2019 Portfolio Review

Portfolio Update 12/31/19

Happy New Year to everyone. It’s been a month and half since I posted my November portfolio update found here; https://discussion.fool.com/november-portfolio-update-34345699.a…

I have found doing these updates is helping me keep better records of my investing thought processes over time. Much like keeping a journal in life when you re-read in the future it helps you remember what your thoughts were at the time of writing. Hopefully others find this helpful as well.

My portfolio monies are NOT all in tax free accounts any longer. Thus I do have to worry about tax consequences of my trading actions for a percentage of my portfolio. So far this as not been an influence on my investing style.


Current Portfolio as of 12/31/19.  
	  
Change since 11/16/19  -2.7%. 
	 
2019 YTD +13.7%.  	S&P 500 +31.4%	    Nasdaq +35.2%  	Dow +22.3%

Stock		Current	     % of Port	      % Change in port	     Market	
		% of Port      on 11/16	         since 11/16	     Cap

AYX		  27.0		29.2		 -2.2		     +6.8B
ZS		   8.7		20.0		-11.3		     +6.0B
ESTC		  16.2		18.2	         -2.0		     +5.3B
MDB		  14.8		14.8	            0		     +7.6B
ZM		  15.6		12.4	         +3.2		     +19.0B	
CRWD		  16.4		 5.4		+11.0		     +10.1B
CASH               1.3             0

			 

New positions since last portfolio update: NONE

Exited positions since last update: NONE

Trades between 11/16-12/31


Bought 		        CRWD		12/12		$48.00
			CRWD		12/17		$48.34
			CRWD		12/17		$49.45
			ZM		12/26		$67.66

Sold			ZS		12/12		$45.24
			AYX		12/17		$97.33
			ZS		12/26		$48.18
			ZM		12/30		$66.64

Thoughts on trades and companies for the month.

Ended up with small cash holdings as I am preparing to move cash from a taxable account to tax free retirement account at the beginning of 2020.

Number one holding AYX 27.0%. What’s to say, everyone on the board believes it a great company with great numbers. Seems to be the most held position by many on this board. I sold a little bit of my holdings just to increase my position in CRWD and ZM.

Number two holding CRWD 16.4%. Last portfolio review I mentioned that I did not have a high convection on the company and may even sell out of my smaller position. Well I increased my holdings to make it the second largest position. Bert likes it and many here have presented a great case for it. I read the c.c. and kept looking at the numbers and just decided it was a great opportunity. I would consider it the #1 idea for 2020.

Number three holding ESTC 16.2%. This stocks performance was -2.5% for 2019. It is one of the reasons for my portfolio’s underperformance. Even though I do not entirely understand the technology, I do feel like they have something special. They are growing quickly still. Everyone is concerned with the lack of earnings, so am I to an extent. I really look at this is a boom or bust stock for 2020. It may hold back my portfolio or it may lead it to outpace the market this year.

Number four holding ZM 15.6%. Higher valuation makes me a little uncomfortable. However the growth rate is so high, plus combined with profitablility. I kept thinking if I wait I might be able to get for better valuation, however what if the opportunity does not present itself? I believe in the companies growth prospects, so I jumped in with both feet.

Number five holding MDB 14.8%. So many of these stock have been covered on this board its hard to think of anything new to add. I have a sneakying suspicion that MDB will lag the market this year. I probably need to reduce my position.

Number six holding ZS 8.7%. ZS is one of the reasons my 2019 did not go as well as hoped. I tend to be slow to get out of a position. I believe the company will bounce back, just not sure of the time frame. The board has influenced me back down on ZS, if the product cannot sell itself, then is it really special? Kinda why I think ZM and CRWD are special.

Year in review for 2019.


Monthly returns

Jan	       +12.3%
Feb		+8.7%
Mar		+2.2%
Apr		+2.6%
May		+1.6%
June		+4.7%
July		+4.6%
Aug		-3.6%
Sept	       -11.6%
Oct     	+1.1%
Nov		-9.7%
Dec 		-2.7%

13.7% annual return on a year like the markets had is frankly not a great year. Looking back to see what moves I made that negatively influenced my returns. I started the year off strong (monthly returns below) and was up 44% at one point in July with a almost 40% cash holding. I inherited some monies this summer in August. I knew the money was coming in July and I knew that this would increase my cash holdings even furthur, so I started to invest more of my cash. It turned out to be at the crest of the year for many of the companies that I increased my positions, primarily ESTC, TWLO and ZS. I also increased my AYX position in early September which was much higher price than its current valuation. I continued investing the cash until November when that position went to zero. Valuation have slightly gone down from there.

