By my calculation, I am up 9.4% from where I was at the end of 2017. This market is almost silly.
Obviously, as Saul often says, this cannot continue indefinitely. Three from below that might have
gotten a bit ahead of themselves share price-wise are Mercado Libre and maybe Cognex and Ubiquiti
(possibly Square just a bit too).
Sierra is on a fairly short lease for me this year, but I may give it at least a few quarters to
show some degree of performance.
YTD Gain Company Name Ticker Percentage of Portfolio
15.6% Nvidia NVDA 26.9%
3.0% Apple AAPL 7.6%
7.1% Arista ANET 9.6%
7.9% Mercado Libre MELI 9.3%
3.4% Ubiquiti Networks UBNT 6.4%
9.9% Shopify SHOP 5.5%
17.8% Square SQ 4.5%
4.0% Bank of Internet BOFI 4.1%
9.6% Cognex CGNX 3.7%
-4.4% Sierra Wireless SWIR 2.6%
5.8% iRobot IRBT 2.2%
4.7% The Trade Desk TTD 3.1%
0.8% Hubspot HUBS 1.9%
1.1% Celgene CELG 1.7%
Foundation Medicine and Square call options have added meaningful portions of the overall gains as well.
8 Likes
Three from below that might have gotten a bit ahead of themselves share price-wise are Mercado Libre and maybe Cognex and Ubiquiti (possibly Square just a bit too).
Volfan,
I’m not sure what will happen to the prices of any of these stocks in the short term, and don’t necessarily follow all of the stocks you listed. Of the above and when I look at my own portfolio, I don’t view UBNT as over-valued by any means. I have a decent understanding of why the stock is held down, not only today but historically, and I am interested to see how the next few quarters progress. And while the stock may have risen more lately, I wouldn’t necessarily say it has soared upward.
The price plateaued around $66 briefly Aug/Sept started dropping and the Left attack hit at some point. At a bit over $73, the rise hasn’t been meteoric.
Their service provider business holds back sales growth currently. If that were to pick up, I believe some very positive things could happen to the stock price. And the expectation is for earnings growth to roughly double sales growth next year.
When I look at UBNT, I don’t see it as having run up to far too fast, but that is just my opinion.
Nice work on the 9.4% YTD by the way.
Take care,
A.J.
1 Like
You may very well be right about Ubiquiti......especially with the share buybacks. I don't think I have
any inkling to sell any of my UBNT position anytime too soon.....but I have become very much aware of
the fact that it is a hardware company rather than a recurring revenue play (likewise with Cognex's
business model). I might have to keep shorter leashes for those 2.
For a post-8th day of 2018 update, I am now up 10.7% (artificially inflated to 11.2% due to low
liquidity for the Jan. 2019 $60 FMI call, with the last one selling when FMI was at about $74/share).
YTD Gain Company Name Ticker
15.8% Nvidia NVDA
3.6% Apple AAPL
10.7% Arista ANET
8.7% Mercado Libre MELI
3.8% Ubiquiti Networks UBNT
10.0% Shopify SHOP
22.0% Square SQ
6.2% Bank of Internet BOFI
9.6% Cognex CGNX
-2.0% Sierra Wireless SWIR
7.9% iRobot IRBT
7.1% The Trade Desk TTD
2.8% Hubspot HUBS
0.2% Celgene CELG
This daily update is a bit silly to keep up with, but this is an absurd beginning to the year. I don't
anticipate keeping this up (neither the absurd >1%/day rise, nor the daily updating).
1 Like
Definitely… odd… when you feel like complaining because every day most of your stock holdings are up another 1-2% on average. Hard to hate it, but it adds to the consternation of how much bigger the next correction might be, at least for me.
Not enough to make me bail, though. 
3 Likes
I am definitely not bailing anytime too soon, but I might start keeping my eyes open to possibly buy some puts, if any decent opportunities present themselves. I did close out my Square Jan. 2019 call position for a tidy 66% gain earlier today, as I figure that is a bit quick for such a gain (even though I did buy it with the intention to hold it long-term). I just bought it on 12/22/2017, as the then-$35/share price for Square seemed to have gotten a bit lower than seemed rational based on the prior run-up. Today’s closing price of $41.25 for Square is probably within a “reasonable” range.
