User question: Victor, curious your thoughts on this whole China situation.
Victor:
Hmmm…politics!! That’s a longer conversation. These things don’t ever resolve themselves quickly. I would have bet a lot of money The two side would never have concluded their talks and negotiations last Friday. In regards to the companies that I invested, best case scenario is that it is a buying opportunity and a temporary dip. Worst case and Scenario, it gets drawn out for year or more, but I don’t see that happening as Trump wants to get reelected. I suspect there will be an equal”up” day when the two sides conclude things, but There are far more qualified pundits out there regarding international relations than me. I just try to invest in solid fast growing companies that will Be around after the political fallout because they are the pics and shovels of the digital revolution!
User comment: That’s totally fair. I appreciate the perspective 👍
Victor:
Note: bottom two are Call Option positions
I am incredulous that my portfolio was down over 5% yesterday due to the Chinese retaliation in this tariff war. It was the single largest drop (in dollars, not as a percentage) in my life. When I consider that our economy this year will likely reach a level of $21 trillion this year, the tariffs the Chinese are imposing on $60 billion of our exports are a metaphorical needle in the haystack. US growth alone over last year is estimated to be $1.2 trillion! (Just the growth.) How that translates to 5-7% drop in the portfolio I own in primarily very high growth SAAS companies that are providing the picks and shovels of the digital revolution is simply incredible.
It is important first to state that I am NOT selling any shares based on these events and in fact, I added a small amount to my TTD and MDB positions yesterday and today. My timing may be off and things may continue to be dicey for a while to come, but adding on illogical dips like this that make no logical sense has helped me to realize almost 120% gains in the past 18 months alone. You can’t swim against the tide, so I try to be careful and prudent, but I have owned 7 out of 9 of the stocks above for over a year already. I do not trade in and out on a daily basis. When I find a company I like that is high growth (most of the companies above have revenue growth q/q that exceeds 40% for 8 or more quarters in a row…a couple now exceed 80% revenue growth!) that I like and have done my analysis of the company fundamentals, growth and about 15 criteria that I track, I start to purchase the shares of those companies, typically in thirds of a desired position. ..i.e. not all at once. In some of these companies, as I gain conviction in their technology, growth, customers and dominance, I have made up to 8 separate purchases to establish the entire position you see above. I can’t and don’t try to time the market…I invest in great companies with great technology and solid management teams and I avoid Chinese companies. Quite simply, I invest in the best of the best revenue growth companies who are leading the digital revolution, with dominance in their technology offering, and often have a huge advantage and moat around their technology, primarily recurring revenues, very high customer retention rates, and the ability to 10x themselves over the next 3-5 years (Apple at $1T market cap could never 10x themselves, so no matter how good the company, so I don’t invest in the Amazons, Apples or Microsoft’s of the world…I am look for the companies that will give those behemoths a run for their money and may replace them one day, if they are not gobbled up by them, which I might be OK with also!).
I will end by making the argument that none of the companies I own have a major presence yet selling in China, all of them are American based and all are or will be required in the digital revolution that is occurring right now. In the past year, we have accumulated more “information” and data than in ALL prior history combined before last year. [Re-read that sentence!!] As this revolution inevitably continues to transpire, we must have new tools and A.I. in the cloud to store (MDB), protect (ZS/OKTA), analyze (AYX), search (ESTC), connect (TWLO), transact (SQ) and market (TTD) data and information. The existing behemoths are antiquated and simply do not have the tools built from the ground up for the cloud. And every company will need these tools to survive, so I would argue that even in a downturn of the economy, companies will continue to purchase these SAAS (Software as a Service) prescription contracts to provide them the required tools to compete with the behemoths and the rest of the business world simply because they are relatively inexpensive and most companies can not build their own. Happy investing!!
Now that is a pretty green Christmas tree today compared to the red light district of yesterday!!
Everyday is not Christmas 🎄, but it sure seems like it lately!
