“The best way to measure your investing success is not by whether you’re beating the market but by whether you’ve put in place a financial plan and a behavioral discipline that are likely to get you where you want to go.”
- Benjamin Graham
As I'm writing,
The portfolio is UP +41% YTD
Our benchmark, the S&P 500 is up about +14% YTD
Nabriva At the Annual General Meeting of Shareholders on July 29, 2020, Nabriva Therapeutics’ shareholders approved a reverse stock split as necessary for the Company to comply with the minimum $1.00 per share requirement pursuant to Nasdaq Listing Rule 5450(a)(1) (Bid Price Rule). The reverse split effected a 1 for 10 stock split, thereby financially engineering a stock price above $1.00. The split was made effective December 3rd and converted our 5,000 shares to 500 shares. The cost basis also needed to be adjusted from $1.57 to $15.70.
Stock splits and reverse stock splits don't change the value of the company, they simply change the price of the stock. While shareholders approved the reverse split, investors continue to show their displeasure in the company and immediately began selling again. For the Stay Invested portfolio, this has been a terrible holding, losing over 76% YTD. These moon shot companies are always good to have in a portfolio because a few of them will deliver big returns, but you can only hold a company like this in a portfolio that has solid performers that can carry these losses.
"Given a 10% chance of a 100 times payoff, you should take that bet every time" - Jeff Bezos
For the new year, I'll be adopting a new layout for the portfolio page. The new layout will illustrate more clearly how I think about how different holdings support the portfolio, which ones are where I expect to see gains and which ones are there for protection. Allocation, or how much money is invested in a specific holding is very important. The new portfolio will show this visually. I'll provide some explanation next year, and please feel free to post questions on the site.
I have also decided to correct something I did a couple of years ago. After the first two years of beating the market, I had a number of emails wanting to see me get to $1 million and more. At that moment the portfolio felt like a video game, which is the complete antithesis of what we're doing here. I got angry and closed the portfolio and started with a new lower-cost basis. Nobody manages a portfolio like that at home, and I frequently espouse to eliminate emotion from investing, so I think I did a disservice to my readers. For 2021 I will be collecting the starting and ending values for each portfolio and displaying them permanently on the portfolio page which will show the running balance since 2016. My intent is to clearly show what an investor who followed the portfolio diligently could have earned over the past five years and what the YTD gains and gains since inception are without the disruption I introduced by restarting the portfolio.
"Markets don't go to zero, Portfolio's do.
Buy quality, be patient...and look twice for motorcycles."
- Clay Baker
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Keep Me Honest 2020
Today is a good time to carefully leg into stocks again (3-20-2020).
Worst Case: S&P 500 decline further to around 2,100 - 2,150 (3-28-2020).
Middle Case: S&P 500 level out around 2,650 - 2,700 (3-28-2020).
Best Case: YE S&P 500 eventually rise to around 3,000 - 3,200 (3-28-2020).
Market bottomed March 23, 2020 at S&P 500 2,237.40 (4-17-2020).
Rule #1: Don't lose money
Rule #2: See Rule #1
Rule #3: Portfolios go to zero, markets don't, Stay Invested
Rule #4: When good stocks you own drop 10% below your cost basis, add shares
Rule #5: Bull markets aren't sustained without the Transports
Rule #6: When Forward P/E is lower than TTM P/E, expect earnings to increase
Rule #7: When an investment bank sells below book value, buy it
Rule #8: Tips are for waiters. Do your own homework.
Rule #9: Don't sell a stock because you're bored with it. Do your own homework.
Disclosure: I am personally invested long in some or all of these stocks or funds that appear in the Stay Invested portfolio and may purchase or sell shares within the next 72 hours. I am also invested in other stocks and funds that do not appear in the Stay Invested portfolio but may be mentioned or related to this article. It is not my intention to advise or encourage the purchase or sale of any security. I am invested long in these securities mentioned in this post:
I am invested short in these securities mentioned in this post: GSX
I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article. This article is not intended to offer investing advice, guarantee 100% accurate predictions, or to be interpreted as providing a personal recommendation.