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Sorry, but it’s time to sell some Facebook

The way I see it, we have ourselves two primary topics that need to be addressed — Facebook and its ceaseless rise, along with the ever-hyped “government shut down.”  One topic of the two is very important and the other doesn’t matter much at all, can you guess which is which?

Facebook FB is still on a tear. The stock has been almost straight up for the last two months, since I wrote about how it was likely to have just become a “must-own” stock for every tech and growth fund manager. I remember back when the stock was back near $20 a share and I answered a loyal Marketwatch Cody Word reader who asked if Facebook could be another MySpace that, “There is always a chance that Facebook  ends up as another worthless MySpace type of website. But I think FB has already hit critical mass and is innovative and broad enough that there is a $100 billion valuation ahead in its future. That would put the stock over $50/share. ”

And see, we’re now there at that $50 a share target I mentioned to him back when such a target really did sound rather ridiculous. And not only that, but because I made Facebook such a large position back when the stock was near $20 a share and I wrote, “As I wrote the other day when we first started buying Facebook at $26 a share, the same people who are so scared of Facebook’s potential to dominate the next phase of the Internet are probably going to love it when the stock is up a bunch and the future is more clear to them. In the meantime, I think Facebook is a must-own and it is as large a position for me now as my long-held biggest positions, Google and Apple.” I called that article, “Google’s past is Facebook’s future.” Both investments have been hugely profitable for me and my readers.

That and the fact that eventually ended up loading up on long-dated out-of-the-money Facebook call options means that Facebook at $50 a share right now is by far my biggest notional position in the portfolio, even as I’ve repeatedly trimmed it down.  I suppose at some point this stock will finally catch its breath and maybe even have a 20% plus pullback in the next couple quarters. With this current quarter coming to a close today, there certainly could be a technical sell-off catalyst here that would drive the stock lower to the point where the Technical Analysts and Chartists decide to sell and/or short it all over again. The bullish sentiment and outright euphoria that the folks at my site/app Scutify are showing towards Facebook is a contrarian signal in its own right, I’d imagine.

So I trim a tiny bit of my Facebook again today at $51 a share and if you were one of the many Cody Word readers who bought it along with me at any point back when the buying it was good, I’d suggest trimming some of your own here now.

Oh, and about that government shut down? If anything, it’s going to be a “Flip It” kind of contrarian result in the markets that would see them sell-off as soon as the Republican/Democrat regime pretends that their pretend showdown here is resolved. Trying to game that government shutdown stuff and how the markets will roll with it is not a winning strategy. I recently added some short hedge exposure with SPY, but that is not because I’m trying to game the showdown. It’s just as hedge. Hedges are important, and so is taking profits. I’ve been doing both lately.

Cody Willard writes Revolution Investing for MarketWatch and posts the trades from his personal account at TradingWithCody.comwhich is not affiliated with MarketWatch. At time of publication, Cody was net long Apple, Google, Facebook and net short SPY. Follow Cody on Twitter at twitter.com/codywillard.

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