The Amateur Investor Ep. 6: A look behind the curtain
In all honesty, with the ongoing pandemic, the draw-down had come faster than I’d expected. The difference was almost night and day as malls that were once filled with people turned instantly into ghost towns. On the investment front, my Portfolio was doing what Bill described as “half a W”. I wish I could give you a Ritholtz-style review of what the market has been doing overall, but since the title of this series has the word “Amateur” in it, I’ll stick to what I know, my holdings.
To use the popular “falling off a cliff” analogy, I got in roughly before it hit a ledge and did a bounce. That’s the colour commentary version of it. I had watched over the weeks as my holdings took the drop I knew was coming before doing a slight bounce as the relevant stimulus packages and payments started going into effect. I had been wrestling with whether or not to cash out my positions, and like the protagonist in any number of martial arts films, I sought wisdom from my mentor, Hsuan. The advice I got given was to question why it was that I was looking to sell, if it was because it fit my investment thesis to do so, if I didn’t see any more profits coming out of the position, etc. Given that I’ve yet to build a thesis that I was able to properly articulate, I made the decision to hold on to all my positions, whilst scoping out some potential buys which would occur whenever I was satisfied that I wasn’t buying into a sinking ship. I say this, having built no clear way of really telling if a company was run well or poorly (I’m trying to find the time to build a protocol for that, so any tips would definitely be appreciated).
In the financial slowdown, a bunch of us at Mockingbird noted a few companies opening up new share offerings in a bid to raise capital for a variety of reasons, most logically to help soften the blow of the hard-stop in business. Two of the companies I held positions with, IEL and WEB had made retail entitlement offers to their shareholders, WEB at $1.70 per share and IEL at $10.65, which I took advantage of since the offers were at significant discounts to what I had originally bought in for.
Full disclosure, I don’t really have much of an investment thesis, though I am trying to work one up. The only thing I have at the moment is a strategy based on understanding which industries would take a dive with the pandemic, with potential gains once things got better. However, like the rest of Mockingbird, I wasn’t able to predict where the bottom was to maximize gain and so had to watch a bunch of my positions bounce about, believing in the inevitable climb they would take when the market recovered.
Long-hold investing, it can hurt.
So without further ado, here’s the breakdown on my current holdings.
A number of these positions I got into after some research, though I will say that I’m still trying to figure out my process for scoping out companies and deciding how much I should get in. At current, the percentage of cash I’ve kept out is really more a reflection of my risk aversion than anything else, since I’m unsure as to whether the market will fall off or not. Originally, I was managing about 40% or so of my portfolio in cash, whilst the rest was more or less as is. It was only when the additional share offers came out that I began to slowly deploy a bit more cash.
What I’m doing now is trying to build a number of crucial procedures. The first will be to establish a process for staying current with the market, then to build out an investment thesis. Once those are more firmly set, the plan then is to hone a procedure for scoping out companies to invest in. All of these will require a good amount of learning, research and potentially stupid questions to the Mockingbirds.
Good thing they’re a patient bunch of guys.
Special thanks goes out to Bill for starting up our website and being there to pull it together whenever it crashes and Hsuan and I flip our lids.
