SAAS ALWAYS COMES BACK

I have to head out soon so this must be brief. Over at House Fly, we have received several items via mail that were damaged and/or sizes too small or too big so now I am tasked with driving us to shopping malls and spending my day on long lines inside denizens of criminality that has resulted in several shootouts the past few years.

In regards to this market, I would argue CRM is the best stock to represent SAAS. Being the biggest and the best in terms of execution, CRM has moved from the comic books of the stock underworld to becoming a Dow 30 component. In recent weeks, like many software stocks, it has been destroyed.

But this isn’t the first time CRM has been destroyed in December. It’s sort of a tradition.

data provided by Stocklabs

That chart represents all of the monthly returns for CRM since it IPOs — only June and December posted negative returns.

Look at the losses.

And now look at January.

There is no guarantee CRM will bounce back sharply in January. In 2016 it took until March to see the stock turning around and I would imagine many people gave up hope in the name. When faced with a situation like this, your best course of action is to dollar cost average. Do not overweight any long term position more than 10% of your portfolio, but keep it above 5%. So if the stock dips and the weighting is down to 4%, feel free to add to it, bringing it back over 5%. If you’re feeling adventurous, bring it up to 8%. If it dips again, the following month buy more and continue to do this until the stock recovers and propels your weighting over 10%, at which point you will then pare it down to under 8%.

This method is intended to be used for good companies with big market caps, not for your bullshit penny stocks without revenues.