Author Topic: Concentrated US hyper growth stocks - Jan, 2021 - first update  (Read 2106 times)

CloudLiu

  • 5 O'Clock Shadow
  • *
  • Posts: 17
Concentrated US hyper growth stocks - Jan, 2021 - first update
« on: January 10, 2021, 08:54:15 AM »
It's better to start a new thread so it's not buried too deep.

Stock picking is a skill like any other skills that can be learned. It's not for everyone.  It's just as engineering, medical, arts skills are not for every one. In fact, the higher the expected return in investment, the harder to squeeze out more return and there will be fewer people able to do it. It's simple: the higher the mountain, the harder it is to climb.

Getting a high return in stock picking boils down to: high revenue growth rate, strong business model, enough investors following to push up the stock price, never fall in love with the product or company, sell and buy the next best alternative whenever possible when prospect changes(I completely sold out of ZOOM Video before it bottomed from Sep,2020 to Nov, 2020), listen to earning call/read transcript and understand the companies, hold 6 to 10 stocks, not 30 stocks, not 100 stocks, not 1000 stocks, not whole market.   If you own the whole market, you will get average return of 7% to 10%. if you hold the best fastest growing companies, you May able to get 50% to 70% return per year.


My net worth at the end of 2019 was 355k CAD when I quit my job. Now it's at around 570K CAD. Up 60%.  Note: Net worth percentage increase is slightly lowered than growth stock percentage increase because net worth includes low or zero return assets such as: house equity and cash.

Currently, 65% of net worth are in US growth stocks and in just 6 stocks.  The rest of 35% net worth is divided between  house equity and substantial cash in saving account.
 
Here are my 6 stocks and their weight in the growth stocks portfolio:

Symbol   Weight
CRWD   23.43%
PTON   22.66%
SNOW   18.30%
LPRO   16.59%
EXPI           13.93%
LMND   5.09%

BTW: They are up 7% already in 2021, just 5 trading days.
Mean while:
SP500: up 1.97%
WCLD: up 2.15%
VUG: up 1.44%
« Last Edit: January 10, 2021, 09:27:57 AM by CloudLiu »

pnw_guy

  • 5 O'Clock Shadow
  • *
  • Posts: 33
Re: Concentrated hyper growth stocks - Jan, 2021 - first update
« Reply #1 on: January 10, 2021, 09:02:55 AM »
Seems a bit premature to draw any conclusions after 5 (!!!) trading days, no?

Parting thoughts: I'm sure that Jack Bogle, if he were alive today, would tell you:
1. Come back to us in 5 or 10 years and tell us whether you're successful in beating the index as a benchmark
2. If active managers that work at high powered companies with unlimited resources can't beat the index in the long run, why should you be able to do it?
« Last Edit: January 10, 2021, 09:12:02 AM by pnw_guy »

CloudLiu

  • 5 O'Clock Shadow
  • *
  • Posts: 17
Re: Concentrated hyper growth stocks - Jan, 2021 - first update
« Reply #2 on: January 10, 2021, 09:11:30 AM »
it is what it is. They were up 16% in Dec, 2020. I bought them at various point in Dec. If I bought them lump sum at the end of November, the return would be much higher.   

Giving different baskets of stocks, their short term performance is an indication of long term return.
You'll notice WCLD out perform SP500 even in the short term. My goal is to beat WCLD the cloud index.

Note: I am not momentum investor. I picked the stocks based primarily on company business performance fundamentals not price movement in the past alone.


VS:

Dec, 2020:

SP500:+3.26%
WCLD: +9.37%


« Last Edit: January 10, 2021, 09:14:31 AM by CloudLiu »

MustacheAndaHalf

  • Magnum Stache
  • ******
  • Posts: 3677
Re: Concentrated hyper growth stocks - Jan, 2021 - first update
« Reply #3 on: January 10, 2021, 09:13:54 AM »
if you hold the best fastest growing companies, you May able to get 50% to 70% return per year.

My net worth at the end of 2019 was 355k CAD when I quit my job. Now it's at around 570K CAD. Up 60%.
You can't calculate the expected return of a strategy from one year of data.

