I think I'm Done

[aln10788]

I can’t keeping buying these companies. I discovered this board in the summer of last year. During the fall I started to slowly add to the companies discussed here. I eventually bought all in and sold my 10 years of S&P500 shares I held in my ROTH IRA. I slowly moved all that money into a concentrated portfolio used by many here.

I ran out of those funds in Feb. All my new money in my brokerage account has been going to these companies as I continue to catch a falling knife. My father passed away in February and left me a decent sum of money. I added a substantial amount of that money he left me to these companies that have been beaten down the past 6 months. I used to think this was an opportunity of a lifetime, now I’m wishing I never discover this baord. It doesn’t seem to matter what these companies report, they just keep falling in share price.

Datadog and Cloudflare had what appear to be pretty good earnings and are still getting slaughtered. There have been other panic posts and people have seemingly qualmed those fears. I don’t recall a time in Saul’s history where he has been down this much. One of the main reasons I decided to go in this direction is over his investing history, the worst down years of the S&p500, Saul still did better.

I don’t see any way that happens this year. That might be fine for him, since he was up over 200% in 2020.But for people like me,losing this amount of money has come with tons of anxiety to a very chill guy. So instead of adopting this investing style hoping to retire a few years early, it’s now looking like I’ll be retiring a few years late. Luckily in still only 33 and hope things turn around.

[MAS4R]

I am 47 and I am not changing anything in my investing.

Will I invest this way in 20 years? No, unless I can get my minimum annual income needs met from elsewhere (by renting out real estate).

But nothing about my macro, sector, or company thesis has changed on a 10+ year horizon (individual companies will keep changing).

The big money is moved according to old textbooks plus a lot of conservatism in terms of assumptions ever since 2000. Eventually, company performance will matter.

Selling now could mean selling X at a low to buy Z at the top.

This is not a comment on individual companies, I will have to see how NET did later today and I am looking again at TWLO considering its performance relative to its valuation.

[darrellquock]

Hello,

I wanted to post a quick message off the boards to you…

Hang in there…

There is no shame is owning index funds if they can get you to your financial goals…

Yes, you have the most valuable asset available to you to recover…TIME.

[LifeOfDreamer]

I don’t recall a time in Saul’s history where he has been down this much. One of the main reasons I decided to go in this direction is over his investing history, the worst down years of the S&p500, Saul still did better.

---

I happened to look at Saul’s first posts the other day.
He started the board in 2014. I didn’t really pay attention here until later in 2017 and early 2018. So I was curious what companies he covered.

Anyway, he mentions in some of the early post his historical returns, and I believe it is the period from 2008 recession until 2012 before he surpassed 2007 highs.

"In 2008, in the big meltdown, I dropped 62.5%, which was pretty terrifying.

In 2009 I was up 110.7%. The way percentages work, after dropping 62.5%, gaining even 110.7% doesn’t get you back to where you started.

In 2010 I was up just 0.3%. In 2011, I was down 14.5%. If you wonder what happened, that was when, with the help of MF Global Gains, I got into all those little Chinese stocks that turned out to be fraudulent. (This was partly the fault of MF GG for recommending them, but certainly in large part my own fault for being naïve. Starrob even warned multiple times about these stocks but I ignored his warnings.)

In 2012 I was up 23.0%, but, as of the end of 2012, four years after the 2008 collapse, I was still not all the way back to where I had been at the end of 2007."

He then did 51% in 2013.
https://discussion.fool.com/my-end-of-the-year-results-for-2013-…

Not sure if that makes you feel better or not, but it tells you the mindset you will have to choose to adopt if you choose to invest this way. Has to be your decision.

I just literally bought NET and BILL in AH, and DDOG premarket today. That is 3 “Saul” stocks I had avoided due to my valuation concerns. They could skyrocket from here or fall 50% further, based on macro market I can’t control. Saul has a process, I have a process…you need to own your process.

My risk-aversion caused me to miss out on the mammoth (and unrealistic) run-up many had in 2020 investing in hyper-growth S-curve companies. I still did really well by normal human standards. Conversely, I am “only” down 9% YTD because I had largely stayed in cash this year. I took a big tax hit and sold everything in Dec because I tend to have price targets in mind, and all mine were met and exceeded. Saul prefers to invest until the growth story changes.

What I tend to notice is that you can be successful with just about any method, provided you do your DD and you stick with the process. What never seems to work is bailing out at the bottom and trying something different…every time I did that it seemed I sold bottoms and bought tops.

Investing is hard.

