What Was I Thinking?

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October Portfolio Update

October proved to be another tough month performance-wise for the portfolio. I contributed $27,000 for the month and continue to be WAY ahead of schedule for contributions. The portfolio value currently sits at $115,500 and since February 15th, 2022 I have contributed $131,604 and I’m down a wonderful $15,739.

I was going to do a lengthy update covering why I think each company in my portfolio is a great long-term buy and hold right now. But then I started looking at the P/E and P/S multiples since September 2021 and all I could think is…

“What was I thinking?”

So that’s what I want to emphasize here. Yes, long-term investing is important and in general, people over trade which destroys so much wealth. BUT there are very valid reasons to sell.

1. If you need the money in the next 3 - 5 years.

2. If a company thesis is broken — the reason you invested is no longer valid.

3. A company becomes too large a position in your portfolio for you to sleep well at night. This is different for everyone, but if you are anxious about your investments when you lay down at night, something is off.

4. Valuations/multiples get way out of whack. This is the least common… and where people make the most mistakes by selling too early. But when a company is trading at a Forward EV/Sales of 69 like was in September, the Risk/Reward is impossible to justify.

So if your portfolio is hurting like mine it’s an opportunity to reflect on why, learn from it, and move forward.

Don’t be too hard on yourself. It wasn’t just retail investors that made these mistakes. Wall Street analysts are just as guilty (or more).

Here’s a look at Price Targets over the last year. Notice how they conveniently come down as the stock price drops. Just like the go up as the stock price goes up.

So investing lends itself to a herd mentality, which I am guilty of following from time to time. I’m trying to get better about that.

I’ll get to those crashing multiples below but one last thought about where we are today.

I think we are now at reasonable multiples. There is certainly a risk that earnings and sales estimates come down due to the macro environment/recession. If that’s the case we risk more downside.

I’m staying invested and plant to continue contributing to my portfolio for the next 25 years or so. I’ll continue to use this newsletter to share my ups and downs as transparently as possible. Not so people copy me, but to hopefully inspire others to start investing (ETFs/Index funds are the best way to start) and hopefully offer a differentiated perspective and not fall victim to the herd mentality that is so common.

Current Positions

$19,259

$11,570

$10,351

$10,346

$9,652

$9,541

$8,714

$8,026

$7,261

$6,541

$5,563

$5,078

$3,956