May Portfolio Roundup

  PERFORMANCE

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GENERAL THOUGHTS

This was the first month where I felt like I really made progress on the technical analysis part of my portfolio. Like I really feel like I've got a simple system that will help protect the downside but allow for upside. I guess we'll see. But using the "Simon Sez" methods from Quill on the MF boards has been revolutionary. I actually felt like I did years ago when I found Saul's monthly roundups – totally engrossed when I came across it. 

So the funny thing is that my stocks really ripped this month. If I had been fully invested I would have been up a lot more. For instance I have a small little portfolio that I run parallel where I was fully invested in my target names and it was up 30% MTD. That's right. Not being fully invested I was up 8%. So that's a big difference. But I've got something I can use going forward, and I wasn't fully invested in it as I tried it out. The positions I was in were only about half allocations. For instance my target position for ZScaler is 10% yet I was only about 5% invested during the month despite it ripping higher. Why? Basically I didn't want to chase. I just wanted to see if my trading system worked. So we'll see how it goes but I feel good about it. Finally. After falling so far I feel like I've got something that can get me back to where I was. It will take time. But I don't feel out of control anymore.

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PORTFOLIO

60% CASH (INCL BIL AND FDRXX)

April Portfolio Roundup

 PERFORMANCE

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GENERAL THOUGHTS

This month wasn't particularly bad until Enphase and Cloudflare reported the last week of April and both fell 25% on earnings. 

I'm really starting to get discouraged now. Like it's not even fun anymore. I keep trying to learn and do new things but nothing works. At least I'm taking smaller bets. What I'm trying to do really is catch a falling knife with these companies and they just keep falling and falling. I got out way way too late and now even 18 months later they continue to fall. 

At some point things will turn around but there still really is no end in sight. In 2021 it was all macro – the Fed raising rates to curb inflation, which crushed long duration assets. Despite that my companies kept putting up great numbers. The stocks fell but the earnings were still good. 

In 2022, now they are putting up bad numbers. Cloudflare had performed well YTD until they reported this past week. The stock is back to basically even for the year yet I've somehow managed to lose money on it (because I've been trading it). 

The truth is that even using a trend following strategy it's really difficult to account for the volatility. When a stock falls 25% in one day while being above trend there's not much you can do. The only thing to avoid it would be to sell out before earnings and then buy back in. The problem with doing that of course is if the report is good you miss the jump. 

At the end of this month I'm still up 40% from January 2020 but it doesn't really feel like it at all. 

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PORTFOLIO

54% CASH (INCL BIL AND FDRXX)

March Portfolio Roundup

     PERFORMANCE

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GENERAL THOUGHTS

And I'm posting this March "update" on 8 April as well. Another impressive month of losing money while the market was up. 

That said, I think I've given up on trying to do macro stuff. That is outside my wheelhouse and I've realized how much work and trading it takes to get right. It's not as simple as buying Treasuries or Gold or "insert ticker" and then holding it for a while. It takes trading.

I'd much rather just buy stocks of companies. And then protect my downside by using a trend following strategy. That's the conclusion I've come to as of now. 

The past few months I've also tried out various things on trend following and the stuff I came up with was way too complicated. That's partly why my portfolio is down. I over-complicated it. 

Where I'm at today is simply using an EMA 5-7 Cross for the short-term trend combined with an EMA 65 for the long-term trend. It's way simpler. It causes me to get chopped up and lose money on short-term trades, but once a trend gets going it should make up for the losses. That's the idea at least. 

I don't want to spend a lot of time on trading, and I don't want it to be qualitative. I want it to be purely quantitative and unemotional. The qualitative part of my investing will be finding the companies. I'm looking to invest in the best companies, not the best stocks. The trend following is supposed to protect the stocks from the macro (and also check my ego if I pick a bad company but am convinced it's a good pick). 

Anyway, I'm hoping that I've come full circle on this. So far I was correct in that November 2022 was the bottom for most of my stocks, and I bailed out at the bottom. That was capitulation on my part. But I needed to get shaken out to stop and do some introspective thinking. That was about five months ago now. Pretty crazy to think that the bottom was five months ago yet my portfolio has continued to fall, albeit modestly. 

Anyway, let's see how it goes from here.

Below was my portfolio at the end of March. It will change from here, but will resemble how it was last year. In other words, it'll be a concentrated portfolio of high growth companies. The only difference will be that I will use a trend following strategy. So I'll have a list of targeted holdings, and then based on the trend of each stock it will either be a 0% or full allocation. 

I'll publish my targeted portfolio starting next month along with the current allocations. It'll be pretty simple. 

