Investing notes. Business, technology, and strategy. In search of long-term business compounders.
As always, this is not investment advice! Please do your own due diligence and take your own financial situation into account. Everyone has a different financial situation, which means different tolerances for risk and ability to take risk. What is appropriate for me may not be appropriate for you.
Since the inception of the Paper Portfolio, April was the single most challenging month.… Read the rest “Paper Portfolio – May 2022 Update”
As always, this is not investment advice! Please do your own due diligence and take your own financial situation into account. Everyone has a different financial situation, which means different tolerances for risk and ability to take risk. What is appropriate for me may not be appropriate for you.
March was an extremely volatile but interesting month.
Markets sold off violently in a way that was eerily similar to the market selloff two years ago.… Read the rest “Paper Portfolio – April 2022 Update”
As always, this is not investment advice! Please do your own due diligence and take your own financial situation into account. Everyone has a different financial situation, which means different tolerances for risk and ability to take risk. What is appropriate for me may not be appropriate for you.
We live in a Chaotic era, an era of Change.
Nothing made that more clear than the last few weeks.… Read the rest “Paper Portfolio – March 2022 Update”
As always, this is not investment advice! Please do your own due diligence and take your own financial situation into account. Everyone has a different financial situation, which means different tolerances for risk and ability to take risk. What is appropriate for me may not be appropriate for you.
What a start to the year.
The selloff that began in late November and accelerated in December…continued to accelerate throughout January.… Read the rest “Paper Portfolio – February 2022 Update”
As always, this is not investment advice! Please do your own due diligence and take your own financial situation into account. Everyone has a different financial situation, which means different tolerances for risk and ability to take risk. What is appropriate for me may not be appropriate for you.
First off – Happy new year! May we all live in less interesting times in 2022.… Read the rest “Paper Portfolio – January 2022 Update”
As always, this is not investment advice! Please do your own due diligence and take your own financial situation into account. Everyone has a different financial situation, which means different tolerances for risk and ability to take risk. What is appropriate for me may not be appropriate for you.
I’m currently on holiday (at a nice warm beach) and I assume you were / are / will be, too, so I’ll keep this short (and because there really isn’t much to say anyway!).… Read the rest “Paper Portfolio – December 2021 Update”
As always, this is not investment advice! Please do your own due diligence and take your own financial situation into account. Everyone has a different financial situation, which means different tolerances for risk and ability to take risk. What is appropriate for me may not be appropriate for you.
In the blink of an eye, the year is almost over as we head into the final stretch.… Read the rest “Paper Portfolio – November 2021 Update”
The Paper Portfolio returned -5.68% during September vs -4.66% for the S&P500. This brings YTD returns to 9.90% for the Paper Portfolio vs 15.91% for the S&P500.
September saw a number of extraordinary and unexpected events. While Capital Flywheels anticipated some volatility around the potential announcement of Fed taper (check), Capital Flywheels did not foresee an energy shortage in China that is now feeding investor concerns around further supply chain stress and potential inflationary impact.… Read the rest “Paper Portfolio – October 2021 Update”
The Paper Portfolio performed well during the month of August. The Paper Portfolio returned 6.00% vs the S&P500’s 2.98%.
This brings the Paper Portfolio’s YTD performance up to 16.52%, still slightly lagging the S&P500’s 21.57%.
The capital markets are currently in a tricky place. “Investors” have likely never been more risk-seeking than they are now compared to any other time in the last decade.… Read the rest “Paper Portfolio – September 2021 Update”
The end of July marks the 2 year anniversary of the Paper Portfolio. During the last two years, the Paper Portfolio has returned 150.42% vs the S&P500’s 52.60%.
While the Paper Portfolio has performed well over the last two years, it has occasionally been defined by periods of excess volatility. This includes the first six months after launch in which many of the high quality stocks in the Paper Portfolio were impacted by fear around WeWork collapse.… Read the rest “Paper Portfolio – August 2021 Update”
The Paper Portfolio performed well during June. The Paper Portfolio returned 14.87% vs the S&P500’s 2.25%. While the performance for the month was strong, the Paper Portfolio still needs to make up some lost ground in order to match the S&P500’s strong performance year-to-date. The Paper Portfolio has returned 11.90% YTD vs the S&P500’s 15.25%.
