Thread by @saxena_puru

1)Portfolio Update Sep-end -

$ADYEY $BILL $CFLT $CRWD $DDOG $DLO $GLBE $GTLB $LILM $NET $NU $OKTA $S $SNOW $SOFI $TOST $TWLO $ZI $ZS

Short #NQ_F

Return since 1 Sept '16 -

Portfolio +353.82% (28.24%pa)
$ACWI +32.59% (4.75%pa)
$SPX +65.17% (8.60%pa)

Contd...

2) YTD return (2022)-

Portfolio (-)40.20%
$ACWI (-)26.69%
$SPX (-)24.77%

Biggest positions -

1) $GTLB 2) $DDOG 3) $SNOW 4) $CRWD 5) $NU

Since 30 Sep, portfolio is net short via #NQ_F

3) Commentary -

September was a tough month for stocks and despite hedging in 2nd half of the month, my portfolio suffered a big drawdown.

Earlier in the month, Dow Jones Industrials, Dow Jones Transportation Average and NYSE Composite breached their June lows and on Friday...

4)...the NASDAQ100 and S&P500 also decisively breached their June lows and confirmed the breakdowns of the other indices.

IMHO, over the next few weeks the stock market is likely to remain under pressure and the indices might decline another 10-15% before hitting *the* low.

5) In order to capitalise on the last leg down of this bear market, I've increased my NASDAQ futures shorts on Friday and my portfolio is now net short.

On the portfolio front, September was a quiet month and I made just one change...

6) After the executive departures at $SHOP, I sold my shares and invested the proceeds in $SOFI.

$SOFI had a fantastic quarter and despite the moratorium on student loan repayments, the business announced solid operating results. When this moratorium is lifted in 2023...

7)...$SOFI should see an acceleration in its business and at the current multiple (Price to book of just 0.82!), I believe this business is significantly undervalued. Notable that earlier this year, $SOFI obtained regulatory approval to become a national bank and this has...

8)...lowered its cost of capital (a major plus).

In terms of my portfolio performance, I am disappointed by my large drawdown this year and although the entire market is come off significantly this year, I should have done way better.

You will recall that late last year...

9)...I repeatedly warned about the looming bust in risk assets so it is unforgivable that my portfolio has declined so much this year!

Not selling near the highs/going into cash and buying back too soon (Russia/Ukraine conflict didn't help) are the reasons behind my drawdown.

10) This bust has once again etched into my brain something which I already knew but failed to implement in this cycle.

In investing, what matters is how much you make after the completion of the entire cycle (boom & bust) and profits must be booked towards the end of the boom.

11) "Buy and hold forever", "Never sell", "Long-term investing is the holy grail"....all this is total nonsense.

What matters is portfolio CAGR and reduction of portfolio drawdown; and in this regard profits must be booked at the top of the stock market/business cycle....

12) Going forwards, I will try to sell of all stocks/book gains towards the end of the next credit cycle and will either stay in cash or net short during the subsequent bear-market. Big lessons learnt during this cycle.

Finally, at the moment, a lot of haters are floating...

13)...on FinTwit and they are mocking growth investors.

They might look smart over the near term, but over the long run the high quality compounders will crush the indices, and they are now on the bargain table.

In the investment business, the only thing which matters..

14)..is performance and in this regard, despite my large drawdown this year, my CAGR over the past 6+ years is ~30% whereas the indices have compounded in the mid to high single digits.

Hopefully, this will show you that despite setbacks, investing in quality compounders works.

15) Macro -

The 10Yr/2Yr UST spread has been inverted for almost 3 months now and historically, such a persistent inversion has *always* been followed by a recession.

If the coming recession is severe, then $SPX EPS will contract + that will put more pressure on stocks.