I’ll chime in, but you ought to give my thoughts two seconds of consideration:
*much of the analysis with some of these stocks is stock related, not business related. I mean, if we can’t even determine the share count on WIX then it follows that every single conclusion made after that is flawed in some way, though admittedly all it would take is a call to IR to get this resolved.
*there is little doubt that buying companies with high top line growth and negative NG earnings can produce truly sensational returns, especially if those companies eventually transition from fake earnings to real live earnings that stand the test of time. What I like about Saul’s method is he doesn’t even care about GAAP earnings which seems the right way to approach it if you want to invest this way. Go for growth, and sell at any hint of trouble, but keep your own counsel. It seems like you’d need a steel stomach to make this work, but time and time again - even in the short time I’ve visited this board - Saul keeps his own counsel and is rewarded. There is no sense in being right if you don’t get paid for it, so kudos to him!
*if it matters, I watched an MSN portfolio in 1999 go up 10x - that’s taking a $100,000 portfolio and turning it into $1,000,000. I watched it happen, and I can vouch for the results. It did happen, and if it happened before, it can clearly happen again. Most of the stocks were clearly speculative, but it worked anyway. So a lot of ways can work, period.
*to give an illustration as to how this can work, imagine you put together a portfolio of 10 stocks with a 50% chance of losing all money and a 50% chance of going up 10x. If 1 works and the other 9 fail, you end up with a flat return. If two work, you end up with an even better return. What Saul seems to be doing is weighting the odds in his favor while at the same time showing a rather remarkable ability to focus on stocks that others get excited about. Plus, he seems to pay keen attention to the BS and also analyzes any move which could interrupt the growth rate. Finally, his substitution for cash flow vs. GAAP earnings is a way to get around that problem. In other words, if you are going to high returns, then you need stocks that can produce high returns - he is doing that with remarkable skill.
*that said, these stocks are going to get crushed sooner or later unless they are the new Amazon, able to find new and bigger fertile fields of growth. You just can’t sustain this sort of momentum, but then again if 10 year rates remain near 2% almost anything can work. That’s just my opinion though, and you should ignore everything I or anyone says in favor of your own due diligence, assuming that diligence is competent.
In short, I wouldn’t want to invest like Saul, but on the other hand I’d also like 25% ytd returns too and don’t have them!! If you are a small investor, esp. just starting, just be aware of the risks here - I’ve been doing this 25+ years and it is a super-charge aggressive way of investing that is contrary to everything I believe - but who cares what I believe. Just make money!