Dreamer

[AnalogKid70]

I have great sympathy for your situation. I went through something very similar in the .com bust when I was around 30. I had saved a decent amount in my 401k and saw it drop 50%. I kept plugging away, and built it back up, then in 2008ish it dropped 40%-50% again. I also had a decent amount in CSCO around the year 2000 - look at it’s long term chart. Brutally painful. I did continue to hold CSCO up until a few years ago, and (with dividends) I think I came out about with a decent gain. But a lot of lost opportunity holding it for 20 years.

I am so sorry for your financial loss. I am sure many others here are feeling similar emotions. I have no advice. Stocks could do anything from this point forward. They could turn around tomorrow and go up the rest of the year, or they could fall further. No one can predict.

I will say that after my early losses I continued studying and learning about investing, and it has been worth it in the long run - even though that does not remove the current pain. You will make it.

Best wishes for you.
Peace

[sweetadeline]

But for people like me,losing this amount of money has come with tons of anxiety to a very chill guy. So instead of adopting this investing style hoping to retire a few years early, it’s now looking like I’ll be retiring a few years late. Luckily in still only 33 and hope things turn around.

I’m 36 around your age, been investing since 2014 when I found this board and have seen my portfolio cut in half after being almost all in on Ambarella in 2014, and it was a decent amount of money. I don’t post much on here because I don’t feel I have much to offer but since were in the same age bracket and I’ve been where you are emotion wise…

My advice is to take some time and just chill out, if you sell your shares you lock in your losses. In 8 years of investing there have been many times where I have been frightened and terrified, ended up getting scared out of my shares only to see them skyrocket 6 months to a year later wishing I had just stayed in the market.

As you become more seasoned you develop tolerance to the fear and gloom and doom many people are feeling now, I couldn’t handle it at first but can now. And with this fearlessness my returns have greatly improved, going from negative returns in the first couple yrs letting fear guide me to 40 to 50% annual returns divorcing myself from emotion.

Hang in there man,
-Sweetadeline

[aln10788]

I just want to make it clear I am not selling at the bottom.I am very financially stable and have more money in index funds thanks to my 457b not allowing individual companies and I have an amazing pension.

I have taken some small losses in my brokerage account for tax loss harvesting. I plan to stay invested in these companies,but for now, I am done buying. I fear for some our companies yet to report earnings, as it seems like there is very little upside right now. If anything, I will trim my positions before earnings and get back in if they are good. Right now the downside is just too high. It seem even good earnings can result in 20%+ losses. It has been that way most of the year.

[squidboyhq]

aln,

You gotta do what you gotta do to sleep at night. That said, here’s Saul’s worst year performance going back to 1993 (from “Saul’s Knowledgebase”):

2008: –62.5%

That’s a full year stat. It’s only May. Things may be far better or worse or the same at the end of this year compared to right now, but Saul’s been through some s@#$ and still came out smelling like a rose.

TL/DR version of the rest of this post: If high growth investing causes you too much heartburn, then you may well be better off selling everything and reinvesting in simple S&P 500 ETF or whatnot. No shame in that! OTOH, you’re young and still adding to your portfolio, so time is very much on your side, time heals all wounds (or at least many of them), time keeps flowing like a river - or something like that.

Long version:

You’re young and it sounds like you have excess cash coming in regularly that you can deploy into stocks that are beaten down to what could be seen as incredible bargain prices a few years from now. That is a major advantage over a retiree.

You can abandon the strategy you’ve been using since last summer and that may well be the right decision for you if you’ve reached your threshold of intolerable anxiety. So again, do what you gotta do.

However, maybe, just maybe, you might want to step away from screens for a bit, take a few deep breaths, and then consider the following possible paths forward (note: I’m not a financial advisor, I’m just a guy a bit older than you who also wants to retire early):

• stick with your current strategy as-is and average down on the companies you are most confident in.
• ride out the pummeled high growth stocks you already own and start investing a portion of your portfolio in less volatile investment choices.
• sell everything, reinvest in low cost S&P 500 ETF and invest all new money in same.

One last thing to consider, though, is how stocks, particularly growth stocks, perform when Mr. Market starts to see the light at the end of the tunnel through the fog of uncertainty. The market tends to move up and move up rapidly when the fog starts to thin. It also tends to begin to move up before company earnings start to show marked improvement.

Anyways, best of luck to you with your investing decisions. When I was just getting started in stock investing, it was back in mid-2008. Not a great time to be a newbie wading into the market. But having lived and learned through that, I can honestly say while it stings to see my portfolio punished day after day, I feel I’ve seen this movie before. Time is on your side, like it was for me back in 2008-2009.