I tend to trade in and out of positions throughout the year. However my portfolio is pretty consistant within a year as to the companies I invest. Below is the lsit of companies that I held this past year with at least greater than 1% position. NTNX definitely did not help the returns this year as well.


14 Stocks owned this year greater than 1% of portfolio in 2019

NTNX
TWLO
AYX
WIX
ZS
SQ
TTD
ESTC
NVTA
MDB
SMAR
EBIX
PSTG
CRWD
ZM

What if I had not traded any of my stocks or stock positions or added any new monies throughout the year what would have been my portfolio return from stock held as of 1/1/2019; annual return 32.9%. Just sitting still would have been better! However it would not have been as much fun!!


My 14 year returns for my portfolio are:

2006  		   8.3%
2007		   6.2%
2008		 -32.5%
2009		  28.1%
2010		  49.3%
2011		   3.6%
2012		   9.5%
2013		  67.0%
2014		  10.4%
2015		   6.4%
2016		   1.6%
2017		  29.9%
2018		  31.5%
2019		  13.7%

Total		  16.6% average annually

Nasdaq	          21.4% average annually
S&P500	          11.0% average annually
DJIA		  11.6% average annually

There have been periods of my investing lifetime were I have had over 30+ stocks and where I have been very conservative and value based (2015-2016). There have also been times where I have had 3 stocks and very aggressive (2008-2010). I do not think there is one right way to investing. I believe everyone needs to find their own path and learn what style will make them successful.

I am working on my investment style. I obviously have a lot of room for improvement! However I do feel I have come a long way from where I started. Originally I would invest in TMF rec’s and would not even look at the numbers. I use to shy away from the “hot hands” thinking that if they increased in value so much so quickly that they were bound to fall if I were to buy them.

Over the years I learned when opportunities would arise. I personally feel there are some good opportunities for the stocks we follow on this board. I fully expect to outperform the market in 2020.

I continued to read the boards and learn from so many of the great investors that give so freely of their energy and knowledge. I became more comfortable investing into companies, after learning to read 10-k, earning c.c. and looking at growth rates. I also became more comfortable buying and selling stocks more quickly based on information or sometimes maybe even a “gut” feel.

One of the greatest strengths of stocks is that in the grand scheme of things, they are very liquid. Try buying into and out of a business on main street. It takes a lot of money, time and effort to actually buy, sell or start a business. Stocks allow for the entrance and exit into business ownership very quickly and easily. That is a great advantage in my book.

Learning about companies for investment has also taught me a lot about general business. A number of years ago I started my own business, then another, then a few more. I have been blessed with business success. I can truely say that one of the reason for my success is that I spent many years reading the TMF boards.

I have received an education in business and investing that can not be offered in a classroom. It is a collective wisdom from a lifetime of experiences from people that span the world in multiple eras, professions and cultures. Some may say, why put in all the work into investing the past 14 years to just mimic the average of a diversified index portfolio? They would not understand the personal growth I have acheived in my knowledge, outlook and other areas of my life that has occurred from the investing effort.

Hope everyone has a great 2020. I personally am thankful to all that contribute to this board!

As always any suggestions or questions feel free to email me.

67 Likes

What if I had not traded any of my stocks or stock positions or added any new monies throughout the year what would have been my portfolio return from stock held as of 1/1/2019; annual return 32.9%. Just sitting still would have been better! However it would not have been as much fun!!

What is “fun” about underperforming the NASDAQ by more than 100% or underperforming a buy and hold by the same???

If the original investment was investigated adequately and believed to be so compelling, just what changed that caused you to jump ship and what was the return on that re-allocated money?? This is a similar comment I made to Saul on his portfolio…if one has various machinations with one’s portfolio during the year…one should track not just the “what if I hadn’t sold” but ALSO “what happened to the money I reallocated”.

