Saying Goodbye to 2015 and Preparing for 2016
2015 was a rough year for investors and analysts as the market failed to live up to the expectations. The year was rough for me too as my accuracy went down from 77% in 2014, to 62% in 2015. Although many of my recommendations didn’t perform as well as I had expected, I still managed to outperform the market thanks to the various good stocks.While I still think many of those stocks are trading at a conservative valuation, I would recommend investors to sell those stocks as I expect the market to undergo a correction in 2016 which will possibly be fueled by a crash in China.
Best stocks of 2015
JetBlue (JBLU) and Volaris (VLRS) have been my best performing stocks in 2016. I had recommended both the stocks multiple times last year and both of them proved to be a winner, appreciating over 50%. However, with crude oil prices falling, many airlines will be competing on price, which is why I think investors should sell these stocks. Price wars have led to bankruptcy, and cost-cutting amid a bear market will likely spook invests, which is why I am recommending investors to sell these stocks.
My other outperforming long ideas include Starbucks (SBUX), Amazon (AMZN), and Avago Technologies (AVGO). Starbucks and Amazon are trading at a premium and a bear market will likely have a negative impact on the stocks, which is why I am recommending investors to book profit by selling the stocks. As for Avago, I still like the company, but given its exposure to China, I think investors would be better off selling the stocks.
Three other stocks that I think investors should sell are Estee Lauder (EL), NVIDIA (NVDA), and Chevron (CVX). Chevron and Estee Lauder have not appreciated much, whereas NVIDIA has had a stunning year. While I still like these stocks, the steep valuation heading into the bear market will probably be a headwind for the stocks.
I have often touted Spirit Airlines (SAVE) as my best stock pick for 2016, however amid price wars and a bear market, I think investors should sell the stock and initiate a long position when the stock falls to lower levels.
Ideas for 2016
As I have already mentioned above, I think 2016 is going to be a bad year for the market. However, instead increasing cash position, I think investors should focus on shorting overvalued companies so as to benefit from the correction. My best short ideas for 2016 are:
- Wayfair (W)
- Mobileye (MBLY)
- Netflix (NFLX)
- Chipotle Mexican Grill (CMG)
- SolarCity (SCTY)
- Shake Shack (SHAK)
- Fitbit (FIT)
- ExOne (XONE)
- King Digital Entertainment (KING)
- GameStop (GME)
- Alibaba (BABA)
- Dangdang (DANG)
- Cheetah Mobile (CMCM)
- Wynn Resorts (WYNN)
- Qualcomm (QCOM)
I think investors can benefit from the bear market by having 60% of their portfolio short from 15 the companies mentioned above. All in all, I think it’s investors should book a profit by selling my best-performing stock recommendations and should initiate a short positions in any or all of the 15 stocks mentioned above.