This interesting chart by @charliebilello has been going around which made me think

Here are the same names ranked by their 2 yr returns

For those not publicly traded 2 yrs ago, used YTD returns, & the return since first day of IPO for the 2 that recently went public Image

There are definitely some pretty crazy things going on in the mkt over the past year or two but trying to bottom/top tick a stock is impossible

It is easy to look at ATHs & say one should have sold or at multi year lows & say one should have bought

Was it possible for owners to know when their stocks sold at ATHs w/out help of hindsight?

If "owners" were trying to sell at the top tick, would they have sold far before those stocks reached the ATH?

Should they feel like they "lost" X% of their money from the ATH?

Loss aversion is a normal bias. Some studies say losses are 2x as powerful as gains

Therefore the avg person w/ a $1000 portfolio would rather earn a steady 5% providing $1050 at the end of the yr, vs a portfolio that rises 20% to $1200 & then falls to $1100 for a 10% return

While the latter portfolio is the logically better option, leaving the investor with double the return & a fatter wallet, the pain of “losing” $100 leaves them emotionally disappointed

For stocks listed above even a 2 yr timeframe isn't long enough to determine whether they were good investments

Similarly, one is not right if their stock immediately goes up nor wrong if it goes down from recent purchase, unless one is trying to play the momentum game

In fact one won't know if it was a good investment until after the business dies & one can look back at the cash that was distributed to owners over its life

Article discussing an interesting paper on this topic:


Experts are really good at telling us what just happened, but not very good at telling us what will happen, at least with any range of consistent accuracy

Looking back at recent past price action from ATHs or ATLs doesn't help determine what makes sense to do going forward

Investing is hard bc we are always dealing with an uncertain future that the mkt attempts to discount fairly

That is why it is one of the most interesting & fun games in the world

Just important to understand what you are trying to do & the risks you are taking!


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More from @SagaPartners

30 Oct
1/ I like reflecting on the idea that culture is potentially a durable moat

Its a soft concept & difficult to quantify, model, or even explain

But this idea that certain companies have a DNA that drives millions of tiny decisions that work towards a common mission is powerful
2/ In a prior life I was sell-side research analyst covering transportation companies

During that time I visited numerous trucking companies

For those unaware, trucking companies arent notorious for their wide durable moats, overly attractive economics, or stimulating workplace
3/ Most of the truck companies I'd visit may be what would be bucketed as an avg company where employees seemed to go through the motions, clock-in then clock-out, going through the motions.

However, in 2015 I visited one trucking company that stood out among all others: $ODFL
Read 13 tweets
3 Sep
This tweet by @CharlieMunger00 inspired me

I looked back at the best returning stocks over the last 15 yrs, broke down the stock's performance in 1 yr periods & then compared relative 1 yr stock results to the S&Ps return to see if it out/underperformed each yr

A few notes:

/1 Image
-Removed companies with mkt caps <$5B bc wanted to show the more well-known winners

-Time period is from 9/1/06-9/1/21. Looked at 15 interim 1 yr periods from 9/1 to 9/1 each yr, then compared to the S&P's returns over the same period to see if it out/underperformed

-Of the 50 MOST SUCCESSFUL stocks (if you bought on 9/1/06 & held thru 9/1/21, roughly half of the biggest winners underperformed the S&P 500 for 4 or 5 of the last 15 years, or 25-33% of the entire period

-None outperformed every single year

/3 Image
Read 7 tweets
4 Aug
If you were in 2010 trying to form a range of expectations for an investment in Google,

What would have been more important to prioritize in your analysis?

Quantitative or Qualitative?... Image

Extrapolate projections from the the $29B 2010 sales base through 2020 ('21 expected sales are now ~$250B providing a 22% CAGR)


Understand why they were growing mkt share in a winner take most mkt (indirect & direct data network effect), highly scalable business model, and large addressable mkt by winning eyeballs.
Read 11 tweets
1 Jun
"Finance depts believe volatility equals risk. They want to measure risk & don't know how to do it. I've used the example of the Washington Post's stock. When I first bought it in 1973, it had gone down ~50%, from a valuation of the whole company of close to $170M down to $80M...
...bc it happened fast, the beta of the stock actually increased & a prof would have told you that the company was more risky if you bought it for $80M than if you bought it for $170M. Thats something Ive thought about ever since & I still haven't figured it out"-1997 BRK meeting
Even best investments of all time will have increased competitive threats, face uncertain risks & have significant drawdowns

Only way to not get shaken out of great investments is have a good understanding of its intrinsic value & be able to ignore mkts periodic somber outlook
Read 4 tweets
14 May
Hindsight bias in the market is very real.

You may find yourself saying:

"I knew I should have bought the stock when it was trading at 0.7x."

Or "I knew I should have sold it when it was trading at 1.3x."

A great test to remove hindsight bias market regret is to ask...

...If that stock immediately fell back to 0.7x or jumped back up to 1.3x, would you then buy or sell it at that price, based on the info you know today?

In many cases the answer is probably no.

That is bc you probably didn't have the conviction at those prices & the only thing that has changed is the market price.

It is very easy to have the market influence your thinking.

Read 8 tweets
12 May
Investors waiting for the macro economic outlook to be less risky/less uncertain. Image
This tweet just came to me after listening to Stanley Druckenmiller’s interview on @squawkbox from this morning.

Here’s a clip of it below.
Hint: The future will always be inherently uncertain.

There’s always something to be worried about.

I agree w/ his ominous outlook given the fiscal & monetary situation
Read 4 tweets

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