My Goals for 2018

… were very conservative, as my thinking was that another year like '17 just isn’t possible.
So I set a goal for only 40% gains this year but I think that needs revision. Either that or I
can take the next 11 months off, or raise my goal to 40% per quarter. (40% per month is just crazy, but
then this is all seems crazy to me.) But I’m in.

There. That ought to slow things down a bit.

I will boot any laggards and add to the big winners up to 15-20% positions. Diversification is
overrated anyway. :slight_smile: The only downside is that I won’t have all that cash earning a whopping
1/20 of 1% in interest any more. Oh well, this is more fun. I’m trying to grab some more ANET but
the price keeps running away from me every day.

Comments and suggestions welcome. Good luck everyone!

Dan
ps: I changed my mind and never did sell any SHOP, in fact I’ve added shares.


ANET	9.7%	Arista Networks Inc
SQ	9.4%	Square Inc
IPGP	7.1%	IPG Photonics Corporation
ALGN	6.8%	Align Technology, Inc.
MA	6.5%	Mastercard Inc
SHOP	6.4%	Shopify Inc (US)
TREE	5.7%	Lendingtree Inc
MKSI	4.8%	MKS Instruments, Inc.
ABMD	4.7%	ABIOMED, Inc.
FB	4.7%	Facebook Inc
NVDA	4.5%	NVIDIA Corporation
LRCX	4.0%	Lam Research Corporation
GRUB	3.9%	GrubHub Inc
MU	3.8%	Micron Technology, Inc.
PYPL	3.8%	Paypal Holdings Inc
CGNX	3.4%	Cognex Corporation
PAYC	2.9%	Paycom Software Inc
GOOGL	2.5%	Alphabet Inc
BESIY	2.0%	BE Semiconductor Industrs NV
HDP	1.9%	Hortonworks Inc

16 Likes

Nice one Raptor. Looks great although there’s a ton of exposure to semiconductors and network infrastructure. Let’s hope there’s no 1999 Cisco moment when the world first stopped for telcos then equipment makers then the whole of the internet. Semiconductors are definitely cyclical and network equipment infrastructure is completely feast or famine.

I’ve been mulling LAM - everyone talks about it but the retro numbers look rubbish. Not sure if I completely missed the boat with IPGP. What I am really concerned with is to what extent 5G invalidates or supports the investment thesis in players like Arista, Applied Optio, IPGP, etc.

Love the ruthlessness behind watering the flowers / weed the weeds or whatever the expression is.
Ant

1 Like

Ant,
what extent 5G invalidates or supports the investment thesis in players like Arista, Applied Optio, IPGP, etc.

Whatever you are alluding to here completely escapes me. Care to elaborate?

2 Likes

Comments and suggestions welcome.

Sounds just like my year 2000. By then I had more money than I thought I would ever have in my life. All I was going to do was double once more. Alas… Beware Hubris and the Law of Averages, they are out to get us!

That said, there is no telling when the good times will stop rolling. I hear opinions from the five corners of the globe, from bullish to bearish and everything in between. Some blame/praise central banks, money printing, the national debt, ETFs, RINOS, Shiller’s CAPE, unicorns, anything will do to back a wild opinion. None know. Me neither.

I do my own analysis, too long to repeat here, and it is generally bullish but I recognize that Mr. Market has a mind of his own, an unpredictable mind, kind of bipolar, and the Law of Averages does apply. Somewhere along the line Mr. Market will change his mind but not even he knows when.

But we can, with difficulty, keep Hubris in check. Translated into English, continue using best practices that worked well in 2017, don’t go overboard, and make sure that the portfolio is “STURDY.” Sturdy means that you are in control, that external forces cannot force you to sell what you don’t want to sell. Sturdy means no margin calls, no sudden needs for cash you can’t safely raise. It has more to do with money management than with the stock market.

Steps in good money management:

  • Have a margin account but DON’T use the margin, it’s there for emergencies

  • Use credit cards but pay them off every month on time - gives you a good credit rating - I can charge up to 5 figures if I have to, haven’t yet

  • Have sufficient emergency cash reserves

  • If you have debt, pay it off

These steps insure that if there is a market crash you don’t get sucked into the whirlpool. Think back to 2008, what was the main driver of the crash? Excess leverage, margin calls, and broken covenants that called in debt. Lack of liquidity forced sales adding destructive power to the whirlpool. Don’t get caught! Investing is not about white water rafting.

BTW, bull markets don’t raise one’s IQ. It’s an illusion. LOL

Denny Schlesinger

PS: I don’t know most of the stocks your list. I have ALGN and TREE and would get rid of MU for the reasons I posted earlier – avoid capital intensive businesses in this asset light era. Avoid stocks with credit risk to increase the portfolio’s sturdiness.

46 Likes

Sounds just like my year 2000. By then I had more money than I thought I would ever have in my life. All I was going to do was double once more. Alas…

It’s not just in stocks that that happens. I remember a neurologist friend of mine and his wife who was an attorney. They were in their late thirties to early forties, as I remember. The real estate market was booming in the city they were living in, and they were buying properties with 20% down or less, and flipping them, selling them in six months, up 20% or so, which was doubling their money. And then they would buy twice as much property with the doubled money, at the same low money down conditions, and doubling again in another six months, and even borrowing all they could to buy more the next time. And the next time. They figured they needed six more months, one more flip, and they could retire for life.

They didn’t realize they were playing “double or nothing.” The real estate boom stopped and they couldn’t sell at any price. A 20% drop in land prices and they were wiped out. A 30% drop and they were under water. He was still working the last I heard, many years later.