Cheers,

Eric

[brandonwahl]

Hello aln,

Far be it from me to attempt an ease of anyone’s fiscal pain, but as a fellow 30-something who is now down something like 60% from November '21, I am reminded of a quote from Bert Hochfeld in early 2020, which I have condensed as follows:

"I am hardly the only person to observe just how difficult [this] has been for those of us who invest. And as well, there are younger people who are experiencing their initial “time on the cross.” [These times] engulf all ages and all types of investors without boundaries of income, sex, or nationality.

The fact is that investors need to start looking ahead, and considering the current panic for what it is, a single event in time which has…created an unprecedented opportunity - one that investors, with patience, capital and a strong understanding in the principles of short-term volatility should take advantage of.

When these times pass, my guess is there will be a decent snap back in recovery - which may extend for many periods of above average growth. I want to consider that period, and not this period, as a baseline in making my investment decisions."

Personally speaking, I came to this board in 2018 and, like you, hoped the nice returns I’d seen discussed would shave a few years off the workforce requirements. That is yet to be seen at this juncture, but I still firmly believe the companies/thought processes discussed here give me the best chance at such. I won’t bother elaborating, but please do read all the links on the right side of the board. For 99% of us, life-changing wealth is a long term game played out over many decades. For those 30-somethings like us, its not even halftime yet.

Brandon

[BruceDavis]

aln10788:

I certainly understand where you are coming from. This type of investing is not for everyone. If you are losing sleep, then changing your investing style is correct for you.

I would suggest that the longer you have until you intend to access the money, the better the expectation of doing well. I think that evaluating an investing style that you intended to follow for over 20 years by the results from the less than a year is not something I would recommend.

However, I need to respond to I don’t recall a time in Saul’s history where he has been down this much.One of the main reasons I decided to go in this direction is over his investing history, the worst down years of the S&p500, Saul still did better.

I don’t think Saul has ever claimed to beat the S&P every year. No investing style will be best every year. And as to never being down this much, in Saul’s knowledgebase, part 1, he says:

In 2008, in the big meltdown, I dropped 62.5%, which was pretty terrifying. In 2009 I was up 110.7%. The way percentages work though, after dropping 62.5%, gaining even 110.7% doesn’t get you back to where you started, but I sure felt better.

So, again, if you will sleep better investing in other ways, then go for it. But don’t sell this investing style short because of 8 months of results.

Bruce

[joegyou]

Hi,

Same age (34). Growth portfolio has been cut in half. I keep adding into shares every week. I try to tell myself that I have the chance to earn more than I need and that all other asset types are overvalued (growth is getting cheaper every week). It is tougher to see your portfolio going down while always adding funds to it, but it will be worth it in the long run (I believe)

However, I am always contributing to index funds and the growth money is the extra.

Only mistake I saw that you did was selling out of the index funds.

I hope that with time we’ll all be in a better position!

jg

[aln10788]

I only sold out of index funds in my ROTH IRA. I still have more in index funds in my brokerage than I do in these growth companies right now.

I appreciate everyone’s response that they have been down this much in a year before, I guess it just feels different for me because I didn’t have these companies in my portfolio for years and didn’t see massive gains on them like most here. Every single company I am down 25-50% overall with significant buys every few weeks at the new bottom.

I apologize for the panic/fear post and taking away from the discussion of our companies. I look forward to people’s breakdowns of BILL and especially NET as I am really confused by that sell off.

[bnh91]

Sounds like people are finally capitulating… might be a good thing

Bnh

[qazulight]

I can’t keeping buying these companies. I discovered this board in the summer of last year. During the fall I started to slowly add to the companies discussed here. I eventually bought all in and sold my 10 years of S&P500 shares I held in my ROTH IRA. I slowly moved all that money into a concentrated portfolio used by many here.

I ran out of those funds in Feb. All my new money in my brokerage account has been going to these companies as I continue to catch a falling knife. My father passed away in February and left me a decent sum of money. I added a substantial amount of that money he left me to these companies that have been beaten down the past 6 months. I used to think this was an opportunity of a lifetime, now I’m wishing I never discover this baord. It doesn’t seem to matter what these companies report, they just keep falling in share price.

Datadog and Cloudflare had what appear to be pretty good earnings and are still getting slaughtered. There have been other panic posts and people have seemingly qualmed those fears. I don’t recall a time in Saul’s history where he has been down this much. One of the main reasons I decided to go in this direction is over his investing history, the worst down years of the S&p500, Saul still did better.

I don’t see any way that happens this year. That might be fine for him, since he was up over 200% in 2020.But for people like me,losing this amount of money has come with tons of anxiety to a very chill guy. So instead of adopting this investing style hoping to retire a few years early, it’s now looking like I’ll be retiring a few years late. Luckily in still only 33 and hope things turn around.

Yep, you should sell out. I mean, if you cannot see the value in these companies you really should not be investing.