I might also short a correlated index depending on the overall trend of the portfolio but we'll see how it evolves.

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PORTFOLIO

76% CASH

February Portfolio Roundup

     PERFORMANCE

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GENERAL THOUGHTS

I'm posting this February "update" on 8 April. Pretty useless, but I am continuing to iterate and learn and my portfolio was about 90% cash at the end of February. Despite that I still managed to lose 4.36%. Impressive!

I bought and sold and bought some other stuff and sold it. 

January Portfolio Roundup

    PERFORMANCE

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GENERAL THOUGHTS

I continue to get whip-sawed around by the market. As I expected I timed the bottom perfectly by getting out of all my stocks at the bottom. For now that's the case. Who knows what will happen. I got caught flat-footed and while my portfolio should have been up about 10% for the month it's basically flat. I'm under-allocated. But alas. We'll see if this is a bear market bounce or the start of a new bull run. 

I tried to allocate to macro positions in addition to my preferred portfolio. It has sort of worked but not really. It will take some serious work to get it right. It's not easy. I'll continue to learn and iterate. Ultimately what I need to do I think is become a better trader. Then I can trade my positions. I don't know if I can really do it. 

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PORTFOLIO

The bolded tickers are my preferred portfolio

Then the macro portfolio is basically precious metals, treasuries, and China

6% - GTLB

6% - SNOW

6% - SLV

5.7% - GLD

5.3% - PPLT (Platinum)

6.1% - BILL

4.9% - BABA

4.6% - IEF (7-10 Year Treasuries)

4.6% - TLT (20+ Year Treasuries)

4.5% - GDX (Gold Miners)

4.4% - NET

3.7% - PSQ (Short QQQ)

3.7% - FXI (China Large Cap)

3.6% - PDD (Pinduoduo)

2.9% - UUP (US Dollar Index)

2.8% - AEHR

2.5% - S

1.9% - EWH (Hong Kong)

1.8% - CRWD

1.1% - DDOG

1% - ZS

18% - Cash

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THOUGHTS

This is a lot of time and effort spent to trail the S&P 500 by 5% in a month. Going to need to get better. 

December and Year End Portfolio Roundup

  PERFORMANCE

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GENERAL THOUGHTS

The portfolio below will look like a marked change from previous roundups. The thing is I want to own only high growth names and be fully invested. But that hasn't worked this year as all my "long duration" assets have been murdered in the macro environment. So I'm iterating on my process to try and improve it. 

Reading Year-end reviews from others with like-minded portfolios I see quotes from Charlie Munger and other missives about how an investor should ignore macro and be able to stomach massive drawdowns. However, I simply would feel intellectually dishonest if I didn't try to learn from the drawdown this year and do something to prevent it in the future. In a way, I think that those sayings are from another time in the market. And that the available information, especially to retail investors, is unlike anything before. 

So I'm working on a process that will try to prevent a drawdown like this in the future while not giving up too much upside. For now I'm working on a signaling process for getting into and out of names. I'm using 5 7 EMA crosses for TRADE (3 weeks or so), combined with a 65 EMA for TREND (3 months). I'd like to find a way to incorporate Volume and Volatility too (I'm starting with the Bridge Bands in Tradingview). 

At the same time, I'm dabbling in macro holdings that are currently in UP Trends.

So the portfolio is now in a way two portfolios: #1 my high growth names combined with #2 what I'll call the "Macro" names (I'm using Hedgeye for their macro framework.)

This is a macro topdown + my own "high growth" framework with a signaling process. 

Basically what I'm trying to do is avoid the cascading waterfall selloffs that have occurred the past 13 months. While at the same time be in some names that are actually working. At some point next year the macro environment might favor high growth tech. That would be based off Growth and Inflation. When that happens, and if the signal is UP Trade and Trend, then I'll be fully invested in high growth names again. 

It's been a tough year, and one that I've probably not fully processed. Down 62% YTD. Wow. But it's important to keep a nimble mind and not become paralyzed or obstinate to change. Perhaps High Growth has already bottomed and so me abandoning the fully invested strategy is too late, and thus a classic example of selling at the bottom. But I'm looking to create a system that I can iterate on for the next 30+ years. I really just can't take any more cascading waterfalls down. And the Macro environment doesn't look good going into 2023 with what will be an earnings recession. The story of 2022 has been Inflation. The story of 2023 looks to be downward earnings revisions. Just because all my companies have sold off so aggressively doesn't mean they can't sell off another 50% or more. That's what I want to avoid. Learn, be honest with yourself, and keep going. 