In 2020, cloud services were needed by people in lockdown.  Why are you projecting the same returns for 2021, when vaccines are being rolled out?  And why doesn't your post mention the pandemic even once?


Here are my 6 stocks and their weight in the growth stocks portfolio:

Symbol   Weight
CRWD   23.43%
PTON   22.66%
SNOW   18.30%
LPRO   16.59%
EXPI           13.93%
LMND   5.09%
When I run experiments, I put the stock in a Google sheet and use the GOOGLEFINANCE function to lookup stock / ETF prices.  And then you can add an appropriate benchmark (S&P 500?) and track your performance against it.

BTW: They are up 7% already in 2021, just 5 trading days.
Mean while:
SP500: up 1.97%
WCLD: up 2.15%
VUG: up 1.44%
You're bragging about one week?  Jan 4 to Jan 8?

CloudLiu

  • 5 O'Clock Shadow
  • *
  • Posts: 17
Re: Concentrated hyper growth stocks - Jan, 2021 - first update
« Reply #4 on: January 10, 2021, 09:20:40 AM »
if you hold the best fastest growing companies, you May able to get 50% to 70% return per year.

My net worth at the end of 2019 was 355k CAD when I quit my job. Now it's at around 570K CAD. Up 60%.
You can't calculate the expected return of a strategy from one year of data.

In 2020, cloud services were needed by people in lockdown.  Why are you projecting the same returns for 2021, when vaccines are being rolled out?  And why doesn't your post mention the pandemic even once?


Here are my 6 stocks and their weight in the growth stocks portfolio:

Symbol   Weight
CRWD   23.43%
PTON   22.66%
SNOW   18.30%
LPRO   16.59%
EXPI           13.93%
LMND   5.09%
When I run experiments, I put the stock in a Google sheet and use the GOOGLEFINANCE function to lookup stock / ETF prices.  And then you can add an appropriate benchmark (S&P 500?) and track your performance against it.

BTW: They are up 7% already in 2021, just 5 trading days.
Mean while:
SP500: up 1.97%
WCLD: up 2.15%
VUG: up 1.44%
You're bragging about one week?  Jan 4 to Jan 8?


My expected return of 50% to 70% return is based on companies revenue growth rate. Not stock price.

I do use Googles spread sheet and functions to track portfolio.

Did you even look into the 6 stocks? 
Out of 6 stocks, only CRWD   is SaaS.

Short term return: see above reply.  Short term perform does indicate future return.

pnw_guy

  • 5 O'Clock Shadow
  • *
  • Posts: 33
Re: Concentrated hyper growth stocks - Jan, 2021 - first update
« Reply #5 on: January 10, 2021, 09:21:47 AM »
it is what it is. They were up 16% in Dec, 2020. I bought them at various point in Dec. If I bought them lump sum at the end of November, the return would be much higher.   

Giving different baskets of stocks, their short term performance is an indication of long term return.
You'll notice WCLD out perform SP500 even in the short term. My goal is to beat WCLD the cloud index.

Note: I am not momentum investor. I picked the stocks based primarily on company business performance fundamentals not price movement in the past alone.


VS:

Dec, 2020:

SP500:+3.26%
WCLD: +9.37%

I don't mean to rain on your parade again because I've already posted in this thread, but you say that you're not a momentum investor and that you buy based on the business fundamentals.

This statement seems quite strange to me based off the fact that you're wanting to discuss great returns achieved over such a short time period. As Benjamin Graham famously said, in the short term the stock market is a voting machine but in the long term it is a weighing machine. Applied to your case, you've told us that over a remarkably short period of time that people are "voting" with their dollar and driving up the price of the few stocks you've selected. However, it's the long term price that weighs the productivity of the companies you've invested in that should reflect the business fundamentals you speak of.

maizefolk

  • Walrus Stache
  • *******
  • Posts: 5438
Re: Concentrated hyper growth stocks - Jan, 2021 - first update
« Reply #6 on: January 10, 2021, 09:32:45 AM »
Happy to follow along and see how this goes.

Stock picking is a skill like any other skills that can be learned. It's not for everyone.  It's just as engineering, medical, arts skills are not for every one.

