sync and once it does give you that feedback then you start going hard then you start going aggressive we're going to take a break right now when we come back we're going to go into some of the stocks that are on arusha's radar so make sure you stay tuned for that do you want to conquer market volatility we can help you protect your hard-earned capital visit www.free.com and find out how vantage points ai technology can forecast stock market trends up to 72 hours in advance with incredible accuracy vantagepoint's patented technology analyzes huge quantities of global data in seconds so you can finally stop guessing what's going to happen next check out www.freestockcoaching.com and experience vantagepoint for free learn how successful traders generate their wealth trading involves financial risk and is not suitable for all investors past results do not guarantee future performance welcome back to investing with ibd podcast sponsored by vantagepoint i'm your host justin nielsen and i'm joined by my special guest star the amanda to my allison arusha paris thanks justin you know like i'm going to be the guest that never leaves though right exactly exactly how amanda was on melrose place so we're going to go ahead and get into some stock some really good stuff that you shared with us about your kind of whole process i guess here arusha but now let's start talking a little bit about where you're at in your process now and what stocks are on your radar what do you got yeah so the first one is uh you unity ticker symbol u unity software is a stock that i'm keeping an eye on right now right if you're look if you're looking at the charts and uh for those you're obviously listening you can always go back and watch the video on investors.com podcast but uh here with unity it has a lot of work to do so this is more a company that i just like the story and i just find it really really interesting so it's on what we call kind of a universe list where it's put put stocks that are interesting they're not ready right now they're far from uh far from forming a base but let's just put it so you check this list maybe every couple of weeks so you don't lose track of them so this is one of those stocks where it came out it went public last year it actually broke out of an ipo base and went on a great great run uh and so i was in it at that point i was like oh wow you know i you know this might be one of those stocks that never comes back but right like a lot of ipos and most ipos they will uh fall apart eventually and and kind of goes sideways for for a while um so so here here are some of the things that i like about unity so what what they are they are a 3d content creation platform and so they're focused on games that's their main thing and a lot of them are mobile games so they're they've created this platform that's used to create mobile games now what was interesting is 70 percent oh this is for the developers really for the developers exactly right so developers are using this platform to create games um so 70 of the top 1000 mobile games are using their platform that's a little bit of market share it's just a tad right uh and and so with this platform you can build it once and you can deploy to many different platforms so you can put on playstation xbox uh the mac the pc nintendo switch so everything you can put it on uh now though the really the interesting thing that really stuck out to me because a platform but obviously there's always competition but with this if you're developer you really only have two choices you have unity's platform or epic games platform there's so it's a duopoly so there's only two platforms that you can choose in this markets that's growing mobile games are growing and so in many ways this is a picks and shovels play right where you don't necessarily have to bet on the publisher that's making a call of duty or something like that uh what what's the next great game you can just bet on the tools right that everyone's using so you know whatever the great game is going to be of the future they're probably going to be using there's a 70 chance they're going to use unity software tools at least for the mobile games exactly and so so that that's what really stuck out to me now augmented reality a lot a lot of developers are developing programs for augmented reality are also using unity's platform and also they're trying to get this platform more involved in movies into aerospace into automotive because augmented reality is kind of going everywhere but uh with the movie space if you watched the recent versions of jungle book and lion king some of those scenes were used using unity's platform to create um a lot of the cgi and whatever but i mean like the in the jungle book i watch that one it's it's phenomenal right it's all like the looks like the the real animals talking right stuff like that it's not the cartoon version but so it's really well done and it's not the old mr ed you know chewing on peanut butter no no it's not so so those are kind of the things that stick out to me is there's a growing market there's only two choices uh and and it's not only just gaming they have other applications and they're and so the potential is pretty big even just outside of gaming so it's both gaming and outside of gaming unity could have more and more demand right now so um those are kind of the things so i'm keeping an eye on it but i don't watch it every day okay and so now how much does it bother you that this is not something that has earnings yet you know it's not profitable now i i should say that the the revenue growth which it seems like since 2018 a lot of companies have been rewarded for having strong revenue growth and this is revenue growth that's not it's not milli you know it's not these tiny amount of millions it's you know you're talking 200 million per quarter so it's got double-digit revenue growth but not profitable yet does that bother you yeah it always bothers me but this is almost kind of the classic software company like like you're alluding to there where it uh a lot of these companies are really going for market share they're they're willing to sacrifice earnings in the short term to try to get as many developers onto their platforms and then slowly increase the prices right so uh so yeah must have for the developers and then they're stuck yeah and they don't want to learn something else exactly exactly i mean the switching costs are huge once you get used to them we've seen that you know at ibd once you once you start integrating all these platforms and stuff like that and you have all your systems running on it it's very hard to to get off and you only switch if you really have to right and i should mention that we actually did put this on swing trader now we're you know for swing trader we're going to be doing a short term play on this we've got earnings coming up in 13 days you can see that down here eps do look this is not the strongest relative strength we know that but it did get support here at its 50-day moving average line the 200-day it's i i can't think of any stocks that we've ever put on that were below the 200. 