Save your money, put it CD’s then when you see a good price on a toy, buy it. Then you know you will lose money, but hey! that is the plan.

Works for me. So I am planning on retiring at 70 if I don’t die first.

Cheers
Qazulight

[12x]

They will, but they’ll say this time is different.

[MFChips]

I believe in data. Jamin Ball publishes very good data and this tweet today shows the following:

The “Median” SaaS stock that he covers (he covers a ton) is 5% below the valuation of the 7 year average leading up to Covid. Let’s think about that.

7 year average leading up to Covid.

What is Median? Median is made up of stocks that were growing slow and fast. But certainly, the median has been growing much higher more recently. As Saul likes to say, there were no companies growing at 50 or 70 or 90% YoY back not long ago.

He doesn’t quantify that. But he does state that it’s not apples to apples and it’s probably more like 10-15% below.

And then he goes on to say the current median multiple is 33% below where it was in Feb 2020.

Think about that.

Read it here and retweet:
https://twitter.com/jaminball/status/1522328030894379008

[MFChips]

I will also add, nobody ever claimed that Saul’s strategy would work in all markets, for short periods of time.

I still believe the one key thing that made it work is that people have trouble with the “non-linear effect of compounding”.

People see 50% growth and think, well that’s 2x better than 25%. But it’s not, when it’s compounding. With time, it is infinitely better.

So if you have top line growth and it’s in a good business, then all you need is time. If you are 30, you have 30 years more than I have. Let time be your friend.

[Delli2019]

Yep it hurts. All of us here are getting murdered in the past 7 months. This is the time to look at the long term. I personally got 70 percent of my stocks in saas and 30 percent in the T company that shouldn’t be named, that I have a ton of faith in.

No one can tell you what to do, but you are young, and hopefully your cash flow from working is good too?

Good Luck,

L

[RaptorD2]

Sorry, my friend, I have little sympathy. Empathy? yes, sure–tons, but sympathy, no.

Please consider this: Most of us are down, way down this year. So, now, how are you going to recover? S&P index funds? Yes, they surely will, but likely (hopefully) growth stocks will get there faster; at least, they always have.

Let’s trade places.

I’m 69, retired at 46. My bride just retired in February. Our income is >98% from investments and (until it is eliminated) from social security. That’s it. I’m down across 6 ports an average of 37.8% ytd and closing in on 50% from ATH of last year. Both of these figures are my highest-ever losses. And every time we have a good day, balance up 5%, the next day it’s down 6%. Or 10%. Or $100k+.

Just so you know, I don’t want your sympathy. (By the way, don’t worry, we won’t starve, but our 2022 trip to Ireland might change to a trip to Omaha :)) I just want you to consider that if I allowed myself (fortunately it’s not in my nature) I could be quite jealous of your position. At 33, you don’t know what’s ahead. You don’t know what your finances will be when you’re 69. But if I had to bet, I’d bet they will be pretty great. How do I “know?” Because at 33, I was paying a mortgage, paying off student loans and had barely a hint of what a stock was. You’re so far beyond that. That’s how I know.

Curtailing buying? Sure. Me too. FOMO is a very powerful thing, and none of us want to miss out. So, we have continued to invest in our favs; Statistically, it’s our best bet for gaining wealth. But you can bet your as… er, bottom dollar, that many here have curtailed buying for a while. There’s only so much pain anyone can take, and speaking for myself, I’ve bought so many bargains ytd, that so far are huge losses and I’m getting tired of it, so I’m taking a little break, and won’t apologize for it to anyone.

I promise you this: Knowing what I know now at 69, and if I could magically be 33, I would be ecstatic. I would be dancing in the streets. I would be singing “Happy Days!” with Buffett and Munger. Great companies are getting cheaper every day. I would have everything I own or maybe even what I could borrow, ready to invest. Yes, maybe I would wait for a 10% bounce “just to be sure.” Or maybe not. There are never very many “sure things” and for tomorrow or next week, there are fewer still. And I know it’s hard, believe me. But just try to adjust your viewpoint: Stop worrying. Start celebrating. Your future is on sale. (Mine too, but yours is longer.) Lucky you.

[kwealth]

Is the “non-linear effect of compounding” really the reason Saul and others have made their money investing in high growth SaaS stocks? What stocks popular with the board over the past decade have remained in portfolios long enough to see years of compounding growth result in recoveries from being 70%+ down?

I don’t mean that question to be critical. It’s just that rarely do companies maintain that sort of growth long enough to cement a long stay in portfolios here…let alone 30 years. The profits seem to be made by taking advantage of young companies whose stock prices rise quickly during a few quarters of hypergrowth.