With my entire portfolio up 10.2% in a day, and 15.5% in two days, and most of you undoubtedly up considerable amounts as well, we should be in a celebratory mood. It feels as if we haven’t had many big up days like this in a long, long while. Let’s enjoy it while we have it because there’s no guarantee that it will last, but it sure takes some of the pressure off. And try to ignore these people who show up on the board just to disrupt what we are trying to do. I will continue to delete them when it seems appropriate.
Best to you all, and hope you enjoy your glass of champagne. 
Saul
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And since I have done well investing my money over the years in an honest manner, I am contributing to organizations to benefit the Ukrainian people and defense effort.
Lucky Dog
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Yes indeed, the past two days have been heartening, though my portfolio is still down quite a way from where it stood at the beginning of the year. But, I don’t really let that become too discouraging. Here’s why . . .
I’ve been with you on this board since very nearly the beginning. I recall when earnings was a central requirement for any company we might buy. We were looking at P/E of 20 or better. I don’t remember exactly what kind of YoY growth we thought was good, but it wasn’t anywhere near 50% on a persistent basis (NET) or such that a company’s stock would get pummeled for only printing 91% when the expectation was more like 95% (MNDY). We were investing in sneakers (I still buy Skechers shoes). I brought Brinks to the board as it looked like they were going to do great things under new management (it didn’t work out). We were in Bank of the Internet until their CEO, (Garabrantz if I remember correctly) seemed to be dancing on the edge of some shady stuff (I recently got a postcard telling me I could be a member of a class action suit against that company). That wasn’t very long ago.
People forget that digital transformation is still in its infancy. Cloud computing was just beginning to be something that was being talked about in IT departments when I retired in 2010. As I was in the enterprise architecture group, the guy who was responsible for evaluating whether or not we might find some application for it was one of my colleagues (yes, one guy in the entire Boeing Company). He was skeptical. His estimation was yeah, we might find a place for it, but we sure as hell wouldn’t put the company jewels in the cloud - way to risky. I’ll bet that attitude still prevails at a lot of companies.
We are invested in companies that are the crem dela crem, positioned on the bleeding edge of this paradigm shift. I know, that term is overused, but it is exactly appropriate for the current situation. We are at the dawn of another great revolution like the agricultural revolution, the industrial revolution and now the digital revolution.
So yes, it’s depressing to suffer the erosion of one’s portfolio when the market does a number on these companies. But the market is stupid and subject to herd mentality, and that’s amplified by reactionary bot trading. It’s not even a “mentality.” It’s more like a chain reaction.
I think it was Bear who observed, we still have our shares (assuming you haven’t done something stupid like liquidate your positions). We still own a piece of these companies. I am confident that in a year, probably sooner, those of us who are retired and have no income will be looking back on these last few months and only regret that we weren’t in a position to buy more stock at these fire sale prices. And for those with a job and a regular income, your regrets will be that you allowed fear born of this temporary setback inhibit you from buying more shares in these spectacular companies.
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Saul, given your 1000% gain since 2017 a 10% move in one day means (if my quick in-the-head math is correct) you just got, in a single day no less, a 100% gain on your 2017 basis. THAT my friend is absolutely phenomenal, so congratulations!
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I know celebration is over…but here this poster shared something crucial. he got margin call and “had” to sell his bill at lowest price. This is exactly market makers had been after. getting cheap shares off weak hands. the other of course is loss of conviction and selling at low. the real value of asset doesn’t matter in this environment. it only matters if you have ability to hold it and also maintain your conviction.
I myself got multiple margin calls. Luckily, I avoided selling stocks because I was able to fund more via my heloc. Tough times indeed and my lesson is not to use margin for these stocks in future. In big picture I had 50% of my net in these stocks which has become 30% right now. I had margin but still relative to my net worth I was not over leveraged which has saved me so far.
in the big picture, I have given back all my 2021 gains and I joined mid of last year.
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With my entire portfolio up 10.2% in a day, and 15.5% in two days
For those who want to know, it’s up 24.7% in three days. There’s a message in that. That’s why you don’t want to get scared out at the bottom by all the value people and trolls who always show up at the bottom. Just imagine trying to judge when to get back in. If you were out, you might not even have noticed the first day’s rise. After the second, you would have said to yourself "Oh, this is a dead cat bounce. I’m not going to enter here, I’ll wait until it’s back down to where it was two days ago. But you would starting to worry, (“Wow… up 15.5% already?”) Then after today’s close you’d start thinking the market had turned, but you don’t want to buy on such a large three day rise and you’d say “It will probably settle back a little tomorrow” (not a bad surmise, actually), but if the market was down a little you’d wait another day to see if it continued down. It might not and then you’d be kicking yourself for not having bought tomorrow. But if it was up tomorrow you’d rush back in with part of your funds at maybe 33% off the bottom, and then it would drop the next trading day, and you’d be kicking yourself for having given in and bought, and then you’d start wondering “Do they still have a way to fall? So-and-so thinks so. Did I make a mistake, should I get out again?” All those decisions are crazy-making! What I do is take positions of ownership in great companies, and stay in them. It’s sooooo… much easier.
