Gasp! I think we have hit Bottom!

Investment Analysis Clubs Saul’s Investing Discussions
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Gasp, I think we have hit Bottom!

I will probably jinx all our companies but I’m going to do something I almost never do, which is market timing, and I’m going to predict that we just hit bottom on our companies. Don’t guffaw too quickly. Just follow what I’m saying. AND SINCE THIS IS OFF-TOPIC, PLEASE DON’T ANSWER ON BOARD, BUT IF YOU MUST, SEND ME AN EMAIL OFF BOARD. Here’s the evidence:

My portfolio hit its low for the year on MARCH 8th, at a close of 83% of what I started the year with (down 17%).

It hit a second slightly higher double bottom on MARCH 29, at 84.3%, and bounced off that too.

And on MAY 6 my portfolio made a triple bottom at roughly 85.0% and had a little bounce off that too.

Yesterday it closed at 84.4% of what I started with, and held, for a quadruple bottom.

It was clearly not going down and down, and down, and down. It was trading in a range of +5% at my little tops, and about down 15% at my lows.

This morning, a half hour after the market opened, it was down about 2%, but a lot of buying came in and it swung into positive territory and finished up 2.8% for a 4.9% swing from the day’s bottom to the close.

After four times bouncing off the same level over a two month period, and making a quadruple bottom, it looks to me as if there is enormous support at that level for our companies, and that they just aren’t going any lower.

But, of course, I could be totally wrong, we’ll just have to see.

Best,

Saul

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Oh, and if anyone is interested, right now Upstart is already up 15% in the aftermarket, after reporting results.

Saul

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How do we play this new inflation scare?

A post like this is really, really, REALLY, inappropriate for our board, and will be DELETED!
Saul

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How do we play this new inflation scare?

I would guess the same way this board tends to play most things: by focusing on owning quality companies and letting time do the rest. I realize you might not have meant it this way, but “playing” anything implies trading and not investing. If it helps, below is the personal macro cheat sheet I’ve put together over the years.

High taxes - Own quality
Low taxes - Own quality
High inflation - Own quality
Low inflation - Own quality
Weak economy - Own quality
Strong economy - Own quality

“AND SINCE THIS IS OFF-TOPIC, PLEASE DON’T ANSWER ON BOARD, BUT IF YOU MUST, SEND ME AN EMAIL OFF BOARD.”

Saul was pretty specific about this in the original post. Yes, macro and market conditions are a little uncomfortable right now. And maybe a lot uncomfortable if you haven’t been through many pullbacks of this magnitude before. Unfortunately, there’s little we can do when they happen.

Please don’t lose sight of the fact we’ve had some outstanding earnings reports recently with several more on deck. Those are what should be driving most of our conversations and decision making. All the recent market has done is possibly put these companies on sale at much more attractive prices than just a few weeks ago. If we pick the right ones, I’m guessing very few of us will end up disappointed in the long run.

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Yesterday (Monday) it closed at 84.4% of what I started with, and held, for a quadruple bottom. It was clearly not going down and down, and down, and down. It was trading in a range of +5% at my little tops, and about down 15% at my lows.

This morning, a half hour after the market opened, it was down about 2%, but a lot of buying came in and it swung into positive territory and finished up 2.8% for a 4.9% swing from the day’s bottom to the close.

After four times bouncing off the same level over a two month period, and making a quadruple bottom, it looks to me as if there is enormous support at that level for our companies, and that they just aren’t going any lower.

A quick update!

My portfolio closed at 84.4% again, exactly where it closed Monday, and just above the middle of the 83% to 85% range where descent has been stopping, so the thesis is very much still intact. We’ll have to see if the “inflation panic” succeeds in pushing it out of the envelope.

What did I do today? I bought as much Upstart as I could raise money for, when I saw it unbelievably back in the low 90’s, buying most of what I bought between $91.70 and $92.70. My position size moved from 9.1% at yesterdays close to 12.2% at today’s close.

What did I sell to raise the cash? A little Crowdstrike, a little Cloudflare, a little Datadog, a little Inari. What didn’t I sell? I didn’t sell any Snowflake or any of my smallest position, ZoomInfo, just because it was already smallest. The small sells didn’t change my portfolio allocations in any noticeable way.

Best,

Saul

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Another update, I am now 1.5% below my previous low for the year.

I added more Upstart today. As I just pointed out on another thread, with guidance for yearly revenue growth of 158%, which they will raise two more times and then beat the third time, it seems a no-brainer to me, but be careful, I have no knowledge of the loan industry at all. It seems that they will probably triple last years revenue (up 200%… as I said, they are already guiding to up 158%, and this last quarter they raised annual revenue guidance from $500 million to $600 million). After all, they say that sequential growth for EACH of the next three quarters will be 28% or more. It was 40% this last quarter.

And their contribution margin seems to contain other expenses than normal cost of product, maybe some S&M expense, and some G&A expense too. I don’t entirely understand it, but I don’t need to with that kind of growth and already adjusted profitable. After all, they made 22 cents this last quarter and they only made 23 cents all last year.

And the three founders running Upstart were all in senior-ish positions at Google. These aren’t some scam people who just came out of the woodwork.

Best,

Saul

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Well, I TOLD you on Tuesday that we had hit Bottom for our stocks? This is now FIVE TIMES that our stocks have bounced off this level!!! That beats a “Double Bottom,” hands down! And this time my portfolio as a whole bounced 8% in one day.

And Upstart bounced 23%, Snowflake bounced 11.5%, Cloudflare bounced 8.5%, Datadog bounced 6.6%, Crowd bounced 3.7%!!! They have showed us that they have found overwhelming support at yesterday’s level!

And on Wednesday and Thursday I TOLD YOU I was putting every penny I could find into Upstart! Up 23% today! And I told you why! What would you expect with the earnings report they had. It was insane that it traded down as it did.

And think of those poor guys that were shorting it. :sleepy:

Well we come here to work together and learn from each other, but it is very rare that I will contribute market timing. But a 5 TIMES BOTTOM is hard to resist. However, I did try to explain as much as I could about Upstart in terms of fundamentals.

Best to you all, and have a great weekend,

Saul

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Thank you Saul. I appreciate all you do and value your generosity of both time and information greatly. I have learned so much from you over the last few years. Thank you.

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