I'm In Between
"I can't stay long, I'm in-between meals"
- Louie Anderson (410 Lb comedian)
The portfolio is UP +26.37% YTD.
Our benchmark index, the S&P 500 is up about 0.27% YTD.
Being In Between
It's the end of July, the first half of the year is over and the second half is underway, as I get ready to take my summer vacation I find myself in-between in many ways.
Being non-partisan to the degree that I can't understand membership in political parties I'm in-between politics. Many years ago being politically in the center wasn't a bad thing and my friends and associates who prescribed to either side of the aisle were much closer; today I can hardly see them in the distance. In August I'll be 59 and still think of myself as 'middle-aged', that in-between space between the beginning and the end. Two of my three children have moved out on their own and one is getting ready to head off to college; leaving me somewhere in-between parenthood and empty nester. I have a garage and shop full of vintage motorcycles that are somewhere in-between running and show winners. At the start of the stay at home order I was 225 pounds, now I'm down to 211 pounds, but still in-between where I'm at and where I want to be. So as I look at the Stay Invested portfolio I'm thinking I see some things that leave me feeling in-between.
"So as I look at the Stay Invested portfolio
I'm thinking I see some things that leave me feeling in-between"
When I started this blog its purpose was to tell my mom's story of loss and recovery after the financial crisis. The blog portfolio was an experiment to see if individual investors could do better, on their own with a DIY portfolio. We did, we've beaten the market every year since 2016 by a wide margin. When mom passed away in 2018 I thought it was time to close the blog and move on because I suddenly found myself in-between. You all didn't think so and encouraged me to keep writing and picking stocks. So "Mother's Little Helper" became "Stay Invested" and we kept right on beating the market. I'm also proud to say that the blog strategy became the basis for an investment firm that my partner and I launched together and now have a number of investors participating in our fund.
"Markets don't go to zero, portfolios do.
Buy quality, be patient and look twice for motorcycles"
What I'm discovering is that being in-between isn't bad or good, it's not a transition, its not a fuzzy lonely space, it's simply a space that demands a bit more reflection, the courage to stand your ground and then pick a direction.
I'm using this in-between time of summer vacation to think about investing in the second half of the year. I'm looking for the big themes and I'm also starting to think that the Stay Invested portfolio might be able to tolerate a little more aggressive investing. I'm not sure, I'll wait to hear from my readers on that last point. Start a conversation at the bottom of this page or email me.
Back in December of 2019 I could have put the entire portfolio into Amazon and we'd be up over 65% today. As much as I believed in that trade in December 2019, I just couldn't do it in the Stay Invested portfolio because if I got it wrong on a single stock lots of people would get hurt and the stock market would just look like a video game. My intention is to keep pounding the table that everyone should be invested for the long term, buying quality companies at fair prices in a variety of sectors.
Now we're in-between the life we knew and life on the other side of COVID-19. Last year I was thinking about the big investing themes over the next 5 years. Now I'm thinking about those same themes and some new ones, but I think they'll arrive sooner. Instead of expecting earnings growth in 5 years, I'm looking for those same numbers to arrive in maybe 3 years. That would create some stunning valuations in names that are already stretched as tight as a spandex mini-skirt (thank you Dale Launer for that image).
Lot's of things we've been waiting on are coming sooner and that's where I want to look for next years portfolio. I'll spend the next 5 months looking for themes, names and price points, but for now, we're in-between. COVID-19 and the stay-at-home/work-from-home experience compressed everything that was going digital. Imagine if restaurants hadn't been ramping up their apps and online ordering systems in the years just prior to 2020. What if Amazon had stoped investing in new technology and faster delivery during 2015-2020. ZoomVideo was a nice little video calling startup that suddenly became everyones connection to everyone else. 2U the online education company is up almost 79% year to date. Chegg is up 96%. Chipotle Mexican Grill has rallied over 36% and Domino's Pizza over 32%, all because of technology and the ability to deliver take-out more efficiently. Solar has been red hot. Enphase Energy, the maker of advanced micro-inverters for solar panels is up over 138% year to date and we participated in over 50% of that rally. Think about that, while out of work and stuck at home Enphase Energy experienced phenomenal growth because people were installing solar systems. Traditional education, made inaccessible by high costs and out of control government loans suddenly went mainstream online because people wanted to learn new skills at affordable prices on their own time.
As investors we just need to be thinking about the big themes and finding the companies that can work in the future ahead. Here are some on my list, please send me more ideas for themes and companies, I'll include everything in my work through the second half.
Digitization of business
'Scary world' stocks for global tensions (defense contractors)
Transparency in police (body cams, cloud services)
Security is a permanent theme (data centers, networks, personal computers)
Autonomous driving and all related technology
Autonomous ride sharing (driven by California politics)
Genomics, customized drugs, vaccines, all things biotech and healthcare
Electric vehicals of every type
Space technology and travel
Payment systems, especially ex-U.S.
Online shopping, globally
ESG Investing (Environmental, Social and Governance)
All things solar electric (panels, inverters, storage, software)
Semi-conductors in data centers, 5G and IoT
The great outdoors, we got out and we're not going back in
Finance is changing (FinTech)
Special Purpose Acquisition Companies (SPACs)
Declining dollar, increasing inflation
"Markets don't go to zero, Portfolio's do.
Buy quality, be patient...and look twice for motorcycles."
- Clay Baker