On this week’s Pod Albert and I had a bit of a therapy session, sharing the woes of all growth investors, reflecting on some of the actions we’ve taken over the last few months to prepare ourselves for this eventuality, and also steeling ourselves for the volatility that is doubtless going to persist for many months (years?) yet.
We’ve both found Fintwit to be an excellent source of inspiration, and also mutual support when things turn south – it’s always good to know that you’re not in it alone, and I found this pretty on-the-money tweet from Caleb to nicely sum up my own emotions right now!
My personal $PAIN is a 10.6% loss year-to-date, down 22% from my all time high on the 12th Feb, but our Telescope Investing model portfolio is in a similar hole at -13.6% since inception in late Jan.
There are a number of theories why growth stocks have taken such a battering of late. The real reason is likely a combination of factors, but primarily just a rebound from frankly ridiculous over-performance in 2020. My own portfolio was up over 100% last year, so it does put things in perspective a little when you acknowledge that recent drops have really just taken us back to some point last year – for me that’s currently October 2020, doesn’t seem so bad now, does it?
It also helps if this isn’t your first rollercoaster ride. Albert and I have invested through several market corrections over the last two decades, and as Morgan says, we’ve seen this show before…
Beth Kindig is a well respected fund manager, we’re also reassured that she’s holding tight.
Albert and I don’t hedge or use derivatives to insure ourselves against a down-market. However we do vary the size of our cash position depending on how extended valuations seem to be generally. I started 2021 with a 20% cash position in my main investment portfolio, and I’ve tried to restrict myself to a single trading day per month, investing roughly 2-4% each time. I used these days to buy (or +add to) my highest conviction ideas:
- Jan: Crowdstrike, +Disney, +Square
- Feb: Magnite, +Fiverr
- Mar: Cloudflare, Twilio, CuriosityStream, +Magnite
- Apr: Starbucks, NanoX, +Square
- May: +Crowdstrike
We also both sold some stocks that we felt no longer fitted our portfolios. I used February to clear out Exelixis, NXP Semiconductors, ExOne, 3D Systems, and Illumina.
As I publish today’s article I note we’re having a very green day, hopefully, that lasts now that my cash is nearly depleted! But if it doesn’t and there’s more turbulence ahead, then really I think the excellent Brian Feroldi should have the last word…
(Oh, and I note that Brian currently has a book in the pipeline, we’ll look forward to reviewing that on the Pod when it’s out, and perhaps it’s a chance for another listener giveaway!)