Saul
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What Saul just described is exactly what happened to me at the March 2020 bottom. I thought I was smart because I missed a huge part of the drop down, having sold at the end of February. But I didn’t get back in at the bottom because a bunch of prognosticators were sure we still had a big leg down to go (if the fibonaccis say so it must be true! Guess not!).
Let me add to this. Not only did I mistime the market in March 2020. I also thought the market was way overbought in December 2020, so I sold a lot of my holdings only to watch everything melt up into February 2021, at which point FOMO kicked in and I bought back in only to watch things fall once more. I did the same thing in September 2021. The market looked ridiculously overvalued so I sold and missed the September-November rally, only to FOMO back in again after things dropped a bit in December, so I was fully invested for almost this entire drawdown.
On top of this, I missed out entirely on the Zoom rally since I could see from the start that growth was simply pulled forward. I failed to realize that the market was not looking as long term as I was on the way up. My other mistake was going too big into Upstart at the peak.
I found this board at the start of 2018, and if I had simply stayed invested, I would have done much better. But my returns are not nearly as good as Saul’s. Instead of 20x-ing my portfolio, I am barely beating the S&P 500. This performance gap is probably 80% due to failed market timing. (The other factors would be missing out on Zoom, the big Upstart drawdown, and also pulling out about 25% of my portfolio at a relative bottom after the summer of 2019 for a down payment on a house - bad timing again, but not so much an investment decision but rather a life decision).
Anyways, all of this is not JUST to say - hey, look at me! I’m a real world example of the exact mistake Saul is pointing out. I would also like to say that I would NEVER in a million years hold anyone except myself responsible for my investing decisions. This board has opened up a world of investing for me and given me so many lessons on this realm of expertise. Sometimes I’ve gone against the grain (skipping Zoom) and some times I’ve jumped on the bandwagon (Upstart). I’ve stumbled on both ends. What is important is that every decision has been my own. I’ve made my own analysis and judgements based on information I’ve seen here and elsewhere and I’ve made my decisions based on that analysis. Because of this, I know what my mistakes were and I’m coming to learn why I made them. This adds up to becoming a better investor over time. If I were simply trading based on what others were doing, I wouldn’t have learned a thing. The Motley Fool’s mission is to make the world smarter, happier, and richer, and I must say that I have received quite an education on this board. I am a lot smarter for my time spent here, and a bit richer, albeit not as much richer as some others. All my thanks to Saul and his volunteer board managers for making this board such a great place to be.
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I know this is OT but may I please chime in for one more reply to what BobbyBe said. If you are in taxable account (most of my port is), keep in mind that if you sell at a high and timed it perfectly and bought at the low, then awesome!!! Doubt any of us are capable of knowing exactly when those times are. But think about selling when you think market is overheated, paying capital gains/ordinary income + state income taxes, then missing out on some run up, and then thinking that market bottomed out and buying back (after paying taxes so right then and there you have to make up that difference vs. just staying in) only to see things go down more… As ugly as it gets. MF has basic example of $1000 staying invested for 10 years vs. $1000 invested and withdrawn even at favorable tax rate at 1 year + 1 day and reinvested. Simple math of compounding of $1000 staying invested for 10 years vs. $1000 + $85 = $1, 085 which is return you get after first year with gains minus taxes on the gains (gains $100, but you only get to keep $85, if you are in no capital tax state so only paying min 15% tax to federal) and so on if you keep selling every year, paying taxes and reinvesting vs. staying in compounded. Of course, this is completely out of the window if something within the company changes. Art of buying is much less worth than art of knowing when to sell for the right reasons.
Make no mistake though please, to this day I still have this thinking that “What if I sold off in Nov 9th when I was at ATH, how I could just do this and that and quit my job if I really wanted to”? And then I go back and look at sells and buys that I made with smaller part of my portfolio and it most certainly didn’t work out in my favor by a long shot.
Many thanks to Saul and this board for keeping up educating people.
And like BobbeyBe said, every mistake I made, I own it and don’t blame a single person. And I am absolutely not sure at all that last three days rally means we have hit the bottom. In fact, I was SURE that Feb 24th morning was the bottom and then I hit quite lower bottom on March 14th.
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Anyone who is tempted to get in and out and play the market should print out Bobby Be’s post 83881 (it’s just before this one), and frame it and hang it on their wall.
Saul
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One last thought. There are those who say you should sell out when your stocks are overvalued. Sounds sensible, but here’s the problem:
On Mar 16 of 2020, the beginning of Covid panic, my portfolio was at 84.0% of where it started 2020. And all my companies were considered “overvalued.” SaaS companies are always considered overvalued.
One month later, on Apr 17, that same portfolio of overvalued companies was at up 29.1% of where I started the year. It was up 54% in a month!!! (129.1 divided by 84.0 equals 1.54 or up 54%)
Up 54% in a month??? Clearly that was time to take profits. But if I had I would have gained 29% on the year instead of 233% on the year. And my assets would have been profoundly lower now.
Heck, I was up 70.3% in two months. That was up 103% from the bottom. Clearly you would have taken profits there. And missed the remaining 160% of further profit.
It’s just guessing.
Saul
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