Read on Twitter
1/judging by the bashing of my “be prudent and don’t be a blind momo investor+my subjective opinions of what I see all over Twitter I think I’ll tell those that care a little story about me and my just under 30 years of investing
2/as we all are when we’re young, I was a gung slinger trader playing in the deepest end of the pool similar to what’s happening now. I made a bunch of money but it seemed so easy I chose not to put some away and keep playing with the lump of cash
3/I was so confident about my trading skill I quite a great job working at an institutional value manager with $8B in assets. Value was so dead and the experienced analysts I looked up to clearly didn’t understand the new paradigm
4/they refused to accept the new leading and ignored most growth and innovators in favor of value, cheap and boring stocks. They were so stubborn they started to lose assets as investors finally got bored too. Mind you our returns were good just not ARK-like at the time
5/Greed was everywhere, not much worked other than the most expensive most innovative sounding business models, ipo rage was ongoing akin today’s ipo rage and spac euphoria. These stocks were absurdly expensive but no one cared. It was too easy to make life changing returns
6/the trajectory of gains turned from up and to the right to straight up reaching for the sky parabolic. That was lesson #1 for me: when parabolic begins, be on the look out for a top, short term or long term no one knows but the risk profile changes and u need to be nimble
7/March 2000 $AMZN peaked at 35x sales. Adjust for current low interest rates and epic liquidity and the 50-100x sales is akin to this period. Now I’m just watching for parabolic behavior. We’ve seen it in some places but not quite yet although last year could qualify
8/there were massive innovators with sustainable biz models and ones that never should have been public, like today and while the best ones kept growing, their stocks lost 75-90% of their value before 2003 bottom
9/there was a massive rotation out of growth and momentum and into value, boring and dividends. My value manager and others like Bill Nuveen at oak mark thrived but it was too late for my value shop, they lost massive assets in 1999.
10/lesson #2 don’t be style stubborn, if the market wants to reward one style, be willing to own it while watching for signs of a trend change. They always happen and nothing leads forever. Today’s growth dominance will end one day be on watch for it and willing to pivot
11/ lesson #3 do not always be fully invested. Sometimes in volatile periods having a bunch of cash is a wonderful thing so try not to get sucked into the fear of missing out. Sometimes when nothing is obvious, do nothing and wait for the fat pitch
12/ lesson #4-
Always understand what the dominant trend is, when it’s down you short rallies when it’s up you buy dips, my best years as an investor were always in the worst markets because I love volatility and understand short term trend versus long-term trend dynamics
Always understand what the dominant trend is, when it’s down you short rallies when it’s up you buy dips, my best years as an investor were always in the worst markets because I love volatility and understand short term trend versus long-term trend dynamics
13/ When we we’re young we take more risk and bigger swings, if we learn from those experiences, we become better investors at times when we have many more assets and are taking care of families. Icreated the Brands strategy because of my investment experiences
14/final: There’s nothing wrong with speculating, I actively trade in the brands strategy but I do so with appropriate size because I manage other peoples money. Just be mindful of where you are in the game and be willing to pivot when evidence arrives and you will thrive.The end
