Thread by @compound100x

1/
I started keeping an investing journal since 2017 to keep track of my thoughts at various pts of market. Reading through them today, some pretty interesting ones worth sharing:

- Feb 2017: Appears that we are close to the end of a bull run.. at 12% annual, much of my

2/ returns have be dragged by cash balance..

- Apr 2017: Markets are just going up up and up.. feels like 2007? What to do with 30% cash..

- Jul 2017: Everyday i'm tempted to buy something.. still hanging with 30% cash

3/
- Aug 2017: Oil has been an interesting lesson. Many said it will bounce back to 80 at some point when it cracked, reasoning that shale is only profitable at certain cost curve. But a lower price environment actually caused more innovation in the space to further squeeze

4/ production cost. OPEC intention to kill some of the shale guys backfired, some did die, but many have gotten to a stage where they squeezed out a survival and many that survived became even more efficient producers. Good lesson here is that when something reaches a certain

5/ scale, it will be hard to stop the momentum.

Nov 2017: 3 years back, I was recommending my friend to get some ETFs, but noted that markets are high and might not be the best time to get it. 2 years back, was discussing with another how we need to hold cash. On hindsight,

6/ this just shows how little I know about macro and need to spend more time studying history. Even today, cash has killed my performance for the last 3 years.. but now is probably the worst time to give up on cash buffer to jump in

Dec 2017: JD continue to see weakness on BABA

7/ competitive threats (acquired Sun Art). Adding more. Positive on JD fresh initiatives, sourcing team goes all the way down to the farmers, share warehousing with partners, continue to focus on service quality (delivery man showing all fresh goods at the door before leaving).

8/ Continue to believe JD to be long term winner and thinking of taking it up gradually to 20% position

Jan 2018: Markets have gone full bull in the first couple weeks of 2018. All indicators are flashing green. People pushing out recession forecast couple years out again

9/ Feb 2018: Correction just started. Retraced Jan gains over 1 week. Let's see how it develop. Positioned to start adding. A month ago, we were discussing how it is hard to see things going wrong, just that equity valuations were full. Lesson is that there need not be a

10/ major negative catalyst for market drawdown. Simple change in sentiments over a few days can cause a major reversal in the trend. Full valuation could serve as the catalyst itself, just like a cheap valuation

Jun 2018: JD is bouncing out of $35 level low given some

11/ sources of good news like strong first day 618 sales, piece on logistics in Fortune Magazine. I'm thinking adding to my 22% position. Just 1 week ago before 618 i was less positive. Take note of how my pysc changed. Should i leave my concentration framework?

12/ Sep 2018: What a month, Richard Liu arrested for rape allegations.. Murphy's Law indeed.. If anything, this episode around JD taught me a valuable lesson on concentration. Hubris, black swan and risk management (think about correlation, JD/Tencent all correlated, if one

13/ thesis wrong, likely all have some impact). You can never know everything, black swans are black swans for a reason. Getting too concentrated increases negative impact from black swan, but still this is a short term event (as per what I think now). If Richard doesn't get

14/ convicted, reputation still hit. Many things to think about.. Can't wait for a year later [and here we are back at $>40]

Sep 2018: People are saying JD is bottoming at 25, no clarity on investigation yet, at 23% concentration, i am struggling to add here. Clear sign of bias

15/ , at attractive price but i can't buy because i already have a big position. Abs value loss on paper looks huge but i'm feeling ok i guess, not worried long term

Oct 2018: JD trading at 0.2x 2018 sales ex log and finance. What am i missing? or is it just bad sentiments

16/ overrunning fundamentals? i'm inclined towards irrational market behavior but am still worried that i'm missing something important about JD. Something else to note in terms of sizing. I upped JD to 30% and when its down to 20%, i'm having trouble doubling up back to 30%.

17/ Take note of what sizing i am comfortable with mentally, situations that drive it down 50% typically put a lot of strain on the original thesis and put a lot of new questions into my mind

Oct 2018: Thinking about current rout in JD, lesson in concentration. I bought big

18/ sizing because thinking was that there wasn't anything else worth buying and if so i should just work my cash and concentrate. But 12 months down the road, there are a lot of opportunities now. Lesson is its hard to twiddle my thumb. I always feel like i need to put my cash

19/ to work, and that bias caused me to over commit to one position. If i adhered to say a 15% limit, it'd be 7.5% now and i can up it to 15% again with more comfort vs. 20% now and thinking about bringing to 30%. Concentration limits are important in risk management.

20/ Concentrate around conviction ideas, but don't buy above just because you have cash sitting and no other good ideas. often the next idea is just one shock away

Nov 2018: Look how fast things move. Tencent is back at the 320 level after touching 260. All that bearish

21/ sentiments seem to be diluted by hopes of deal when Trump meets Xi at the G20. People are looking for reasons to get back in, when fed chair say he might moderate hike in 2019, markets went up substantially

Apr 2019: Folks talking about missing the opp on buying this and tt

22/ but 3 months ago, everyone was worried about China/US.. Sentiments swing fast. Take temperature, don't be afraid to buy when fear is peaking, key is being sure on the moat, runway, mgmt

Apr 2019: Terry Smith: We don't market time because we know we are not good at it.

23/ There's only 2 types of people i've met, those who can't do it, and those who don't know they can't do it..

Jun 2019: Google antitrust discussion. There is fear that we have 20% more correction to go given momentum, macro outlook etc.. Might make sense to lighten tactically

24/ , but as a core position need to get the lightening right. Antitrust headwind is real, breakup is possibility, but underlying business fundamentals doesn't really change. There are many remedies Google can adopt, spin cloud? spin Youtube? buyback? My view is don't lighten a

25/ core position unless price gone to ridiculous level. Interesting to see how this situation develops

Jul 2019: What a difference one month makes, discussing Google potentially heading down to $900 and its now back at $1,100. Easy money continues across the world

26/ Jul 2019: Google back at $1250 on good results and $25b buyback announcement. Don't trade the great companies!

Aug 2019: Fear is back, market tanked on Trump imposing tariff on $300b more goods. Chinese labelled currency manipulator etc. Yield curve inverted. "Smart" macro

27/ guys like 13D saying signs of market topping, etc. etc.

Jan 2020: explosive start to the year as markets rally in full bull mode.. feels like 2018.. beware.. stay true to rules set around sizing and risk management

We all know what happened since Jan 20, but its pretty

28/ interesting how in just 2 years of journal keeping, if there is one consistent takeaway, its about market timing and how i should basically do none of it. It's easy to say since we've been in a secular bull market, but i'm an optimist and i'd say i'd want to be more of Terry

29/
Smith, find the good companies, buy at right price and do nothing. And as Buffett reminded us so many times, collect the businesses you'd want to own for LT as if the markets are closed for the next 5 years.

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As i was in 2018, can't wait to look back at 2020 in 2022, see how this whole COVID mess shakes out and what consensus thinking now ends up wrong again.

Looking forward for new lessons to be learnt then!