I think I'm Done

Investment Analysis Clubs Saul’s Investing Discussions
14

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

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15

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

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16

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

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17

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.

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18

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

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19

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.

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20

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.

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21

Ok this has to be the bottom. When the whining gets to Saul’s board you know it is the point of maximum pessimism. Now, this is the time to invest. Thank you board.

Andy

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22

I’m almost 60. I had to liquidate my entire retirement account during my divorce two years ago. I started self-directed investing for the first time in my life last year at 58, with a tiny windfall from selling our marital house. I’m down more than 66%.

It’s all relative, is my point. Try to manage your anxiety, and realize that when this market turns around (not if), you’ll still have decades to invest and this experience of hard times to draw on in your decision-making. Grab a refreshment of your choice and try to have some perspective. When I was 33, I was making almost no money, working my way through grad school, and playing in bands. Life is what you make it.

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23

Andy, not sure if you post that in jest, because numerous people have called the bottom on this board, months ago. Many have also complained how much they are down. Saul even commented back in February how well we recovered from those lows. Look at us now. I continue to buy what many consider to be the bottom, only for it to reach a new floor. Certain stocks reaching all time lows.

My point being I’m done buying for now. Done catching a falling knife. Do you think this is a rational market what is being done to BILL, DDOG NET after their earnings? S reaching all time low. SNOW reaching all time low.

All that being said, people must not be reading the whole thread because nowhere did I say I was selling. I am doing very well financially. I just am done buying this dip that has turned into a huge crater.

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24

My point being I’m done buying for now. Done catching a falling knife. Do you think this is a rational market what is being done to BILL, DDOG NET after their earnings? S reaching all time low. SNOW reaching all time low.

Actually Aln that isn’t what you stated, you never said that you were done buying now, here is what you stated:

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.

That sounds like someone who has thrown in the towel.

And

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.

It always feels the darkest before the dawn Aln and this is something that you have failed to grasp with Saul. If you understand your companies and really watch them and study them, than these drops in prices will not scare you. It’s the ones who have been buying stocks because Saul bought them that are going to get scared out right at the bottom. I have seen this before from other members of this board. Back in 2018 people went to cash and lost out on the upside move of the market. In 2020 they went to cash and the market went back up. All of this doesn’t really matter though because this board isn’t here to discuss the macro but individual stocks that we all know are going to come back and go back up. This sort of investing isn’t for everyone but for those who understand and keep looking for the best of the best it can be very profitable.

Andy

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25

You are right Andy, my first post was a little dramatic. It was hot off the heels of BILL and NET earnings. I appreciate everyone’s response here, especially dreamer who reminded me that Saul has been down more than this. Like I said it just hurts more for me because I didn’t have the huge gains before this huge loss.

Once again appreciate everyone’s advice. I know things will get better. I think Saul sometimes frowns on these types of discussions but I think they are healthy. We are all human with lots of emotions.

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26

I am sorry for all of this board’s denizens big losses this year. With the very deep and clear understanding that market timing / valuation is verboten on this board, I feel compelled to say this:

this crushing, soul-destroying Nasdaq bear market has NOTHING to do with the individual stocks discussed and promoted here. It is NOT about “these stocks”. Something like 70% of individual stock performance is determined by The Market; it gets amplified in both directions by the quality of the companies. Some of the SaaS companies focused on here are among the most impressive growth and profitable enterprises we have ever seen.

There is some major “deleveraging” going on globally now, for whatever macro risk reduction reasons we don’t know about, and its going to stay ugly until whatever that thing is bleeds out.

I’m well aware that does not lessen the absolute despondency some of you are feeling about their 6 month performance. But these companies are not pets.com in 2001.

FC

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27

That’s alright aln, all I can tell you is to follow your companies and find the best of the best. When we go through these down turns it always feels like the end but you are in your 30’s still working. When you feel like this put money to work like crazy, you will be very happy you did. When you feel like you are on top of the world, that is the time to pull some money out and put it aside for times like this. To be in your 30’s, and have found this board, that is something you should truly treasure. The investment advice you are going to get is going to change your life and your families. Hang in there.

