Chris, there are other ways to choose an investing strategy. No watching required. What you’re doing
here is avoiding a serious mistake – letting an insufficient sample size fool you into making a bad
decision.
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Saul, I feel I must answer two points you raise!
First, your index comparators are broad, while your portfolio, a preferred sector or usually even sub-sector, is narrow. A SaaS ETF in addition to the others(you could add, say DHI to represent the outlier) would be much more relevant. You are comparing the results of a big mixed farm to an intensive broiler shed.
‘Does anyone still doubt…?’. Well yes, over a suitably long investment timescale. Certainly an investor contemplating mutual funds in the past would have been well advised to doubt! Hence the success of Vanguard and the proliferation of ETFs. Not a single fund manager was left standing after, say, 20 years.
Active will do much better in the next few years. Buffett plays bridge and he chose the right moment to place his bet. But which would I invest in for the next 25 years, SAULX (an admired Morningstar gold 5-star fund with an immortal manager) or 9 ETFs of my choice? My admiration for your prowess is enormous and undimmed but I’d take the ETFs!
Ears, sure u mean well but I really don’t know what Saul and others here have to do educate you further.
A Serious mistake you say, a bad decision? 80/90% up. I will take that bad decision till the cows come home…
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Saul,
To boost up Othman and the rest of you guys self-esteem (LOL), I will pick up the rear guard at 75%. Not a record for the group, but it is the best I have done since the tech bubble (which was IMO a point of temporary insanity). It is also the best I have done since I left mutual funds, 17 years ago. IMO it’s a great return for a little more diversified and, depending how you look at it, a little more conservative portfolio.
Although I am concentrated, I am far less concentrated in tech than you all, I still think that a heavier weighting in health/medicine will pay bigger dividends over the next five years. No question it lagged this year. Of course my KITE call trade helped boost my returns as my occasional option trades typically do. So for the first time on any discussion board (drum roll, crowds cheering ;o) here’s my allocations:
SHOP (11.8%)
ANET (11.6%)
SWKS (8.0%)
NGG (6.7%)
CELG (6.6%)
MELI (6.3%)
APPL (5.5%)
SQ (5.0%)
ALGN (4.9%)
NVDA (4.4%)
IONS (4.1%)
FB (4.0%)
VEEV (3.6%)
FMI (0.6%Long Jan 18 47.5 Calls)
and the balance cash and intermediate term bonds because of limitations of my 401K.
For the coming year or two, you guys may want to consider CELG recent beat down in combination with CELG drugs in Phase 3 studies, offers a VERY appealing entry point. CELG has key positioning due to bluebird bio and Juno investments, as well as a key MS drug. Juno seems to have leapfrogged KITE with its recent work. A very, very exciting pipeline for you all to consider, with forward PEG forecasts <<1.
You really rocked this year. Kudos to you.
Best,
bulwnkl
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I will pick up the rear guard at 75%. Not a record for the group, but it is the best I have done since the tech bubble (which was IMO a point of temporary insanity). It is also the best I have done since I left mutual funds, 17 years ago. IMO it’s a great return for a little more diversified and, depending how you look at it, a little more conservative portfolio.
That’s great Bulwinkl, congratulations! Man! No-one has to apologize for up 75% in 11 months! That makes five results from our group of year to date results:
+97%
+97%
+91%
+83%
+75%
That averages to about +89%. And we certainly don’t have identical portfolios. You and I only overlap in 5 out of your 14 positions (and there are a couple of your stock symbols that I have never even heard of).
Let’s just remember that there is NO guarantee that December will continue the upward trend, and we may give some back (or gain a little more, who knows?). And let’s also remember that it’s HIGHLY unlikely that next year will be as good as this year. After my previous three years in which I was up 100% or more, the following years were up just 19.4%, 16.7% and 0.3%. That’s up 12% average. Up 12% is better than a kick in the pants, but keep your expectations in check.
Best to you all, and I hope you had a great Thanksgiving weekend!
Saul
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I’m sure that some of you have done even better, as I made some bad choices along the way that cratered as soon as I bought them, and others that continued going up after I sold them.
I’m guessing you know this already, but in any activities that involve a non-trivial element of chance (as does the short-term movement of stock prices, and to a lesser extent, business results) one should not judge whether choices were “bad” or “good” based on the outcome of individual choices. If this is not fully self-evident to anyone, I would highly recommend Fooled By Randomness, as well as Howard Marks’ memos.
