THE SLOW CAPITALIST
Edition 07: Caught Inside
We haven’t had much good surf lately, and this week I found myself thinking about one of those hectic winter sessions in Plett.
The wind turns hard offshore, and big southern swells stack up, filling the bay as far as the eye can see. The water turns dark and icy, and the sky stares down at you, emotionless. Then a set catches you inside. Walls of whitewater hold you under and steal your breath. You come up seeing stars, lungs burning. Every instinct tells you to panic and swim for shore.
But panic can make a bad situation worse. The trick is to stay calm, protect yourself and look for a way through.
Markets felt a bit like that this week.
In Edition 05, we talked about limiting damage and sticking to our levels. In Edition 06, we looked at the midweek chop and why we don’t let market noise hurry our decisions. This week brought a sharp sell-off in high-growth tech and AI infrastructure. CoreWeave fell hard as investors grew more concerned about debt and credit across the neocloud sector. Those concerns are worth watching, but they don’t prove that the whole AI investment story has changed overnight.
Watching the screen during the day can make every move feel urgent. That’s why we have a process. In the water, you stay calm and look for a way back out. With the portfolio, you check your rules and let the weekly close give you the score.
Here’s how I handled the week.
The Tennis Court Dilemma: Why I Cut Nike but Kept Netflix
In Wednesday’s spotlight, The Tennis Court Dilemma, we looked at the risk of falling in love with a brand because we use its products.
I wear Nike shoes on the court and know how they feel. That familiarity made it easy to feel attached to the company as an investor, too. But using a product doesn’t mean its stock belongs in my portfolio. When my reasons for holding Nike weakened and the chart deteriorated, brand loyalty wasn’t a reason to stay.
That raises an uncomfortable question: I’ve been a Netflix subscriber for years, and Netflix is still in my portfolio. Why is Nike gone while Netflix remains?
The answer has to be the investment case, not the interface. I need to be able to explain what I believe about the business, what would change my mind and what the chart is telling me. Knowing a product can start the research, but it can’t finish it.
Netflix has been expanding into live programming. It has secured the rights in Spain and Andorra to show all 104 matches of the 2030 FIFA World Cup live. That’s a meaningful move into live sport, but it doesn’t prove on its own that the strategy will pay off or that Netflix deserves a place in my portfolio.
The lesson is simple: don’t hold a company just because you like the brand. Keep checking the business, the price and the reason you bought it. Netflix still has to earn its place in my portfolio. Nike didn’t, so I sold.
Friday’s Close: What My Rules Called For
A Wednesday sell-off isn’t, by itself, a reason to sell. But waiting for the week to close only helps if you follow the plan you set.
The portfolio was down 2.77% on Friday. That’s the daily move, not the full week’s performance.
Here are the decisions my rules called for:
CoreWeave (CRWV) — Full exit. Friday’s close was $61.39, below my $72.71 technical level. Three triggers were active: the share price broke below my level, concerns about the business affected my investment case, and pressure from the wider market added risk. Under my rules, three triggers mean a full exit. The credit and debt concerns were part of the picture, but they don’t prove on their own that the business is failing.
Rivian (RIVN) — Full exit. Friday’s close was $12.42, below both my $14.20 technical base and $13 weekly support. Three warning signs were in place: the share price had broken below key support, pressure on EV demand and policy had weakened the investment case, and higher yields were weighing on growth companies that aren’t yet profitable. My rules called for a full exit. When three separate warning signs line up, holding on can become hope dressed up as patience. I sold the position to protect capital.
Rocket Lab (RKLB) — Trim half. Rocket Lab announced that Neutron’s first launch is now expected in 2027. That’s a setback for the schedule, though it doesn’t settle the company’s longer-term prospects. Friday’s close was $50.84, above my $48 weekly stop. With two triggers active, my plan called for a 50% trim and a stop on the rest.
My trigger rule is straightforward: one trigger means review and a defined grace period; two mean reduce risk; three mean exit. The grace period applies when only one trigger is active. It doesn’t override a higher trigger count.
The Watchlist: Waiting for the Right Setup
Selling or trimming doesn’t mean I need to rush into the next idea. I’m watching these levels and waiting for the right setup:
MP Materials (MP): Watching around current levels.
Micron (MU): Watching near $650.
Broadcom (AVGO): Watching near $275.
Lumentum (LITE): Watching near $700.
Constellation Energy (CEG): Watching for the entry zone where the Fibonacci levels come together.
Kinross Gold (KGC): Watching the area around $20.20, where a long-term trendline, a 50% Fibonacci retracement and the rising 200-week moving average appear to meet.
These are levels I’m watching, not automatic buy signals.
Final Thought
It’s been a tough week. Sometimes you get caught inside. You don’t have to panic, but you do need to know what you’ll do when the next set arrives.
Know your levels, respect the conditions and follow your plan when the next wave comes.
Have a good Sunday.
The Slow Capitalist is for informational and educational purposes only. It does not constitute financial, investment, legal or tax advice. The views are my own. Investing involves risk, including the possible loss of your principal. Consider your own circumstances and risk tolerance, and speak with a qualified professional before making investment decisions. I may hold positions in the securities discussed.