Portfolio Update +112%. Doubling Down on Amazon
Why I made Amazon 20% of the portfolio…
Welcome to The Growth Curve. I do two things here:
I share my portfolio and all transactions every week.
I share deep dives into underfollowed small to medium cap stocks to help you find new investment ideas. Our last two deep dives were on Fluence Energy (FLNC) & UiPath (PATH). Our next deep dive will be on NuScale Power Corporation (SMR).
I broke one of my own rules this week and made Amazon a 20% position in the portfolio. I’ll share more thoughts on why I think now is a good time to build my position in Amazon in the portfolio update section below.
But first I want to share some thoughts on position sizing:
When I was just getting started investing and didn’t have any kids, I had no issues having 20% positions in my portfolio.
Fast forward 15 years and I’ve now been married 14 years with 4 kids. I have a different level of risk tolerance now. I’ve also been humbled and realize that no matter how right I think I am about a company, the stock can do irrational things due to factors unrelated to the actual company.
That’s why I’m thrilled to be up 30% YTD even though there are people all over X posting 100%+ YTD gains. That’s amazing for them, but I’m just personally unwilling to take on the level of risk it takes to get those returns. Most of those people are either using margin or they’re heavily concentrated in a few very volatile stocks.
I’m in no rush here. I’m investing for the next 50+ years (I hope) and providing for my family is way more important than maximizing portfolio gains if it means taking on too much risk.
With Amazon being a 20% position in the portfolio, a 50% move in the stock would have a 10% impact on the overall portfolio. I think there is a low likelihood of a 50% move lower, but I could see the stock moving 50% higher (or more) in the next 1-2 years based on fundamentals and the current negative sentiment. That would have a big impact on the portfolio.
When we compare that to IREN Limited (IREN), which I recently started around a 2.5% position in, I think it’s much more likely IREN loses 50% just due to normal volatility. That would only have a 1.25% impact on the overall portfolio. I also think it’s much more likely that IREN goes up 5x or 10x than Amazon. Those moves would have a 12.5% or 25% impact on the portfolio respectively.
That’s why I’m happy starting 2.5% positions and building them up to 5%-6%, for volatile hyper growth companies as I gain confidence in their business or the fundamentals make more sense.
If I’m really right, the position will get more meaningful as the stock goes up. If I’m wrong, it won’t hurt too bad.
Portfolio Update
Portfolio performance since August 29, 2022
Since August 29, 2022, the portfolio is up 111% vs the SPY return of 69% and the QQQ return of 103%. The portfolio has a compound annual growth rate (CAGR) of 27% since 2022.
* The screenshots are from before market open Friday. I’m making no changes to the positions but as of this writing, the portfolio is up 2.4% on the day so the overall returns are a bit better than the screen shots.
Current Portfolio & Transactions This Week
Jump into the chat to discuss Amazon, the current portfolio, and our deep dives with the rest of the Growth Curve community.
Here’s the full portfolio, this week’s transactions, and some more thoughts on why I made Amazon such a large position before the company reports earnings next week.