A two week update.

Investment Analysis Clubs Saul’s Investing Discussions
1

I know that this post is off topic, so reply off-board if you must reply, but I think of this as an educational and reassurance post, and part of the job I set myself as leader of the board.

With all this talk about inflation, interest rate hikes, and the danger of a recession, it’s easy to feel as if this pull-back is still in full swing. However, for our companies, it seems to have bottomed a little over three weeks ago, on Thursday, June 16th.

Well then, how much is each of our companies off the low price it reached in this decline? Here they are (as of July 8) in order of results.


**MDB, from $213.4 to $314.2	up      47.2% !!!**
**CRWD, from $130.0 to $190.4	up      46.5%** 
**SNOW from $110.3 to $159.68	up      44.8%**
**BILL, from $89.9 to $129.9 	up      44.5%**
**S, from $18.64 to $26.81	up      43.8%**
**NET, from $38.96 to $52.08 	up      33.7%**
**DDOG, from $81.1 to $108.3	up      33.5%**
**MNDY, from $87.05 to $114.23	up      31.2%**

So the top five are up an average of over 45% from their bottoms, and the other three an average of just under 33% from theirs. You’d never believe it if you just listened to the news, the talking heads, and the trolls.

Now, by definition, someone sold and someone bought at the low price. I just hope that the seller wasn’t one of you, scared into selling by all the voices saying “It’s going much further down!” on the day it bottomed.

As long as the company news is unchanged and good, what I do is stay in. (Note that that’s not the same with a company whose news and story have changed, Upstart is a recent example where, if I had had a position, I would have exited pretty immediately).

The reason I stay in is because just as I don’t know how far the rises will go, I don’t know how far the falls will go either. While this one turned into a once in 20 years or once in 30 years drop, the reason I don’t exit when a pull-back gets going is, for instance, if I had tried market timing and exited on Mar 16, 2020, when my portfolio was down 37% from my Feb high to 84% of what I had started the year, I would have missed a 297% gain from there to the end of the year, that’s 397% of what I had at that bottom, a quadruple for all intents and purposes. I promise you I had no idea that that would happen and it was a very scary time with the onset of Covid.

Best,

Saul

By the way, if other essentially consumer facing companies like Upstart start pre-announcing huge negative revisions to revenue and earnings, it can only be good for our companies as investors start thinking “Who isn’t pre-announcing?” and “Who is least likely to have that happen?”

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2

Unless you include where prices are relative to their most recent highs, this data alone has uncertain value. Statistics can be misleading. For example…

If your stock fell 60%, then increased by 50%, you are still down by 40%.

While an increase from lows is desirable, it does not necessarily herald a new beginning.

It’s too early to celebrate.

Cheers!

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3

It’s too early to celebrate. <<<<

Roy,
I didn’t see any celebration; more of a ‘look below the surface of the water’ kind of comment.

Vince

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4

If your stock fell 60%, then increased by 50%, you are still down by 40%.

Well Gee, Roy, I never would have guessed that. My portfolio is still down over 55% in spite of the rises.

While an increase from lows is desirable, it does not necessarily herald a new beginning. It’s too early to celebrate.

What I was saying, and very clearly I thought, was that listening to all the talking heads, and news, and trolls, you would think that all of our stocks were still at their lows and sinking rapidly. You would never guess that they had risen 45% from their lows. And yes, while it may not last, sure it’s cause for a mild celebration!

Saul

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5

What I was saying, and very clearly I thought, was that listening to all the talking heads, and news, and trolls, you would think that all of our stocks were still at their lows and sinking rapidly. You would never guess that they had risen 45% from their lows. And yes, while it may not last, sure it’s cause for a mild celebration!

I suppose you can look for mild celebrations, but to put things in perspective.

NET was down 81% from its ATH (in mid June), now it is “only” down 76%

tecmo
…

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6

but to put things in perspective, NET was down 81% from its ATH (in mid June), now it is “only” down 76%

Hi tecmo.
Just for a little reality. It doesn’t do you any good to live in the past at its “all time high” and anchor yourself there. You can only live in the now. That’s the reality of investing.

If you had $100,000 in NET at its low a few weeks ago, this weekend you had $133,700. That’s what up 33.7% from its low means.