The key distinction here is that if I figure out a better way to build a bridge as an engineer, it doesn't make the bridges you build as an engineer any less functional. If you find a better way to treat ocular melanomas as a doctor, it doesn't decrease the survival rate of patients I treat for the same condition. In contrast, stock picking really is zero sum in that the only way for you to do better is to beat all the other folks trying to do the same thing.

Anyway, good luck. I hope you post updates regularly.

FrugalToque

  • Global Moderator
  • Pencil Stache
  • *****
  • Posts: 677
  • Location: Canada
Re: Concentrated US hyper growth stocks - Jan, 2021 - first update
« Reply #7 on: January 12, 2021, 10:12:52 AM »
Symbol   Weight
CRWD   23.43%
PTON   22.66%
SNOW   18.30%
LPRO   16.59%
EXPI           13.93%
LMND   5.09%

BTW: They are up 7% already in 2021, just 5 trading days.
Mean while:
SP500: up 1.97%
WCLD: up 2.15%
VUG: up 1.44%

You want people here to get excited because you went to a stock market web page and picked six stocks after they had risen in the past week?

I think this might not be the place for that kind of adulation.

Toque.

MustacheAndaHalf

  • Magnum Stache
  • ******
  • Posts: 3677
Re: Concentrated hyper growth stocks - Jan, 2021 - first update
« Reply #8 on: January 12, 2021, 11:22:52 AM »
Here are my 6 stocks and their weight in the growth stocks portfolio:
Symbol   Weight
CRWD   23.43%
PTON   22.66%
SNOW   18.30%
LPRO   16.59%
EXPI           13.93%
LMND   5.09%

In 2020, cloud services were needed by people in lockdown.  Why are you projecting the same returns for 2021, when vaccines are being rolled out?  And why doesn't your post mention the pandemic even once?
Did you even look into the 6 stocks? 
Out of 6 stocks, only CRWD   is SaaS.
You're narrowly focusing on part of my post, while ignoring that your 3 largest holdings all have the problem I described.  Almost 2/3rds of your assets are in 3 companies that benefitted under the 2020 lockdowns.

Your second largest holding is Peloton.  People couldn't go to the gym during lockdowns, but Peloton brought high tech exercise bikes which sold rapidly.  Peloton benefitted heavily from lockdowns.  After vaccination, they will compete with gyms and bicycling outside.  How is 2021 going to be the same as 2020?

Your third largest holding is Snowflake.  Notice how you narrowly focused on "cloud services" and not that "Snowflake Inc. is a cloud-based data-warehousing company" to quote wikipedia.  Both SNOW and CRWD benefit from cloud computing being in high demand during lockdowns.  What happens when vaccinations are complete and activities away from the home compete with data warehouses and cloud services?

Your expectation that 2021 is a repeat of 2020 isn't realistic, and in turn it means 2/3rds of your holdings have unrealistic expectations.  You can research that and come to your own conclusion, or you can ignore obvious differences between 2020 and 2021, and change nothing.

hodedofome

  • Handlebar Stache
  • *****
  • Posts: 1442
  • Age: 41
  • Location: Texas
Re: Concentrated US hyper growth stocks - Jan, 2021 - first update
« Reply #9 on: January 12, 2021, 02:06:18 PM »
Here are SAAS stocks that I track and their performance over the past 5 years. The outperformance vs the S&P and Nasdaq is consistent. As it should be.

They are the future as well as the present and are taking over the world. All on-premise software will get ripped out over the next decade and replaced with these SAAS products.

https://docs.google.com/spreadsheets/d/1H5-MemM3h_DLC12zUPtbfKPZT9r2pY_XEmHVS90-gAc/edit?usp=sharing

The only thing stopping the SAAS stock train is a bubble and subsequent burst. Bull markets end in euphoria.

CloudLiu

  • 5 O'Clock Shadow
  • *
  • Posts: 17
Re: Concentrated US hyper growth stocks - Jan, 2021 - first update
« Reply #10 on: January 24, 2021, 09:19:12 AM »
Re: StashingAway : lottery vs stock investing
I donít believe in luck.I donít depend on luck for my future.Iíve never purchased a single lottery ticket,  Lotto or whatever, in my life.  Company organized group buy in lotto regularly and I never bought in. The only exception is the company half and half draw which I participated  a few times. Half of the money went to charity.

