Happy Friday everyone, it was a great profitable week of trading for us and our names are doing quite well relatively speaking. I continue to stay long Cloudflare, Anaplan, BlackLine, and the newest addition SharpSpring. I briefly touched on how in December I wanted to pick up some micro cap names and study them, those picks are SharpSpring and Iteris, Inc. I own Iteris, Inc in my active portfolio.
I now have access to J.P. Morgan's Guide to the Markets, so the data I will be able to provide and dissect for my members will be of even higher quality. I am hoping within the next year, I will pay for something higher end as well. I was torn between Factset and Sentieo. Pricing is not too much of an issue, and I have done very well without a Bloomberg Terminal since last using one and do not feel the need to change my ways now.
I wish Fiducia made enough from paid members to hire another pure analyst and writer and to continue to build out the website, I could use a high quality analyst (but cannot afford one, yet). Again, I want to reiterate that the trading aspect of Fiducia is something I do on the side for my income and I just happen to post my trades to the website. I would prefer people sign up to join the community rather than just the trades. We are building long-term wealth here with strong secular winners (in my opinion).
I saw a lot of posts recently on Twitter about major drawdowns in some names. I do not want to insert myself into the conversation to spark debate, but I feel my $.02 could be warranted and maybe help someone else out because that is what I want to do. What do you actually think the business is worth at the end of the day?
We saw an influx of record liquidity into the global capital markets in 2020, the Federal Reserve continues to buy buy buy and the market continues to chug along, coupled with stronger-than-expected earnings I feel there is a sense of complacency in the markets and I continue to monitor that. I want people to understand that this influx of cash into the markets makes us look very smart in the short-term, per our returns, but what I would like novice investors that started in 2020 to understand is this is not normal. I mean, not at all, and I have only been in the markets for 8 years.
There are businesses with essentially little to no economic moat trading at insane valuations, if you think the valuations of the companies I own are high.. this is nothing. My advice is to invest in strong businesses that have noticeable moats and pricing power, companies that are building sticky ecosystems to capture market share and have an edge in what they do, and please fully understand what you own. I emphasize this in every post I make. It seems almost every company now is "the next big thing", to be honest, I doubt it. I could even be wrong on the names that I own. Over the next three and five years, I think you are going to see a divergence in what a quality business who are winners looks like, and what a shit business looks like. Excuse my professional language. I think the liquidity in the market basically makes a bad business look good in terms of share price return. Mr. Market, I do not agree!
I do think there are risks in the market people need to be aware one. One is valuations on crappy businesses. The second would be international affairs, I think tensions are rising between China and the US, coupled with Russia and Ukraine. There are always risks to the market, but in the end the markets climb a wall of worry. I have no comments on tax raises really.
One reason I remain bullish is the fact we just came off a major market pullback, yeah sure we are up a lot in a short time frame BUT look:
Now, I am not saying we wont witness pullbacks along the way, 10%, 15%, 20% even is fine with me (more preferably). I mean, -33.9% in such a short time frame? Give me a break, I believe what we are witnessing is the strength of HFT/Algos in the market and getting stronger by the day, which is totally fine with me. Only people that should be worried are those using massive amounts of leverage.
Given where we are trading on the S&P 500, subsequent returns over the next 5 years do not look super attractive. Given this data, we could potentially see a major pullback before we move much higher. Everything seems to be working right now (hmm). Just watch your portfolio positioning, for the sake of preserving capital.
Earnings coming up for Fiducia:
Cloudflare: 5/6 after market
BlackLine: 5/6 after market
How do I prep for earnings? Well, I focus on reading the last earnings call coupled with my notes I took so I know WHAT to look for. Building out patterns between earnings calls (and competitors) helps me understand and build my thesis even further. Sometimes you learn more about other industries and broader economics, like my investment in Zebra (that I sold off), I loved reading their calls because I got extremely good insights into the economic recovery. Zebra was my recovery play, and we profited nicely.
Also, what I love about trading is I can make money in up markets, down markets, sideways markets. There is always opportunity to capitalize.
YTD profits in TOTAL trading (not just options): $104,590.30
Have a great weekend everyone.