Portfolio Summary
Note:
% of portfolio uses market value.
Cost allocation denotes my cost basis as a % of full position size. 100% means it is a full position, whereas 100% + denotes an overweight position. I have recently lowered my cost allocation $ as I foresee I will have lower contributions in this coming year.
My performance:
Adds: $TDOC
Sells: nil
Click here for my March portfolio analysis, where I got hammered by the market.
I try to read my reports of the previous months - it helps me to collect and consolidate my longer-term thoughts. This allows me to improve my thoughts (for the longer-term) which can hopefully translate to better write-ups.
Let’s face it, one month is more than enough to get sucked into the hyper-sensationalized news cycle; What’s the reason for stock market doing X% today?
Portfolio Commentary
Besides the $TDOC buy (which @ $189 we now know to be a wrong call as $TDOC closed at $171 on 30th April), I have not really added more to my positions. With the benefit of hindsight, we can now evaluate even more clearly for some of the market buys I made in March. The lines denote price and time of each purchase. I’ve made a few others besides these few below but didn’t want to plague you guys with charts.
<Insert some wise comment on being contranian, thinking long-term, and making rational decisions>
Markets can do what they want. I will have 💎🙌
The tail end of February and March was definitely brutal, that’s for sure. Most of my stocks marked a short-term bottom at the tail end of much, then reversed somewhat. Some reversed more so than others, and I’ve observed that it is directly related to the ‘hypeness’ of the stock (e.g. $LMND, $FSLY oops).
My current thinking is that it will range for a few months as retail investors sell because they get ‘bored’ with no gains. Accumulation will happen (if fundamentals are proper) by institutional investors. Then all it takes is another catalyst (perhaps value stocks are ‘overextended’)? Could be wrong and ‘a few months’ can be 1 year though.
I can’t sell in May and go away though, but the market value of my portfolio can surely do so with stocks dipping on great earnings results ($TDOC and $PINS being early examples).
Great opportunity for dips (❁´◡`❁)
The way I see it, growth stock valuations are still frothy and while premiums should be paid for businesses that deserve it, I am cautiously optimistic that there may be another sell-off in the market, and will attempt to be more patient (opportunistic) with my market contributions this time around. I may be 100% wrong though. Its all about weighing the probabilities.
This element of being opportunistic should be present within every investor that is seeking outsized or life-changing returns. How else can we get extraordinary returns? The average investor underperforms the market over the long term (anecdotal), so the question is:
What are you doing that other investors aren’t?
This quote is adapted from Common Stocks and Uncommon Profits, where one of Phillip Fisher’s criteria for identifying great companies is that the company should be doing something that other competitors aren’t.
Investing is not a zero-sum game, for sure. But, if you’re aiming for the moon (or Mars), best to find a 🚀🚀🚀, or the dogefather.
The “i” in investing
People seem to think that finding great companies is hard. But I do think that it is the human element that is really hard, and is underestimated by investors because of their ego. The greatest opponent is always yourself, and always will be yourself. As such, when the opportunity comes, we should act as rationally as possible. It’s kind of like rehearsing for a performance or an event. You run through the scenario in your head hundreds of times; your mental model for such scenarios will adapt to that of a rational investor.
When the opportunity does come (i.e. your favourite stocks are a victim of a broad-market drop), your emotions will kick in, no doubt, but because you’ve rehearsed this scenario countless times, more likely than not your ‘habit’ will kick in, and you will buy the dip. Routine (by habit) trumps irrational behavior everytime. The more you do it, the more it is ingrained in you.
Of course, it’s also important that you reflect on your past actions. My monthly journalling is one way to do so. It also forces accountability, since you (with hindsight) can ask yourself why you didn’t do what you should do. This is literally the easiest thing that you can copy from successful people.
When things are going well and prices are high, investors rush to buy, forgetting all prudence. Then, when there’s chaos all around and assets are on the bargain counter, they lose all willingness to bear risk and rush to sell. And it will ever be so.
(Chapter 9) Uncommon Sense for the thoughtful investor by Howard Marks
H Y P E
At the risk of sounding repetitive, human nature is something to marvel at and to study. ~ 400 years ago with the “tulip mania”, we are seeing the exact copy of human nature manifesting itself in the markets today. I can probably name a few off the top of my head:
Bitcoin 2017
Cannibis stocks (see $TLRY at Sep 2018)
Blockchain/Crypto stocks and crypto (late 2020s - present)
NFTs (Q1 2021)
Hyped-up growth stocks?
As the cheat sheet says, the point of maximum financial opportunity happens when there is capitulation, panic and anger. Note that the cycle is also similar to the ‘hype’ cycle for emerging technologies.
Having been late to the bitcoin party for 2017, I have personally witnessed and participated in that hype cycle. There was no trough of disillusionment, but there was the crypto winter (when Bitcoin when to $3K). Looking back, while I did lose money, it was a great lesson. Nothing gives you a bigger slap in the face like buying $XRP (a scam) at $3 USD 😅. It was also because of that, that I dug deep and studied the underlying technology. It was my fault for buying so late and I couldn’t blame the market for it. Fast forward to 2020, I was lucky to be early in the crypto party (cost basis of $10k BTC and $200 ETH). Or was I?
It’s harmless to participate in these hype cycles. Heck, I’ve done my fair share of ‘bubbles/cycles’ already in 2020 / 2021. Best way to learn ride a bicycle is not to run as fast as the bicycle and claim ontwitter(dot)com that you’re a cyclist. When you do fall down though, let’s hope you don’t blame the bicycle.
Everything is a (bi)cycle.
One thing is for sure: volatility will be part of my investing journey.
*For those in the back who’ve just joined us*
Thanks for reading till the end. I’ll see you at the end of May. Send any criticisms you have of my article my way via DM or comment below.
Joey