I worked hard at my job for more than a decade and lived frugally and saved up initial capital to invest. I did 10 years of dividend investing and it generated 12% per year which looked like a flat line on a return curve vs the growth stocks investing I started in 2020. 


Re: MustacheAndaHalf: Covidís tailwind on some stocks and my expectation of return in 2021 vs 2020

I agree COVID gave a little tailwind to some companies because of the acceleration of digitization. Not all companies are in the same boat as Zoom Video. I sold out of Zoom Video because COVID brought too much future revenue to Zoom in 2020. The future growth rate is a big question. Zoom will slow down for sure but how much?  I donít know.

I observed revenue growth rate is the number one factor determining stock price performance. Now, the number one thing I look at when picking companies is their historical and current revenue revenue growth rate. My 6 picks were growing revenue consistently between 60% to 100%  per year BEFORE COVID pandemic.So what if COVID boosted them a little in 2020. The small tailwind from COVID has no deciding effect on the future growth.

The stocks I own now is completely different to what I owned in 2020.
In 2020, I hold a mixed bag of slow growers and fast growers. Lots of them.
In 2021, I will hold only fast growers. My goal is 6 to 7 stocks.  I expect my 2021 might perform better than 2020.

Simply put, if one picks a group of companies with consistent  above average revenue growth rate and consistent  rising stock price, one will outperform the index. The risk is over paying it.  Example is Snowflake. The valuation is nose bleeding high. If paying too much, stock will go side way or even down in the short term.

Revenue growth rate alone is not a guarantee for investment success.  We also need to look at business model, product, total addressable market and stock performance. Example: Beyond meat, its revenue grew fast for few years but seems it plateaued.  and after initial surge. stock went nowhere for 1 year.  I am vegan myself but I think the reason is Veganism has a small total addressable market.


I just looked at the numbers carefully, My 2020 total return from growth stock was: 71%.
See table below: Notice the annualized return increased as I reduced the number of stocks and increased the revenue growth rate requirement.
 

Change of target revenue growth rate and number of stocks on performance:

Annual Revenue GrowthNumber of stocks From:To:DaysReturn:Annualized
20%17512/31/20197/6/202018813.30%27.43%
30%307/6/202011/30/202014730.00%91.83%
100%611/30/202012/31/20203116.40%497.78%


Total return in 2020: 71%



Re: maizefolk, Stock picking and zero sum game

Stock market is not a zero sum game.   
Zero sum game is where oneís gain is another loss with no exchange of anything else. One example is casinos.  Itís called gambling because itís a game of chance.

In the Stock market, there is a willing buyer and seller of a stock. The stock is price paid. The exchange is partial ownership in a business.
Even day trading is not a zero sum game.  E.g. If someone buys a  house for 100k and sells it the next day for 99k. Whose fault is it?  The seller. Itís stupidity. BTW,I donít do day trading.

Then,  you look at stock pickers vs indexers.
If I picked  6 of the fastest growing companies in the world and get 50% return. 
And indexers bought index funds containing 1000 of stocks and got 10% return.
Who's fault is it?  My gain is not their loss. It's called opportunity cost.

In reality, indexers are hitchhikers riding on the hard work of stock pickers.
The way index funds work is that they are market cap weighted or equal weighted. 

For market cap weighted index, they put more money into higher cap stocks. They donít look at business performance.   They donít pick companies. They let others pick and they change their allocation accordingly. If a large cap company is in a decline, and index funds put the same amount of money to large cap, the pricing is not going to reflect the large cap company decline. e.g. IBM, revenue declining, stock price declined as result.  Is the stock decline the work of index funds? Nope. It's  a work of stock pickers and short sellers.  Index funds are always a few steps behind stock pickers. Index funds will reduce allocation after stock has dropped.

For equal weights, they put the same amount of money in all companies. This has no affect on changing the valuation of companies according different business conditions..