Adjusting for the inflated value of my $60 FMI January call position, my portfolio is “down” to being up only 10.2% on the year so far.
Looking back at some prior data from my still early, self-directed investing career; starting from what was basically a market trough but pretty close to being 2 years ago, here’s how I have done…which makes me feel a bit less behind Saul (other than starting from a presumably much smaller base).
Gain from 2/29/2016 to 1/12/2017
47.9%
Gain from 1/13/2017 to 1/12/2018
46.3%
Total February 29, 2016 to January 12, 2018 return
94.2%
The dates are what they are due to timing of a deposit into the portfolio. I should note that NVDA accounts for the vast majority of this performance. The closing price for NVDA on the last Leap Day was $31.36/share. NVDA is up 611% from that date to today’s $222.98 close. I’ll also note that the portfolio value as of 2/29/2016 was down right at about 20% from the total amount of capital funding the portfolio prior to that time (17 months between October 2014 and February 2016). Averaging that out very roughly as (48+46-20)/3.5 (1 year + 1 year + 1.5 years) would yield an average annual performance of about 21%
I should also note that I began listening the Rule Breaker Investing podcast in October 2015, if I remember correctly, and I joined the Rule Breakers service at the end of May 2016 (followed not too much later by joining Stock Advisor).
I do not expect to have 45% annual gains too often going forward, but if I could consistently average 21%, maybe I could feel comfortable retiring from the full-time working world around the age of 45 or 50 (2029-2034).
4 Likes
You say “I do not expect to have 45% annual gains too often going forward, but if I could consistently average 21%”
If you’re considering 21 percent annually the low end of expectations, you will likely be disappointed. This kind of thinking tells me we are in bubble territory. Every reasonable, established economist says future returns will be between 4 and 10 percent. Just because your stocks have gone up 9 percent in four days does not mean the intrinsic value of the companies have gone up 9 percent.
“With expectations of a future 2% dividend yield, which is lower than the historical average of 4.4%, and a 4% growth in earnings, Bogle forecasts that future investment returns on stocks will be 6%. Factoring in a drop in the historically high price to earnings ratio (P/E Ratio) of 24 to about 20 or possibly less would shed 2% off of that 6% return. That leaves an annual rate of return of 4% for the U.S. stock market, which is less than half of what the return has been over past decades, and that’s not including investment fees.”
27 Likes
If you’re considering 21 percent annually the low end of expectations, you will likely be disappointed.
That’s a reasonable observation.
Every reasonable, established economist says future returns will be between 4 and 10 percent.
That, too, is a reasonable observation but not necessarily relevant. The returns economists talk about are the market average. About one quarter of investors beat the average and the other 75% underperform. I recently posted about how market sectors were doing
Sector ETFs for Dummies
According to ETF Daily News the S&P 500 is made up of eleven sectors the best performing one returning 37.55% and the worst losing -1.08%. Had you invested in a sector ETF based on the best performing sector you would have beaten the market by 78%. Even a Dummy should get that!
http://discussion.fool.com/sector-etfs-for-dummies-32949494.aspx…
As simple a strategy as investing in high tech can bring market beating results.
Denny Schlesinger
5 Likes
If you’re considering 21% annually the low end of expectations, you will likely be disappointed. This kind of thinking tells me we are in bubble territory. Every reasonable, established economist says future returns will be between 4 and 10%.
“With expectations of a future 2% dividend yield, which is lower than the historical average of 4.4%, and a 4% growth in earnings, Bogle forecasts that future investment returns on stocks will be 6%. Factoring in a drop in the historically high price to earnings ratio (P/E Ratio) of 24 to about 20 or possibly less would shed 2% off of that 6% return. That leaves an annual rate of return of 4% for the U.S. stock market, which is less than half of what the return has been over past decades, and that’s not including investment fees.”
Hi Todd,
If you don’t think we can beat the AVERAGE return of a vast pile of good, bad, and mediocre stocks over the long term, I’m curious as to why you are on this board. It sounds like you think we have to settle for the average of the indexes, which means you should be buying a market index and forget about it.
