Since the time I began to try to follow Saul’s advice and listen to the contributions from everyone here:
| Year | % Change |
|---|---|
| 2018 | +38.9% |
| 2019 | +32.9% |
| 2020 | +203% |
| 2021 | +46.8% |
| 2022 | (-)58.55% |
Starting with $100 at beginning of 2018- end of 2018 = 138.9%.
For 2019 I started with 138.9 and multiplied that by (32.9%) = 184.6%, giving me $184.60 at end of 2019. 184.6 (203%) = 559.3% at end of 2020. 559.3 (46.6%) = 820% after four years, at end of 2021. 820 (-58.55%) = 339.89% after 5 years; Increase what I had at the end of 2022. 340 by 46.8% = 499% after 5 yrs and 8 months of this year.
| 2023 | Month to Date | Year to Date |
|---|---|---|
| January | +14% | +14% |
| February | +6.45% | +21.2% |
| March | +1.55% | +23.13% |
| April | (-)14.5% | +5.28% |
| May | +31.5% | +38.4% |
| June | +7.3% | +48.5% |
| July | +4.4% | +54.5% |
| August | (-)5% | +46.8% |
| September | (-)2.5% | +43.1% |
| October | (-)10.1% | +28.65% |
Many strategies can outperform the market.
Here are four we know:
1.)The High-Quality Business Strategy
2.)The Special Situations Strategy
3.)The Growth at a Reasonable Price Strategy
4.)The Classical Value Strategy
I modify the 1.)High Quality Businesses and 2.) Special Situations strategy.
Overview:
The (Concentrated) High-Quality Business Strategy is what I think of when I think about the investing style of Warren Buffett.
“We own a concentrated portfolio consisting of high-quality businesses.” “High quality means growing cash flows, competitive advantages, and a strong balance sheet.”
The Special Situations Strategy was popularized by Joel Greenblatt’s book “You can be a Stock Market Genius.”
It’s about finding situations where businesses are miss-priced due to different circumstances. These could be due to anything out of the ordinary. Warren Buffett, calls them “workouts.”
I modify these two strategies according to my my risk profile, mostly. I combine these two strategies as they apply to companies currently in the fastest growth phase regarding their customer adoption, as measured primarily by revenues. By definition, this is when a company’s growth is most volatile. I also make sure to follow Saul’s advice to not invest in turn arounds.
I try to invest into companies with the most effecient business models that are selling the picks and shovels for a disruptive technology that’s growing revenues at hypergrowth rates🤩. I invest in companies that are public and are presently ‘overvalued’ by many investors.
What then is my advantage? I believe that when most investors in the public market are talking about upside and downside to their investments, their talking about share price related valuations. When I talk about the upside and downside regarding my investments, I’m talking about how much each company will bring together multiple disruptive technologies creating transformative economic advantages for their customers. It’s the hypergrowth in customer adoption rate that brings forth the possibility for hypergrowth in revenue accrual, right.
I spend ~98% of my (part)time making sure I’m invested in the very Highest Quality Businesses and ~2% of my time making sure Fear Uncertainty and Doubt is not really about anything fundamental to the success of these companies. If I find unwarranted FUD around a company that satisfies my modifications to the High Quality Business strategy, I invest.
| 10/31/23 | 9/30/23 | 8/31/23 | 7/31/23 | 6/30/23 | 5/31/23 | 4/30/23 | 3/31/23 | |
|---|---|---|---|---|---|---|---|---|
| Tesla | 33.35% | 31.46% | 31.63% | 35.02% | 33.69% | 33.11% | 31.07% | 30.32% |
| Snowflake | 20.3% | 19.21% | 14.95% | 20.01% | 15.99% | 16.03% | 31.64% | 28.18% |
| Cloudflare | 12.59% | 12.58% | 17.93% | 19.26% | 19.80% | 33.8% | 28.65% | 27.03% |
| Pure Storage | 10.64% | 10.08% | 8.97% | |||||
| Samsara’s | 8.87% | 9.69% | 8.38% | |||||
| Nvidia | 14.26% | 6.84% | ||||||
| Crowdstrike | 0% | 5.26% | 9.98% | 14.11% | 13.34% | |||
| Zscaler | 0% | 4.89% | ||||||
| Monday | 0% | 8.15% | 7.89% | 14.26% | 16.16% | |||
| Datadog | 0% | 7.20% | 13.27% | |||||
| MongoDB | 0% | |||||||
| Cash | 0% | 0% | 0% | 3.7% | 2.42% |
This portfolio is what is in my family’s non-taxable Roth and Rollover IRAs only. It contains the bulk of what we’ll live on during retirement. We have not added any money to these accounts for many years. To buy something I’ve sold something else. I don’t trade options or use any leverage. I stay fully invested at all times and keep, on average, less than 1% in cash.
10/6/23
I sold 12.5% of my large position in Snowflake (on a 5% share price bump) and a smidge IOT in order to buy a 2.5% position in Aehr (on @ 17% drop in share price today and ~30% drop in the last month ) after better than expected (weak) Q1 and as per usual no updated guide ER. (I was thinking this might be FUD)
I reversed this on 10/9/23, unfortunately I sold this the day before a +14% pop in Aehr’s share price apparently due to ‘the fed softening’. No regrets, I sold out due to my re-consideration of my personal limitation in understanding Aehr’s customers. Thanks Smorgasboard for two amazing posts here (and your ‘back of the napkin math’ confirmation posts on 10/10, the next day).
I don’t believe I must understand any technology at any kind of granular level. What I appreciated about reading Smorgasboard’s angle on Aehrs business was that it more fully formed my opinion on my own limitations about how Aehrs customers might go about making their decisions.
10/20/21
I sold my 6% position in Crowdstrike and ~10% of my Samsara position to double down on Nvidia (Now 14% of portfolio).
I wanted more Nvidia and had to sell something. I know that Tesla setting up a 10,000 GPU cluster this last quarter has to be an anomaly; but, after listening to several interviews with Jensen Huang, CEO of Nvidia, I’m much more confident how Nvidia’s (30 years in the making) highly parallelized Unified Device Architecture (now CUDA) is what has brought about their catch-bird seat in the multi-Trillion $ Serviceable Addressable Market (for this multi-year build out of accelerated computing and in many of the Zero → $Billion AI related markets Nvidia is now positioned to take advantage).
I believe Nvidia has demonstrated a singular ability to position themselves for an increasingly dominant position (see Oracle partnership deal with the Nvidia DGX Cloud, as a significant example Nvidia Announced a Huge Win for Its DGX Cloud AI Solution -- Is This Good News for Investors? | The Motley Fool). I no longer wonder why Nvidia’s margins are software-like (Q2 GAAP and non-GAAP gross margins were 70.1% and 71.2%, respectively).
10/30/23
I sold my position in Zscaler to buy back some Tesla@$199 (sold similar amount at $267) and added back a smidge to Samasara.
When I look at future catalysts for Tesla, as a company, and given my level of certainty around those catalysts, I’m often tempted to go all in on Tesla. I see massive disruption happening and no real competition (BYD is not selling at price points anywhere near Tesla).
Yes I’ve been trying for years to be invested in ‘World Changing/Elevating Companies’(If you want sustained growth endurance, I think this is a good place to start.). I’ve never been more confident in my over all portfolio than I am now. I don’t think I ever really thought I’d have this opportunity to be as invested in such great companies.
Best wishes to all,
Jason