Why do companies get different market caps?  Itís the work of individual or institutional stock pickers.   And the work of short sellers too!  BTW, I donít short sell.
If everyone does indexing, then the market stops working because index funds donít change valuation according to change in business performance.



« Last Edit: January 24, 2021, 09:23:04 AM by CloudLiu »

Proletariat

  • 5 O'Clock Shadow
  • *
  • Posts: 25
Re: Concentrated US hyper growth stocks - Jan, 2021 - first update
« Reply #11 on: January 24, 2021, 09:45:11 AM »
In 2020, cloud services were needed by people in lockdown.  Why are you projecting the same returns for 2021, when vaccines are being rolled out?  And why doesn't your post mention the pandemic even once?

I'm not advocating that anyone stock pick or go all in on cloud stocks but clearly cloud is not just a pandemic phenomenon. People fail to realize Amazon is not really a retail company. They power like half the internet at this point and their AWS business is their cash cow and is growing rapidly.

Parting thoughts: I'm sure that Jack Bogle, if he were alive today, would tell you:
1. Come back to us in 5 or 10 years and tell us whether you're successful in beating the index as a benchmark
2. If active managers that work at high powered companies with unlimited resources can't beat the index in the long run, why should you be able to do it?

I mean you don't need a ten year timeline if you have a thesis that plays out in the next few years that nets you more gains than you would in a lifetime. Again, I'm not suggesting anyone pick stocks here but there are clearly many examples of people beating the market.  I think in general it's fair to say that allocating a reasonable portion of your portfolio to deep value investing might not be the worst thing you could do with your time and money (not saying that's what OP is doing). There's a guy who turned roughly $50k into so far $11M (he's taken at least $2M in profits) on GME because he had a thesis that turned out to be correct and he stayed convicted over the last year and a half or so. Is that rare and a bit of a moonshot? Sure, but clearly it does happen. He's also not betting his entire net worth either and I'm sure he's diversified into more stable investments.

But yeah I think anything under a year in general is far too soon to be bragging about beating the market by a couple percentage points.

maizefolk

  • Walrus Stache
  • *******
  • Posts: 5438
Re: Concentrated US hyper growth stocks - Jan, 2021 - first update
« Reply #12 on: January 24, 2021, 09:55:39 AM »
In reality, indexers are hitchhikers riding on the hard work of stock pickers.

You understand statements like this make stock picking sound less appealing and indexing sound more appealing right? A

nyway, looking forward to the first update. Are you targeting Feb 1st?

MustacheAndaHalf

  • Magnum Stache
  • ******
  • Posts: 3677
Re: Concentrated US hyper growth stocks - Jan, 2021 - first update
« Reply #13 on: January 24, 2021, 10:38:20 AM »
Re: MustacheAndaHalf: Covidís tailwind on some stocks and my expectation of return in 2021 vs 2020

I agree COVID gave a little tailwind to some companies because of the acceleration of digitization. Not all companies are in the same boat as Zoom Video. I sold out of Zoom Video because COVID brought too much future revenue to Zoom in 2020. The future growth rate is a big question. Zoom will slow down for sure but how much?  I donít know.

I observed revenue growth rate is the number one factor determining stock price performance. Now, the number one thing I look at when picking companies is their historical and current revenue revenue growth rate. My 6 picks were growing revenue consistently between 60% to 100%  per year BEFORE COVID pandemic.So what if COVID boosted them a little in 2020. The small tailwind from COVID has no deciding effect on the future growth.

The stocks I own now is completely different to what I owned in 2020.
In 2020, I hold a mixed bag of slow growers and fast growers. Lots of them.
In 2021, I will hold only fast growers. My goal is 6 to 7 stocks.  I expect my 2021 might perform better than 2020.

Simply put, if one picks a group of companies with consistent  above average revenue growth rate and consistent  rising stock price, one will outperform the index. The risk is over paying it.  Example is Snowflake. The valuation is nose bleeding high. If paying too much, stock will go side way or even down in the short term.

Revenue growth rate alone is not a guarantee for investment success.  We also need to look at business model, product, total addressable market and stock performance. Example: Beyond meat, its revenue grew fast for few years but seems it plateaued.  and after initial surge. stock went nowhere for 1 year.  I am vegan myself but I think the reason is Veganism has a small total addressable market.