I averaged 32% for 19 years from 1989 through the end of 2007, a period which included a major down in 1993-94, and the 2000 bursting of the internet bubble. It can be done. In 2010 the talking heads were talking about the Lost Decade for the market, because the averages were back where they had been 10 years before. I was up 500% in those 10 years (not 50%, but 500%), in spite of getting killed in 2008, and I didn’t know what they were talking about.
Mind that doesn’t mean we won’t get massacred in a major downturn, even considerably worse than those in conservative positions in fact, but over the long term we will do lots better than the averages.
Every reasonable, established economist says future returns will be between 4 and 10%.
Did any “reasonable, established economist” predict that my entire portfolio would be up over 100% since Jan 1st of 2017, just a year and a couple of weeks (a number of others on the board have comparable results). Your reasonable economist would have predicted 7% at the midpoint.
I “know” I won’t do anything like that this year, but I sure will try. And I do hope for 20% per year average. But I’ve been in bubble thinking for 30 years, I guess.
That leaves an annual rate of return of 4% for the U.S. stock market
I may end up this year at down 30% for all I know, but to AVERAGE just 4% a year, I don’t think so!!! Unless you feel another 1929 is right around the corner. It’s been almost four generations since the last one, so who knows.
Saul
39 Likes
Bogle forecasts that …
Any particular reason to expect that Bogle knows the future any better than anyone else?
In particular, I have seen suggestions that dividends are likely to go up as a result of the tax bill.
I agree with your point that expecting 21% as a minimum is wildly optimistic, but I think one can make that point with historical S&P500 performance and the unlikelihood of any one individual investor outperforming it 3-4X.
Every reasonable, established economist says future returns will be between 4 and 10 percent they said that a couple of years ago too.
Economists would be the last people I would look to for stock market advice. They can’t even give good economic advice. They miss recessions routinely.
But it is clear that equity markets can not continually outperform the underlying economy.Even considering that Capital is rapidly replacing Labor , that governments world wide are creating liquidity looking for a home, and that a wave of interlocking productivity increasing innovations are sweeping across the world.
21% is un-realizable. Compound 21% for a 50 year investing horizon and you will see that it s unlikely you will get there, Well over a billion dollar starting with $100,000. Most of us are no Warren Buffett. My guess is that anybody expecting that much is pretty new to the stock market.
9 Likes
By my calculation, I am up 9.4% from where I was at the end of 2017. This market is almost silly.
My company just had a leadership meeting last week. The CEO spent a bunch of time running through options for what to do with the extra money the company will have this year from the new tax law. Since our company is most centered in the US for design and manufacturing, the CFO says we’re looking at a boost in profits by 10% this year alone - and that’s if we don’t grow the business at all.
While I personally feel we’re financing this boon to companies on the back of our children, the senior leadership at the company feels that Wall Street hasn’t priced in what the tax cut will do to the value of our, and many other, companies. This current rise may be some awakening to that.
Has anyone here done an analysis of which companies will gain the most from the cut in the corporate tax rate, and which will gain the least? That might be useful information to consider.
12 Likes
Sectors to begin your search for the highest tax rates (those with most/all of their revenue in the US):
- Energy / utilities
- Health care
- retail - although many companies have good amount of foreign revenue some are US only.
Hodges
1 Like
This may be of some help. S&P 500 effective tax rate by sector and by specific company.
https://www.marketwatch.com/story/does-corporate-america-nee…
Rob
2 Likes
If you’re considering 21 percent annually the low end of expectations, you will likely be disappointed.
A minimum expectation of 21 percent was not what I intended to convey with my statement. I was mostly just surprised to see that that was my average to this point (which did include some really bad picks, like my 97% loss in SeaDrill and greater than 60% loss in Under Armor to this point and a realized 50-ish% loss from buying shares of Cameco). I actually invested more than twice as much in Cameco in late-2014 as what I invested in NVidia (woof!).
