Since the beginning of this year
SNOW -200pts or -63%
UPST 106pts or -74%
NET -82pts or -65%
CFLT -49pts or -70
DDOG -74pts or -45%
MNDY -195pts or -64%
ZS -151pts or -50%
Bill -120pts or -52%
I have owned SNOW and DDOG. Happy to say I emptied the basket at the end of last year.
CNC
… A collection of mutual funds from American Funds.
Also, CRWD -14%.
I was late to the party (Saul’s board), so I haven’t held any of that for 5 years. Fortunately, I don’t hold most them. UPST, CRWD, DDOG. Most of what I do have is negative right now, except for COST and my company stock (both of which I’ve held a long time).
How are your American Funds doing?
How are your American Funds doing?
Has been better. Worst is New Perspective. Last 12 months -18.19%
Even my Income Fund of America is down: -3.77%
CNC
Several posters on the Value board have been discussing Saul’s prospects there as such postings are not allowed on Saul’s board.
At the moment the prospects of Sauls stocks look grim to me.
The business appear to remain solid. The entire market it down, and more volatile stocks should be down more.
Not defending him, nor condemning him. Just stating a fact. When the market finally recovers, it will be interesting to see if these recover faster or continue to flounder (i.e. the stock price…the companies are still growing like gangbusters).
At the moment the prospects of Sauls stocks look grim to me.
Every one of them? Why? A number of them are doing quite well as businesses, even if their share prices went berserk, and they are probably more immune to macro issues than are most other businesses. Morningstar rates a number of them 4 or 5 stars, based on business and current share price.
A number of them are doing quite well as businesses, even if their share prices went berserk, and they are probably more immune to macro issues than are most other businesses.
Excuse my cynicism, but in SaulWorld this is irrelevant. The game there is momentum trading in a particular segment, it has nothing to do with whether the company will be doing well in 18 or 36 months.
If their share prices went berserk, then (in that sphere) it’s long past time to dump them. I give Saul credit for having a formula and sticking to it, a lot of the other posters there don’t seem to get it. In, out, lather, rinse, repeat. He buys, then heads for the exit at the first whiff of smoke (even if it turns out to be the neighbor just frying bacon.) His trigger finger twitches twice before mine even gets itchy.
Whether those companies are susceptible to macro issues is likewise irrelevant; if you are waiting for them to re-acquire the berserk-ness, I think you may be waiting a very long time. (Having watched a few bubbles in my time it’s hard to remember when a stock which went “berserk” plummeted and then regained that former glory. There may be a couple I can’t think of but most have not done so: AOL, MSFT, CSCO, etc. Oh wait, Apple. Clearly an outlier. Oh, and BitCoin, but I think we all agree that’s not the same thing at all.)
Anyway, not a slam against Saul or the “method”, just noting that it’s a totally different game, all our rules do not apply.
Excuse my cynicism, but in SaulWorld this is irrelevant.
Yes, I know. But the comment was about whether those stocks might be sensible investments for sensible people now that their share prices have descended back to earth. And, as I noted, some fairly sensible analyses suggest that at least for some of them, the answer may be “yes”.
I bought a bit of SNOW after it dropped below its IPO price recently. I also had a bit of CRWD, bought post-thrashing, but sold it for a modest profit. M* regards DDOG, ZS, MDB at current prices favorably.
If their share prices went berserk, then (in that sphere) it’s long past time to dump them.
I’m not sure why I’m prolonging this (or defending Saul, sort of), but: this is exactly not what Saul’s done. To the contrary, he’s held many of those stocks long after he (arguably) should have sold them, precisely because valuation is irrelevant to him. The businesses continued to grow revenues at a healthy pace, and so he didn’t care that shares were selling at 30, 40, 50 times sales.
I don’t follow Saul’s stocks. I prefer growth stocks with earnings. Those without earnings are too speculative for me. But to each his own. Your mileage may vary.