If you had $100,000 in CRWD at its low a few weeks ago, this weekend you had $146,500. That’s what up 46.5% from its low means.

Saul

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7

Tecmo, you are missing the context.

You are correct that it would be very misleading to only talk about how far up a stock is from its all time low.

But the context of today is that pretty much all growth stock investors are getting crushed this year. We all know this and are reminded of it pretty much every day.

On the other hand, it’s very easy to totally miss that our stocks have actually been seeing a little bit of positive momentum lately. Markets are forward looking, could it be that we have finally hit a bottom? I dunno, maybe!

I think a little optimism is warranted. No one is being exceedingly optimistic. Just a little optimistic.

This thread’s veering off topic, so let’s close it off. No more replies unless Saul wants to add something.

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8

Saul, I am taking the risk of being called troll (that I am not) to say something I thought about saying few times but never dared to say. But somehow I feel I want to say it…

I noticed a weird thing that, every time after you posted a celebration type message after a rally in this bear market, these stocks immediately went through another round of big drop. I 100% like to see such rally (who doesn’t?). But from “superstitious” perspective, I guess it may not be a bad idea for people to not celebrate any such rally until we are really out of woods.

I am saying this for 100% good intension. Feel free to delete it since I have said what I wanted to say. Thank you.

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9

Stryker,

I think most investors try to focus on the underlying business and view company results in “constant currency” terms. With currency fluctuations what is currently a headwind will eventually be a tailwind (and vice versa). Just my 2c (or 20c now with inflation)

Bnh

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10

I think most investors try to focus on the underlying business and view company results in “constant currency” terms. With currency fluctuations what is currently a headwind will eventually be a tailwind (and vice versa). Just my 2c (or 20c now with inflation) – Bnh

Here’s my 2c:

  1. I live in the US. I evaluate company performances on the basis of USD because, over time, my returns are in USD and my eventual spending is in USD. For me, there is no value is considering results in “constant currency” terms because it’s tracking something that has zero application to my life. And that investment in a non-US environment will just have to outperform my US alternatives in order get my dollars.

  2. I’ve been investing for a LONG time. While currencies can fluctuate, some currencies appear to have a permanent direction in terms of value… DOWN. Over the decades, Latin American investments (from a US perspective) have had a multi-decade headwind of ongoing DOWN. While it is true that classical economic/financial theory will suggest that a change in direction may eventually be due… it is also true that none of us on this board will be here forever… and it could well be beyond all of our lifetimes before Latin America stabilizes their currencies over the long haul. On the other hand, it is certainly possible for our country to destroy OUR economy and join the LA countries in the economic dumpster. Then maybe your tailwind will manifest itself… but it’ll be an ill wind…

Rob
Former RB and BL Home Fool, Supernova Portfolio Contributor & Maintenance Fool
He is no fool who gives what he cannot keep to gain what he cannot lose.

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11

Both are living in the past

For the record, I explained some of my thinking in a post - but it was deleted.

Let’s try to live in the future; say 3 to 5 years out.

In the past 4 quarters, NET has generated about $730M in revenue, what do we think revenues will be like say 3 years from now. Can they sustain 50% growth? That gets them to $2.5B. What type of operating margin might they have? 20%? That gets them an operating profit of $145M - is this general thesis for a long term hold?

tecmo
…

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12

The main message here is to keep a positive - winning - mindset. Which is perhaps the most essential trait of a successful investor in the long run.

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13

Not sure what this board is becoming. Lately it seems to be a lot of what’s going to get deleted, what can someone say, reminders by Saul of what can’t be said. Seems to be spinning it’s wheels. When is the last time an actual new investment was presented by anyone, discussed, and accepted as a true possibility. How many, including myself won’t even try for fear of being shot down by the leaders of the board. Speaking of the leaders of this board, where have they all gone?

There used to be a very active core group that walked with extreme confidence, that seemed could do no wrong, that had mastered the market. Some of them have disappeared over the last few months. Seemingly once headed towards leadership roles, starting there own websites, newsletters, live webcasts, videos on Yahoo, building Twitter followings, all at the best of times. Many now silent at the worst of times.