This has not been an easy year for quality / growth / secular winners since many investors seem inclined to rotate into beaten down value stocks or companies that were negatively impacted during the pandemic (and hence likely to benefit from a reopening).… Read the rest “Paper Portfolio – July 2021 Update”
For everyone in the US, happy Memorial weekend! This is likely the first holiday weekend where a large portion of the population is finally vaccinated and ready to experience the world once again.
Hope everyone has a happy and healthy weekend!
During the month of May, the markets remained choppy. High-growth / high-multiple stocks reversed some of the gains experienced in April, while more reasonably valued large-cap growth stocks and reopening / value plays benefited.… Read the rest “Paper Portfolio – June 2021 Update”
Following the challenging month of March, April turned out to be a nice reprieve.
Our decision to lean into the March weakness for last month’s Paper Portfolio update also helped support performance.
During the month of April, the Paper Portfolio returned 7.44% against the S&P500’s 5.29%. This returns the Paper Portfolio to positive YTD performance, coming in at 3.74%. However, this remains below the S&P500’s YTD performance of 11.98%.… Read the rest “Paper Portfolio – May 2021 Update”
March was a challenging month! The first truly challenging and divergent month for the Paper Portfolio in a while.
While I have been anticipating a period of underperformance since at least August of last year given the strength of the Paper Portfolio over the past 12-16 months (I just didn’t know when), the timing did end up being a little surprising.… Read the rest “Paper Portfolio – April 2021 Update”
Hello, friends. 👋🏻👋🏻
Before I dive in, just wanted to remind everyone that I originally started the Paper Portfolio only to be a writing device. I wanted something that would force me to write more frequently.
This is not intended to be investment advice. I am not a registered investment advisor. I am not qualified to give you investment advice.… Read the rest “Paper Portfolio – March 2021 Update”
Truth be told – I did not realize January was about to end until the parking lot admin showed up yesterday with my February parking pass. I am usually quite good at keeping track of time…which made the situation all the more surprising.
But there is nothing like a continued firehose of news flow to make time compress.
In hindsight, a lot did happen…chaos in the U.S.… Read the rest “Paper Portfolio – February 2021 Update”
Happy New Year – May we live in less interesting times in 2021!
What a year.
Although 2020 could have been a lot better in many ways, especially when it comes to offline social interactions, capital markets were definitely much better than anticipated.
Not only did the deepest and sharpest recession in 100 years not lead to extended stock market weakness, we are now at all-time-highs significantly above where we started before the pandemic.… Read the rest “Paper Portfolio – January 2021 Update”
Entering the month, the Paper Portfolio maintained a defensive posture given election uncertainties.
We began to take this defensive posture starting late in the summer, which allowed us to escape the volatility of August, September, and October largely intact.
When we chose to further maintain our defensive positioning during the last update, Capital Flywheels argued that this could cost us in terms of performance but it would likely be the smart thing to do, especially since we have already outperformed significantly this year.… Read the rest “Paper Portfolio – December 2020 Update”
The Paper Portfolio’s continued defensive positioning during October turned out to be an appropriate move. The Paper Portfolio returned 1.36% vs -2.65% for the S&P500, despite being skewed towards well-owned names. This brings year-to-date returns to 74.38% vs 2.64% for the S&P500.
The initial shift into a defensive position at the end of August helped us avoid the volatile down-draft of September.… Read the rest “Paper Portfolio – November 2020 Update”
Much like the general market, the Paper Portfolio had a volatile September.
However, the Paper Portfolio proved to be much more resilient than the market overall. The Paper Portfolio was approximately flat during September, returning -0.34%. In contrast, the S&P500 returned -3.74%. This brings year-to-date performance up to 72.04% for the Paper Portfolio and 5.58% for the S&P500.
The resilience of the portfolio is further highlighted when you consider its performance against the Nasdaq 100, which returned -5.64%.… Read the rest “Paper Portfolio – October 2020 Update”
Similar to July, August was another choppy month. Although the Paper Portfolio did close the month well, it did so with materially more volatility than the index.
