As of the close of business on Friday (yesterday), the portfolio is at +37.2% gains since January 1 and has exceeded both its all time and YTD highs that were previously achieved on February 19 of this year. If you recall, I wrote about canceling my SE Asia trip on Feb 16 due to COVID-19, and this was just prior to the widespread market recognition that COVID-19 was hitting the United States and the oil price wars heating up between Saudi Arabia and Russia. Fast forward 2 1/2 months and many of the portfolio companies have now again exceeded their all time highs and are sitting at 52 week stock price highs; benefiting tremendously from the accelerated digital transformation 2.0 that COVID-19 has facilitated. I am a big believer that in crisis there is also incredible opportunity if you stop, pull yourself up and out of the smoke, and look down from 30,000 feet.
I’ve already written a few times that some pundits and experts speculate the digital transformation has accelerated up to 2 to 5 years forward in just the last 2 months. I believe this transformation has and is now significantly benefiting our portfolio of SaaS stocks.
While the five market indexes that I track thay represent the overall market are down roughly negative -19% year to date (average of all 5 including S&P 500, Nasdaq, Dow, Russell 2000), our portfolio is up 37.2%, representing a +56% out-performance!! Just since Jan 1!!
Will this continue? Who knows?! At its worst during this crisis, our portfolio of 12 companies dropped about -36% off its high (going just barely negative for the year) before turning around and surging forward quickly. Had I sold the companies, I would have incurred significant tax liabilities and never would have been able to get in quickly enough to catch the upswing. By solid companies with strong balance sheets, no debt, and incredible growth and you don’t have to worry as much about the overall market. By all rights, the portfolio could drop again if things get worse and next winter could be scary for many traditional companies, if/when it hits again. But the opposite could also happen with our companies and we could benefit tremendously if our companies continue to prove to be the next generation of technology driving the digital transformation wave; I do not feel it is out of the question to think this portfolio could be +100% this year (in 2020 of all years!) on the accelerated transformation I have been texting about for the past 2 1/2 years.
It is certainly an exciting and exhilarating time to be alive, even if at the same time scary end paralyzing at times. Take care of the three most important things: sleep, nutrition and exercise. And try to keep a clear head and see the bigger picture once a day when you can, whether it’s through meditation, yoga, journaling or intense exercise…find a way to think about the long term and the bigger picture.
And if you figure it all out, be sure to let me know! 😉. My best wishes for health, safety, and happiness amidst these challenging times. And Cheers on this Saturday afternoon from the Apple Orchards of Northern California where I have been sheltering in place with my family for 6 weeks in a one room barn!!
