"This Trade Refuses To Stop Making Money" - Update!
Good evening guys! I just wanted to give a little update on a trade I posted several months ago called "This Trade Refuses To Stop Making Money". In my post, I said the following:
This trade is fairly simple; it's looking to capitalize on the fact that Apple and Microsoft, America's two largest companies by market cap, are enjoying the spoils of immense profitability and revenue growth at the cost of legacy technology + communication providers CSCO and ORCL . I've been in for a while and think now is probably the time to share to the lovely people of TradingView. I've yet to come up with a surer or more liquid bet, and it still seems to have tremendous legs. Everyday I open up my brokerage account it's up 0.5%.
I just wanted to update this post by saying that I no longer have this trade on in full size, as I've taken half of my exposure to this idea off. The idea still has some legs from a technical perspective, but I'm finding it harder and harder to be long AAPL at these prices and short CSCO at these prices. AAPL's valuation has grown at an alarming rate, as years and years of natural valuation growth have been sucked into the current stock price. I think this is an 80 dollar stock trading with a giga cap premium on it. Conversely, CSCO is a great company throwing off more cash than ever before, trading at record low valuations. I continue to trade what's in front of me, but I also want to respect the shifting tectonics of valuation and fundamental operations that ultimately underlie the trade. Hence, my positioning back towards cash.
Perhaps I will remove the CSCO and AAPL legs at some point and just get long MSFT and short ORCL, but I don't think we are quite there yet. Something to keep an eye on, though.
This trade is fairly simple; it's looking to capitalize on the fact that Apple and Microsoft, America's two largest companies by market cap, are enjoying the spoils of immense profitability and revenue growth at the cost of legacy technology + communication providers CSCO and ORCL . I've been in for a while and think now is probably the time to share to the lovely people of TradingView. I've yet to come up with a surer or more liquid bet, and it still seems to have tremendous legs. Everyday I open up my brokerage account it's up 0.5%.
I just wanted to update this post by saying that I no longer have this trade on in full size, as I've taken half of my exposure to this idea off. The idea still has some legs from a technical perspective, but I'm finding it harder and harder to be long AAPL at these prices and short CSCO at these prices. AAPL's valuation has grown at an alarming rate, as years and years of natural valuation growth have been sucked into the current stock price. I think this is an 80 dollar stock trading with a giga cap premium on it. Conversely, CSCO is a great company throwing off more cash than ever before, trading at record low valuations. I continue to trade what's in front of me, but I also want to respect the shifting tectonics of valuation and fundamental operations that ultimately underlie the trade. Hence, my positioning back towards cash.
Perhaps I will remove the CSCO and AAPL legs at some point and just get long MSFT and short ORCL, but I don't think we are quite there yet. Something to keep an eye on, though.
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