200-day just you know just appeared but again this was breaking a downtrend so uh we decided to do a short a short-term play on this uh give it a shot and uh maybe see if it's it's everything that arusha has said it's cracked up to be at least in the short term well what's interesting is if it can get past that 115 level yeah right now maybe it can build the right-hand side of this really huge type of base right here but honestly this is probably still three months away six months away from really being considered hey this is a must-own stock and have a high concentration in the portfolio yeah okay so let's go from you to you y-o-u which is an ipo and this is clear secure inc uh what is it that they do yeah it's really funny and i i think this is this is a good lesson i think for every everybody out there is you're going to run across some stocks that you just recognize in just in your everyday life and so i was just looking at at this stock uh and i just you know i see on the technical side okay it's a new ipo it's starting to kind of be the the u-shaped base but then i saw the name of it i was like clear secure so every time i would go to lax you you have uh yeah these lines that you have to deal with and i have i would have tsa pre so i could go through one special line uh and get skipped by kind of the normal line which is always beautiful keep your shoes on keep your belt down keep my sheets out which is really really nice uh but then there's an even more special line there's like a more elite line and i was like what is this and so this was like the clear line the clear secure line where they're using biometrics and they have machines right there and you can i guess they're using their to scan their eyes right yeah you just put your retina up there yeah and um boom you know it's it's done so again what they what they can do is basically say hey we don't we don't need to see your id we can see your eye and you know we can identify who you are and i mean that's very uh very clear so you don't need a person visually checking out that id well i'm not sure if you've been to the website but this also has not just at airports but there's also uh sports venues some stadiums that are uh using clear technology and so it's it's expanding out to more than just airports which is interesting that it's but i don't know how i i it's going to be interesting to see how accepted this is right right uh it may be years maybe 20 30 years before something like this is really accepted as biometric stuff because it really is becoming like minority report it is an interesting idea right now maybe it's ahead of its time uh they have some they have some earnings here uh so it's something that i'm not necessarily rushing out to buy right now but it's one of those stocks that could kind of just go it's it's new technology they're kind of starting maybe even a new category right where all of a sudden there might be a lot of demand like i didn't even think about the sporting events but who knows maybe other maybe other businesses like really secure businesses are going to use this and in addition to sure governments are using it um so these guys could have a really interesting thing here especially if they have a mo around their business but the the reason why we brought it up is everyday life sometimes you'll run across some of these things and so when you see see that stock and then all of a sudden it's a new new company pay attention because it it could at least be profitable you may be able to you know make some money on it to pay for that membership yeah exactly good point so speaking of something you might be running across in your everyday life um i don't know about you arusha i personally am not on snap but well i am only because if i want to communicate with my daughters uh this is basically the only way i can do it uh you know they can be in a room with each other communicating through snap uh instead of talking to each other and of course you know there's there's all sorts of um i mean my 16 year old i watch her on it and she's like she'll respond to 20 people within about five seconds and i don't understand how how she does it so quickly but uh what is it about snap that intrigues you since you don't have uh daughters that are yeah it uh and i don't even use uh i don't know if i've ever used it but the the the platform but i will take a video of my daughter for you just uh it's incredible well i g well the one the one the one reason why i was aware of it uh besides that they are our neighbors here in in venice and they bought up all of venice a few years ago when they went public but um uh is the they can do those they have that technology to you know put what do they call it just in your filters filters yeah yes where where they can put you they can put all little kind of uh different different types of things on your face or yeah my daughters have had beards they put a beard on my seven-year-old uh you know horns a halo you know you name it you know all sorts of things yeah and so when i saw that years ago i was like you know this is probably a fad but apparently it's not but they they had theirs they obviously are making this technology very very popular uh because everyone seems to be using it uh and so that that is kind of uh one one reason why you got kind of kept it on the radar now i haven't done a great job of really profiting off of this company but justin pulled up a weekly chart here really where snap was set up perfectly was uh last year in the fall when it formed that cup with the handle so if this it spent like three years so immediately kind of like facebook right yeah very very facebook it blew up immediately right a lot of fanfare oh my gosh it's finally coming public now's our chance and then they kill the stock right because it's it's too hyped up they kill the stock it it goes all the way down to four and analysts were still kind of scratching their heads