My point is this. If you make the decision to step to the forefront and take on a leadership role when it’s easy to do so, when business is great, you need to also work through the worst of times, to show those same leadership skills when the you know what hits the fan. Saul is still here, but that core group of vocal leaders that were once very active on this board, some of them have completely vanished, not only here, but everywhere else they built a following.

Ok, even as I type this I feel like I’m wasting my time even now, as this will most likely not last 15 minutes on the board. Just know, to the person that deletes this, I’m not attacking anyone here, I’m just trying to give the board something to think about. A critique of what I think has happened here, and what this board has lost over this terrible sell off. I’m certain is will all make a comeback when this bear market ends, will find it’s vibrancy and footing again. At least I hope so.

TMB

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14

My point is this. If you make the decision to step to the forefront and take on a leadership role when it’s easy to do so, when business is great, you need to also work through the worst of times, to show those same leadership skills when the you know what hits the fan. Saul is still here, but that core group of vocal leaders that were once very active on this board, some of them have completely vanished, not only here, but everywhere else they built a following

I think your characterization of some people on this Board as leaders suggests they have a responsibility to the rest of us. I don’t think it is fair to those people who have been more vocal and likely more knowledgeable than the rest of us to have that responsibility placed on them, and to now be criticized because they are not there when you need them. Voluntarily and selflessly sharing their thoughts and ideas should be commended. They shouldn’t be criticized just because you seem to feel they owe you something. That is not what this board is about. And, by the way, you are free to present a new investment for discussion; you need not rely on others for that.

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15

Not sure what this board is becoming.

After over 20 years following investing boards I can assure you that what is happening here is typical of what happens to super successful boards. During the bull run everyone is a genius but few are prepared to deal with deep bear markets. Unfortunately the leaders of such boards are demonized and blamed for everything.

What is missing in most investing discussions is how to prepare for soul crunching bear markets. The preparation has to be both mental – which Saul has talked about a lot – but just as important is the financial preparation, you know, the lifeboats on ships, the inflatable wests on airplanes that one hopes never to need. But you can rest assured that every so often markets will melt down and if you are not prepared you’ll crash.

Not to get into portfolio management, it’s the story of the three little pigs. There is a bad hungry wolf out there are you have to take precautions.

Denny Schlesinger

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16

The reason I stay in is because just as I don’t know how far the rises will go, I don’t know how far the falls will go either. While this one turned into a once in 20 years or once in 30 years drop, the reason I don’t exit when a pull-back gets going is, for instance, if I had tried market timing and exited on Mar 16, 2020, when my portfolio was down 37% from my Feb high to 84% of what I had started the year, I would have missed a 297% gain from there to the end of the year, that’s 397% of what I had at that bottom, a quadruple for all intents and purposes. I promise you I had no idea that that would happen and it was a very scary time with the onset of Covid.

Quote from Saul above. Saul is being pretty open with how he approaches things and very detailed about what he is doing. Does anyone know how useful/helpful this is? You don’t have to follow him, just take it in and add it to your knowledgebase. We all have to make our own decisions.

It’s been said many times that this board isn’t like other discussion boards (either here at TMF or anywhere else). The board’s focus is specific, has evolved over time, and has some rules. By comparison with other boards, it is huge.

However, initial membership is not filtered in any meaningful way. Anyone can come here, observe, comment, contribute, etc. What some find objectionable on this board, is that, the focus and the rules come, in general, from Saul. The content comes from everyone, but it is guided by Saul and his designees (see ‘huge’ comment above). And let’s face it, some of the members might not share the focus of the board, or believe there should be rules.* So, unfortunately, if Saul didn’t guide it, or if he let too many tangents go, this board would become just another board, or worse, because it is so large.

I don’t want that. I am here for Saul’s unique perspective, and how he has created a braintrust to work on growing companies with the potential for outstanding results. I do not agree with everything he says, but if you want his kind of results, then you may want to listen to him. Unfortunately, he can’t answer everyone’s posts, and this is a volunteer board. If you follow the rules generally, then the board keeps producing useful information (for free!). Enjoy it if you want, be courteous at least, and perhaps be thankful for the information generated and shared here.

This is a difficult time. This market shows that investing in equities will always be risky. Most of us are hanging in there with great patience and courage. We can work together to get back to good/better returns. Let’s work against the problem**(rough market, what investments make sense?) and appreciate the resource.

