Pikatrain's portfolio at the end of Nov 2020

Date 11/29/2020

Previous months:
October 2020 https://discussion.fool.com/pikatrain39s-portfolio-at-the-end-of…

== My annual return ==

2017 0.56% (About ~2 months, not investing too much)
2018 2.30% (Mostly FANG-alike stock, technical)
2019 14.34% (Give up stock selection, switching to ETF: QQQ, SPY and keep only Amazon)
2020 85.26% YTD

A little break down of 2020

JAN 26.40%
FEB 31.91% * Use margin and option to sell short stocks
MAR -24.22%
APR -50.48% * Switch to Saul's strategy at its lowest point, about -74% in mid-April
MAY -9.08%
JUN 24.76%
JUL 40.15%
AUG 42.38%
SEP 83.34%
OCT 63.76% * ATH around 100% on 10/13
NOV 85.26%

== Account activities and why ==

November was a quiet month for me. My account hit a low point on 11/10, where my return dropped to ~50%. I decided to ignore the market and pay little attention to the stock price change by focusing on my day to day jobs.

I later decided to trim a bit of my zoom portion, where I bought around $500 and sold them around $420. I made this transaction to reduce my margin usage: I often trim the portion where I had a loss, not winning for tax reasons for minimizing short-term capital gain. I will probably trim some PTON in December. My ultimate goal is to cut my margin usage further and pay as little capital gain as I could if possible when I believe the market might be overheated.

I decided to trim my margin further because I notice CNN’s fear and greed index hit 92. This 92 is a signal of suggesting me to play a bit conservative and be less greedy. I feel that the vaccine will slow down the COVID, and it won’t be a surprise to me that in another few months, we see a deceleration on pandemic-tailwind stocks like ZM or PTON. I don’t know how the market will respond, but, in a short period, it’s NOT going to help boost the stock price for ZM or PTON for a new ATH if the pandemic is over.

Both ZM and PTON have created strong moats in the last few months and offer great products. There’s no reason for me to ditch them altogether and move funds away from these two stocks, especially because I’m going to pay heft tax if I do so. However, I’m slowly trimming them down to 20-25%, instead of ~30% of my portfolio.

== My investment principles ==

My tax rate is very high, so if there are two stocks to trim, I will consider tax implications, especially due to short-term capital gain, into my decision process. Namely, if two stocks are similar to me, I often sell the one I make less (or lose the most).

I usually avoid a stock when Saul (or any other experienced investor) gives some little “experiments,” or their conviction is low (<10% of their portfolio). I am fine with only keeping 4-5 stocks, and I don’t see a reason to diversify by adding 10-20% in another 1-2 low confidence stocks.

I generally avoid stocks where I can see a clear headwind in the next six months, no matter how incredible the management team and the product are. If in the earning call, the CEO/CFO says they are going to have some bumping rides (or headwind or slow-down) in the next few months, I trust them 100% because they have no incentive to lie for such a statement.

== My allocation on 10/31/2020 ==

SYBL    NOW    (Previous Month)
ZM	24.41%  (31.84%)
PTON	23.78%  (25.00%)
DDOG	20.20%  (17.68%)  
CRWD	16.05%  (13.69%)
SQ	15.56%  (11.79%)

P.S. Leverage 1.53x (reduced from 1.57x)

== Stock discussions ==

Little change to my belief this month.

RBLX: Roblox is going to have an IPO in Q4 and I’m very interested in taking a small percentage like 5% in its first week. They have a great moat where kids favor Roblox over PS2 or Nintendo Switch. I know it’s hard to believe but the “social” side of the game is tremendous. My kids keep telling me things about new friends they made in the game, and they play with their classmates in the virtual world where they create games together, for example. My kids already spend all their allowance on this ecosystem. I watch my kids playing these games and I think they are a brilliant concept. It’s basically an Apple app store (for games only, targeting kids between 6-16).

I generally feel that kids have little control over spending money, and on average I have allowed my kid to spend $20-$30 per month, which is equivalent to my Netflix plus Youtube subscription. I won’t be surprised some heavy users spending $100+ per month. And from what I can tell, they are addicted to this platform. There are unlimited games you can play all the time and the network effect are going to be tremendous. It reminds me of my time where almost everyone is playing AOL or Starcraft in high school and college – if you don’t play, you have no friends at school.

PTON: I subscribed to Peloton digital membership since it’s free to me (via CSR credit card). I gave it a try and the class is okay. The experience is average with my cheap-indoor-exercise-bike. I also watch a few cardio classes and generally speaking, I’m not amazed. However, I’m not a gym or group-exercise person and I prefer exercise like hiking or jogging. I’m still on the fence whether I will pay the monthly fee as I can get a similar experience via my youtube membership. Given their supply challenges, the development of the vaccine, and the experience I observed, I’m thinking of reducing it (and ZM) to make room when RBLX go IPO.

SQ: I’m optimistic about Square and I feel that even when the pandemic is over, they are going to benefit from the recovery. I see no reason why people are going to stop using Cash App, and I do expect them to get more revenues when the business reopens.

DDOG & CRWD: There’s no reason for me to make any change. I will keep holding them for a foreseeable future.