A corollary to this is that one should not really make any conclusions about your investing prowess based on this (or any one year’s) results. Same reason. Results over a vary long period, encompassing multiple business and stock market cycles, is really necessary…and even then has a possibility of being due to chance. (I know you have a great long-term record…my point here is for those who may happen upon this year’s results and make unfounded conclusions).
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We’re not cowboys. We just understand the math. We know we’ll lose 50% at some point. We’ll just be so far ahead by then, it will be worth it.
Just to have some actual historical results to back this up, Saul, I’m wondering if you might be willing to share your results from 2001-2003 and 2008-2009. If indeed you only crashed roughly in line with the index (which was down roughly 50% in each case), while crushing the market most other years during that time frame, then that would provide great empirical support to your method (assuming it has been roughly the same during that period).
My return has only been ~35% YTD which is nowhere near your returns.
I have mainly followed MF portfolios services and the idea to buy and hold, and not to sell based on ‘short term’ issues.
Certainly some year may be better some may be worst but I (and the MF portfolios) haven’t gotten near the returns you have. Certainly my portfolio is not as concentrated as yours. The problem is always what to concentrate in. You seem to have pitched your focus and made the transition in quite a timely fashion while the ones who stayed in SKX, BOFI and the ones you were in a year or 2 ago definitely did not do nearly as well.
To Tom G., in your opinion what is it that make Saul et al more successful than any MF portfolio? Arguably if you can know what to concentrate in, the returns can be much higher than in a more diversified portfolio- case in point…and ‘judiciously’ selling can make for better returns in the shorter term.
You may not agree with the way Saul is investing but it works and it works better than MF’s!?
tj
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Saul’s historical results are in the knowledgebase in the right margin, specifically in part 1.
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Saul, I’m wondering if you might be willing to share your results from 2001-2003 and 2008-2009.
Hi Commoncents,
Tamhas has already posted this but let me elaborate. The Knowledgebase, that this board is based on, is linked to at the top of the right panel on each post page. It had to be posted in Parts 1, 2, and 3. My past record is in Part 1, near the beginning. The three parts are worth reading all the way through, and many members have read them two or three times. It was revised a couple of times but its current incarnation is about a year and a half old. Have fun reading.
Saul
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PS - It’s under the heading: ## My Historical Results
Not a regular poster but a devoted follower. So, i have the rear so far, 74.5%
SQ. 16%
OLED. 15.6%
ANET. 13.9%
SHOP. 11.4%
NVDA. 9.8%
EXAS. 9.7%
HUBS. 7.5%
SPLK. 6.9%
UBNT. 3.8%
2 LEAPS, SHOP, UBNT. 1%
Less than 3% cash
Best,
Andy
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Forgot this one
PFPT. 1.5%
OK, I think the dilution issue has become a distraction from the core issue of whether issuing 10 million shares valued at the equivalent of nearly 50% the market cap of the company for the benefit of the initial major shareholders (listed in the NPI thread), is a negative for the stock.
Duma, excuse me for henpecking but those shares were issued a long time ago. Now they are being registered for sale to the public.
I believe it is and for the reasons stated, it will essentially put selling pressure on the stock (unless the selling is very carefully timed and spread out).
Yes, this is a very valid observation! How should the investor (not the trader) react? The sale of the shares will put pressure on the share price but the underlying company value is unaffected. I’d wait for the price to bottom to load up, if I were interested in the company. This is where TA is the perfect adjunct to “intelligent stock picking.”
Denny Schlesinger
As has been stated earlier if there is no change in the outlook for the company the downward pressure engendered by more shares coming to market; I view the dip as a buying opportunity. INBK had a dip caused by a secondary on 9/15/2017 and dropped to the 29’s where I got in. TLND sold off as I expected and I used the selloff to get into a starter position at upper $39s. I know more shares will be introduced to the market so have kept powder dry should it retrace more. I have no idea when those shares are coming to market but am hoping it will be from a higher basis. So far it has traded up.
Rob
Just to have some actual historical results to back this up, Saul, I’m wondering if you might be willing to share your results from 2001-2003 and 2008-2009. If indeed you only crashed roughly in line with the index (which was down roughly 50% in each case), while crushing the market most other years during that time frame, then that would provide great empirical support to your method (assuming it has been roughly the same during that period).
Found my way to your Knowledge Base and annual record, so don’t bother.
I was pleasantly surprised that you have done as well in the market’s serious down years as you did. In particular, you held up well in 2008-2009 for such an aggressive style, and even better 2001-2003. Not what I would have expected.