Best investment results all,

Bill

*if you want portfolio management or basic investment advice, there are other resources for that.

**not us against each other.

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17

TMB,

When is the last time an actual new investment was presented by anyone, discussed, and accepted as a true possibility.

Somebody, I forget who, brought GTLB up as an investment opportunity to this board not too long ago. It has been one of the few hypergrowth stocks that is performing well the past few months.

There are almost no companies IPO’ing due to the market environment, so there aren’t that many new to the market investments to pick from. The problem is we are in a massive bear market that has been causing these stocks to severely underperform pretty much any other asset for 8+ months now. People are exhausted from seeing losses in their PF pretty much every week. This is what bear markets do, they grind investors down until enough people give up or enough pain is felt.

Bnh

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18

TMB, your post is pointless here. A lot of us have lived through severe downturns before and know when to hold on tight even when the red is on the bulk of the stocks and there is no end in sight.

There are times to sell and there are times to hold on or for those with no stomach for these kind of downturns, to get the heck out of the stock market.

Criticisms of boards is pointless.

LD

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Your missing my point. If someone is going to step forward during the best of times, they do take on a responsibility to be present in the worst of times. No one pushed anyone on here to become a core person leading the charge. When someone, I won’t name names, builds a brand around themselves from their exposure on this board, builds a following by asking for emails to gain access to their knowledge and their newsletter, then when it gets really tough, disappears from everything they asked for and built, that’s bailing on your viewership you created. That’s not being responsible. I’m not saying everyone has done this, but some certainly have.

I get your point but completely disagree with it. Nobody is getting paid here. Everyone gets to express their view points within reason. The only people who is a leader is Saul, if you consider anyone else a leader that is on you. I never did, yes I listened to their viewpoint put never considered them leaders. Many people come and go from this board and I suspect many more will. This has been a truly soul crushing down turn and every month Schwab calls me asking me if I am ok. I just laugh and tell them I live in a one story house. Seriously, this to will turn around and if you are still working or if you put money aside for a rainy day, you will be fine.

So once again, if you made someone in your mind a leader on this board that is on you, the real and only leader is Saul.

Andy

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20

Not sure what this board is becoming…Seems to be spinning it’s wheels.

This post is so misguided on so many levels. First, thank void for spinning! This board is a refuge from the normal monkey-chatter on most boards, where people seem desperate to hear and make themselves heard even if there’s nothing to say. If a day goes by without posts…that’s great! I didn’t come here to join another “social club” and sift through inanities.

When is the last time an actual new investment was presented by anyone, discussed, and accepted as a true possibility.

It’s pretty obvious things are in a holding pattern driven by market conditions. Many of the businesses people here own are doing fine given the context, probably still the best options long term. However, the stocks are being punished due to circumstances beyond anyone’s control. This is true everywhere. When I buy a stock, I’m buying the business, and I remain convinced that what I hold are still the best businesses. Nothing has changed, even with the crunch. And if nothing has changed, what more is there to say?

How many, including myself won’t even try for fear of being shot down by the leaders of the board.

Ah, the old “if you disagree with me, you’re silencing me” meme. This is a sad development in our society. If you get shot down, so what? Maybe you’re learn something, isn’t that the point? Or is the point to make a post so that everyone will cheer and you get a participation award? Are you trying to learn, or assuage your ego?

If you make the decision to step to the forefront and take on a leadership role … to show those same leadership skills when the you know what hits the fan.

Nonsense. Nobody owes you anything. My take on this board is there is no real “leadership” here, only “demonstrations”…in other words, leading by example, rather than pontification. What a relief from most boards, where pontification is the norm.

Finally, I do wonder why you bothered. Is there any other board where people are doing well, where people are winning out in this market? I doubt it, because if there were, you’d be there, or maybe you’d come over here and mention it as an alternative. So it seems to me you’re just taking out your frustration on other people, blaming them for your situation.

But it’s nobody’s fault. Everybody is sitting here going “wtf?” and wondering if Michael Burry is right and we’re about to drop another 50%, or whether we have to wait a year in a holding pattern before things start to move again, or whether the war will drag on, end, or get worse, or…who knows? :person_shrugging:???

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