Yes, Saul’s board seems concerned that stocks with excellent growth prospects can falter. But indeed they can. And that can make for an excellent buying opportunity. Or there can be more bad news ahead. It becomes a timing issue. Now may not be the right time.
I don’t follow Saul’s stocks. I prefer growth stocks with earnings.
Even those with earning are not immune to this sort of volatility. Take boom to bust Upstart. EPS of 1.6 and PE of 23. Down something like 80% from ATH.
I don’t follow Saul’s stocks. I prefer growth stocks with earnings.
That’s fine. But just for the record, a goodly number of the so-called Saul stocks have earnings, positive cash flow, and little if any debt. They’re not all unicorns.
If their share prices went berserk, then (in that sphere) it’s long past time to dump them. I give Saul credit for having a formula and sticking to it, a lot of the other posters there don’t seem to get it. In, out, lather, rinse, repeat. He buys, then heads for the exit at the first whiff of smoke (even if it turns out to be the neighbor just frying bacon.) His trigger finger twitches twice before mine even gets itchy.
This characterization is also wrong. Since Saul makes a point of staying fully invested at all times, he doesn’t “dump them”, he just switches from one to another. And sometimes he goes back in to a company he got out of, even at a higher price, if he decides it was bacon he smelled and not the bad kind of smoke. And who’s to say that the share price has gone “berserk” and won’t go much higher. So long as the company is executing…
His MO is truly simple: stay fully invested in about 10 of the best companies. And everybody gets to decide for themselves what the best companies are. But for now, Saul believes that means hypergrowth SAAS companies. And it’s easy to see why “value investors” are appalled – the best companies always seem expensive.
-IGU-
Excuse my cynicism, but in SaulWorld this is irrelevant. The game there is momentum trading in a particular segment, it has nothing to do with whether the company will be doing well in 18 or 36 months.
Momentum trading refers to following stock price trends. This isn’t even vaguely what Saul does. You get shut down for discussing stock prices on Saul’s board.
What Saul actually follows are very high growth metrics. If a company is growing some metric like revenue or sales or new customers at more than 50% a year, that is an interesting stock whether its stock price has recently risen or fallen.
If Saul was trading price momentum, he would have gotten out of his port which has been falling in price since November 2021. But since he is trading growth metrics, he holds these stocks even as their price falls, as long as their business growth continues.
Like many strategies, Saul’s comes under attack precisely when it is most likely to do well: when its stock prices are lower. The loudest posters on any board seem to believe the winning strategy is buy high and sell low.
R:
Ralph: Like many strategies, Saul’s comes under attack precisely when it is most likely to do well: when its stock prices are lower. The loudest posters on any board seem to believe the winning strategy is buy high and sell low.
So is now the time to back up the truck and load up on Saul stocks? I sold all of mine in December.
CNC
Momentum trading refers to following stock price trends. This isn’t even vaguely what Saul does
If that’s the definition of “momentum” you use, then you are correct. Perhaps I used it carelessly, but I meant his system works on sales and growth momentum, irrespective of profitability or stock price.
There was a time when I paid attention to that, but once you acquire wealth it becomes a vastly different game: capital preservation, which is where I am. The idea of “value” is a non-starter there, that’s what I was referring to.
When I read Saul’s comments about how he views a company, and the “metrics” used for investing decisions, I see a giant, starry, flashing golden “GORILLA GAME” sign.
Innovators; early adoptors; chasm; tornado; maintsreet.
Saul tries to find Gorillas as they finish crossing the chasm, and enter the tornado phase.
He bails as soon as the metrics begin to indicate the business is entering “mainstreet”.
This is also related to TALC (Technology Adoption Life Cycle). Saul attempts to identify Technology that is in the Hockey Stick portion.
I’ve never seen Saul mention GG. This is just the mental image I get when reading his writings.
I also do NOT think that Saul’s style is exactly GG.
I’ve read a few investors/posters who claimed to follow GG, but mostly they were unable to clearly explain what they were thinking.
IMO, Saul is the first/only person who clearly explains his thoughts.
