Portfolio breakdown
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. Full position definition now 10% higher than June, as I have been consistently putting money into these positions.
% cost represents the cost basis as a % of my total $ invested in portfolio.
Portfolio Performance
Adds: $MP (2x), $OKTA, $TDOC, $NVTA, $TWLO
Sells: None
Trims: None
Portfolio commentary
It has been quite a calm month with only earnings from $TWLO and $TDOC (see below). In other parts of the world, volatile things happened (see my China section), which I’m thankfully not exposed to. Otherwise, this month is neither good nor bad. Note that investing performance is measured over the long term, and sometimes that means sitting through months like this, that are meh.
Keep investing, and keep learning
Personally, I think I let myself fall victim to FOMO. It’s hard to be patient with your buys when market is swinging like a roller coaster. Some days your portfolio is completely green, other days red. Will your portfolio drop another 20%? Who knows? It’s definitely not a bear market now, so the trend is not down. Notably, all of my buys this month is currently underwater excluding $MP. Am I worried? No, since my goal is to have outsized returns, and that comes from finding the best companies with which to compound your capital.
Watch the business, not the stock!
I’m still in the process of refining my decision-making framework; hopefully with rational cues rather than emotional ones.
Earnings calls
I’ll post the Twitter threads which I did on my portfolio companies here for ease of reference.
Teladoc: As management said in their Q1 call, 2021 is their year of R&D. A lot of integration needs to happen re Livongo and other acquisitions to really reinforce the value proposition to both the customers and the healthcare stakeholders. All in all, my investment thesis remains unchanged, as numbers shows shifting from infectious to non-infectious, showing that the growth in metrics will remain resilient. Furthermore, really hard to find a company doing 2B in revs for 2021 (forecasted) growing at 100%. Thankfully, $TDOC opened -9% on the next day, then closed green. Very bullish (or is it?), and likely Cathie Wood isn’t the only one buying the dip.
Twilio: Great quarter with revenue growth re-accelerating to 65%. As usual, core biz of communications strong, with Messaging strongest growth imo as it is first point of contact in B2C engagement. Management bullish on Segment (as with all of us), with customer reception seemingly +ve (great product mkt fit). Customer Data Platform (CDP) = letting biz harness customer engagement data (which = digital gold). How strong is the value proposition if you enable businesses to mine this digital gold? Acquisition of ZipWhip is a strong step in trusted communications. DBNER >130% for past 6 quarters, customer growth reliable.
Coming up next week: $ROKU, $NET, $DDOG, $MP, $FSLY, $LMND, $NVTA 😅
Going to be a long week…
Reading list
This monthly article is kind of like my online journal, and I think I do a great deal of reading compared to my IRL friends who are investors. I follow many great people and sometimes they produce great content. I read/listen to it, and if it value-added to my perspectives, then its a pretty worthwhile use of my time. Sharing it here allows me to write down things of note and share them with my readers in hopes that the content may value-add to their perspectives as well. If you like what you see, why not subscribe to my newsletter? If there is positive reception to this, I may flesh this reading list out separately as a bi-weekly kind of thing.
Lyn Alden’s interview on the macro environment, debt cycles, inflation v deflation, portfolio positioning with an emphasis on commodities. Lyn is always a joy to listen to; her podcasts are always packed with information, and always manages to value-add to my worldview, especially since I’m relatively new to investing.
While we share different investment philosophies, I think having knowledge of these areas (e.g. macro view, market/debt cycles) will augment the timing of my portfolio contributions. I don’t have to start buying value stocks but there’s always something to be learnt by having multiple perspectives. Her thought process is something I respect and try to emulate.
Derek Sivers: Innovation Versus Imitation [The Knowledge Project Ep. #88]: Musician, speaker, writer and entrepreneur, Derek Sivers chats about creating and running CD Baby, reading, mental models, living a meaningful life and that biggest mistake he’s ever made.
I think its rare to see someone so having a high level of clarity in their thought process. My main drive behind monthly articles is to synthesize my thoughts and to reflect on them. Every quarter, we evaulate our portfolio companies against our investment thesis for them. It makes sense that every month (or on a desired frequency), we should evaluate ourselves againsts our investment execution.
7investing podcast: Should you invest in SPACs? The folks at 7investing provide a great deal of investing wisdom and insightful information. This time, Simon Erickson and Steve Symington discuss everying about SPACs, beyond their purposefully attractive prospectus-es into nitty gritty details on where exactly the incentives are (PIPE, deal sponsors, warrants).
Part 2 delves further with real-life examples of companies. Highly recommend this if you’re interested or invested in SPACs. I learnt a great deal.
