It’s been a crazy year so far. I was up as much as 40% to kick off the year and then bottomed on May 13th down ~28% or so. Since then, my portfolio has rebounded over 50% and is now at 13.5-14% YTD vs. the S&P 500’s 13.1% YTD, so beating the S&P index by a tiny bit.
Who knows if growth stocks and my portfolio will continue to climb after the huge run we’ve seen. There’s a lot of FUD out there about another 10-20% correction coming or that inflation this time around will not be temporary but will be more similar to the 1970s.
I try not to worry about the above, while macroeconomic factors are definitely something to consider, it’s not something I have too much control over. What I do have control over are the stocks that I invest in and the allocations I make into those individual stocks. With that said, the majority of my portfolio is invested in strong companies that have the following characteristics:
- Growing revenue at a rapid pace (Generally 30%+)
- The majority of my positions have some sort of recurring revenue component which mitigates some downside risk when there are demand shocks
- High gross margins
- Have little to no debt
- Not a super large-cap (besides $NVDA), so there’s room to grow
These companies should continue to generate strong returns despite market volatility and as the old saying goes, “Time in the market > Timing the market.”
Quick Portfolio Update
I trimmed more Pinterest ($PINS) since I’m not convinced that they’ll be able to monetize their platform as aggressively as I thought they would be able to (slowing MAU growth is never a good sign). I also trimmed $SKLZ since I’m trying to consolidate my portfolio more to my most confident positions. Bought a lot more $FVRR, $ZI and $UPST.
Finally, I trimmed more $SPT in the mid-high $80s. It’s not that I don’t believe in Sprout Social, in fact I think that they are an awesome company, but I do think their EV/S (~32 currently) multiple has expanded a bit much given how fast their revenue is growing and I wanted to diversify my holdings a bit given the size of my $SPT position. I also wrote some covered calls in the $110-$120 range with a January 2022 expiration. I figure if it hits that range, they will have a 35 EV/S multiple based on my forecast of their revenue growth, which is higher than Zoom Video’s current EV/S multiple and I would be fine selling my shares at those prices.