InnerPeace’s end of Nov Portfolio and Reflection of my Deviation with Saul’s Style

[innerpeace123]

Hello fellow investors,

I began following the Saul-style investment philosophy in 2017. Since then, I’ve navigated the turmoil at the end of 2018, the steep drop in early 2020, and the incredible bull run from mid-2020 to the end of 2021.
However, the subsequent downturn was brutal; my portfolio suffered a 90% drop,
a painful lesson driven by the improper use of margin and overconfidence in
SaaS stocks.

My Portfolio as of 11/28/2025:

Exit: ASST, HIVE

Add: APP

My year-to-date return is over 100%, largely thanks to an early, and admittedly lucky, entry into AI Infrastructure stocks, amplified by some margin. While the YTD performance is encouraging, the primary goal here is to discuss our individual holdings and strategy.

Reflections on My Investment Style

With the recent market pullback, I took some time to reflect on my portfolio’s performance and my decision-making process. Looking back at the discomfort and the losses I sustained during this correction, I realized that the pain was largely self-inflicted—specifically because I deviated from the standard “Saul style” of investing.

Here are my reflections and the changes I made in November:

1. The Danger of Margin
Saul has always advised against using margin. I ignored this and used “just a little bit.” Predictably, when the stock prices dropped, I was forced to sell positions to maintain maintenance requirements, which crystallized losses and exacerbated the drawdown.
Action: I have reduced my margin usage.

2. Portfolio Allocation and Trimming
Another core principle here is to trim positions when they exceed your target allocation or comfort level. I didn’t do this. For example, during the run-up, IREN grew to exceed 20% of my portfolio—well above my usual comfort zone. Had I simply followed the rule of “selling down to the sleeping point,” I would have inadvertently sold near the highs.
I realize now that while Saul’s intent isn’t to “time the market,” his portfolio management rules often have the secondary effect of locking in profits and managing risk effectively.
Action: Going forward, I will be more disciplined about trimming oversized
positions.

3. Concentration and Conviction (Exiting ASST and HIVE)
At the end of last month, I found myself holding 11 different companies. That
is too many for me to follow closely. This lack of focus became dangerous
during the correction.

• ASST: I realized my understanding of the company was limited, so I closed the position.

• HIVE vs. IREN: In the context of the AI infrastructure correction, I decided to consolidate capital into the highest-quality operators. While HIVE has a very attractive P/S ratio and valuation, its operations are not as mature as its peers. In a downturn, operational risk matters more than a cheap valuation. I sold out of HIVE.

Deep Dive on IREN:
I maintained and strengthened my conviction in IREN. The market seems worried about GPU useful life and accounting depreciation policies. However, looking at the industry, CoreWeave (CRWV) uses a 6-year depreciation schedule, while IREN/HIVE uses 4 years. IREN’s accounting is conservative, and I am not worried about the longevity of their hardware.
Operationally, IREN continues to sign new contracts, and their HPC compute ramp-up is happening faster than I anticipated. Management has stated that HPC margins will be higher than Bitcoin mining margins—and remember, IREN is already one of the highest-margin miners in the industry.
Action: I cleared out ASST and HIVE to focus on my highest conviction
ideas.

4. Beta vs. Alpha: A Philosophical Reset
I used to think I was clever enough to “improve” upon Saul’s method to generate higher returns. In a rising market, it is very easy to mistake the market’s Beta for my own Alpha.

Analyzing my recent mistakes, I found that every “innovation” I tried was actually a step backward. I feel like a rebellious child who took over the family business, tried to change everything to prove how smart he was, hit a wall, and eventually realized that his parents’ old-fashioned way of doing things was right all along.

I look forward to hearing your thoughts.

[brittlerock]

@innerpeace123 that’s a very sobering post. I’ve recently come to the conclusion that I have too many positions. And, I’m holding maybe two that are unlikely to ever fully recover, let alone become profitable. I should have sold them long ago, now I don’t know - hoping for a bit of a rally before I say farewell.

I don’t have a set limit for size of a position. It varies with my confidence level. My confidence level is subject to vary with each quarterly report. AppLovin is my largest position. The company is a cash machine and they are really just getting started.

Oh well, just some random thoughts prompted by your post.

[wpr101]

Great summary here and interesting to read your thoughts on margin. The way I view Saul style investing is that it is a sure path to wealth, but that adding leverage through margin or options, makes it no longer a sure path. This is because it can lead to the risk of ruin or losing the whole balance. I know a lot of investors only add a small amount of margin/options but what often happens is that in a bull market the temptation becomes strong to add even more leverage.

A few years ago I was working as an engineer at a competitor to Robinhood. One of my tasks was to setup the options part of the trading platform which I ended up getting assigned because few engineers on the team had much experience with stocks. I didn’t have much experience with options but ramped up by reading a few textbooks on options to learn the strategies.

I could also see all the options trades in the database that were coming through the platform. My hope was that there would be some sophisticated traders come onboard who I could study their strategy. However, what I observed was that 99% of the trades coming through were lottery style gambles. Usually the strike or the expiration made almost no sense for any coherent strategy. For example, the textbooks said that for call options the optimal one to buy is usually the call that slightly in the money. Yet I don’t think I ever saw someone buying with a strike like that.

In the end, even though I got a deep understanding of how options work I don’t use them anymore. The bid/ask spread eats up value on both the buy and sell which is not negligible. I find that the growth style of investing already has big risks so I don’t like adding more risk to juice returns. I do believe that long only investing with no hedging is optimal because it’s balanced right in the middle.

Saul also pointed out that options investing is zero sum meaning there is one winner and one loser of the trade while the market maker captures the spread. That’s an interesting thought to me that some forms of investing are zero sum like options, while long investing Saul style is positive sum.

As far as innovating or deviating from Saul’s style, I think it makes sense to build on the foundation of Saul’s style in other ways besides adding leverage. I used to say my strategy is complete but I prefer the word comprehensive because it implies the strategy is still evolving. I use stock screeners a lot and I know Saul didn’t like them. However, at the time when Saul was writing the Knowledge Base those services like Stock Advisor and Rule Breakers were providing more value, and it was easier to base picks on other’s recommendations back then. I’ve also notice a lot of investors with this style still face challenges with valuations or how to think about the concept for a growth stock. Lastly, mental game is another area I’m focused on especially after 2022 when many of use saw losses well outside of what we thought possible.