Saul

30 Likes

back to 2008, what was the main driver of the crash

In addition to highly priced stocks there were massive problems with real estate and the banking system that do not seem to be present now.
OTOH, governments are more extended than ever but can bail themselves out with the printing press.

Especially so soon after 2008 I would expect the next bear to be a more typical cyclical one. Though there are memories of the double barrel crash in the 1930’s.
Arguably the second one was politically (FDR) induced. And it was worse than part one.

1 Like

BTW, bull markets don’t raise one’s IQ. It’s an illusion. LOL

LOL, indeed. I can always count on Denny to take the worst-case perspective on all I say. :slight_smile:

Maybe I didn’t make it clear but I sure didn’t mean to give the impression that I was doing great due to
skill, Denny, nor that I think the market will keep going like this. Just the opposite in both regards
in fact. The math just simply will not work for this to extend much further.

I’ve made almost a full year’s worth of living-in-retirement expenses already since Jan. 1, and my point is
that this surely can’t keep up. Without getting political, the current environment is balls to the wall for
corporations, and take as much as possible from the citizens. Investing is the only way I have to get
something from the situation, so I plan to milk as many pennies out of this as possible. After that, I
will be begging for food, shelter and health insurance like everyone else. “Make hay while the sun
shines” seems to be the way to go. Currently the sun is shining on small-cap fast growers having anytning
to do with tech.

“And this too shall pass.”

Sure it will. Until then, it is what it is. When fear replaces greed, we’ll see who’s good at musical
chairs I suppose. I never liked that game, but I seldom lost either. I know it isn’t the TMF way of
investing, but I seldom love a company. And I don’t see the need to hold on to stocks while they
languish for long periods, just to prove I can.

I’m not in love with tech either. If I get my way, I’ll retire to a mountain cabin and throw away all
electronic gadgets. Then all these technologies that are going to “change the world” can do so without
me. I could live with that just fine.

Dan

5 Likes

Dan -

A 40% goal isn’t “very conservative.” Nor is it conservative or slightly conservative. It’s ambitious.

I count 6 years out of 27 from 1989 to 2015 that Saul made 40%, according to the returns in the knowledge base. If I recall correctly, he fell short of 40% in 2016 but made it in 2017, for 7 out of 29 total.

Better question: what’s your long-term goal? Your longer time horizon, your total return needs? If you’re thinking about retiring in 2019 then fine, a 2018 goal is the most important. But just like a business should have a long-range strategic plan to put short-term goals into context, it’s smart at least to consider where a 40% goal for 2018 puts you in terms of what you really want out of your financial life.

good luck,
dan

5 Likes

LOL, indeed. I can always count on Denny to take the worst-case perspective on all I say. :slight_smile:

That wasn’t a barb aimed at you Dan!

Denny Schlesinger

A 40% goal isn’t “very conservative.” Nor is it conservative or slightly conservative. It’s ambitious.

Hi Dan, I don’t know if you spend much time here but several investors are reporting 2017 gains north of
twice my goal. I only mention it because I was on track for similar gains until I made a huge and
stupid mistake in December. I have yet to reconcile 2017 but even with the worst mistake I’ve ever made,
my gains were … I don’t know, but well over 50%.

The point is—and I wish I had made it clearer— that we all know, notwithstanding the late 90’s, these
are rather unique times with tech poised to “change the world” as so many pundits are eager to point
out in every article on investing. And the stock market bears this out. Nothing has changed over the new
year. Why would these investors make a lot less this year than last, if nothing changes? Sure it
will change some day but the only time I invest is today, one today at a time.

To answer someone else’s question, I am indeed 65, and I am indeed planning on retiring next year. Or
rather my bride is. I’ve been retired since 2001 and my ‘job’ is investing. Anyway, yes, every dollar added
to the war chest right now is crucial to our future plans. Dear Wife wants to travel, and she ain’t talking from
Lincoln to Kansas City, if you know what I mean. She has worked hard and deserves it. I can’t be the one
to let her down.

In light of all these factors, I think 40% is very conservative. Of course the entire market could take a
dive. If it does, I don’t have far to go to reach my goal, although that will necessarily change now unless I
do decide to take off the rest of the year and park funds in ETFs. While that’s tempting sometimes, I
enjoy the market melee.

Here’s to 2018. I hope it’s a great year for all of us. And if things get shaken upside-down, it always
helps me to remember we’re all in this together.

Dan

3 Likes

I don’t know if you spend much time here but several investors are reporting 2017 gains north of twice my goal.

Yeah, I lurk here enough to know that 2017 was a very strong year for folks here. Nor am I saying that 40% or 80% or 120% in 2018 is impossible. But setting it as an a priori goal just seems to me like you’re setting yourself up for disappointment.

Nothing has changed over the new year. Why would these investors make a lot less this year than last, if nothing changes?

I have no crystal ball, but things always change. And even if a business doesn’t change, investor perception of it does, and that moves markets.

You’re not taking 40% or more as a sure thing, and that’s all I was suggesting. Best of luck reaching it and whatever other goals you set!

cheers,
dan

6 Likes

I was on track for similar gains until I made a huge and stupid mistake in December. I have yet to reconcile 2017 but even with the worst mistake I’ve ever made, my gains were … I don’t know, but well over 50%.

Hi Dan, do you want to share what that huge mistake was so some of us can learn from it?

Thanks,

Saul

5 Likes

The only downside is that I won’t have all that cash earning a whopping
1/20 of 1% in interest any more.

There’s any number of AAA-rated, Prime MMFs paying 1.4-1.50% already and with at least 3 interest rate hikes coming up, that will continue to increase.

2 Likes