The underlying reasons for the volatility remain the same as in the prior month. The Paper Portfolio is exposed largely to secular growth stories, many of which benefited from COVID-19 disruption to offline businesses.… Read the rest “Paper Portfolio – September 2020 Update”
Like June, July was a fairly volatile month with investors trying to decide which way to go. The Fed’s continued loose monetary policy supports value reflation trades, but economic growth remains weak with elevated unemployment. Weak economic growth tends to support secular growth stocks (more certainty) and companies with strong balance sheets (more defensive / survivability). Given the Paper Portfolio’s strong preference for the latter, the Paper Portfolio experienced a fairly volatile month with periods of significant outperformance punctuated with periods of significant underperformance.… Read the rest “Paper Portfolio – August 2020 Update”
The Paper Portfolio did very well in June.
Initially, the Paper Portfolio lagged the index early in the month as investors furiously bought stocks related to economic reopening (including a number of very questionable bankrupt companies like Hertz)…the Paper Portfolio, unfortunately, has limited exposure to that theme. But, fortunately, our timely addition of Boeing allowed us to at least partially participate since Boeing is one of the few long-term secular businesses that is suffering at the moment.… Read the rest “Paper Portfolio – July 2020 Update”
While COVID-19 remains very much with us (unless you happen to live in the few lucky places that have decisive control over the virus such as China / Hong Kong / Taiwan, Singapore, Japan, Korea), May was a key turning point across the world.
Many countries / states / cities took steps to reopen even if the virus is only weakly controlled.… Read the rest “Paper Portfolio – June 2020 Update”
April was a very strong month.
April almost effectively reversed the pain felt during March.
While many investors likely have been surprised by the magnitude and pace of recovery (the S&P is now less than 15% below the peak in February whereas it was >30% below the peak just a little over a month ago!) given the still-uncertain COVID19 situation as well as a collapsing global economy, the situation does seem to be stabilizing.… Read the rest “Paper Portfolio – May 2020 Update”
March was a strange month. Saying “the world changed” almost seems like an understatement. Yet, the crazy thing is when Capital Flywheels reviewed the March 2020 Update in preparation for the current update, it’s clear that the world was already changing a month ago in hindsight but Capital Flywheels failed to fully grasp the enormity of the situation.
Despite having awareness of the disruption the coronavirus caused in China as early as mid January, awareness of the potential spread that was underway in the United States (to the point that Capital Flywheels had already been stocking up on essentials since early February and avoided crowded locations), and awareness that experts had limited understanding or tools to counter a pandemic-type scenario, Capital Flywheels still assumed that things would be okay and that stocks were a bargain (while personally building a pandemic bunker)!… Read the rest “Paper Portfolio – April 2020 Update”
During February, the Paper Portfolio experienced volatile performance as global equity markets reacted to the pandemic potential of COVID-19. The portfolio ended the month down 1.32%, reversing the strong gains delivered in the first two weeks of February. While the reversal was disappointing, the Paper Portfolio continues to perform very well relatively and is well-positioned for the future. The Paper Portfolio continued to deliver significant outperformance relative to the S&P500’s decline of 8.22% in February.… Read the rest “Paper Portfolio – March 2020 Update”
The paper portfolio is off to a strong start in 2020. During the month of January, the paper portfolio returned 4.18% vs -0.04% for the S&P500. January was the strongest relative month since the inception of this portfolio.
While the index was also off to a strong start in the first two weeks of the year, the S&P500 quickly gave back all of the year-to-date performance as fears around a new strain of coronavirus in China infected the minds of global investors despite the virus’ limited footprint outside of China at the moment. … Read the rest “Paper Portfolio – February 2020 Update”
Happy New Year!
During December, the paper portfolio continued to outperform the S&P500 by 0.99%. Similar to previous months, the performance of the underlying stocks continue to be dragged by the significant allocation to cash (~28% at the beginning of the month). Excluding cash, the stock-only portion of the portfolio outperformed the S&P500 by 2.23%.
With the strong performance over the last two months, the stock-only portion of the portfolio is now outperforming the S&P500 since inception in July 2019.… Read the rest “Paper Portfolio – January Update”
During November, the paper portfolio outperformed the S&P500 by 0.92%. This number, however, masks the underlying strength of the portfolio since ~40% of the value is still allocated to cash. The stock-only portion of the portfolio outperformed the S&P500 by 3.89% with significant strength across almost all holdings except for Uber, Match, and Activision Blizzard.
Despite significant strength across most of the stocks in the portfolio, all of them continue to look undervalued over a longer time horizon.… Read the rest “Paper Portfolio – December Update”