July’s almost over, and 2023 is going by too damn fast.
So far, it’s been an exciting year of personal and professional growth for me.
Side note: earnings season is in full swing and this was too good not to share.
Goals
To hold myself accountable, each year I chart out a handful of goals and check my progress periodically.
Towards the top of my list was ramping up in my new job (started last November), and drinking from the firehose to quickly get up to speed. After being tasked with a few complex projects, I feel like I’m getting the hang of it.
In retrospect, it was kind of nice to start around the holidays, as the first couple months were focused on onboarding and the pace of my team’s projects was relatively slow. This allowed me to hit the ground running in January.
Last summer, I was in Vancouver BC when an older gentleman who was headed to a cruise in Alaska sparked a conversation with my girlfriend and I. We had a nice albeit short convo, but his parting words stuck with me ever since: “Dive into life.”
It sounds corny, but given the chaos the universe throws at us, tragedy in folks’ personal lives, and the constant barrage of bad news from the 24/7 news cycle, it’s a great perspective to maintain.
Given my 100% remote role and company’s generous PTO policy, I’m determined to make the most of my workplace flexibility. I’ve been fortunate enough to scratch my travel itch a handful of times and have some exciting trips coming up.
Growing up, my family basically never went on vacation to places like Hawaiian resorts, Europe, and other faraway lands. We had a multi-generational household and lacked the means to take the types of trips I heard about my peers going on, so I don’t take my newfound privilege for granted.
Another one of my major goals for the year is to have more consistency in regards to both health/wellness and spending time with friends and family. I’ve stayed on top of the former, but fell way short of my goal to incorporate yoga at least once a week.
I also have some work to do on the latter. Life has been pretty busy, but I can still be better about carving out time with my people.
My mission to continue reading daily is going well and I’m consistently knocking out 10-15+ min of reading both upon waking and before bed. I’ve also found myself picking up a book and reading in my free time throughout the day much more this year.
So far I’m at 14 books through end of June—we’ll see if I can maintain this pace through year end.
A new bull market?
Given a handful of large purchases I’m hoping to make in the next 3 to 5 years, I have a goal to increase my savings rate and invest more. Ideally, I want to save and invest at least 40% of my income.
Thanks to a few fortuitous events, the AI hype cycle, and investors’ animal spirits coming back full bore, this is going about as well as I could hope…
If only this were true.
I had a couple liquidity events that screwed up the YTD return in Fidelity, so here’s the correct view of my portfolio from my Personal Capital account:
This performance will be next to impossible to repeat anytime soon, so I took some profits and rebalanced into cash and index funds.
In investing, it pays to be early, and alpha exists when your view differs from what the market is pricing in. Said differently, you make $ when reality exceeds expectations.
Earlier this year, it was easy to be bearish. Every economist warned of the looming recession. Inflation continued to run hot. Jerome Powell and the Fed raised rates at the fastest pace in decades. Regional banks failed left and right. The yield curve was inverting. The list goes on.
For example, let’s walk through what happened with Alphabet (Google’s parent company) stock GOOG 0.00%↑ GOOGL 0.00%↑ . Here are a few articles highlighting investor sentiment earlier this year:
Google’s AI bot Bard made a factual error during its first public demo, wiping $100bn off the company’s market value
Google’s management team is “asleep at the wheel”
Google’s layoffs are thanks to over-hiring and mismanagement
In markets, price drives narrative. Back in March with the stock off 40% from all time highs, it became critical to make a call on how much of this was truth vs narrative.
Some of the best investments are made when the future is unclear, sentiment is negative, and you have to hold your nose when hitting the buy button. “Markets climb a wall of worry.”
Few wanted to touch the stock, yet it was trading at historically attractive valuation multiples. Therein lies the opportunity.
Ultimately, Mr. Market came to his senses and Alphabet was on its way to a new 52-week high.
One of my favorite Warren Buffett-isms (GOAT) is as follows:
Warren likes to say that there are no called strikes in investing. Strikes occur only when you swing and miss. When you’re at bat, you shouldn’t concern yourself with every pitch, nor should you regret good pitches that you don’t swing at.
Warren says that in your lifetime you should swing at only a couple dozen pitches, and he advises doing careful homework so that the few swings you do take are hits.
I do my best to adopt the same mindset when deciding whether to buy individual stocks, but it’s a lot easier said than done.
IMO, you learn more from your losses than you do from your wins. The most glaring mistakes I made were related to two of the biggest beneficiaries of the hottest trend investors are chasing this year: AI.
The first mistake was an error of omission. Nvidia NVDA 0.00%↑ is the most obvious winner of the generative AI frenzy.
Investors bid up the stock on the expectation that demand will soar for Nvidia’s chips needed for complex AI computing tasks. It was the S&P 500’s biggest gainer through the first half, up a massive 179%. Meanwhile, I watched from the sidelines and never bought the stock.
The second mistake was selling too early. Microsoft is a name I’ve owned for a while. MSFT 0.00%↑
Excellent management team, major beneficiary in cloud and AI, and strong pricing power, among other things. There’s a lot to like, yet I decided to sell and take profits when I thought the market was pricing in overly aggressive future growth. The stock subsequently shot up to all-time highs.
Lessons learned: keep it simple, don’t overthink it, and markets can bid stocks up higher than you’d think (especially when investors are excited about a hot new technology).
Based on market history and where the market is currently priced vs earnings estimates, I’m not counting on the S&P matching or beating the 16% gain during the back half of the year. But who knows! I wouldn’t be mad at it.
What I’m watching, reading, & listening to
Juvenile: Tiny Desk Concert (NPR Music) — the collab we never knew we needed.
The Porsche Family’s Race to the Top (Quartr)
Remarkably, over a million Porsche 911s have been manufactured since its launch, evolving through eight significant 'generations', as they're known within the company. While each generational shift has undeniably improved performance, comfort, and technology, they have all stayed true to the original design ethos.
Indian Future Vintage with Kartik Kumra of Karu Research (Designed to Last)
Adidas scores a hit with first batch of unsold Yeezy shoes (Financial Times) — After the the fallout with Ye, Adidas announced it had decided to sell some of its outstanding Yeezy inventory because destroying it would force the company to write off €500mn.
By the end of the “Yeezy day” inventory clear out, Adidas had received orders worth more than €508mn ($565 million) for 4 million pairs of shoes, exceeding the company’s most optimistic forecast. Lol
Threads and the Social/Communications Map (Stratechery) — Solid piece on the evolution of social media and Meta’s latest experiment, Threads. META 0.00%↑
10 Surprises From the First Half of 2023 (Bilello Blog) — 62% of US mortgage holders have a rate below 4% and 92% have a rate below 6%. With current mortgage rates at ~7%, many existing homeowners are staying put, leading to a dearth of homes for sale.
Business Breakdowns - Rolex: Timeless Excellence — In this conversation, Ben Clymer (founder of HODINKEE) breaks down what makes Rolex so special.