I just looked at the numbers carefully, My 2020 total return from growth stock was: 71%.
See table below: Notice the annualized return increased as I reduced the number of stocks and increased the revenue growth rate requirement.
 

Change of target revenue growth rate and number of stocks on performance:

Annual Revenue GrowthNumber of stocks From:To:DaysReturn:Annualized
20%17512/31/20197/6/202018813.30%27.43%
30%307/6/202011/30/202014730.00%91.83%
100%611/30/202012/31/20203116.40%497.78%

Total return in 2020: 71%
I strongly disagree that COVID gave a "little tailwind" to some companies.
Your largest holding is Crowdstrike, with 1 year performance of 257%
Second largest holding Peloton gained +421% in the past 12 months.
Snowflake wasn't public a year ago, so it has no 12 month performance.

Covid dominated every stock last year, these stocks included.  Peloton competes with gyms, and in 2020 no gyms were available.  People were trapped inside, unable to exercise outdoors.  To call that "a little tailwind" is false.  Last year was a massive boost to Peloton's fortunes, and their +421% performance shows it. 
"Peloton CEO warns of months of order delays, as overwhelming demand sends sales skyrocketing 172% and rattles supply chain"
https://www.businessinsider.com/peloton-ceo-warns-of-months-order-delays-overwhelming-demand-2020-9

Cloud services power Netflix, which is another example of pandemic demand being much higher.  There's clear evidence the pandemic had a massive effect, as shown in the articles I'm quoting:
"Netflix Subscriber Growth Slows After Surging During Pandemic"
https://www.forbes.com/sites/joewalsh/2020/10/20/netflix-subscriber-growth-slows-after-surging-during-pandemic/?sh=59c7cf1f244e

Where is the global pandemic described as a "little tailwind"?  What's your evidence?

You can quote your personal analysis all day, but you don't seem able to admit the pandemic played a massive role in the stocks you hold.

CloudLiu

  • 5 O'Clock Shadow
  • *
  • Posts: 17
Re: Concentrated US hyper growth stocks - Jan, 2021 - first update
« Reply #14 on: January 24, 2021, 10:38:49 AM »
I'll try to provide monthly update 1 or 2 days after last business day at the end of each month. People say short term performance doesn't matter. I say it matters. They add up fast because of the effect of compound interest. They'll see.

I'll post updates to this thread. It seems moderators don't like I create too many new threads. I remembered I posted another thread about Canadian growth stocks but it got deleted. I don't know why?   Anyway, there are not many growth opportunities in Canadian market so I'll focus on the US market.





 
« Last Edit: January 24, 2021, 10:59:59 AM by CloudLiu »

CloudLiu

  • 5 O'Clock Shadow
  • *
  • Posts: 17
Re: Concentrated US hyper growth stocks - Jan, 2021 - first update
« Reply #15 on: January 24, 2021, 10:42:28 AM »
Re: MustacheAndaHalf: Covidís tailwind on some stocks and my expectation of return in 2021 vs 2020

I agree COVID gave a little tailwind to some companies because of the acceleration of digitization. Not all companies are in the same boat as Zoom Video. I sold out of Zoom Video because COVID brought too much future revenue to Zoom in 2020. The future growth rate is a big question. Zoom will slow down for sure but how much?  I donít know.

I observed revenue growth rate is the number one factor determining stock price performance. Now, the number one thing I look at when picking companies is their historical and current revenue revenue growth rate. My 6 picks were growing revenue consistently between 60% to 100%  per year BEFORE COVID pandemic.So what if COVID boosted them a little in 2020. The small tailwind from COVID has no deciding effect on the future growth.

The stocks I own now is completely different to what I owned in 2020.
In 2020, I hold a mixed bag of slow growers and fast growers. Lots of them.
In 2021, I will hold only fast growers. My goal is 6 to 7 stocks.  I expect my 2021 might perform better than 2020.

Simply put, if one picks a group of companies with consistent  above average revenue growth rate and consistent  rising stock price, one will outperform the index. The risk is over paying it.  Example is Snowflake. The valuation is nose bleeding high. If paying too much, stock will go side way or even down in the short term.