On the other hand, the record for 2006-2015 (the latest 10-year data from that Knowledge Base) supports the idea that the record for 2017 was largely chance, as you beat the market by more than 80%…yet for that other decade your posted results trailed SPY (with costs and dividends factored in, data from Yahoo Finance) 0.79% CAGR (5.64 vs 6.43). Let’s say we add 2017 (to date, but count it as a year) to that (I don’t know your 2016 data): Saul 11.8%, SPY 7.37%. So for that 11-year period, you’re clearly beating the market…a very worthwhile achievement; yet the outperformance for that period is completely different than the 2017 performance would suggest. So either your investing skill has had a magical transformation…or, as I suggested…a large element was chance (of course, with your skill superimposed).
p.s. One other thing I would suggest is that a large element of your outperformance over the years may be due to the fact that you run a concentrated portfolio. Assuming one has investing skill and is able to truly identify above-average investments, the act of concentrating one’s funds in the best of the best ideas is bound to lead to above-average results. Nevertheless, that does assume you have a method of determining above-average stock picks…which your record suggests you virtually certainly do.
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Haven’t kept tight track of my returns and not all of my portfolio is invested as this board outlines but returns of that portion of my port, well into 6 figures.
I have the rear so far, 74.5%
Thanks Andy,
That makes at least six of us so far up over 70%, and averaging about 86%, while the market is up 12-13%. Pretty awesome for now. Again, keep your expectations rational for December and next year.
Saul
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I’ll play. Longtime lurker and seldom poster. I think I have read most of the posts on this board from the beginning and have learned so much. Thanks Saul!
87.6% YTD
SHOP 26.9%
ANET 15.6%
LGIH 9.3%
MELI 9.2%
NTNX 8.3%
HUBS 7.6%
TLND 6.3%
UBNT 6.1%
INST 6.0%
TTD 4.7%
Scott
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Bulwnkl,
Embedded in your reply was an interesting statement about the decline of the effectiveness of antibiotics and the year 2030. That’s crazy stuff.
~TracyK
Bear,
A single company. But a very large position. I was overconfident and underestimated the risk.
Going bankrupt isn’t the only risk. For example, a couple of years back some folks here were high
on AudioEye (AEYE). Recurring revenue, phenomenal growth. Problem was it was mostly all faked. There
are many risks when you invest in individual firms, and some of them will surprise you.
Ears
Ears,
I appreciate you sharing that. I think I would encourage you to not remain “once bitten, twice shy.” Yes, company-specific risk is a concern for anyone who invests in individual stocks. Many of us suffered through INFN last year as it fell from ~20 bucks a share to more like 10. RUBI didn’t turn out well either. I personally made a huge mistake to stay in SEDG as it cratered, even as Saul explained his (good) reasons for leaving it. But even Saul has held losing positions at times.
Doesn’t change the fact that the winners far outweigh the losers. If there’s one thing the Fool says that I agree with it’s this: you can only lose 100% on any given position, but you can make several hundred percent or even more. That’s really the math that’s relevant to our ongoing discussion. Don’t look at the incredible record Saul’s had over 30 years. Don’t look at the year many of has had. Simply realize that we can be wrong several times and just right a few times, and the math works out.
It’s certainly possible to under-estimate company-specific risk, as you seem concerned that the readers of this board will do. But I think you, on the other hand, may be over-estimating it. In a portfolio of 10-15 stocks, it would be awfully unusual for them all to crater simultaneously due to company-driven factors. When I say we’ll lose 50% at some point, I mean in another severe downturn. I see the multiples dropping severely. At that point I’ll probably wish I could take out a loan to invest. In early 2009, I doubled my 401k contribution to take advantage of the low multiples on everything. Then I was invested in the S&P. If I’d been invested in individual stocks, I might have had a triple digit gain year like Saul.
I don’t think any of the readers of this board expect to have years like 2017 constantly. In fact, last year was a meager year for many of us. Even Saul trailed the market, and I personally was down double digits, percentage-wise. But I survived. And now, even after that terrible performance, I’m doing much better than if I’d just been in the S&P the whole time. I am sure I will have another losing year again some time. But I think the winning years will outnumber the losing years. Not because I’m a genius investor, but because the market goes up more than down.
Since the trend is up long term, it pays to accept more volatility. Individual stocks rise and fall far more than indexes. I’m willing to take on that volatility. Yes, as I discussed above, I’m also taking on some company-specific risk. I will endeavor not to under-estimate it. Honestly that’s one reason for this board – we can discuss if we’re doing just that with any company we like! Just please don’t over-estimate it, either.
Bear
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