I don’t think there’s a single reader of this board that thinks 65% every year is achievable. It’s simply a fact however that some of the readers of this board have achieved something close to that so far this year. I’m one of them. So, yeah, I gloat, a little.
None of us that have achieved outstanding results so far this year are invested in “the market.” If we had we would have, by definition, average results. Saul has discussed this at length on more than one occasion and it’s discussed in the knowledgebase.
Not every high performance stock discussed here is SaaS, recurring revenue, i.e. LGIH, NVDA, BCO and others. SaaS and recurring revenue seems to be where a lot of the growth is today. High growth with strong fundamentals are the key considerations. There are a lot of SaaS, recurring revenue type stocks that would not be considered candidates, or shall I say “Saul” type stocks.
Saul has an uncanny sense of when to get out of an investment. That’s hard to emulate, much harder, IMO than picking a growth stock with strong fundamentals. Saul has 20 years or more experience with Saul’s method. I’d venture that the rest of us, not so much. I’d also venture that none of us who are guilty of gloat have a portfolio that looks exactly like Saul’s with respect to tickers and percentages. I don’t.
But I’d venture all of us have highly concentrated portfolios. The biggest advantage of concentration is that it facilitates actually paying attention daily to each and every holding. Before I adopted Saul’s methods (and I’m still learning for sure) I held a lot more companies and never read the quarterly reports of any of them, just as an example.
And I’m pretty sure we are all aware that when the correction comes, which it most assuredly will, we will take a beating - but so will everyone else. By definition, a “correction” is unkind to all but a very few. The question I keep asking myself is not whether these high volatility stocks will go down more than the market, I know they will. But, will the greater fall be more than enough to offset the superior performance? I venture not. But, of course, I could be wrong. Nothing in life is certain. That goes double for investing. And double it again if all your investments are in the stock market. It’s a risk that I (and I trust others) are willing to knowingly accept.
And finally, will the dreaded correction kill any of these companies? Can’t answer that until the chickens come home to roost. But I mentioned the strong fundamentals above. A correction is most brutal on companies with growth fueled by a promise rather than a product. The companies with strong fundamentals tend to come back stronger than ever with much of the competition having left the field.
You may read this and think I missed your point, but I don’t see it that way. My eyes are open and I’ve given this a great deal of thought. I keep coming back to the same conclusion, there’s no better alternative. If there is one, I don’t know what it is. Any suggestions?