Revenue growth rate alone is not a guarantee for investment success.  We also need to look at business model, product, total addressable market and stock performance. Example: Beyond meat, its revenue grew fast for few years but seems it plateaued.  and after initial surge. stock went nowhere for 1 year.  I am vegan myself but I think the reason is Veganism has a small total addressable market.


I just looked at the numbers carefully, My 2020 total return from growth stock was: 71%.
See table below: Notice the annualized return increased as I reduced the number of stocks and increased the revenue growth rate requirement.
 

Change of target revenue growth rate and number of stocks on performance:

Annual Revenue GrowthNumber of stocks From:To:DaysReturn:Annualized
20%17512/31/20197/6/202018813.30%27.43%
30%307/6/202011/30/202014730.00%91.83%
100%611/30/202012/31/20203116.40%497.78%

Total return in 2020: 71%
I strongly disagree that COVID gave a "little tailwind" to some companies.
Your largest holding is Crowdstrike, with 1 year performance of 257%
Second largest holding Peloton gained +421% in the past 12 months.
Snowflake wasn't public a year ago, so it has no 12 month performance.

Covid dominated every stock last year, these stocks included.  Peloton competes with gyms, and in 2020 no gyms were available.  People were trapped inside, unable to exercise outdoors.  To call that "a little tailwind" is false.  Last year was a massive boost to Peloton's fortunes, and their +421% performance shows it. 
"Peloton CEO warns of months of order delays, as overwhelming demand sends sales skyrocketing 172% and rattles supply chain"
https://www.businessinsider.com/peloton-ceo-warns-of-months-order-delays-overwhelming-demand-2020-9

Cloud services power Netflix, which is another example of pandemic demand being much higher.  There's clear evidence the pandemic had a massive effect, as shown in the articles I'm quoting:
"Netflix Subscriber Growth Slows After Surging During Pandemic"
https://www.forbes.com/sites/joewalsh/2020/10/20/netflix-subscriber-growth-slows-after-surging-during-pandemic/?sh=59c7cf1f244e

Where is the global pandemic described as a "little tailwind"?  What's your evidence?

You can quote your personal analysis all day, but you don't seem able to admit the pandemic played a massive role in the stocks you hold.


You are mixing stock price performance vs business performance. I keep my attention to business performance, most importantly the revenue growth rate. Most business revenue did not increase as much as Zoom did.   CRWD's revenue was growing above 100% per year during the past 3 years. That was before COVID. Last TTM, CRWD grew revenue slightly less than 100% sequentially to 75%. It actually slowed down a little bit.

Same with Peloton, Peloton was growing revenue at 100% per year for the last few years before COVID.  Last TTM, revenue grow rate was 80%. It actually slowed down bit.  It's expected. 100% per year growth can't last more than 5 years.  100% compounded for  5 years is 32 times increase. After that, growth will slow gradually. In Zoom's case, it grew too fast so it crashed.
Peloton's recent Precore acquisition will help to expand total addressable market and production.   The fact that PTON can't keep up with delivery means demand far exceeding supply and it means there'll be more room for growth. Currently, IIRC, there's still 1 to 2 months wait for delivery.


Valuation wise, they are richly valued but not over valued.

BTW: My middle name is cloud. It's a reason I used it in my user name.  I am not obsessed with certain product type: e.g. SaaS or Cloud stocks. I am focused on revenue growth rate first.




« Last Edit: January 24, 2021, 10:57:43 AM by CloudLiu »

MustacheAndaHalf

  • Magnum Stache
  • ******
  • Posts: 3677
Re: Concentrated US hyper growth stocks - Jan, 2021 - first update
« Reply #16 on: January 24, 2021, 10:53:23 AM »
In 2020, cloud services were needed by people in lockdown.  Why are you projecting the same returns for 2021, when vaccines are being rolled out?  And why doesn't your post mention the pandemic even once?

