Since switching entirely to growth investing in January of 2021 as I was tired of Morgan Stanley barely (and usually just under) matching the market:
Though I was up as much as 40% in the fall of ‘21, I have now lost approximately half of my retirement fund (which means I’m down a seven figure amount that begins with a 2).
My portfolio consists of 14 equities, all typical tickers for discussion on this board. As of today, I don’t have a single stock that is in the green (DDOG was the last to go below the break even mark as I began buying in the 70s and added at various points). Somewhat comically, I finished “averaging into the market” right about at the peak of the market. There were no funds left to “buy the dip” though I did concentrate down from about 22 positions to the current 14 (buh bye OKTA, LSPD, and a few others).
They were all my decisions after I did my own due diligence and I blame no one.
Fortunately, I do not use margin, and don’t need the money for at least 10 years (though it does mean that I can’t retire early and I have concerns about working as much in the future as I did to accumulate the nest egg). I’d give you a reason for each company I invested in, but it matters not much at the moment as all of the nuances seem outweighed by macro economic concerns.
The only regrets I really have is having a poor risk management stop/loss plan, and putting too much stock in “board royalty” who believed that the warning signs of inflation and QE tapering weren’t to be heeded (a lot of folks seemed sure they could do this as they had banner years in 2019-2020, I gather).
The last bulwark of my investment strategy is that since all of these companies are great ones, (at least appear to be so) hopefully in a few years this is but a blip on the horizon. I still sleep well at night, and that’s what has prevented me from selling what I have left. But it sure makes one ponder bigger questions about what the hell we’re really doing and who’s running this world….
I am sorry to hear about your situation.
“The only regrets I really have is having a poor risk management stop/loss plan, and putting too much stock in “board royalty” who believed that the warning signs of inflation and QE tapering weren’t to be heeded (a lot of folks seemed sure they could do this as they had banner years in 2019-2020, I gather).”
I (like several others) suggested on this board (in December and January) that higher rates are extremely bad for hypergrowth stocks - and that was met by outright derision and hostility.
I guess everyone would have gotten the message by now.
Frustration is very understandable, especially for all the people who jumped on the bandwagon in January, 2021 without the returns of 2017-20 to fall back on. But the OP also at the same time says that he won’t need the money for 10 years. Yes, this has been brutal, but results from 6 months in a 10-year journey aren’t enough to draw any conclusions.
Now, maybe this time Saul and his methods will be wrong and not work in the long term…but that can’t be judged based on the returns of 6 months. Saul has a 3 decade record through ups and downs, recessions, wars, etc. Yes, this has been bad and not the typical 30% correction and return to new highs in 6 months…but until proven wrong, my money is still on Saul to outperform in 5 years those who played this perfectly…heeded catsunited’s warnings…sold everything at the highs…bought oil on January 1st…hedged…shorted, etc. The big losers are the ones who can’t stick it out…selling everything now to buy treasuries or commodities.
Just because Saul has given the bears a +/- 100% head start (him down 50% and them up 50%), this is a marathon for those with a 5+ year time horizon (which anyone investing here should be)and we are in the 3rd or 4th mile of 26.2 I don’t know the stats, but I seriously doubt that the leader of the marathon at mile #3 is often the winner. So for all the bears, I think their victory dance is very premature.
Yes, many of us could have done a better job of risk management and capital preservation (I am down seven figures as well), but hindsight is 20/20…Saul is the greatest investor of the last 30 years and he is resolute in his methods…the Gardners have a similar track record and are steadfast as well…another respected service that I subscribed to is bullish long term on innovative tech and their technical/macro expert was calling for an end of 2021 rally and still sees us in a long term uptrend…so not everyone saw this coming. Of course those who were right are pounding their chests, let’s see where they are in 5 years. Again, I’m not impressed by the marathon leader in mile #3…show me the leader at #26.