Hell, who knows, maybe this new process is hogwash and a waste of time and I'll look back a year from now and realize I was just panic selling at the bottom. But I have to reiterate to myself that I can't come off a year like this without some serious reflection on how to prevent it in the future. I would feel stupid to just keep doing the same thing. If I try the process and it chokes performance I can continue to iterate or abandon, but for now I need to try to improve it. 

In the market, every day is a new day. And you have to sort of start over every morning. The new year is a good reminder to do that. It's a good time to start anew.

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So, as for my "desired portfolio", here is what it looks like based off the most recent earnings reports:

Tier 1 (Allocation sizes: 15%-25%)
None

Tier 2 (Allocation sizes: 7%-12%)
10-12% - Snowflake (SNOW)

10% - Bill.com (BILL)

8-10% - Zscaler (ZS)

8-10% - SentinelOne (S)

8% - Gitlab (GTLB)

7-10% - Cloudflare (NET)

7% - Datadog (DDOG)

7% - Crowdstrike (CRWD)

Tier 3 (Allocation sizes: 2%-4%)

None

*****

As for December, the high growth names continued to trend down but I was mostly out. On the final day of the year, SentinelOne and Snowflake both triggered UP trade (5 day EMA crossed the 7 day) so I allocated some there. For now what I'm doing to get back into a High Growth name, is to go 1/4th of the desired allocation when the Trade is up. So Snowflake position is 1/4th of 12%, which is 3%. And SentinelOne is 1/4th of 10% which is 2%. 

When a name triggers UP Trend (above 65 day EMA) then I'll go fully invested in that name. Since most of my high growth names are pretty correlated they tend to cluster together in terms of when to get in and out.

I'll ignore the 5 7 cross if the price is above the 65 EMA. 

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CURRENT PORTFOLIO

Macro Names:

8% - US Dollar Index (UUP)

6% - Gold (GLD)

4% - Platinum (PPLT)

4% - Gold Miners (GDX)

2% - Silver (SLV)

1% - Consumer Staples (XLP)

1% - Utilities (XLU)

High Growth Names:

3% - Snowflake (SNOW)

2% - SentinelOne (S)

69% - Cash

November Portfolio Roundup

 PERFORMANCE

*****

GENERAL THOUGHTS

I'm not posting my portfolio this month because it's in flux as I try to work out a new strategy going forward. It was mostly in cash at month end. Needless to say I probably should have done it earlier, and perhaps the fact that I'm bailing marks the bottom. But I doubt it. 

Generally speaking, going forward, I'm going to try and just go long things that are going up. At least until we get through this Quad 4 bear market. 

It's been interesting looking back and trying to buy the dip when all my stocks were trending down. It doesn't work. Buying the dip only works in bull markets, AKA when stocks are trending up. Even with this trend following strategy that I'm working out now, it doesn't really work because I get in and then just sell out lower. Perhaps it'll prevent me from having cascading waterfalls down. But it's definitely "choppy" at best. I get "chopped up". 

There has been so much uncertainty this year around the macro. At first it was inflation and rising rates and the market trying to wrap it's head around it. Now it's dealing with the impending recession while still trying to guess how high rates will go. How bad will it get? We don't know. Maybe a lot worse. 

There is so much talk from people trying to pick the bottom. Buy tech. Buy stocks. It's super-charged FOMO. The reality has (very) slowly sunk in. The bottom was not in. It kept getting worse. 

And that's why I eventually changed my mind and my strategy. I realized that, objectively speaking, I should have never owned these stocks this year. That's easy in hindsight but I realized how obsessed I was with hoping the bottom was in. When the bottom blew out again in November I finally capitulated and changed my mind. I think changing your mind in the markets is important. Not to become too dogmatic. 

Hedgeye has really helped to open my eyes to the macro. To see the "why" of certain things. We'll see if I can actually strategize a way to make money using it. We'll see. It'll be fun to track Saul's et al portfolios vs mine in the coming months. I just can't accept losing 60% YTD or 70% from ATH. It's not acceptable going forward. 2020 and 2021 were years like I'll never have again. Tripling my portfolio in under 2 years. Surely that'll never happen again. And hopefully the same is true for 2022, losing 60%+ in one year. Hopefully that'll never happen again either. It's par for the course. It's easy to be smart during raging Fed-induced bull markets. It's hard to grapple with emotions on the other side, raging Fed-induced bear markets. At least I didn't blow up. That's actually a very good feat. Because a lot of people did. A lot of people who made money in 2020 and 2021 gave it all back in 2022. I'm still up about 80% or so. So that's pretty good. I mean that's incredible to be up 80% in three years. 

Either way, I have to live and learn. I still have a long runway ahead. I mean a few decades at least. Keep going. Keep learning. Survive and compound.