Andy

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28

Hi aln,
I sympathize. When I was 33, I was in debt due to bad margin investing but it was my fault and I only blame myself.
My finances recovered through PATIENT and consistent LONG TERM investing…
I am 69 (like RaptorD2) now and am down >60% from Nov 21. You would be truly shocked if I mentioned how much money I’ve lost (on paper)!

Saul’s style of investing has worked great so far (except for the last few months). It’s only a matter of time before the market goes back up.
I like to remind myself that I chose to invest in a concentrated portfolio of growth stocks and really can’t blame this Board and their selfless members.
I still have conviction in the high growth stocks. Today I bought more stocks like Bill.com at bargain prices.

I have enough reserves for a few years and am confident the market will turn around.
As we know, most of these companies are still doing great and there isn’t much wrong with their financials and outlook.
It’s the entire market that’s down. I won’t even blame macroeconomics and their automated algorithmic trading strategies.

Please hang in there and good luck, we are all in this together and many of us are in worse situations.

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29

this crushing, soul-destroying Nasdaq bear market has NOTHING to do with the individual stocks discussed and promoted here

It has everything to do with the stocks here. NPV = Rt / (1 + i)^t. That is where “i” is the discount rate. The net present value of high growth stocks is lower because interest rates are higher.

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30

It has everything to do with the stocks here. NPV = Rt / (1 + i)^t. That is where “i” is the discount rate. The net present value of high growth stocks is lower because interest rates are higher. – ajm

A year ago, the LIBOR was 0.28% and now it’s 2.69%. So, that denominator has changed from 1.0028 to 1.0269

THAT has a miniscule effect for growth companies. A sorta big deal for bonds, but minuscule for growth.

Rob
Rule Breaker Home Fool
He is no fool who gives what he cannot keep to gain what he cannot lose.

”If you are in the right companies, the potential rise can be so enormous that everything else is secondary. Every $1,000 I and my clients put into Motorola in 1957 is now worth $1,993,846 — after all the ups and downs of the stock and of the market…
If I’d sold Motorola because I thought it was overpriced 10 or 15 years ago, chances are I would not have known when to get back in, and I would have missed a tremendous profit. If one of my stocks gets overpriced, I warn my clients that things may be unpleasant for a little while but it will rise to a new peak later.” Phillip Fisher

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31

Correction:

I wrote: “A year ago, the LIBOR was 0.28% and now it’s 2.69%. So, that denominator has changed from 1.0028 to 1.0269”

I mis-identified the denominator. That value above is the change in denominator EXCEPT for the power (t) is is raised to.

So, instead of minuscule, it is minuscule to a power. Still minuscule for growth.

Rob
Rule Breaker Home Fool
He is no fool who gives what he cannot keep to gain what he cannot lose.

”If you are in the right companies, the potential rise can be so enormous that everything else is secondary. Every $1,000 I and my clients put into Motorola in 1957 is now worth $1,993,846 — after all the ups and downs of the stock and of the market…
If I’d sold Motorola because I thought it was overpriced 10 or 15 years ago, chances are I would not have known when to get back in, and I would have missed a tremendous profit. If one of my stocks gets overpriced, I warn my clients that things may be unpleasant for a little while but it will rise to a new peak later.” Phillip Fisher

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32

Things could always be worse - I just read that Tiger Global (which is down 44% YTD) has lost roughly $183M every day this year. That equates to losing ~ $28M every hour the market has been open. I know we’re all suffering, but at least we’re not losing $28M per hour - so, we’ve got that going for us…

I also read today (not verified - just a rumor at this point) that part of todays big sell off might have been Tiger Global blowing up and having forced liquidations. FWIW.

Be ready to buy when there is blood in the streets.

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33

Be ready to buy when there is blood in the streets.

Hard to do when it is YOUR blood.

YR

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