Early Week Thoughts

Let us start the week with some positivity. I do not believe investing should be made complicated, there are so many strategies out there for different risk tolerances, everyone has a product, everyone wants to sell you something. I am not a believer in overpaying for an "advisor" or money manager, honestly, if you are paying more than 90bps I feel bad. A lot can be done on your own without paying someone over 1% to manage your own assets. Coming from this industry, I see a lot of disruptive businesses. I think it is relatively hard, if not impossible, to beat the main indexes over the long term. I have been, I would not say lucky, but in a way lucky, that I have been able to do so over the 6 year period of managing my portfolio.

I work hard at this, not necessarily "long hours" but I put A LOT of hours into reading about my companies, learning as much as I can, the opportunities they have, valuation (which is a very touchy subject in this day and age, no I am not a big believer in running DCFs on companies as much anymore). The best investors over a 20 year period I have spoken with say ignore all the news, macro day to day, everything is just noise. Daily price movements are nothing to look at. Buy quality names, understand the name, and monitor the UNDERLYING BUSINESS fundamentals. I think number tweaking is too manipulative and it is easy to 1) say its undervalued and 2) to say it is overvalued. I love academia, and I love anecdotal, I love macro economics, but I like making things simple. Right now? The Central Banks are on our side, M2 supply is through the roof. I don’t know why bears have to make things so difficult.


Source: FRED


The velocity (which is important too) of the M2 listed below:




The velocity of the money is essentially the rate of the money is exchanged in an economy. I want to make this as simple as possible, to me, this says buy risk assets (equities) to me. But, the hard part is buying right equities. For me I like the higher growing names with recurring business models and companies growing at min 20%+ revenue. I want to own a lot of names, but I find condensing my portfolio to 3-5 names has be beneficial for me (it may not work for everyone, full disclosure), I am willing to take on risk and I can gut drawdowns. My largest drawdown has been 31% and that was in Feb/March of 2020. I am proud of the work I have accomplished and I hope to continue to grow and learn from others, lets keep it up.

I continue to stay long Cloudflare, Stitch Fix (I have shaved some because I want to add to BlackLine), and I own BlackLine. I am excited headed into the new year, the election volatility does not bother me. I do not care to talk about it. I am excited for the benefits of Work From Home (WFH) stocks. Yes, all the stimulus and liquidity injections into the markets worry me. Honestly, if you are not worried about this are you a real investor? Should we ignore the noise and buy quality names? Investors should always be worried. Valuation is ALWAYS a concern of mine, do not get me wrong, Cloudflare is not "cheap" by any chance. But honestly, reflecting on the best performing stocks, have they ever really been cheap? I believe Cloudflare is a 10x in 10 years. Not arbitrary. Their underlying business is an extreme "must", and the company only started in 2009… I really do not think this is complicated. We can sit here and debate how the company has no earnings, no strong FCF. I am investing in management to make those HAPPEN. Now it will not be a straight shot, there will be huge upswings of over 100%, there will be downswings of over 50% (probably). The ability to BUY and HOLD is what will differentiate us from trader, to real investors. I plan on holding this name long-term. Very long-term. I cannot stress that enough.

Stay dynamic.

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