I really think that investors like Saul and his followers will come out of this big winners in 5 years (hopefully me too). Again, while the frustration of the OP is completely understandable, for someone with a 10-year time horizon to draw conclusions after less than 6 months of rough sailing is very premature. At some unknowable point in the future our stock prices will begin to again reflect the underlying business performance of our companies, and when that happens, you probably don’t want to be 90% cash or fossil fuels. Only time will tell.
I am down quite a bit in my portfolio as well and it has been frustrating. However, this isn’t new.
Following the historical trends of public market valuations of SaaS companies reveals four corrections since 2016, reducing the enterprise value/forward revenue multiple of
these companies by 30-60%, according to Tomasz Tunguz, a managing director at Redpoint Ventures. One common trait associated with these corrections is that all these corrections were short-lived, with market new highs recorded 12-18 months after the corrections.
Here is the link to the article, https://tomtunguz.com/five-corrections-saas/
“You simply cannot practice growth investing without accounting for valuation, and vice versa. Dismissing and censoring valuation conversations is malpractice.”
Most likely your post as well should be deleted. Malpractice? Is Saul managing your money? The rules are simple and written down for the board to follow. This board is about hyper growth investing, that’s it. Simple. Someone stepping into this board and warning about valuations and Sauls responsibility now, in a major correction of hyper growth, that’s just too easy. Knowing that a bear is correct about 10% of the time on any historic time frame, where should one be the other 90% of the time, in value stocks? If that’s the case, then why read the board at all.
I’m not a fan boy rose colored glasses, blind follower of Saul. I see that he is human, that he makes mistakes, like all of us do. His are a bit more public then ours are. I also know that Saul is like the market, 90% of the time he’s up and to the right. He does a lot of good. You just happen to be jumping on a 6 month window when hyper growth has done poorly and somehow blaming Saul for it. That’s crazy talk.
Malpractice? That’s a really uncalled for low blow.
“Valuation matters and discussions of how to value hyper growth stocks should be permitted. Saul censors them because he’s not a growth investor but rather a price momentum investor. Discussions of valuation have nothing to do with momentum investing, hence the censorship.”
A suggestion then. Start your own board. Or I’m sure you have other boards, other places to heed your warnings.
The reason I’m even responding to your posts is that I was pretty much where you were at in Nov. I found myself with 38% cash after feeling that everyone was way too bullish, and seemingly everyone was looking for a year end rally. I used that month to lighten up on positions that I didn’t have high conviction for. The big one was cutting my long held AMZN in half.
What I didn’t do was come on this board to let everyone know how I felt about valuations, and the over exuberance of the masses, and that hyper growth was due for a correction. Not this board. I have other places to discuss those topics more freely. Not Sauls board. I knew better. I attempt to follow his rules. They are in place for a reason, and you or I might not agree with all of them, but that doesn’t mean we can break them. Saul has his method and I respect it. I might not follow it, I’m certainly much more diversified, but I do use it with a portion of my portfolio. It’s not working right now, in fact it’s terrible right now, but I’ve been very slowly putting that cash to work in names like DDOG, NET, SNOW, MDB, CRWD, ZI for a very good reason. They are well researched here, they are fast growing, and they are now selling at much more reasonable prices then last Nov. Oh, and if I’m wrong, if they never recover, then that’s on me, not Saul, or anyone else on here.
Saul censors them because he’s not a growth investor but rather a price momentum investor.
Just because you keep saying this doesn’t make it true. Could you call this style “business momentum investing”? Sure, I’d buy that. The companies with the best growth/margins/cash flows always seem to generate the most love here. How about “S-curve investing”, riding the sexiest slopes up and then narrowing or selling a position when the curve shows signs of flattening? I’d wouldn’t shy away from that description either. ZM is probably our best example, and Saul played it perfectly. Being honest, I wish I’d paid more attention to him at the time.
