September Review: Down $100k+ (-26%)

This is the “cake” my kids and I made for my wife’s birthday (or “birth” which is what the cake says) last week. She’s getting older every day. don’t worry, she doesn’t read this so she won’t know I’m telling all my internet friends that she’s old. She thinks I’m just playing Dungeons & Dragons with all this time I’m online. If you want to prove her wrong, start a $5/mo subscription or get a major discount and pay for a whole year for $50 at this link…I’ll use part of the proceeds to buy a cake for her next year. I’m kidding… I’ll still make her a horrible cake. But if you want to help support this newsletter, that’s how you can do it!

There’s no sugar-coating it. September was a very painful month to invest the way I do. I stayed fully invested because I truly believe that being invested in the world’s best founder-led companies is the best way for me to grow long-term wealth.

The hardest thing about it was the stress of telling my wife and the thought of our portfolio dropping another 50% or so from here knowing how that would impact our family’s financial security.

These are some of the reasons investing can be hard. There’s so much more to it than just putting money into an index every month or owning good companies. We have our human fear of loss partnered with the constant stream of negativity from the 24/7 news cycle and fear-mongering headlines from the financial entertainment networks like CNBC. Here’s how I hurdled over those mental obstacles

1. I updated my wife on how our investments were doing. She was 100% fine with it because she realizes the importance of long-term invest (we’re still up 150%+ over the last 5 years)

2. We live below our means and both work which will provide just fine for our kids even if all of our investments evaporate in an armageddon.

3. I try to limit how much I read CNBC and the news in general on a daily basis and when I do read it, mostly ignore it. Not to say it’s good to be ignorant to important world events, but watching the news is now the best way to do that. Instead, I have a subscription to The Economist and catch up with the news on Fridays.

4. I do need to get better about checking my portfolio. I check it way too often on good days and bad. Trying to get down to checking once at the beginning of the day and once at the end. Okay maybe once in the middle of the day too. I’ve heard it causes headaches if you wane off of it too soon…like coffee (that was a joke).

The chart below helps give perspective to the power of living below our means, compounding, and why it’s important not to panic during drops like this. It shows our account growth since November 2014. This includes our contributions as well.

The big drop in September/October 2018 was from a combination of taking a large sum out for a down payment on a house and the drop in the market towards the end of 2018.

The big drop recently is from the SaaSpocalypse which hopefully ended last week (it probably didn’t).

Thank you all so much for reading and helping to support my goal of making investing accessible to anyone with an internet connection. We are now at 980 total subscribers and 68 paid subscribers which brings in roughly $3,500/yr (before Substack’s 10% cut for hosting the newsletter and taxes). If you enjoy this newsletter or my amazing iPhone photography skills (see below) please hit the ❤️ at the top of the page (this helps others find us on substack.com), share with friends, and/or start a paid subscription for $5/month or $50/year.

Portfolio Review

Performance7-Day (Fri Sep 27 - Fri Oct 4): +6%September: -26%Year-to-date: +21%Since November 2014: +170%

S&P 500 Year-to-date: +18%S&P 500 since November 2014: +58%

Holdings and position sizesStock:Alteryx (AYX): 19%The Trade Desk (TTD): 17%MongoDatabase (MDB): 16%Twilio (TWLO): 15%Okta (OKTA): 8%Zscaler (ZS): 7%Anaplan (PLAN): 6%PagerDuty (PD): 5%Zoom (ZM): 3%Slack (WORK): 3%DataDog (DDOG): 2%Crowdstrike (CRWD): 2%Elastic (ESTC): 2%

Options: -1% Short 1 x CRWD Jan 17, 2020 $60 Put. Collected $540 for the obligation to buy 100 shares of Crowdstrike if it is at or below $60 by the expiration date of Jan 17, 2020.

Short 2 x PD Feb 21, 2020 $25 Puts. Collected $698 for the obligation to buy 200 shares of Pager Duty if it is at or below $25 by the expiration date of Feb 21, 2020.

Short 1 x ZM Jan 17, 2020 $65 Put. Collected $424 for the obligation to buy 100 shares of Zoom if it is at or below $65 by the expiration date of Jan 17, 2020.

Short 2 x ZS Jan 17, 2020 $45 Puts. Collected $730 for the obligation to buy 200 shares of Zscaler if it is at or below $45 by the expiration date of Jan 17, 2020.

* If you add all of these up, they go over 100% because I rounded the stock allocations to the nearest % and most rounded up.

What I’m Reading

Wait But Why - The Story of Us: Super long and will blow your mind.

The Collaborative Fund (Morgan Housel) - Three Big Things: The Most Important Forces Shaping the World

Thanks again for your attention and support. I hope this continues to be worth your time. Please send me an email and let me know how I can make this more valuable for you!

Screenshots:

7-Day

September

Year to Date

Since Inception

Current Positions