Early 4-week summary for the faint-hearted
I hear a lot of noise about selling out into cash, people panicking about a possible downturn etc. I thought a bit of calming down would be worthwhile. Has everyone forgotten February already? If I had sold out at the mid-week low on Feb 8th, at the peak of that panic, I would have “saved” my year-to-date profit which was, on that date, almost 6%. And here we are, six weeks later, and I’m looking at about 33% instead.
First of all, this isn’t supposed to happen! When the markets head down our overpriced stocks are supposed to head down further and faster. Well let’s look at what actually happened (using my Jan and Feb closing dates):
The S&P had a great January, up 7%. However, in February it was down, and in the last four weeks it’s down another 5.8%. And year to date, it’s down 3.6%.
The Russell had a good January, up 4.3%. However, in February it was down, and in the last four weeks it’s down another 2.5%. And year to date, it’s down 2.1%.
The IJS Value, etc… year to date it’s down 3.5%
And if you want to throw the Dow in, it’s down 4.8%
Okay, I had a great January too, greater in fact, up 17%. However, in February I was up 4.3% while the indexes were all down, and in the last four weeks I’m up another 11% or so, while the indexes are all down. And year to date, I’m up about 33%, while the indexes are all down.
And there’s nothing special about me, what I’m doing, or my portfolio. I’m sure that most of you who have been investing in the stocks we follow are in the same range, plus or minus depending on which stocks you have, and in what proportions.
[And for a more insane comparison, the S&P is up about 15% since Jan 2017 (last year was a great year for everyone), while most of us are up in the range of 120% to 150% in the same time.]
Now are you sure you want to abandon our overpriced and dangerous companies in a panic and go into cash? Just wondering?..What companies? Let’s look at some of the companies our board is following, and how they’ve done in these past four terrible weeks, while the market has been falling, and looking at them even after the bad week they’ve just had.
Arista is up 7.4% in 4 weeks…
Alteryx is up 5.8% in 4 weeks, and up 38% if you look back 6 weeks.
Nutanix is up 40.2% in 4 weeks, and up 58% if you look back 6 weeks.
Shopify is up 3.3% in 4 weeks, and up 18.5% if you look back 6 weeks.
Square is up 15.4% in 4 weeks, and up 31% if you look back 6 weeks.
And Twilio is up an amazing 63% if you look back 6 weeks.
Okay, I think you get the point. These dangerous stocks, that some have referred to as “Saul stocks” while pitying us, and predicting that they would fall faster and further when the market pulled back, are rising while the indexes are falling, and falling is what the indexes have done last two months. Why? What’s going on? Well first of all, second of all, and third of all, we are invested in great companies that are disrupting important markets, growing like mad, and most have recurring income.
Now I’m in no way offering an opinion about whether or not we will have a recession or a bear market starting tomorrow. I’m just saying don’t go panic because we’ve had a few bad days. Keep the cash aside that you’ll think you’ll need, and add a little more to that, and then go out and find the best companies you can to invest in, and stick with them until either there story deteriorates, or you find a better place for your money.
Best to you all,
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