Lots of doomsday headlines in the world lately.
- Trump trade war with China and his tweetstorm
- My fellow Korean Kim JungEun doing the typical routine of launching and testing long range missiles.
- Massive protest in Hongkong
- Amazon fires and Brazil president going rogue
- Brexit and real wacko Boris Johnson
- Mr. Tough guy Bolton gone and potentially changing narratives with Iran
- Nationalist and dangerous politicians
- Canadian election in a month and hopeless prime minister or wanna be Justin vs Sheer… Is it fair to say these two are probably close to the most incompetent candidates of the history of Canadian election?
- Falling rates where it costs 1-2% a year to save money
- Inverted yield curves and potential recession
It is endless parade of bad news. But, hey, it has always been like this for last many years…
What do you as an investor need to do under this hostile investing environment?
Stay invested, watch your eggs and rebalance whenever necessary
Do you have unused investment loan, line of credits? Great. Save it for the potential recession. No one knows when but recession typically follows in 1-3 years after yield curve get inverted. When the time comes, you can be the true winner. Slowly deploy into super high quality names.
Recently we had SAAS stocks selloff. Great companies that grow their revenues by 40-70% all corrected by 10-15% over 2-3 days period. Most of their P/E are negative or over 100 but they grow 40-70%. That means their P/E would be 30-60 in a year so…. Still expensive but if they continue the range of growth, it is quite cheap…
I bought some Trade Desk when SAAS stocks corrected. Embarrassed to say that I added the company to my watch list when it was around $90 but did not buy it until it doubled. It is now $210 even after dropping 25% from all time high. This high growth company can be seen as very risky from my traditional metrics point of view but everything is going well for them. Tailwind from booming industry, smart management, scalable along with no strong competitions yet. I think I will do okay with it if I think next 5 to 10 years.
Let’s talk about the results now.
Markets did very well since 2019.
YTD results are following
- TSX did 16.8%
- Nasdaq did 23.4%
- Dow did 16.7%
- S&P 500 did 20.2%
Who can really complain to 16-23% of performance?
I did 30%. It has been hovering around 30% for last 3 months. When markets performed 23%, it isn’t something that I can proudly brag about it as it can always come down if one of my stocks fall.
My another brokerage portfolio did 26.89% so again, it isn’t doing much better than the markets but I will take it.
5 years anniversary
Yesterday, September 12, 2019 was my 5 years of anniversary of investing myself. I opened my brokerage account on September 12, 2014 after being frustrated with mutual funds’ mediocre performance over the years compared to the markets.
My 3 investing goals are
- Beating the markets 80% of time
- Double my capital every 5 years
- Have fun
I think I have managed to achieve all 3 of them. Exactly 5 years later, I more than doubled it at 110.63% while TSX performing 22%. I have been enjoying the process of watching my eggs and adding more companies to my circle of confidence.
I bought many terrible stocks and some even dropped more than 50% but learned whatever I can along the way so that I can prevent losing that much to ever happen again in my life.
Capital preservation is extremely important and I have been religiously following one rule- ‘Don’t lose money’
As long as the companies that you invest in grow their top and bottom line, you won’t be losing money. The stocks can be traded erroneously temporarily but they typically get traded close to the fair value ranges which is based on top and bottom line.
Go for low hanging fruits. There are so many easy to understand companies.
Why waste your effort and time to predict something that is extremely difficult? Reduce speculation.
Why do you want to put yourself at the mercy of market price that you can’t predict? I am talking about oil and gas or other resources stocks.
Just go find companies that you understand how they make money and invest in them.
Don’t spend too much time guessing and predict the future of next hot stocks…
See what happened to blockchain technology and weed stocks?
You may do very well but that can ruin your life as well.
Just risk a portion of your money that you are willing to lose.
Here are my most popular posts.
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Legendary investor Peter Lynch’s Top 13 best stock picking tips from ‘One Up on Wall Street’
Why Quality Matters the Most- Linamar, MTY, Enghouse, CGI Group and Google
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Canada’s Warren Buffett, Mark Leonard’s Constellation Software
Constellation Software’s another blowout earnings under Mark Leonard, the best capital allocator in Canada or possibly in the World!
Constellation Software and MTY Food Group’s blowout quarter
Canada’s Warren Buffett, Mark Leonard’s Constellation Software growth story continues with Q4 earnings results
Absolutely spectacular result mate