Meta-threads on finance by Sahil Bloom: Nothing I love more than short threads that provide succinct and with great clarity. In this case, Sahil Bloom has written over a hundred threads on finance, money and economics. AND he continues to produce these threads on a weekly basis. If you like digesting nuggets of wisdom every now and then, this ones’ for you.
Other notable mentions include 10kdiver’s weekly investing threads with a focus on numbers, as well as Ming Zhao, who writes weekly threads with great clarity as well.
Liberty’s frequent writeups on interesting events and/or things (arts): Originally, I read his articles because they contain nuggets of information on companies which I’m invested in (like $NVDA). Over time, his articles just become a once-a-day/2days digest on anything interesting. It’s quite refreshing to have such a read, especially since I curate my twitter feed (via Twitter lists) for more thoughtful information (signal) than the common shitposts (noise).
Crypto
Crypto-land is Crypto-land. People who don’t own crypto won’t talk about it. People who do will only do so when BTC climbs back to all-time-highs. I am still invested in it, and hold a long-term view. The non-existent barrier to enter the crypto space (anybody in the world can buy crypto via internet) will likely spark a few more mania cycles, IMO, before it ever becomes a reliable store of value.
Why? Essentially, with the volatility, its a truly global, 24/7 casino. Anyone (and I mean anyone) can enter the crypto casino and come out a literal millionaire. The willy wonka golden ticket now is within reach for internet-enabled citizens of Earth, ever since Satoshi invented Bitcoin. Not yet useful for a gloablly-recognized store of value, but as a supremely volatile, speculative asset? Sir yes sir.
Channelling my inner Musk:
Recently, I’ve taken a plunge into the bitcoin mining space, and have bought 2 miners from Compass Mining (thread on company below). Barring debates on the lack of intrinsic value, the returns from mining bitcoin can be reliably modelled, since the model is equivalent to buying a machine to manufacture products (and selling them).
Depending on your imagination of bitcoin’s price over 2, 5, 10 years, investing in miners can be a wealth generating tool. My thesis is that while central banks worldwide introduce their version of digital currencies, perhaps bitcoin will somehow serve as a shadow reserve currency, ensuring censorship-resistant transactions can take places between any 2 persons at any 2 places. Even if after 10 years Bitcoin still trades at the same price as it is now ($40+K), the economics of operating the miner (and selling those bitcoins) still generate positive returns. Of course, risks are always present.
For retail investors like us, it can be really difficult for us to get started. If bitcoin mining is your interest, you may wish to take a look at Compass Mining, which offers a platform for you to buy miners and host them at mining facilities around the world. I bought my miners from Compass Mining; opted for crypto payments. How convenient (as credit cards has a 3% charge)! For a detailed overview on the company (and how you can start mining), you can check out Lyn’s comprehensive article reviewing the risks and rewards associated with it.
Will provide updates via Twitter when it goes online (End Sept and End Oct).
Keep stacking sats!
Note: I will also flesh out my cryptocurrency holdings next month as they represent majority of my current net worth (not by choice).
China
Investing is hard enough as it is, but if you’re a new investor in China companies from 2021 onwards… Sending thoughts and prayers to you 🙏 (Disclaimer: no position in Chinese companies).
CCP has done a lot of regulations, likely stemming from 2021 being China’s 100th anniversary of the founding of their party. Top of mind, regulation stem from: $BABA (due to Jack Ma), Bitcoin mining, $DIDI, $TCEHY’s music rights, Private tuition -> Education companies, and perhaps even more. I’m not entirely plugged into the developments, but this thread from Lillian (who is very plugged into China’s tech scene) summed it up very well:
We know that share price is the present value of expected future cash flows. Will regulations have a definite impact on future cash flow? For $TAL, it certainly is possible, as is Tencent and Alibaba (via Ant Financial as they own 30%). For others (e.g. $JD, $FTCH), there does not seem to be a particular regulation aimed at their sector (retail?). Yet, price is currently affected by the Chinese sentiment.
For the opportunist, this represents a great buy-the-dip moment. For others, perhaps the risk premium for China stocks permanently increased. You’d never know when CCP decides to impose regulations on your sector. As such, investing in chinese companies are much riskier than say 2019, and especially more so for US investors, given the ongoing geopolitical tension.
Investing is hard.
Conclusion
Sometimes amidst all the happening news and events that we see or hear in media (especially social media), it can be easy to forget that the core principle of investing is about ownership in great companies. It is literally all that matters. We are stewards of our portfolio, and it’s a looooong journey.
Joey Koh