I wanted to reflect on 2021 investment activities.
I started 2021 like most years with seven stocks and 17.5% in cash in my portfolio. As the year progressed I kept trying to find some additional stocks to invest in that I felt strong about, in business performance and valuation. As you can see below, I struggled buying and selling out quickly in many companies early-mid year. Around August I decided two things that would fundamentally change in how I manage my portfolio going forward.
First was I decided to only invest in companies that I felt were strong in performance with good valuation. I started with three companies in August and quickly paired down to two companies. Additionally I decided not to hold cash. Most of my portfolio is located in Roth IRA’s. I hold cash in banks for emergency funds (which are not included in my portfolio results). Only reason I hold cash in my portfolio is to take advantage of trading opportunities.
Once I decided to invest in what I feel are my two best companies, I saw no reason to hold cash in my portfolio. Now I buy and sell trading positions around my two companies if I feel there is a good opportunity. An example would be flipping from ~60% TCNNF to 60% UPST over the last two months of the year, to take advantage of UPST low prices (perceived low by me at least). I started to track the number of shares of each company every month to document the increase/decrease in shares.
At year end I held 57% more shares of Upstart and 35% less shares of Trulieve versus end of August. I took advantage of selling UPST in September and October when its stock price was high and buying Trulieve, then selling some of those shares to buy Upstart in Nov/December when UPST shares were much lower. The price points of purchases were better, thus netting my portfolio more shares of Upstart than previously held. Only way this works is if you view both companies equally and owning more shares of one versus the other makes no difference to you.
One benefit of going with only two companies is tracking everything in my monthly updates and keeping up with company news has become much easier. I would not mind finding a third company that I feel equally excited about to invest in, so far I have not found that company. I entered Jan. 2021 with Trulieve being my sixth largest holding and did not purchase Upstart until June. I purchased seven new companies in 2021, most of them I sold in less than a month. Historically I try to buy a small position in a company and then start to research more in depth, this historically has led to me churning companies in my portfolio.
As you can see below my buying and selling as dropped dramatically since going to only two companies. It sets a higher bar for a company to be included in the portfolio and obviously since I do not own many companies, there is not much to sell. I feel very confident that I will hold some percentage of Trulieve at the end of 2022 barring any major unforeseen issues. Upstart is a bit more of a wild card and will greatly depend on their quarterly reports. I guess another way of saying this is I feel very certain of Trulieve’s growth path and its stability, whereas with Upstart I am less certain. I do believe Upstart has a greater potential for gains in 2022 as I believe its price has gotten to low considering its revenues and rate of growth. That is why my portfolio is currently weighted heavier to Upstart.
Results year to date at end of month
January 18.5% February 20.1% March 8.5% April 8.6% May 4.8% June 15.8% July 8.8% August 18.8% Sept 42.4% Oct 40.5% High of year at 59.9% on Oct. 22nd Nov 24.0% Dec -1.8% Low for the year was -14.8% on Dec. 20th
Here is the percentage of cash I held when I did my end of month reports during this year.
At averages out to 4.8% over all months. Last year I averaged 18.2% of cash holdings. Last year had a YTD return of 193.9% vs. -1.8% in 2021.
My portfolio is at two positions currently. Historically my portfolio is between 5-9 positions. Below is number of positions held at end of each month.
Jan -7, Feb -9, Mar -6, Apr -7, May -7, June -7, July -9, Aug -3, Sept -3, Oct-2, Nov-2, Dec-2
New positions 2021
Sold positions 2021
Mar-GRWG, NET, EXPI
Aug-SKLZ, INTZ, GAN, DDOG, DOCU
Monthly reviews 2021
May did not post on boards
My portfolio to start the year was: 1/4/2021 1/4/21 12/31/21 CRWD 13.6 200.49 204.75 TDOC 12.5 200.63 91.82 DOCU 11.5 222.41 152.31 DDOG 11.0 91.23 178.11 ZM 8.6 359.98 183.91 TCNNF 6.0 33.42 26.01 EXPI 4.1 30.70 33.69 GDRX 0.4 41.65 32.68 LMND 0.2 113.36 42.11 CASH 32.2 1 1
If I would have just left my investments the same all year with no trading my YTD would have been -28% YTD or -26.2% less than actual YTD portfolio return.
Here is my annual returns since I have been tracking them:
2006 8.3% 2007 6.2% 2008 -32.5% 2009 28.1% 2010 49.3% 2011 3.6% 2012 9.5% 2013 67.0% 2014 10.4% 2015 6.4% 2016 1.6% 2017 29.9% 2018 31.5% 2019 13.7% 2020 193.9% 2021 -1.8% My 16yr avg +26.6% VTI 16yr avg +18.2%
I started to read Saul’s board back in 2017 and changed my investing style. Before that time I was being extremely conservative as I was using my portfolio as a safety net for my family. I had started a few businesses and did not have a regularly paying job. I had a young family that I needed to make certain I could provide for thus not willing to be aggressive with my investing.
Obviously a lot has changed in the past five years. My businesses are successful and I sold a few for nice gains, which I put into the market and made good returns on. I paid off all my personal debt and now can be more aggressive with my investments. Additionally I learned a ton about investing from many people on the Fool boards especially those on Saul’s board. I went from somewhat understanding investing to feeling like now that I have a good handle on investing. I read SEC documents on my companies and conference call transcripts. I know how to create metrics that I like to look at to determine value and make investing decisions. More importantly I have learned to tame and even take advantage of the emotional part of investing.
2021 represented a big change in the way I am managing my portfolio. For me it is a better way. I have more confidence in my two companies than I do for the previous 7-9 I was holding. It does mean more voliatilty and greater extremes in the fluctuation of your portfolio’s value from one point in time to another. I fully expect outperforming indices in 2022, if I do not I will re-evaluate my investment style.
I want to thank all of you who contribute to the boards. There is no doubt in my mind that you all have added insight and gain to my portfolio. I am humbled to be able to invest along side such great investors. These boards are truly special.
I hope everyone has a great and prosperous 2022!