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Puru Saxena

13 Dec, 7 tweets, 2 min read

In spring/summer/autumn, when I suggested we were in a young bull market, most were still unsure and fearful. Many hot growth stocks were also way lower.

Over the past 4-6 weeks, sentiment has become euphoric, many IPOs have tripled in a matter of weeks, $ABNB has doubled...

...in a day, $DASH has almost doubled in a day, dozens of IPOs/SPACs have come to market, 20yr olds have put up hundreds of videos on TikTok and YouTube recommending hyper growth stocks, people I know have given up their jobs to become day traders and valuations have risen a LOT!

So, the situation has changed quite a lot and I'd be crazy not to recognise these changes.

To be clear, I am not suggesting the party must end tomorrow. If history is any guide, the show will probably go on until the Fed keeps expanding its balance sheet.

Finally, I dont...

...feel the entire market is a mania - plenty of areas which are depressed and have just broken out of long, multi-year bases. So, once vaccines are rolled out, possible that these might outperform?

The mania appears to be in the names associated with "digital transformation".

Finally, some of you have expressed displeasure because I seem to have changed my mind.

Prices/sentiment and valuations have changed a LOT very quickly so yes, I have assessed the *current* conditions and changed my view about where we might be in this tech bubble.

A few...

@Matt_Cochrane7

...months ago, when I was interviewed by my friend @Matt_Cochrane7 , I did state that this felt like an incipient bubble which would probably get bigger.

Well, as it turns out the mania has become bigger so I must recognise this and try to gauge where we might be in this cycle.

Obviously, I dont have a crystal ball but if I had to guess, I'd say the rally in "digital transformation" will probably end either just before or when the Fed stops buying assets.

Just an educated guess, could be wrong. Time will tell.

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More from @saxena_puru

Puru Saxena

@saxena_puru

13 Dec

The best long-term investment returns are generated when an unloved (almost hated) asset or sector comes out of a decade long bear-market.

US stocks in '82 or '13
Commodities in '00
EMs in '03

The dogs of the past decade likely to do well over the next 10-15 years.

By the time a story is fully understood, its usually too late.

Investors loved US stocks in the late 60s, they loved commodities in the late 70s, they loved Japan in the late 80s, they loved TMT in the late 90s and they loved commodities/EMs in late 00s.

How did that turn out?

A number of the shiny/growth stocks have tripled or even quadrupled since March!

The question to ask is "have their operating results tripled or quadrupled over that period"?

NO, they haven't. These stocks have rallied due to COVID fear and multi-expansion. Worth remembering.

Read 6 tweets

Puru Saxena

@saxena_puru

7 Dec

During the TMT bubble, each tech stock peaked when its valuation peaked (not when its revenue growth peaked).

The Fed is currently super easy but with valuations extremely stretched for many COVID beneficiaries, the reopening of the economy *might* be a risk for these stocks.

For my part, I've been reducing my enterprise software exposure and have already brought it down from ~50% to just under 30% of my portfolio.

If valuations stretch further, will reduce even more.

Clarification -

Enterprise software with its recurring revenues is a fantastic business and many of these companies will continue to grow for a very long time and power global businesses.

However, their current market caps appear quite bloated relative to their revenues...

Read 4 tweets

Puru Saxena

@saxena_puru

3 Dec

Those who missed the entire run in the highest quality growth stocks can no longer stand the fact that these names keep going higher (on the back of outstanding business growth).

The name calling and snide comments reaching a whole new level now! Sorry you missed the run....

When I first became active on Twitter (Feb '19), the wise people called me a moron for only owning the 'momo', 'overvalued', 'bubble' names!

The crash occurred in March and guess what? My stocks bounced back first and went on to make new highs - some even tripled..

....or quadrupled within months.

Most of my companies have continued to announce outstanding operating results and they are still being bid up by the market.

Meanwhile, I'm still being trolled as the momo guy who got lucky and will soon learn a lesson!

Read 5 tweets

Puru Saxena

@saxena_puru

3 Dec

Narrative - Rising 10-yr UST yield is bad for growth stocks

Reality - $IWO positively correlated with 10-yr UST yield

History shows that rising long-term rates from such low levels are POSITIVE for growth stocks/risk assets.

Conversely, falling long-term rates are NEGATIVE for growth stocks/risk assets.

Rising rates imply the bond market is becoming less worried about the economic outlook.

This chart goes back ***20 YEARS***

$IWO = positive correlation with 10-yr UST yield

Facts/reality > narratives

Read 4 tweets

Puru Saxena

@saxena_puru

30 Nov

1) Portfolio summary - Nov-end

$ADYEY $AFTPY $CRWD $DAO $DDOG $DKNG $DOCU $FUBO $LSPD $MELI $OKTA $PINS $PLTR $ROKU $SE $SHOP $SNAP $SNOW $SQ $STNE $TWLO $U $UBER $VRM

Return since 1 Sept 2016 -

Portfolio +471.83%
$ACWI +50.46%
$SPX +67.46%

2) CAGR since inception (1 Sept 2016) -

Portfolio +51.91%
$ACWI +10.29%
$SPX +13.18%

YTD return -

Portfolio +311.08%
$ACWI +10.25%
$SPX +12.10%

Contd...

3) Biggest positions -

1) $MELI 2) $ROKU 3) $PLTR 4) $SE 5) $PINS

Buys - $AFTPY $FUBO $LSPD $SNAP $STNE $UBER
Sells - $AYX $BABA $FROG $FVRR $GDRX $ZM

Contd...

Read 13 tweets