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The month that was:
In February, the Nasdaq went down by about 3.3%, the S&P 500 went down by about 0.8%, and the Dow went up by about 0.3%. Bitcoin fell about 22%.
On February 20th, the Supreme Court ruled that most of the tariffs President Trump put in place last year were not allowed under the law he used, and struck them down. The President quickly announced new tariffs using a different law. Then, on February 28th, the United States and Israel launched airstrikes on Iran, which I will write more about next month.
The biggest story in the stock market this month was a crash in software stocks. In January, the AI company Anthropic released a tool called Claude Cowork, which can do tasks on a computer like an assistant. At the end of January, it added plugins that help with legal work, finance, data analysis, and sales. On February 3rd and 4th, investors panicked that AI tools like these could replace a lot of the software that companies pay for every year. In two days, software, financial data, and investment firm stocks lost about $285 billion in value. Thomson Reuters fell about 16% in one day, and FactSet fell about 10% on February 3rd and another 10% two days later.
This is called disruption. Disruption is when a new technology changes an industry so much that the old leaders lose their business. For example, digital cameras disrupted film companies like Kodak, and streaming disrupted video rental stores like Blockbuster. Investors now worry that AI could disrupt software companies that charge for each person who uses their product. If one person with AI can do the work of five people, a company may only need one software license instead of five.
But not every new technology destroys the old companies. Many software companies are adding AI to their own products, and they have years of customer data and relationships that are hard to replace. Right now, no one knows which companies will be hurt and which will benefit. When fear is this high, I think some high quality companies can get too cheap, but I am careful not to buy too much too fast.
Buys -
Bought 6 NOW at $107.75
ServiceNow makes software that helps big companies manage their workflows. ServiceNow did a 5-for-1 stock split in December, and its stock has fallen about 30% this year. ServiceNow is building AI agents into its own software, so I think it can be one of the winners. I started a new position.
Bought 4 TYL at $352.27
Tyler Technologies makes software for local governments, like court systems and tax collection. Governments rarely switch software, which makes Tyler's business very steady. I started a new position after the stock fell with other software companies.
Bought 15 HOOD at $73.36
Robinhood is an investing app that is popular with young investors. I started a new position.
Bought 20 SFM at $67.84
Bought 1 MSFT at $413.94
Bought 1 AMZN at $232.69
Bought 1 ONON at $43.92
I added to Sprouts, Microsoft, and On Holding, and bought one share of Amazon. On February 5th, Amazon said it plans to spend about $200 billion this year, mostly on AI data centers, and the stock fell about 9% the next day.
Sells -
Sold 15 NVO at $50.31
On February 3rd, Novo Nordisk said that its sales would go down this year, because of lower prices and more competition for its weight loss drugs. The stock fell about 18%. I sold my shares for a loss of about 19%.
Sold 9 ISRG at $504.54
Intuitive Surgical has gone up since I bought it in October, and I sold most of my shares for a profit of about 9%.
Sold 16 BAH at $78.64
Sold 7 AVGO at $317.38
Sold 5 ACN at $240.94
I sold my Booz Allen Hamilton, Broadcom, and Accenture shares for losses. Accenture fell because investors worry that AI will reduce the need for consultants.
Buys and Sells -
Bought 21 INTU at $381.81
Sold 7 INTU at $409.40
Intuit, which makes TurboTax and QuickBooks, was one of the hardest hit software stocks. I first wrote about Intuit in my April 2023 newsletter. I bought shares at much lower prices this month, and sold some of them when the stock bounced at the end of the month.
Bought 11 FDS at $213.30
Sold 4 FDS at $248.87
I sold a few FactSet shares at the start of the month, before the crash. After FactSet fell more than 20%, I bought more shares at much lower prices.
Bought 3 EFX at $174.86
Sold 3 EFX at $194.89
I bought Equifax at the start of the month and sold it for a profit of about 11%.
Bought 11 ADBE at $262.22
Sold 13 ADBE at $255.81
Bought 35 CMG at $39.10
Sold 60 CMG at $38.55
Bought 14 DASH at $174.01
Sold 14 DASH at $170.11
Bought 16 SNOW at $170.21
Sold 16 SNOW at $170.40
Bought 50 PFE at $26.65
Sold 50 PFE at $26.51
I also made short-term trades in Adobe, Chipotle, DoorDash, Snowflake, and Pfizer. Most of them ended with small losses or almost no change.
Thanks for reading my newsletter!