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A couple of days ago I stumbled upon a Twitter AMA from an investor we hope to get on the show someday, Bluegrass Capital. He is a popular fintwit account, so as you probably expected, the entire Q&A was investing related. He actually got a question from Chamath Palihapitiya, which made the thread go semi-viral.
But let’s get to my main point. During the AMA Bluegrass was asked a simple question: “Why Investing?”. His response: “best game that’s ever existed.”
This has stuck with me. I’ve replayed the conversation dozens of times in my head, and for a while, I had no idea why. But then it hit me: this is the answer I would give if someone asked me “Why Investing?” (and if I wanted to answer truthfully).
As a non-finance major who has been doing this for less than five years and not like an idiot for less than two, I always have trouble when someone asks why I care so much. Typically, I shrug it off and say something like “well, I just wanted to start a retirement account” or “I think it’s fun.” I’m just trying to end the conversation as quickly as possible.
Not anymore. Now (and this may seem trivial, but it is important to me), whenever someone asks why investing over anything else, my answer will be: because it is the greatest game ever invented.
Why is it the greatest (or best, or most satisfying) game of all-time? Simple. Investing is an ever-evolving intellectual challenge with yourself and others, and if you become one of the best at it in the world, you can live your life with unparalleled freedom.
But how do you “win” at investing? And what do you have to do to become one of the best in the world? Those are topics for another post. But during the AMA I asked Bluegrass if he read shareholder letters to research companies and he responded with this:
Alright, now to the individual accounts.
Individual Account
Trades Made (in chronological order):
Sold 45 shares of JD.com at $40.92
Bought 50 shares of Revolve Group at $8.50
Bought 10 shares of Altria Group at $37.50
Bought 20 shares of Revolve Group at $11.00
Bought 50 shares of Bostom Omaha at $16.00
Sold 4 shares of Sprouts Farmers Market at $21.52
A fairly slow month, with the only big news being I sold out of JD.com and entered positions in Boston Omaha and Revolve Group. BO is a “mini-Berkshire,” and I plan to hold onto the shares indefinitely. I am confident in their management team. As for Revolve Group, this is more of a 3-5 year thesis for the fashion industry. Read my full overview of it here.
Portfolio Statistics
Average Consensus P/E: 53.8
Average Consensus EPS growth: (4.92%)
Average Consensus Rev. Growth: 13.42%
Portfolio Diversity: 58.5% Tech, 11.67% Consumer Cyclicals, 9.82% Industrials, 8.26% Healthcare, 5.62% Consumer non-cyclical, 5.12% uncategorized, 0.98% Cash
Those first three bullet points are a terrible combination. High valuations with decreasing EPS growth and low sales growth is not a formula for success.
Returns since January 27th, 2020 (when I connected to Atom Finance):
This is for my individual account only. The returns below also include my Roth IRA. Make sure to check-out Atom Finance. It is great and free!
Stocks on My Watchlist
Sea Limited Co.
The Trade Desk
These two companies are high-growth in industries I like (gaming/e-commerce and online advertising). If I have the cash and they trade at lower prices I want to scoop up some shares.
Roth IRA
Trades Made:
None
Portfolio Performance Since January 2017
*These are time-weighted returns to adjust for withdrawals, deposits, and timing.
I’m still trailing the market since 2017 (as I said, I was an idiot for a good while). However, that gap is closing, and I believe I have now positioned my portfolio for long-term success. Here’s to not regretting that last sentence in 2025.
Alright, that’s it for my April 2020 portfolio update. Make sure to follow us on twitter @chitchatmoney, subscribe to this newsletter if you haven’t already, and check out our podcast here for more of our content (and analysis on a lot of the above companies.
See you in a month,
Brett Schafer
*I am not a financial advisor. Nothing I write is advice or a recommendation.