I believe you have been on Saul’s board since 2016 or so?..the returns on the NASDAQ from then have been:

2016 NAS up 7.5% vs your 1.6%
2017 NAS up 28.25 vs your 29.8%
2018 NAS down 3.9% vs your up 31.5%
2019 NAS up 35% vs your up 13.7%.

Seems you were doing just fine until this last year. But if you held the same stocks from 2016 forward, you would be up 79% on the NAS Index vs 97% on your portfolio…so this past year may just be an aberration UNLESS you are churning your portfolio to your detriment?? If the latter, now would be a good time to go back to reflect on your buy/sells in 2019 and try to recall why you did what you did?

But congrats that you are still doing better than the index over past 4 years…that is an accomplishment (if the studies are to be believed) that less than 20% of money managers can achieve.

10 Likes

Hi Duma,

The fun part is the investing journey. I enjoy learning and trying to be the better investor I can be. Do I want to underperform the market? Did Tom Brady want to lose to the Titans yesterday? Of course not. However 2019 is just one point of reference in time. Let’s see what my portfolio does in 2020. If I underperform again, then yes it will be time for new strategies possibly. Of course I expect to outperform in 2020.

I actually added what if I had done nothing in 2019 based on your suggestion in your reply to Saul’s portfolio. I thought it would be interesting to look at.

What did I do wrong in 2019? With hindsight 2020 vision as my guide a couple of things:

  1. I got scared out of MDB early due to the Amazon competition, I bought back in after the run up and it has not appreciated much since I invested.

  2. NTNX position did nothing. Would have been a negative but I traded in and out a few times and made money on those moves.

  3. I started to invest my cash position at the height of the market, due to an unexpected inheritance which was equal to about 15% of my portfolio. I also had 40% cash in my portfolio. I bet on TWLO (purchase at $145) and ZS (around 70) right before their fall. Ouch.

  4. ESTC-has been negative -2.5% for 2019. I have a big position in ESTC had have had a good part of the year. I bought some of my position in the 90’s. Ouch.

  5. Bought a good bit of AYX higher than its flying right now.

Those moves right there will do it. I will point out I still own AYX, ESTC, MDB and ZS. My thought is it is a temporary downturn and they will regain there previous prices. I obviously feel that I am investing my money in the places where I believe it will have the greatest return.

I will always be evaluating and forming new opinions on my companies/stock holdings as new information and ideas are presented for consideration.

12 Likes

What is “fun” about underperforming the NASDAQ by more than 100%

Duma, how is up 13% underperforming the Nasdaq by over 100%. He was up 39% of what the Nas was up. If he had underperformed by more than 100%, it would have meant he was negative. If the Nasdaq was up 2% and he was up 1%, would saying he underperformed the Nasdaq by 100% make any sense?

And retirementdough was very courageous posting his summary, warts and all, as part of his learning process. You made some good suggestions, which cannot be denied, but what was "fun’ about criticizing his decision making when you never post any of your own positions or portfolio results at all. Perhaps you should share how you are doing and what you are investing in.

Best,

Saul

68 Likes

Saul:

I wasn’t being overly critical of Retirementdough…though you are right regarding the “fun” part…mine was a little quip.

As to underperforming the NASDAQ in 2019, his returns were up 13.7% whilst the NASDAQ was up 35%…the NASDAQ performance return was nearly 3 times (in percentage terms) his portfolio in 2019.

But as I said, I was also quick to point out that 2019 could have been an aberration since his 4 year return beat the NASDAQ.

I brought it up since he commented that had he not traded as much, his return would have been up 33%…quite a difference in return…maybe there is a lesson there somewhere…maybe not.

5 Likes

Thank you that was an informative post I appreciate your transparency. Wishing you a great 2020

1 Like

Thanks for sharing. Looks like you made a change in strategy this year. You were comfortable holding 40% cash. But decided to drop that to 0% while at the same time investing all your inheritance. So sounds like you invested almost 55% cash close to the peak. In retrospect if you had never held as much cash to begin with or if you had continued to hold 40% cash you might have had better returns. Going fwd is there one approach regarding the size of your cash position you like better?

1 Like