Follow me on @facelesstrader (Twitter), and Nikki Yu’s Awesome10X on Youtube Channel
Investment Moderation (concentration or diversification) is hard. It’s hard to make fair and consistent judgments about what companies should and should not be allowed to own. It’s hard to gain the level of contextual understanding needed to properly interpret every allowable risk tolerance. You can spend all day sifting through the best and worst of your holdings, make rapid-fire decisions to sell companies you’re not comfortable to hold for decades. Day in and day out, eliminate subpar companies and force yourself to say yes only to a few.
Be compelled to force rank your holdings. What’s your ideal size? What’s your ideal weights? Think what would you like that portfolio to look like by 2020 and 2025 and 2030
Then and only then, sleep and calmly allow every imperfection and process of elimination to fine tune those names that you truly wish to keep.
Owning a Concentrated High Conviction Portfolio has high stakes. Reminder that owning a few names can have history-altering consequences both on the upside and on the downside. People who didn’t know that Pandemic was coming had serious consequences to their portfolios, affecting their lives. The Dow Jones is just breakeven this year even while the Nasdaq has shot up to all time highs. (100% above lows of March and more leading companies up 300% and more.) Consequently, from high interest to low interest rate environments, Nasdaq or technology has outperformed over long stretches of time the S&P 500. See Chart below:
This is why I prefer to stick with only technology names and not rotate to high quality cyclicals. Despite volatility, in the long run, this is where I and the rest of the world will be, a year from now, five years from now and a decade from now.
On Style Bias- Growth Only.
me personally id tell you what:
VALUE DOES NOT INTEREST ME.
Only 10X Secular trends Interest me.
i have zero care if a 1 euro company in europe goes to 2 euros. because it was 90% down and undervalued and paid cash dividends and had cashflows like this. I’m not a Tobias Carlisle. I’m not a value investor. I don’t even like to dig in to Benjamin Graham precepts.
I’m a Peter Thiel and a David Gardner type. I’ll seek my 10X companies in IPOs SPAC. I’ll cover Unity Engine, I’ll cover KCAC batteries, I’ll cover some healthcare IPOs if I have to…Amwell, Goodrx. I’d study NNOX but NOT VALUE INVESTING LAGGARDS. i don’t plan to rotate to zilch dinosaurs even if they’re worth diamonds before.
- Faceless trader