However, calling this style “price momentum” is even more Phoolish than your name implies. In fact, it’s lazy and dishonest. Dozens of companies here have been sold for slowdowns in growth, missing key performance metrics, or providing weaker than expected projections or guides. Those are all business reasons entirely separate from the stock. Nowhere have I ever seen a trim or sell decision based solely on a price decrease from $X to $Y. That’s because business execution has always been the overriding factor here, as it should be. Frankly, it’s shocking you keep failing to grasp this most basic concept even though it’s been pointed out to you repeatedly. Maybe that’s why your consistently off-topic posts keep getting deleted. It’s hard to claim malpractice when it’s clear you don’t even understand what’s being practiced in the first place.
Much like TMB I wondered about even responding to this nonsense. After all, it’s not like anything is going to change your obviously made up mind. But like TMB’s comments, this might hopefully provide additional context for those currently trying to decide exactly how hypergrowth fits into their overall investing philosophy. For those readers, good luck with whatever you decide.
As the OP for this thread, I’d like to make a two comments before it [the thread] is deleted as we head off topic.
I am not “frustrated”; Frustration is an emotion that probably would have impeded me from sticking to the plan: which included, should a large correction occur, a steadfast determination to take a longer view and not panic sell. I’ve concentrated my holdings (even if I’m still in 14 compared to Saul with 8-ish) and I am unemotionally staying growth-invested and acknowledging that 6 months, or a year, or even 3 years is a very small sample size for this strategy. That’s not to say I won’t change companies in my portfolio if the company-specific reasons I invested changed. But the overarching strategy of the portfolio as a whole remains.
I referred to areas for which I had a blind spot: I failed to exercise risk management and my thought process was too deferential to others as I brushed aside valuation, inflation and QE concerns. That’s different than saying we should have discussed them more on the board. The aim of this board is to discuss the companies. I don’t think there is censorship here but rather a genuine attempt to keep us on topic.
But here’s what I would impart to relative newbies reading our board: since our board is so focused on discussing the companies and their businesses themselves, just because we don’t TALK about the other factors, doesn’t mean you can’t THINK about them (and there are other places on the Fool to discuss) and incorporate them into your own strategy. I wish I had.
I never felt Saul or others suggested one not think about these other factors and incorporate them as you see fit in your strategy. I’ve always taken the deleted posts and closing of threads to be a tacit decree that there are enough sources out in the big bad world that you can discuss and dissect elsewhere. I happen to disagree with Saul on the state of our macro economic environment, but that’s different than feeling censored.
Philip, It is so odd that you always show up at the bottoms to attack us for not being value investors like you.
But why in the world do you come to a high growth investing board if you are not interested in it? Is it just to attack? To gloat at bottoms? To try to make people feel bad? Are you just jealous because our multi-year results have been so enormous, and so beyond what you could expect, and you thus feel compelled to gloat when we are down temporarily?
There are plenty of value investing boards. Why not spread your gloating there?
This is a board to discuss French cooking! If you don’t like French cooking and prefer Chinese egg rolls, don’t come to our board to tell us how much better Chinese egg rolls are, go to a board for Chinese cooking.
And any more of your posts to attack and gloat on our board will be deleted.
Especially when it is in the service of denying people access to information necessary to good decision making.
This single board at Motley Fool is not the only venue for people to seek information. It seems rather silly to talk of “denying people access to information”… I bet there’s more than a handful of boards at Motley Fool that attempt to define GARP within their groups, and no one, that I know of, is preventing people from accessing those boards.
Please Saul, delete this thread.
It’s taken off in a direction I never intended and is distracting from what the board is about. I’ll post a better monthly summary at some point with information about my actual companies, how my thoughts on valuation in this marco environment impact, but don’t impugn, my growth investing.
Happy weekend everyone.
Please Saul, delete this thread.
I’d advocate that it be kept, for what it’s worth. I think the rationale provided by several (including yourself) regarding the reasons for why the board is moderated the way it is have been helpful and insightful, and I appreciate that they’ve generally been level-headed and non-inflammatory. I recognize it’s a repeated topic that is likely tiresome, and perhaps this thread has run it’s course and shouldn’t continue further, but I don’t think that means entirely deleting both the good with the bad. And I think your OP and several responses are definitely part of the good things about this board.