Due to the popularity of Saul’s board, I know that many people look at my portfolio and others’ who post here. Please remember that I’m not here to advise. You have to decide whether to invest in growth stocks and whether or not to run a concentrated portfolio, and if so, with what percentage of your net worth. If someone who was retired, or on the verge, suddenly decided to put 100% of their net worth into a portfolio like mine in mid-2021, it absolutely would have messed up their plans. At the lows this year my portfolio was down more than 60% from its 2021 high. If you haven’t been through that, take some time to do the math. Staggering.
As bad as this year has been, if you widen the lens, you see a very different picture. Cumulatively since January 2017, my portfolio has gained about 1,100% even after falling so much this year. I think this style has worked for me for a few main reasons:
- It fits my mentality. I can change companies often, but I’m committed to investing for the long haul.
- When I started, I had a solid job and was adding money to my portfolio regularly.
- I had some great luck early after adopting this style, in that 2017-2020 (especially 2020) was an incredibly good run for growth and especially SaaS.
Saul and many, many others have successfully run a concentrated portfolio for decades. But that doesn’t mean it’s for everyone. And before trying this style, please understand the downside (2022 is a good reminder). If you want to read about my path, there are links to every monthly review (starting Feb 2016) at the bottom of this post.
The choppiness continues. The indexes were each up roughly 5% this month, and you can see that all my major holdings were down. However, Peloton was up 35.5%…but who cares. As I said last month it seems like this is happening irrespective of the merits of each company. That’s fine with me, because eventually quality wins out. In the short term, macro and sentiment drive returns. In the long run company performance drives returns.
Comments on each company
Like last month, no new positions, and none closed: Mostly I just added and trimmed and added and trimmed all month.
Datadog and Bill.com are up, because they fell less than the others, and because I added. I’m letting these two grow a little larger than I planned, because I don’t know where else to put the money. These are slowing and might fall out of hypergrowth temporarily, but I still believe they’ll grow fast for a long time.
Snowflake is down because I trimmed a bit. It just hasn’t been beaten down as much as others, and I don’t believe it will grow much faster or produce much more FCF, etc. So I want to redistribute the funds to others. I’ve smoothed out CRWD, SNOW, S, and NET into a “mid-sized” group.
I added to Crowdstrike and SentinelOne, so they’re larger positions despite the shares falling a ton. I also added to Cloudflare.
I didn’t touch The Trade Desk, and I trimmed Peloton as it rose so much, so it’s just a completely irrelevant 0.2% position now.
I’m still convinced these are the best companies I can find. They’re not growing as fast as they used to be, for lots of reasons. The law of large numbers, the crummy macro environment, etc. And if it becomes clear that it’s also because they’re losing their edge, I’ll have to sell. But I don’t see that now.
Sorry this is so short, but there’s not that much to say. Trailing PS ratios have come down from 60-70 at the highs last year to 10-20 now. I don’t want to be glib or jinx us all, but how much lower can they go? The goal remains the same: pick the best companies. Eventually the multiples will bottom and maybe even expand again. Then, company revenue and profits will drive share prices instead of falling multiples.
Until then, we wait. A happy December to you all!
“Compound interest is the eighth wonder of the world. He who understands it, earns it … he who doesn’t … pays it.” - Attributed to Albert Einstein
Previous Month Summaries
Dec 2016 (contains links to all 2016 monthly posts): Bear's Portfolio at the end of 2016 - Saul’s Investing Discussions - Motley Fool Community
Dec 2017 (contains links to all 2017 monthly posts): Bear's Portfolio through Dec 2017 - Saul’s Investing Discussions - Motley Fool Community
Dec 2018 (contains links to all 2018 monthly posts): Bear's Portfolio through Dec 2018 - Saul’s Investing Discussions - Motley Fool Community
Dec 2019 (contains links to all 2019 monthly posts): Bear's Portfolio through Dec 2019 - Saul’s Investing Discussions - Motley Fool Community
Dec 2020 (contains links to all 2020 monthly posts): Bear's Portfolio through Dec 2020 - Saul’s Investing Discussions - Motley Fool Community
Dec 2021 (contains links to all 2020 monthly posts): Bear's Portfolio through 12/2021 - Saul’s Investing Discussions - Motley Fool Community
Sep 2022: Bear's Portfolio through 09/2022
Oct 2022: Bear's Portfolio through 10/2022