Had I wanted to really sound silly optimistic, I could have tried to suggest that the early 1.5-ish year 20% loss was my “learning curve” and that 45% would be more representative going forward…but I am aware that that would be an exceedingly delusional expectation.
All that said, my intent will remain to beat the market averages, primarily by being able to be selective and not have to buy bad or way-past-their prime companies. That seems to be the primary focus of this particular board.
8 Likes
Todd, what was your point in posting the following?
If you’re considering 21 percent annually the low end of expectations, you will likely be disappointed. This kind of thinking tells me we are in bubble territory. Every reasonable, established economist says future returns will be between 4 and 10 percent. Just because your stocks have gone up 9 percent in four days does not mean the intrinsic value of the companies have gone up 9 percent.
"With expectations of a future 2% dividend yield, which is lower than the historical average of 4.4%, and a 4% growth in earnings, Bogle forecasts that future investment returns on stocks will be 6%. Factoring in a drop in the historically high price to earnings ratio (P/E Ratio) of 24 to about 20 or possibly less would shed 2% off of that 6% return. That leaves an annual rate of return of 4% for the U.S. stock market, which is less than half of what the return has been over past decades, and that’s not including investment fees.
Do you disagree that stock picking will not out perform the averages? If so why?
Do you disagree with a concentrated portfolio who’s characteristics include companies with rapid increases in earnings and revenues? If so, why?
Are you a devout follower of Paul Krugman? If so, why?
Do you disagree that stock picking will not out perform the averages? If so why?
Not Todd. On average stock pickers will beat the market average in one of four cases. That’s what the Pareto or power law distribution predicts. You have to excel at stock picking (or be lucky) to beat the market average in the long run.
Denny Schlesinger
3 Likes
Now up 12.1% through 13 days of the market being open.....silliness continues.
Positions representing just under 92% of my self-managed portfolio's value:
YTD gain Company Ticker % of port
18.9% Nvidia NVDA 27.0%
15.0% Arista ANET 10.1%
9.7% Mercado Libre MELI 9.2%
5.5% Apple AAPL 7.6%
5.6% Ubiquiti Net. UBNT 6.4%
14.3% Shopify SHOP 5.5%
22.8% Square SQ 4.5%
8.6% Bank of Itrnet BOFI 4.2%
12.9% Cognex CGNX 3.7%
3.6% The Trade Desk TTD 3.0%
-2.7% Sierra Wrlss SWIR 2.6%
15.8% iRobot IRBT 2.4%
12.0% Hubspot HUBS 2.1%
4.4% Pure Storage PSTG 1.9% (gain from purchase price on 1/17/2018)
-1.6% Celgene CELG 1.6%
5 Likes
Now 14% in 14 days, Silly-ness level overload almost.....and my only notable remaining options positions are some FMI, KMI, and PSTG calls.
The KMI calls are actually showing a lower market price than their true value, due to lack of afternoon volume.
Gaining 1% a day just sounds silly. _**No way this can continue**_, but it will take some bad earnings results to knock these down.
YTD gain Company Ticker
20.8% Nvidia NVDA
17.0% Arista ANET
12.0% Mercado Libre MELI
4.6% Apple AAPL
6.4% Ubiquiti Net. UBNT
18.2% Shopify SHOP
30.6% Square SQ
8.9% Bank of Intrnt BOFI
12.8% Cognex CGNX
6.4% The Trade Desk TTD
-3.4% Sierra Wrlss SWIR
17.3% iRobot IRBT
14.1% Hubspot HUBS
4.6% Pure Storage PSTG
-1.4% Celgene CELG
Silliness indeed. I’m up 35.3% this calendar year so far. Mostly TSLA. But also NVDA, SHOP, and AAPL. Everything but the AAPL is highly leveraged via short puts, thus the even more ridiculous gains. Nine up days, five down days.
-IGU-
Volfan,
Not sure that we will see very many “bad” earnings reports as the companies are digesting how the tax break will affect them. Unless the company is non-US based or has massive losses that they continue to use on a forward basis (to reduce tax liabilities), I think we are in for a lot of beats and meets to both the current and forecasted revenues/earnings in the upcoming earnings seasons.
JK