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1/ I’m sure many investors who started earlier this year are feeling pretty down right now
I first started investing in SaaS companies in summer 2019 after a huge multi-year run
A couple weeks later, we entered a large correction and my stocks kept crashing even after great ERs
I first started investing in SaaS companies in summer 2019 after a huge multi-year run
A couple weeks later, we entered a large correction and my stocks kept crashing even after great ERs
2/ I felt like an idiot for buying in at the top, but I believed in my companies and bought the dip.
What was supposed to be a 5-10% correction soon turned into 20%, 30%, even 50% crashes.
I made another mistake of buying too much, too quickly so I had to sit through it all.
What was supposed to be a 5-10% correction soon turned into 20%, 30%, even 50% crashes.
I made another mistake of buying too much, too quickly so I had to sit through it all.
3/ It was especially painful because I had no cushion of gains to fall back on, I was losing all my money. Worse yet, the stocks that I had sold to fund the purchases kept going up!
I first bought Livongo in early Sept at $30 and just a month later, it was at $15 on no news!
I first bought Livongo in early Sept at $30 and just a month later, it was at $15 on no news!
4/ This was really a formative period for me as an investor. It taught me the importance of discipline.
Investing is hard. Saying that is one thing, but you have to experience it.
If a stock drops 20% right after I bought it, would I be tempted to sell? Or excited to add more?
Investing is hard. Saying that is one thing, but you have to experience it.
If a stock drops 20% right after I bought it, would I be tempted to sell? Or excited to add more?
5/ In hindsight, I felt like I had just invested at the top of a bubble as earnings didn’t matter. Bears came out and said they warned us valuations weren’t sustainable.
Sell-side cut their PTs, citing peer group multiple compression. I still can’t pinpoint a reason for it all.
Sell-side cut their PTs, citing peer group multiple compression. I still can’t pinpoint a reason for it all.
6/ But I stuck with my convictions and didn't change my philosophy to what was "hot". It wasn’t until 4 months later at the end of December that these companies started to get momentum again.
What seemed so painful turned out to be a gift. $CRWD at $50? $ZM at $65? $LVGO at $15?
What seemed so painful turned out to be a gift. $CRWD at $50? $ZM at $65? $LVGO at $15?
7/ While multiples are much higher today, great companies always come back eventually.
Although there was a bubble in some spec stocks, I don’t think the high-quality hypergrowth cohort was.
We had multiple years worth of gains in 2020 and they need time to digest it all.
Although there was a bubble in some spec stocks, I don’t think the high-quality hypergrowth cohort was.
We had multiple years worth of gains in 2020 and they need time to digest it all.
8/ Few investors can handle the volatility required for high returns. Stocks that can go up 100% in a month can go down 50% just the same
Picking the right stocks is just half the game, having the right mindset is even more important and it's times like these that develop it.
Picking the right stocks is just half the game, having the right mindset is even more important and it's times like these that develop it.