well it's great that they have this you know all these subscribers but how are they going to make money and that's what it was with facebook too exactly uh so very similar to to the facebook story so they need to spend a few years to uh really prove to the institutions that these guys could they they could make money but the in the september they formed a cup with handle which the reason why we look at patterns is it starts to pick up some real consistent institutional accumulation and that was a really nice constructive cup with handle there and then they reported earnings so that within that couple of handle there are some institutions really betting that they were going to blow out earnings they were rewarded six weeks later when the stock gapped up monster just in a monster way on earnings you can see uh there's a when you're on looking at these marketing charts take a look at the huge weekly volume on snapchat on this 25 change 2020. so that was kind of the game changing it went in all-time highs there that's when snap finally proved to wall street that they can make money and this is an institutional quality stock after that it's been doing well it formed it really kind of choppy base and i was trying it a little bit in here and there but i was getting whipped around but last week they reported earnings again excited wall street and it gapped up again so i tried it on the gap up just i bought a little bit there and i've been slowly that was a 23 24 gain on the 23rd of july yeah and so what this is is a breakaway gap on earnings and so it emerged into new highs on huge volumes so it's a powerful breakout and this is the type of breakouts that i like to buy right you get earnings out of the way it's it's a massive breakout coming out of a big trading range and so here this is where i'm i'm i'm betting that it's gonna work now obviously if it starts to sell off um and i'm down eight plus percent then i'm gonna cut my losses and i'll let it set up again but this is setting up in a way and it broke out in a way that and it has this interesting growth type of story that i have to take a shot you know and i'll let the market tell me whether i'm right or wrong on this now uh the fact that it undercut the low of that gap up you know so it's it's come in and filled in the gap a little bit um but i mean it's really retained the bulk of those gains uh is there a level where you're like oh this this isn't working this needs more time or it needs to handle out and you need a you need to step away what's what's the line in the sand for you yeah a lot of times it's a few percent below the low of the gap up day right so this one came pretty close just like yesterday yesterday everything was getting tested yeah and so they don't make it easy all the time right so but so it started coming in i gave it till the end of the day before uh being forced to do something or if it would say close at the end low of the day i i would have been forced to lighten up on the position i i wouldn't have closed out of the whole position but i would have lightened up on it and given given that smaller remaining amount of shares uh though to see if it can if it can come back now today came back i bought a little bit back but i'm still i i didn't go in with a big position out of the out of the gap up so i'm just slowly just buying adding to the to the position right now and and we'll we'll see if it works i i think if the market can kind of get its footing and really start to start an uptrend right here or at least our growth stocks can really all start to work snapchat should be one of the ones that joins the rest of them right and we did have uh facebook earnings after the close today so i i saw it was trading down a little bit in after hours we'll see how it opens up uh pins has looked been looking interesting pinterest uh so again you're looking at a lot of the the group members uh pinterest reports earnings tomorrow after the close uh so once this podcast drops but yeah that's a good point um some pretty good lessons there arusha uh thank you for sharing your ideas with everyone and thank you for being on the podcast uh it's a pleasure having you back buddy no it's great i'm glad you're welcoming me back i mean maybe you can come in a dress in a little bit more casual manner nice time around next time i'll just have my pajamas like i normally uh show up at work on zoom at least when i don't have to use video very good so well next week uh arusha is going to be back with me we're going to be doing this together and we're also going to be tag teaming with jim ropel uh arusha talk a little bit about jim ropel because you've known him for a long time yeah jim jim is one obviously one of the most popular uh guests on the podcast and and so when he heard that that i was uh coming back to join forces with justin he wanted to to be the the first guest on the podcast he is a portfolio manager he has his own hedge fund at ropel capital management always has amazing lessons to talk about and you want to talk about persistence you want to talk about just hanging around for the big waves yeah jim uh jim looks for the big waves he tries to capture these great grilled stocks and in many way though the things i always learn from jim is you know try to hold them longer for for the big move right and um long time long time client of william o'neill right was has has been you know personally mentored by bill o'neil for many many years uh so he's he always has some great stories to share and and uh we're all gonna learn a lot absolutely so we're looking forward to that we hope that you join us for that segment next week uh that's it for this investing with ibd podcast thanks for joining us stay tuned for next week we'll see you then and for this week's notes and charts make sure to go to investors.com podcast where you'll find details for each episode in the podcast episode section and make sure to subscribe rate and review our podcast if you haven't already we'd really appreciate it you can also send us your questions and comments to investingpodcast investors.com we would love to hear from you and may use your comments on an upcoming episode hey everyone thanks so much for watching investors business daily on youtube if you want to watch more videos make sure you hit that subscribe button so you don't miss a thing

Channel: Investor's Business Daily

Views: 2,314

Rating: 5 out of 5

Keywords: investor's business daily

Id: mNhaMMZv914

Length: 54min 37sec (3277 seconds)

Published: Thu Jul 29 2021