Popular Investors Discussion: Panic Drop & Etcaetera
Stocks & Cryptos: Top Picks, Where Bitcoin is Heading and 2025 Outlook
Top Stock Picks
Panic Drop - Largest Stock Allocation into Meta Platforms (META) and Biggest Conviction into Amazon (AMZN)
In 2022, I purchased a significant number of META shares, which have now become the largest holding in my portfolio. Based on my calculations, its intrinsic value is $545, representing a 10% discount.
I am very bullish on Meta for the long term. The company has strengthened its moat by consistently acquiring companies and investing heavily in R&D. For me, Meta is a buy-and-hold investment, and I don’t plan to change this strategy anytime soon based on recent earnings reports.
Amazon is like having four companies in one. It is expanding in logistics, leading in cloud services, generating substantial ad revenue, and competing with other streaming platforms through Prime. My calculated intrinsic value for Amazon is $235, which means it is currently 22% undervalued at the price of $184. I believe the stock price will eventually reflect the true value of the business, so I am staying patient with Amazon.
Etcaetera - Largest Stock Allocation and Biggest Conviction into Alphabet Inc. (GOOGL)
In my case, Alphabet (parent company of Google and YouTube) was one of my very first investments when I started investing back in 2020. It is currently my top holding in my public eToro portfolio, because I strongly believed and still believe that it’s going to be the number 1 player in the AI field, just like it managed to use data to be unrivaled in advertising revenue as well.
Its capacity to collect and interpret data is unmatched. It has everything it needs to succeed, and despite initial delays I feel the company is catching up. I don’t have any price target for an exit - I plan to hold it forever.
Top Crypto Picks
Panic Drop: Solana (SOL)
Solana is my largest crypto position because it continues to outperform all other altcoins and shows significant strength against Bitcoin.
Etcaetera: Hedera Hashgraph (HBAR)
I am not a big crypto investor when it comes to my public portfolio but one of two crypto holdings I have (the other one is Cardano) is Hedera. That is one of few altcoins with superior technology and a clear differentiator. The speed and safety of processing transactions are virtually unmatched on this one. My target price of $1 is ambitious but I believe it can be met.
Outlook for 2024-2025 Stocks
Panic Drop Analysis
There are no warning signs at the moment, but I do believe that the recent surge in stock prices could lead to a larger correction compared to the last one. The last correction in March was 5.5%. Based on previous election years, the next correction bottom will likely occur around September or October. Tactically, the first half of August is one of the five worst periods for S&P 500 returns during the calendar year. Once the typical weekly correction is over, I expect a rally heading into the end of the year.
For next year, the markets are still more likely to end positive. The question is, what will outperform?
The S&P 500 (SPX) has outperformed small-cap stocks for three consecutive years. 2024 could be the fourth year in a row. So far this year, the SPX is up 16.5%, while the Russell 2000 (RUT) is up 8.63%.
Historically, the SPX has not outperformed the RUT for five consecutive years since 1994-1998 (only once since 1979). If the 4, 3, 2, 1 pattern holds, we could see the start of small-cap outperformance into and through 2025.
Etcaetera Response
I do share a lot of the technical outlook mentioned above. However I personally wouldn’t split between large cap and small cap, rather by quality and risk assets. There is a fine line as many large caps are rather quality and many small caps are rather risk assets.
I think the markets are currently focused on quality stocks (large and small) and because most of the large are quality, they have been outperforming. We will slowly switch into risk assets or at least riskier assets, which include many small and micro caps, but also disruptive companies like crypto miners, blockchain firms, niche segments such as AI-powered surgery companies, etc.
The reason being the easing of the Fed leading to more liquidity into the stock market.
Where Bitcoin is Heading
Panic Drop - Bitcoin Outlook
It looks like we are seeing a typical right-translated cycle for Bitcoin. I don't have specific targets, but I expect a new all-time high by early next year at the latest. Based on previous cycles, we can anticipate a peak in Q4 of 2025. I plan to hold my positions until then unless I observe any structural damage to the trend.
After the top, I expect the bear market low to form in Q4 of 2026. That will be the time to load up again and rinse and repeat.
Etcaetera - Bitcoin Price Target
$100k will be an absolute battlefield. That’s where many retail investors set their exit targets at. It’s a rigid psychological level. And yet very few people have doubts that this level will be reached.
The strength of the bull market will depend on one thing: with how much confidence the market breaches $100k. If the level gets rejected multiple times, it is likely to be the (disappointing?) peak of the current cycle. If it’s breached, the sky (and the moon) are the limits.
Sectors To Avoid
Panic Drop - Avoid These
I avoid trading airline and automotive stocks due to their cyclical nature. I prefer stocks that I can hold for several years without worrying about their long-term viability. I also steer clear of companies with low cash flow and high debt, as I want to ensure that my investments can withstand a recession. While this might seem obvious, it's easy to forget these principles when a hyped, shiny new investment comes into favor.
Etcaetera
Per se, I don’t have any stock, sector, asset class or financial instrument that I recommend to avoid. Any instrument can come in handy at any time. Because of my investing style, I allow myself to invest in anything that would help me reach double digit returns. The one thing I don’t do is use leverage. I rarely short (but that can happen) and I practically never invest in currencies (I will always be slower than any algo out there).
We hope you guys enjoyed our common work! This was Timothy Assi (Panic Drop) with Akim Guerreiro (Etcaetera). The links to our Substacks can be found in the header of the article.
Until next time! 🙏
Timothy & Akim
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