Fiducia Thoughts: November 2021

Opening Thoughts


I have been on a little bit of a writing hiatus, only covering the earnings reports. There is so much to say about these markets we are in right now. Everyone has their own opinion, whether it is backed with data or not, so it is a lot of information to take in. From fund managers, to retail investors, I hear a lot of different opinions on the market. At the end of the day, I do not care what you say, it is all about what you do.


I have not had much to say on the broader market, until now. I do think there is some froth in certain pockets of the market, but for the most part when the top 10 businesses in the S&P 500 have an earnings contribution of 28.7%, and have a combined weight of 30.3% in the S&P 500, I have a little more wiggle room with how I want to play the broader market and trade (and invest).


From what I have noticed on Twitter, I think people are forcing investments. I have a feeling that price action is creating false narratives on shit businesses, the probabilities you found the "Next Amazon" or even compare it to Microsoft, Apple, Amazon, Netflix, etc, just...just... stop it. Conversations I am having with various people lead me to believe that I am making the right choices in my investments in my long-term portfolio, even though Iteris likes to go down 3% per day.


Not every company has a competitive advantage, moat, or network effects (strong network effects at least). I see these words get thrown around an awful lot, maybe more than they should. I know there are a lot of new investors over the last two years, even from my own friend group. This is great and I am glad to see it, but there is also something about this gambling economy I am noticing in the US at least, and I am not so fond of that. Yeah I like to gamble here and there, but trading for a living and investing, I have to take educated risks. I am not buying Cum Rocket Coin or Squid Game Coin, I mean honestly when people ask me about these stupid things I get annoyed and just cant even waste my time with that.


Sometimes it is hard to dismiss valuation, or maybe sometimes you should look past it (in a way) and focus on management and how they are deploying capital, but the actual lack of thought on valuation I have seen over the past year or so, has me on the edge. The disregard in this area probably wont end well, but we wont know until we are living in 2030, 2035, 2040+. That is when "you will be right" on what you own. Even for myself, as a short-term trader and LT investor, I have to separate my mindsets. They are two totally different mindsets to have. Might I add, and have been writing about for over a year, the amount of liquidity and low rates we have seen, adds some juice to your portfolio.



 

Trading Mentality


It has been a tough year trading, well, it was a tough two months is more like it. I took an outsized position in Lam Research calls which I was a bit too early in, and took around a $100k loss. What sucks even more? I was right, and Lam is at my price, but I was about a month early. I revert back to why I "buy time" on trades. I guess I did not buy enough time.. I will come back from it, I am about neutral on the year in profits, all living expenses paid for, still sitting fine and have a few open positions. I figured it is easier to write about my mistake, and tell you that it still happens. I will probably still take outsized positions in the future, but manage risk a lot, lot, better.. for instance, I have an outsized position in Amazon call options, I am cutting losses at -12%. Not sitting around and waiting. This will most likely happen in every traders life, all you can do is move on and be better.

 

Long-term Portfolio


Man do I love my portfolio, but I am also willing to cut 100% of a name in a heartbeat. I think that is a decent mindset to have when going into your investments. For those of you who are not members of the website, I write about the businesses I own and some other topics when they come across my mind. I dont market or push for subs on my website. It is more of a community for me and that is how I want it to be.

The screenshot above is as of 11/16/2021. I really wish I could contribute more to this account, this is my Roth IRA. I have been saving for retirement since April 2014, that is how long I have had this account, I am now 25 years old. I have no issues with concentration. I can sleep very well at night, maybe there are better businesses than what I own, but I am confident these will perform very well in the next three and five year periods.


I have retired a lot of names in this portfolio, I have owned Cloudflare, Square, Apple, Facebook, Veeva Systems, Brookfield Asset Management, Draftkings, Home Depot, Disney, Livongo, Nvidia and many more over the past seven years. Tweaking your portfolio until you feel comfortable takes time and a lot of patience. Right now, I feel very comfortable with what I own. Sound investments that are growing.

 

Concluding Remarks


In this market, it is you vs everyone. People want you to lose money, especially when trading. There is someone on the other side of each trade and it's pretty much a battle. Being stubborn and complaining wont get you very far, instead, own up and figure out where you went wrong. I have to tell myself this all the time. I saw something on Twitter today I think that making xxx amount of profitable trades in a row, maybe step back and stop and see what's going on. What are you doing right? What can you improve? Dont get too giddy, head down and focus. So, credit where credit is due to whoever it was!!


That's all. Get some cheddar.


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