Wow, September was a roller coaster of a month. It started not so good, then went crazy for a few weeks and then ended on a doozy. At one point, I hit 55% YTD, and then in the last few days of the month, gave back a lot of those gains, finishing the month just shy of 40% YTD. I’m getting some deja vu here, since once again rising treasury yields are causing all of this recent market volatility. I can’t say I saw this coming. I thought we were reaching some pretty insane valuations, which caused me to raise some cash, but as always, I was surprised at both the speed and magnitude of the drop.
Crypto & Mining Update
Crypto had a rollercoaster of a month too. There was definitely a lot of positive upward momentum going into September and then suddenly the day El Salvador made bitcoin as legal tender, it cratered 20%. Then the China Evergrande crisis made investors flee risky assets for a few days and then finally China decided to ban all crypto transactions. For the month, Bitcoin was pretty much flat despite all the volatility since there was a big rally the last few days of September and into early October. While I still hold a decent-sized crypto allocation (around 4-5%), I still wonder what bitcoin’s future will be. The tech isn’t that great relative to other cryptos from my understanding which has resulted in higher transaction costs and slow transfer speeds (at least compared to something like Stellar $XLM which can transfer insanely fast). Similarly, Ethereum has had a lot of volatility too due to some technical related issues with regard to an accidental fork, etc. Cardano and Solana are both making quite the run due to their potential tech vs. Ethereum’s.
I currently hold the following cryptocurrencies:
- Bitcoin
- Ethereum
- Stellar
- Cardano
- Solana
- Chia
Bitcoin and Ethereum make up 90% of my crypto assets and the other cryptocurrencies make up the remaining 10%.
Onto mining… I decided to finally sell my 3090 since I thought a $2k+ investment for a card that hashes 125 MH/s wasn’t worth it when I have a $1k card (3080) that hashes for 105 MH/s. Shockingly, I was able to sell it for basically what I bought it for, so that was nice. I decided to buy a 3060 TI (LHR sadly) instead to use as my primary graphics card since the 3060 TI only uses 120 W of electricity vs. the 3080’s 230 W. With the sale of my 3090 and Ethereum’s rebound, I am solidly in the black in terms of my crypto mining equipment investment. It took just 6 months to fully pay back the investment and I’m transferring a decent chunk of the mined ethereum to BlockFi given the insane interest rates they offer for various crypto assets and stablecoin.
If you’re interested in earning 4.5% on BTC, 5% on ETH and 8.25% on USD (Not FDIC insured), you should definitely do some research and sign up with BlockFi (referral link gives both of us $10 in BTC).
Economic News
The jobs report wasn’t great in August largely due to the delta variant causing some slowdowns but the retail sales report was pretty decent. Overall, economic conditions seem to be fine despite all this recent volatility which stems from rising Treasury yields due to concerns with inflation and increasing interest rates. There will be a lot of interest in the September jobs report as it will likely give the Fed more confidence to either start their taper in November or to postpone it. Given all the issues with global supply chains which are causing a spike in inflation, I think the Fed is looking to curb “easy money” policies asap. On another note, Jerome Powell has done a good job striking a good balance between being dovish but also prudent on letting up on easy money policies. The market for the most part has been pretty receptive to his remarks in the past few announcements he’s made.
Portfolio Update
S&P 500 return YTD: 14.68%
My portfolio YTD: 39.40%
September was a rough month for the market where the S&P 500 lost 4.8%. My portfolio MoM lost 0.94% but as noted, I was up as high as 55% YTD, so it had a pretty big drop from 55% to 39.4%.
Upstart continues to be my biggest position and grew into a 25%+ position (from 16%) this month with its huge 37% rally in September. Their Q2 report was phenomenal and I expect them to continue to outperform in Q3.
Portfolio Breakdown
| UPST | 25.7% |
| CRWD | 11.8% |
| DDOG | 8.6% |
| DOCU | 6.0% |
| ZI | 5.8% |
| LSPD | 5.2% |
| SNAP | 4.7% |
| ETSY | 3.7% |
| MELI | 3.5% |
| ROKU | 3.5% |
| GLBE | 2.9% |
| TEAM | 2.8% |
| NVDA | 2.6% |
| NET | 2.5% |
| CROX | 2.5% |
| ENPH | 2.2% |
| SEMR | 1.8% |
| AFRM | 1.0% |
| < 1% Positions | 3.2% |
Portfolio Notes
Lightspeed ($LSPD) – I added a lot to this position especially after they tanked a ton due to a short report from Spruce Point. Spruce Point had a lot of misleading statements and their short thesis is based on very old information. I fully expect Lightspeed to recover from this and this reminds me of when Citron Research had a huge short report on Shopify that resulted in Shopify’s stock tanking a lot before rebounding a lot.
Here’s a podcast that Lightspeed’s President, JP Chauvet, explains how their acquisitions accelerated their roadmap and will help their business grow and scale.
From an earnings perspective, in Q1 (Q2 equivalent), Lightspeed totally crushed it with:
- Accelerating revenue growth (78% YoY organically)
- GTV was up 202% YoY, up from 77% YoY
- ARPU was up 44% YoY
- Increasing and accelerating customer locations growth – 95% YoY, 26% QoQ from 55% YoY and 3.5% QoQ
Semrush ($SEMR) – I added a lot to Semrush since I think they are still undervalued given their growth rates and relative valuation. They added a CMO to their executive suite and released a handful of new releases that should be helpful to marketers. This stock definitely had a huge surge to $30+ before coming back to earth. Definitely some weird price action.
Very curious to see what their Q3 report will look like. Google Trends shows a reasonable uptick in demand especially vs. their biggest competitors ahrefs but who knows if that will have an impact on revenue. They also appear to be hiring a ton of people and based on their job postings, they seem to have a lot of open roles for sales reps focusing on LATAM. Their “Other” international is their fastest-growing business segment, growing 62% vs. the mid-50s for USA & UK.
Affirm ($AFRM) – Started a small position in Affirm due to their partnership with Amazon, their strong Q2 and the growing popularity of Buy Now, Pay Later. I will admit that Buy Now, Pay Later scares me and makes me think there may be another debt bubble in the future, but I still think we’re in the very early innings of this big movement.
October’s Plan
Well, it’s the 5th day in October and the market has been crazy. I’ve already bought the dip a few times in September and then again yesterday. Hopefully the market starts stabilizing, but historically October isn’t a great month for the market. We’ll see what happens this year.
Earnings for most of my companies are still about a month out, but Netflix does kick off the earnings season in just 2 weeks. Crazy how it feels like we just ended the last earnings cycle and Netflix is about to announce their Q3 results.
I also have two blog posts I’m working on:
1. Asset Allocations
2. Understanding your paycheck deductions