I hope everyone who reads this had a wonderful Father’s Day. I tried to get this out on Friday (when I normally send weekly updates out) but my mom was in town and I wanted to focus on enjoying time with family.
1-week: +$7,606 or 1.54%.
Month to date: +$58,489 or 14.31%
Year to date: +$179,130 or 58.69%
As you can see in the chart below, our 1-Year return is actually lower then our year to date return (since Jan 2019). This is because the last half of 2018 was a rough stretch for the stock market (and the stock price of the companies I own). However, the business performance of these companies stayed strong (I sell out of companies if/when I see signs of weakness) and their stock prices have recovered.
You can see just how painful the last half of 2018 was. I experienced a 34.64% drawdown in portfolio value from 9/11/18 - 12/25/18 (Merry Christmas!!). I remember that time well, my family and I were traveling to visit our parents and I was trying to sneak away to read up on The Motley Fool and listen to David Gardner to figure out which stocks I wanted to buy or add to.
But that experience taught me an important lesson. It emphasized that we should not have any money we know we are going to need for large purchases in the next 3-5 years invested in the stock market and we have to be invested in business that we truly want to be part owners of.
We invest in great businesses, not stocks.
I’m sure there will be another drawdown (maybe it will start today?) but I’m also sure that I won’t let that drawdown impact my investing decisions (or I’ll try not to…we’re all human).
So let’s stay humble, stay curious, and stay invested in what we believe are the world’s best founder-led companies.
Current Portfolio Holdings
The Trade Desk (TTD): 19.18%
Twilio (TWLO): 17.12%
MongoDB (MDB): 16.65%
Alteryx (AYX): 15.94%
Okta (OKTA): 9.62%
Pager Duty (PD): 7.88%
Zscaler (ZS): 7.35%
Roku (ROKU): 5.48%
Anaplan (PLAN): 5.43%
Options (potentially very risky and a complete waste of time for some/all investors)
Short OKTA Aug 16, 2019 $120 Strike Call - I was paid a $4.99 premium for selling this so essentially, if Okta is above $125 by expiration, this was a losing trade.
Short OKTA Nov 15, 2019 $150 Strike Call - I was paid a $13.71 premium for selling this so essentially if Okta is above $163.71 by expiration this was a losing trade.
Note: these are “Covered Calls” which means I own at least 100 shares for each Call I sold. This is very important because if the stock price is above the strike price, I am obligated to sell 100 shares at whatever price the stock is at. Basically, you can really really screw yourself by selling naked or uncovered calls. You can also screw yourself out of a lot of gains and cause tax implications by selling covered calls which is quite possibly what will happen with Okta.
We’re all learning here…
I have some other options positions open, which I risked 2%-3% or so of my portfolio on. I’ve sold some which have been very profitable, but the ones remaining will probably end up worthless which will mean I came out about even on them.
At the end of the day, this was a small experiment, education, stupid decision, gamble that I did which isn’t worth the time for me. I also don’t believe options are necessary for most people to build incredible long-term wealth. In fact, I think they can be a way to destroy wealth so I don’t want to continue spending time buying/selling them or writing about them.
I’ll remain focused on investing in and writing about the world’s best founder-led companies. I think I said the same thing last week and then decided to catch the options bug again… please forgive me, I’m trying here!
What I read/listened to
Podcast: Rule Breaker Investing - Don’t be a Dip. Love hearing about David Gardner’s investing style. He doesn’t wait to buy the best businesses on dips, why should I?
Podcast: Motley Fool Money - David Gardner interviews 2U Founder Chip Paucek on the future of education. I usually listen to Motley Fool Money every Friday, but if you’re not a fan, skip to the 20 minute mark for a great discussion on the future of education.
Article: Professor Scott Galloway response to an inquiry for life advice. I disagree with a lot of what Prof Galloway writes, but this is fantastic. He shares some advice based on his lessons learned from living with and caring for his mom during her last few months of life.
Book I’m reading: Path of Least Resistance: Becoming a Creative Force in Your Own Life (affiliate link). I normally don’t do self-help books, but I don’t think that’s what this is. This was recommended by Patrick O’Shaughnessy so I had to give it a shot. I’ll do a review once I finish it.
Wrap it up already Austin
That’s all for this week. As always, thank you for your time and attention. If you want to support the newsletter, please like (hit the heart above it helps people find us!), share with friends, or change to a $5/month or $50/year “subscription” which includes the exact same content you are currently reading for free.