Hi investors.
I don’t want to leave you hanging here on the worst day of the year, though not sure I can add much. No doubt the trade war is stoking some panic selling. To be clear, I am not selling my portfolio positions. As stated earlier last week, I did sell some additional SQ today based primarily on the factors I mentioned in the texts on SQ above. I would emphasize that the sale of part of my position were ALL pertaining to the company slow down in growth, but I still have a 3% position and did not sell any other investments today based on the market gyrations. I simply can’t time the market and don’t try. Human psychology will lead many to sell today or tomorrow in a panic. Each of us has to feel comfortable with the decisions we make. Yes, it may get uglier before it gets better, but I like and am confident in the companies I own, I LOVE their growth, and I bought each of them for the long term and feel they will outperform the market every year…not just today, or next week…every year, based on what I know about them today. I will reiterate that the portfolio was up 101.5% YTD a week ago Friday (that is, year to date since Jan 1, 2019). This is a big deal. Not that I will be happy if it plummets to “only” 50% gains over the next week, but I will still be up significantly compared to the overall market. I strive to own GREAT companies and am certain that I can continue to analyze and choose stocks that will be better and perform better than the overall market.
Consider the S&P 500, for example: Out of 500 stocks in that index, don’t you think you could pick the worst 10 performing companies pretty easily and exclude them from your portfolio, thereby improving your odds considerably? Definitely. What about the next 10 worst stock? Most definitely! Unless you just want to average the markets, with absolutely no work at all, why would you invest in indexes. And if you could improve your odds by picking the best of the best companies, why wouldn’t you do that also. No doubt, the portfolio got hammered today…and it may again tomorrow. But that is not a reflection on the performance of the company and when the market turns around, and it always has, these company’s stock prices will again outperform the overall market significantly. This is usually the time that I start looking at my positions and companies and assessing which ones I like the best; which ones I have been wanting to add to and may want to considering picking up more shares; which ones were unduly or unjustly punished in this most recent market correction.
As Warren Buffett is famous for saying, “Be fearful when others are greedy and greedy when others are fearful”. I’ll leave it to you to determine where we are in that cycle, and I take that saying with a grain of salt, but nonetheless, I do feel that the markets are possibly over-reacting to external, man-made forces and would not be surprised if/when the pendulum corrects in the other direction. Is this a fundamental and permanent slow down in the economy? There are not yet any indications of it by most macro-economic factors. Is this a decrease in corporate/company earnings? It does not appear so with 75% of companies that have reported so far have outperformed expectations and increased earnings. If this another 10% correction before heading higher and catalyzed by Trump trumping the fed with his attack on “only” a .25% rate decrease by raising the bar on tariffs and the Chinese counter attack with Yuan devaluation? Quite possibly. If so, then long term, I would expect this pendulum to swing back relatively quickly. I guess we will have to wait and see what appetite Trump and Xi Jinping have for a prolonged trade war during an election year…should be interesting. Hopefully, this correction will release some steam from the market and allow our portfolio of companies to march higher…their earnings are certainly firing on all cylinders so far. Cheers!
User comment: Thank you Victor. I so appreciate your master class in investing!
User comment: A finger or two of some good bourbon this evening will help this day go down a bit smoother. Cheers and staying the course.
