For a little attempt at reassurance!

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For a little attempt at reassurance.

First, let me emphasize that I don’t know what our stocks will do next week or next month or next three months. All I know is that my companies are doing VERY well.

Now here’s the little attempt at reassurance: Back in the fall of 2019 (a year and a half ago), our companies took a terrible tumble with a rotation into value stocks. People like zerohedge showed up on the board and hammered us with “These overvalued stocks will probably NEVER see the highs again that they had in August!” Yes, I kid you not! Someone even said they’d “never” get back to their highs. Some normally very sensible people on the board were so concerned that they thought it might take two years for some of them to actually get back to those highs. The decline was so bad that after being up 77.4% at the end of July, my portfolio finished 2019 “only” up 28.4% !!! It actually lost 28% from the highs. (Yes, sector rotations like this have happened before).

Wait! I’m not done yet! Then came the Covid Scare of 2020! After being up about 34% on Feb 19, by Mar 16th I was down 16% on the year. That was a drop of 37%! Read it again, 37%!!! In a month!!!(Yes, drops like this have happened before).

The shorts, and the value people, showed up on the board, sounding oh-so-earnest, they were only telling us this for our own good, and out of the generosity of their hearts, but we should all sell out and go into CASH! Our overvalued stocks would drop another 37% easy. I even know a board veteran who did get temporarily scared out.

But by the end of last year our companies’ stocks had enormous gains. My portfolio finished last year up 233%, at 333% of what started the year at, well more than a triple, and about a quadruple from March 16’s lows. If I had gotten scared out, I would have missed all that. And many others on the board more than doubled or tripled what they started the year with.

I certainly don’t expect tripling again this year, and that is NOT what I am saying, but it’s important to roll with the punches and not listen to guys who show up all of a sudden to tell you to sell out. Trying to time the market is a losing game!

I hope that this is of help.

Saul

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First, let me emphasize that I don’t know what our stocks will do next week or next month or next three months. All I know is that my companies are doing VERY well.

And that’s all that matters, IMO. Which is why I don’t put much stock (pun intended) in “charting”. All charting does is look at stock price, not company fundamentals.

The market is inefficient, but over the long term it’s a pretty reliable evaluator of companies. If you have a good company then the stock is going on sale right now. “Buy the dip”. Don’t know when it will go up again, but as long as the business and numbers are solid, it will eventually go up.

1poorguy (doesn’t do shorts or options; I’m either long or I’m not)

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Saul, this is my first message on this forum. I don’t speak English very well because I am German. I have been following this board for a year now and was looking for a forum for hypergrowth stocks in the tech sector and especially SaaS as I have been an IT expert myself for 20 years with many companies that are the subject of this forum. I can only repeat what many forum members have written here, our companies are the future. If it has been very hard for many newcomers for a few weeks now that the shares of our companies have lost a market value due to a hard correction, that not, that they will continue to do so in the last few year or years. I read a lot of messages from Twitter accounts, hedge fund companies and the messages that come from the busy people always in the opposite direction to give the anxious investors an even worse feeling for their investments. We all know the consequence, these demanding people sell their shares when they are already 20-30% in the red. Different year - before the crash, which was made safe by the pandemic - 70% of my shares were owned by the German share index (Dax). I have also often been in the red for many years, because the German share index is made up of values ??that were already doing relatively badly before the Covid slide (See Lufthansa, TUI, Deutsche Bank, Commerzbank and so on). I have sold all the german stocks during Covid Crash and slipped in tech stocks for the SaaS relationship rights. My greatest positions were Fastly, Elastic, Alteryx, Atlassian (which i’ve owned before). Then I found this forum and found that there may be good investments out there. I’ve switched to other companies over the past year.

Until mid-February 2021 I was on a fully invested portfolio with the values ??from Crowdstrike, Cloudflare, Datadog. Snowflake, Elastic, Fubo, Skillz, Magnite, Tesla, Palantir in a plus of 45% ytd. Now I’m somewhere at -8% and I don’t mind the difference to my minus in the Dax values ??at the time, because I know that I’m invested in the right companies (can change over the time… have twilio and other companies on watchlist) and that I’m safe (I’ll leave Tesla out … since this is not the subject of discussion) that in a few years’ time we can only laugh about the course correction in the tech environment in 2021. My company that I work for (insurance industry IT) is going massively into the cloud and digitizing wherever possible. And that in Germany, where digitization has been completely missed in recent years! So we are on the right track. And since Europe is a big market and there is relatively little competition to the big American cloud and generall SaaS providers (apart from SAP), I believe in a very big growth market in Europe in the next few years. So I’m staying with the companies mentioned here in this board for a long time. I am very grateful to this forum, I have learned a lot and the best thing is: It’s calm and businesslike here. Don’t rush, don’t panic.
Thank you all!

I apologize for the bad English (translated via google with some Here and there corrections).
Regards, a german fool.

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I always come back to my favorite quote during corrections or downturns by the legend, Peter Lynch. He inspired me to buy what you know and really tried to show retail investors all the possibilities and advantages that the little guy has through his great books.

