A few thoughts
To start with, the five market indexes I track and compare against are down year-to-date by
-38.1%
-32.7%
-25.7%
-23.2%
-19.7%
They average down 27.9%, meaning the $100.00 you started the year with is now worth $72.10. That’s astounding and horrifying.
The “overvalued” stocks in my portfolio, which you are all familiar with, give me a portfolio which is down just 7.1% year-to-date. So my $100.00 at start is now worth $92.90. That is a huge difference in two and a half months.
What that means is that if you conscientiously tried to cushion your portfolio of “overpriced” stocks with nice “safe” market index ETF’s or equivalent, on average the more “safe” general market stocks you added, the worse your portfolio was hit. It’s pretty ironic isn’t it?
And someone on the board wrote off-board to bemoan that in spite of all the warnings about using options, he overused them and went from up 40% to down 27%! A word to the wise is sufficient.
What have I been doing these two weeks? Let’s look alphabetically. Keep in mind though that the changes for the most part (except Afterpay) are just nibbling or adding around the edges without any major changes.
I’ve continued to sell off Afterpay, feeling that retail moderately high-end clothing will slow down hugely with all the craziness. It’s down to a quarter of a percent position.
I’ve added small amounts to Alteryx several of times.
I haven’t touched my Coupa position, which is the smallest of my major positions anyway, at 10%.
I think I should add bunches to Crowdstrike as it fell to ridiculous levels today, but I don’t have the cash or the confidence.
I just added a little once to Datadog, which is still a 19.5% position, but has been edged out of second place by Zoom at 19.8%.
I’ve added multiple times to Okta.
I haven’t touched Red Violet, which reported earnings today, by the way. It’s still a 1.6% position. This was the December quarter so coronavirus wasn’t involved, but revenue was up 92%. If you are interested I suggest you read the earnings report.
As far as Zoom, I have added to it, but most of its increase in proportion of my portfolio comes from it not falling when everything else was falling.
I’ve also added about 2% of margin to pay some of the purchases. As I indicated in the KB, I sometimes allow myself up to 3% or 4% of margin if the circumstances seem to warrant it.
What do I think?
I haven’t a clue when all this will end. I’m pretty sure that Zoom will be a winner. Just reading all the posts about various universities makes it clear that Zoom has become the de facto winner in this space, and when people think of video conferencing or working from home, Zoom has already almost become the standard as far as mind-share, world wide apparently. As far as our other companies, I believe that they will continue to outperform the general market both going down, and in the inevitable rise when this is over.
It has never crossed my mind to get into cash. I’m no good at guessing when to get back in. In the 2008 crash I was down more than the markets, but I was up 110% in 2009 by staying in. This time I’m in safer companies (subscription revenue, high gross margin, low capex, no debt, etc), and am doing considerably better than the indexes, as I described.
Stay well and don’t take health risks.
Saul