Portfolio Update November 2018

This is my fourth portfolio update. My last update was thread 47975, and focused mostly on my emotions during my first big drop in a long time, and my first big drop during my high-growth experiment (started only just this August).

Currently I’m up 11.6% for the year, after being up nearly 29% in mid September. I had fallen almost all the way to a zero-gain at one point, so I’ve had a relatively good recovery these last two weeks. I’m down 13% from my all-time high, but things feel like they are going in the right direction again.

PSJ   11.2%
Cash   8.3%
AMZN   8.0%
MDB    7.4%
AAPL   6.6%
NFLX   6.2%
PYPL   5.8%
TTD    5.7%
NVDA   5.7% (now my worst performer)
SQ     5.3%
STWD   5.3% (high yield REIT)
TWLO   5.1%
ZS     4.1%
MSFT   4.0%
ANET   2.6%
IRM    2.4% (high yield REIT)
ILMN   2.4%
FRT    2.2% (another REIT)
BRX    1.8% (high yield REIT)

I’m at 38% high growth, 12% REIT, 8% cash. The rest I consider “big name growth”, such as AMZN, NFLX, etc. Not Saul stocks, but should be reliable market beaters. This makes me a hybrid high growth investor, not going all-in with the strategy here, and that suits my temperament rather well. My long-term target, which I adopted in early 2016, is a CAGR of 12% with short term targets of beating the S&P 500 by 1% per quarter. With this current strategy of mine I think a 2% per quarter beat is realistic.

October saw me make far fewer trades than I normally do. I consider this a good thing. I’ve done enough research into my own behavior to realize I’m hurting my own gains due to how often I move things around, even if I am hitting my growth targets. This also meant I didn’t panic this month, like I did in September.

My cash position has dropped almost in half during October. Bought more PSJ. I see it as both a diversified software growth play with less volatility than individual names.

I see AMZN as a reliable long-term play. Not hyper growth obviously, but market beating and worth holding. There is too much going right with this company to not keep the shares.

MongoDB is the high growth stock I understand the most and is why it’s my largest single holding in that category. But when we get to that 8-9% allocation is when I get nervous about having too much in a single name (ETF’s the exception to that rule) so I don’t plan to add more.

AAPL is a long term hold of mine that I am likely going to trim. It’s not as simple as them being mostly a HW company, it’s that the HW seems to be decelerating. Yes, they are trying to concentrate more on services, but most of those services will be sold on Apple HW.

NFLX is a stock I both love and a service that I love. However, it’s been beaten hard and I’m still considering if I hold or trim. When I started hearing ads for Amazon Original series on the radio is when I realized the streaming business is both maturing and its getting competitive, and the money burn at NFLX worries me.

PYPL looks to be doing everything right and has been a strong performer for me. Bought as a Stock Advisor recommendation and have been happy ever since.

NVDA, what a story there. My faith in the company has been rocked. What was once a reliable top-3 performer for me is now my worst holding by a comfortable margin. About the only keeping me in is a friend at a hardware based ML/AI startup that tells me “this stuff is hard to get right, don’t count Nvidia out yet, they are still king and going nowhere”. In other words, his company is trying to beat NVDA (and TPU, etc) and he’s telling me this is a difficult task to pull off. Staying long for now, but really watching this close. They are up 18% off their October low, so that says something. Right now, that bounce is what is keeping me in NVDA.

The REITs I got back into as a buffer to the ups and downs, plus three of the four have high and solid dividends. My first big experiment with moving away from funds was in 2015, when I had 20% of my money in 4 REITs, and they made more money for me that year than the remaining 80% lost me (a targetted retirement fund). I got out of the REITs in early 2016 (wisely, I timed that very well), but now getting back into the space.

What I’m looking at doing next:

MSFT, ANET, looking to dump these. They have not been big performers for me, and I believe I’d be better with this money in more PSJ than in these two stocks.

AYX, looking to get back into this stock. Sold at a profit before the world came crashing down. My interest in this stock came back after I attended Tableau Conference in late October, where Altyrex was the main sponsor with the biggest booth. I was impressed with what I saw and heard in the booth.

Looking at more PSJ as a less volatile high-growth route than picking individual names.

Looking at CRM. On fire. Great company, great CEO.

Overall, not really looking to do much. And might not do any of the above next month.

I understand the philosophy behind “build the cushion”, about not market timing, and staying invested. I understand the math behind it all. And I am getting more used to the big rise in volatility I’ve had these last three months. However not willing to go all-in, and might not ever. Hence, I own PSJ, I own some REITs, etc. But that’s ok for me. I see myself easily exceeding my retirement target without taking on even more risk, and I see that as a positive.