JMO
ralph
CountNoCount
So is now the time to back up the truck and load up on Saul stocks? I sold all of mine in December.
Unfortunately, I am the opposite of a market timer. I rode Saul up more than 100% from my entry peaking in 11/2021 and have ridden him down 66% or so from that peak until now. Just tracking the price on a graph, there is no real evidence of a turnaround in the stock price decline having happened yet. So what do I do? Just hang on so that if it does turn around soon I’ll be on it.
If you got out in December and you were to buy back in now with all that cash, you would have more than 2X as much in your portfolio as if you had done what I did, just hang on. That’s quite a win! I suppose it also means you can afford to look for a more obvious change in the trend, maybe something like at least 3 months since it made a new low, and still come out way ahead of just having held. Right now its most recent low was June 17, hardly in the mists of history quite yet. I don’t think its gone 2 months without making a new low since 11/2021 (recent-ish low, since its peak in 11/2021 lets say).
Good luck with that timing!
R:)
Goofy wrote:
If that’s the definition of “momentum” you use, then you are correct. Perhaps I used it carelessly, but I meant his system works on sales and growth momentum, irrespective of profitability or stock price.
…
The idea of “value” is a non-starter there, that’s what I was referring to.
A Value investor ties her purchases to a price which is lower than a conservative estimate of the business value right now. If it ain’t earning 10%, or whatever, don’t buy it. What this does NOT take into account is how much it will be earning in 1, 2 or 5 years.
Saul, by concentrating on growth metrics over 50%/year is implicitly aiming at companies which WILL BE making much more money sometime in the very foreseeable future. His screens essentially look for companies that 1) have been growing gangbusters for a year or 2 or 5, and 2) will keep doing that for at least a few more years.
Find 2) is the hard part, but if you do, then you can make money even on very overpriced stocks. As small growth companies become larger companies, their overpricing decreases, so you are battling that headwind as a Saul investor. But the tailwind is the 50%/year growth and if that keeps up you should do all right. And indeed, investing in companies growing 50%/year Saul has managed to average about 30%/year in earnings, which means the natural tendency for the growth premium to shrink has only eaten 2/5 of the 50%/year underlying growth that Saul purchases.
What Saul doesn’t seem to have is any metric of where, in an absolute sense, the price of future growth is at. He buys the best growers and counts on the idea that whatever the growth premium is, it won’t shrink faster than the companies he bought are growing. But that premium can shrink and has shrunk recently, probably by something like 80% in less than the last year. Even doing that shrinkage, it has likely only “given back” a year or two of a growth trend in that premium that took place over at least the 3 years prior to 11/2021.
I wish I were in the land of capital preservation! But I really really would like to have just another million or two, and you can’t get that with BRK, not without some really lucky timing and high leverage bets. Maybe I’m leading myself to the slaughter, but I think I"ll look good 10 years from now, assuming I live that long. Game on!
Cheers,
R:)
What Saul doesn’t seem to have is any metric of where, in an absolute sense, the price of future growth is at. He buys the best growers and counts on the idea that whatever the growth premium is, it won’t shrink faster than the companies he bought are growing.
Precisely. And that, in my view, is the flaw. I genuinely applaud Saul for identifying the hypergrowers and the underlying rationale for their hypergrowth. But when the shares start selling at 50x revenues, it’s sheer obstinacy (again, in my view) to refuse to perform even the simplest back-of-the-envelope projection of what sort of sustained revenue growth and (eventual) net margin would be required, say, 5 years hence in order to justify the current price and sell when the value is pretty clearly no longer there. This would seem to be esp. true for folks Saul’s (and my) age. Also, my complaint is not hindsight. Many folks were saying this a year or so ago, but they got shut down.
Lastly, it’s not as if he’d been doing this for many years and demonstrated that it can work. For the vast majority of his history, he was a (very smart) fairly traditional GARP investor, buying stuff like Skechers and truck stops and paying close attention to PEGs and such.