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Triple lock investing

November 4, 2022

This is not a bad looking chart although that is not the point of this alert. I am always looking for sure fire investment winners. If I can find them I know I can turn them into investment gold by using highly leveraged tax-free spread betting.

So what is triple lock investing.

The first part is the share itself. I want to see all the indicators looking positive in tandem. This means rising moving averages, no serious negative break on the trend line and a rising Coppock line.

The next step is to look at an ETF containing the share in question which must also have its indicators rising in positive formation. One I have found is Global X Cloud Computing which is charted below and where Shopify is 3.9pc of the fund.

Finally let’s look at a key index of which Shopify is a constituent, not the Nasdaq 100 which is dominated by a handful of mega caps but the unweighted Nasdaq Technology index. I want to see this one looking positive on all indicators as well. Like the ETF this positive condition is not met presently so no buying of Shopify.

Strategy

You could call this a 3 x 3 strategy since each of the stock, the ETF and the index must have all three indicators pointing higher and all three must themselves be pointing higher. This gives us a checklist of nine of which Shopify currently scores two so I won’t be buying it, certainly not on my spread betting account.

However it does look interesting because I believe in the management team, I believe in the concept of the business, making it easy for everyone to launch their own multi channel business cheaply and effectively and even with global reach from day one and I believe in the execution. These guys know what they are doing which is why Shopify has become such a large business in a short number of years.

Shopify is built to help merchants as they grow from first sale to full scale and everywhere in between. Solutions like Shopify Shipping and Shopify Capital help smaller businesses grow, while development features, like Shopify Functions, enables customized pricing and discounts to increase consumer engagement and loyalty. Shopify Capital has come a long way since its humble beginnings in 2016. Even back then, we had Shopify had our merchant’s backs when no one else did, supported them by providing a few thousand dollars to a handful of retailers.

Fast forward until 2020, capital hit the $1bn mark. And in 2021, it surpassed $2bn in funding. At the end of August of this year, capital broke another record. We’ve provided cumulative funding of $4bn since inception to our merchants.

Q3 2022, 27 October 2022

Another huge asset which is costing money to build presently but will pay dividends in the future is the fulfilment network.

We are building an end-to-end logistics platform that will connect every single part of a merchant supply chain. It enables merchants to dynamically route inventory across all their channels from B2B [business to business] to D2C [distributor to consumer]. Ultimately, we will create a fulfillment network that can accept orders and make customer delivery promises from the moment of merchants’ goods lead their supplier.

Q3 2022, 27 October 2022

I am ready to believe that despite the shares dramatic fall from grace since October 2021 when the price reached $174 that Shopify is still a world beating company and that the shares will reach new peaks in the next bull market. But given that huge potential I don’t want to take the risk of buying them in the teeth of an ongoing bear market. I want to buy when the tide is coming in not going out, when all nine of those indicators look positive.

I may not buy right at the bottom but with that confidence and fives times leverage on a spread betting account there could still be spectacular gains to be made. And you don’t have to do the five times thing which I love although before the next bull market starts I will be pitching it as a great way to invest a small amount of money and explaining the mechanics for those who are unfamiliar with how spread betting works. Nothing wrong with a surefire gamble!

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