“Far more money has been lost by investors preparing for corrections than has been lost in corrections themselves.”
-Peter Lynch

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Welcome to the board cl72n. Please don’t hesitate to post again. I understand your hesitation with the language. When you are writing you want to get all the spelling and grammar correct, but if you were talking, the words just come out, and you would just want to be understood. Don’t worry. If you have something you want to say, just say it, and we will figure out what you wanted to say. (You did very well with google translate in this one, actually).
Best,
Saul

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Hi, Saul, thank you so much for trying to give us some reassurance here.

Sorry, I think I posted a similar reply a few days ago, but didn’t hear back from anyone.

I also do believe in the futures of our companies. But all bubbles start on the foundation of reality. Just Like during the rail road bubble where people believed in the rail road was going to change the world, and during the dot come bubble where people thought the internet was the future

I am quite scared, to be honest. I am not old enough to remember the internet bubble. But I know you got out of that bubble just at the right time. Which was very impressive

Could you please share some of your experiences back then. In 1999, what made you think differently than today

Thanks again.

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All,

I generally can’t contribute here but I would like to provide two links on the “reassurance” topic. While opinions on charts utility for prediction vary greatly I think they are useful for illustration. In the tweet linked below an analyst with an advisory service well known to some members of the board illustrates that in the past year there have been six “value rotations” and each has been followed by an increase in the spread of the performance of growth stocks over value.

https://twitter.com/knox_ridley/status/1367678202735300609

Cathie Wood of ARK investment post a weekly video that covers a broad range of topics. In the most recent video at about the 11:00 minute mark she begins discussing the differences between retail and institutional investors and then moves on to outline the ARK hypothesis based on disruption leads to the conclusion that over time (investment horizon= 5 years) growth in the form of innovative disruptive companies will provide superior performance to what are perceived as value stocks.

https://ark-invest.com/videos/market-commentary/march-5-2021….

Bob (out, back to lurking)

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Hi Everyone,

I started investing in Dec 2018 and found this board in July 2019. Till that time, I was investing in value stocks and I had not earned anything. After reading Saul’s Knowledge base, I was/ am highly impressed with the investing logic and practice. So, I changed all my holdings to growth stocks. When I bought on 26th July 2019, market was at all time high. And just after I bought all the growth stocks, it started melting down but I stayed the course as I strongly belive in Saul’s philospohy. I was in red till december 2019 and once upon a time my portfolio was around 40% down. Today , even after recent correction, my portfolio is 181% up from July 2019. In Feb , my portfolio reached 250%+ before going down.

My portfolio:-
CRWD-30%
SE-18%
NET-15%
DDOG-15%
Afterpay-8%
SNOW-7%
NARI-7%
FVRR-5%

ZM,CRWD, DDOG, SE, Afterpay are major contributors to my portfolio. However,I use margins but Saul advises against using it.

Thank you Saul and other members of this board for their generous contribution to this board.

Kind regards,
Monty

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DDOG is 10 percent of the portfolio and not 15 percent. Sorry,I am unable to find option to edit the previous post so I have posted again. Please delete both posts if they violate the rules of the board.

Thanks,

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For those not feeling reassured let me offer this. I had to check the date of Saul’s post to verify it was new because it sounded identical to a post from the past. These stocks went on to set new highs from there and are still significantly higher than the last trough that was significant enough to warrant his calming voice. Take advantage of this and add shares at a cheaper price. Until you are retired you are a net buyer of stocks so any pullbacks benefit you even if looking at the dollar value of your account is painful.

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Thanks for the rational input Saul.

When stuff like this happens, check the fundamentals in the markets, and look at the fundamentals of your holdings. What changed between February 14th and now?

First the market; Clearly the NDX is selling off, while DOW is surging (set a new record high today). That’s pretty obviously a rotation. But on the whole the industrials are still lagging way behind Tech. It seems some profit taking is one driver… makes sense when markets are up several multiples. The other apparent market shift is likely a reaction to the COVID reopening, with rate seers anticipating a rate hike. Why? Because they expect when COVID is gone lots of people who have hoarded their money this past year with nowhere to spend it will finally put that money on Main Street and cause inflation. Inflation may drive the Fed to raise rates. If rates go up, business stops borrowing money to expand or buy back shares, and so on. It’s the taper tantrum all over again, despite Powell assuring that rates are not going anywhere for another couple of years.

Next our holdings; as best as I can tell, nothing much has changed. Earnings were mostly done already, no major surprises to the downside, only upside surprises. ZM came out strong, and rose to $450 AM, but got killed the next day. Some of that was to be expected, ZM cashed in on the WFH surge, and will have to prove they have legs beyond COVID. But reality is COVID only accelerated what most companies needed to do anyway; digitize and get to the cloud. Are any of these companies going back to paper or insourcing their data centers now that they moved to the cloud? Obviously not!

Markets don’t just move in one direction. They go up, and they go down. So, these race horses are taking a breather, and in the meantime they are on sale. I’m cherrypicking some of my faves at a discount. In a year from now things will be much rosier.

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Well I am certainly glad that I wrote the attempt at reassurance that started this thread last weekend, but I certainly didn’t expect it to happen so immediately. I’m no better than anyone else at timing the market, which is why I pick great companies, stick with them, stay fully invested, and never listen to the guys who say “Sell out and go into dividend and value stocks and ETF’s”. I hope that my post helped some of you stick with it when it got scary.
Best,
Saul

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