I'm not advocating that anyone stock pick or go all in on cloud stocks but clearly cloud is not just a pandemic phenomenon. People fail to realize Amazon is not really a retail company. They power like half the internet at this point and their AWS business is their cash cow and is growing rapidly.
If you check my posts again, you'll notice I keep saying 2021 won't be a repeat of 2020.  I leave open the possibility that cloud stocks will do better this year than the overall stock market.  What I don't believe is that the record setting cloud usage of 2020 will happen again in 2021.

I don't see data on Amazon for 2020, but in 2019 their retail profits were 5x their cloud services profits.  Compare the situation in 2020: their cloud competitors remained in place, leaving them with 33% (not 50%) of the market according to statistica.com.  But in retail, malls and stores closed, leaving them with almost no competition.  With those conditions, I'd bet against Amazon cloud passing up their retail business in 2020.  I disagree with your claim that they are not a retail company.

Proletariat

  • 5 O'Clock Shadow
  • *
  • Posts: 25
Re: Concentrated US hyper growth stocks - Jan, 2021 - first update
« Reply #17 on: January 24, 2021, 11:51:10 AM »
In 2020, cloud services were needed by people in lockdown.  Why are you projecting the same returns for 2021, when vaccines are being rolled out?  And why doesn't your post mention the pandemic even once?

I'm not advocating that anyone stock pick or go all in on cloud stocks but clearly cloud is not just a pandemic phenomenon. People fail to realize Amazon is not really a retail company. They power like half the internet at this point and their AWS business is their cash cow and is growing rapidly.
If you check my posts again, you'll notice I keep saying 2021 won't be a repeat of 2020.  I leave open the possibility that cloud stocks will do better this year than the overall stock market.  What I don't believe is that the record setting cloud usage of 2020 will happen again in 2021.

I don't see data on Amazon for 2020, but in 2019 their retail profits were 5x their cloud services profits.  Compare the situation in 2020: their cloud competitors remained in place, leaving them with 33% (not 50%) of the market according to statistica.com.  But in retail, malls and stores closed, leaving them with almost no competition.  With those conditions, I'd bet against Amazon cloud passing up their retail business in 2020.  I disagree with your claim that they are not a retail company.

Fair but I still think 2020 could be a huge catalyst for the foreseeable future and since cloud has already been growing rapidly I think there's definitely a chance some of that spills over into the near-term. Long-term of course I think it's definitely a no-brainer.

Revenue != profit. Retail is Amazon's current largest source of revenue, but not their largest source of operating income - AWS is. I think cloud has much greater potential than retail in the long term, that's why I'm saying Amazon is really not a retail company even though it looks like it right now. The growth potential for cloud is much greater in my opinion. Cloud is high margin and scales well. Retail is low margin and difficult to scale. I am not saying Amazon is going to balloon in price over the next year or even five years, just that huge potential is there. I don't even really care about Amazon in particular, but I'd say 9/10 people have no idea Amazon even owns internet infrastructure as an example.
« Last Edit: January 24, 2021, 12:18:32 PM by Proletariat »

CloudLiu

  • 5 O'Clock Shadow
  • *
  • Posts: 17
Re: Concentrated US hyper growth stocks - Jan, 2021 - first update
« Reply #18 on: January 30, 2021, 05:07:50 PM »
Portfolio result on Jan 29, 2021


I am adding the Russell 2000 to the performance comparison.  Russell 2000 may be hard to beat in the short term because it contains many momentum stocks with ranges of revenue growth rates. My portfolio is still likely to beat Russell 2000 in the longer time frame. Let's say more than 1 to 2 years., because I am laser focused on revenue growth rate. The longer the time frame, the further will be the difference in performance due to compounding.



My 6 stocks portfolio performance in Jan, 2021:
1 month % change: +9%
Note: I added 1 new stock at the end of January, so itíll be 7 stocks next month.

Meanwhile:
SP500: -1.02%
WCLD: +0.30%
Russell 2000: +4.66%

Current holdings and weight(%) and price change:

                           
                           
   Ticker      Current Weight      Jan-2021 Change   
                        
                           
                           
                           
   CRWD      20.59%      1.88%   
   PTON      18.98%      -3.68%   
   EXPI      18.34%      68.87%   
   LPRO      15.81%      3.80%   
   SNOW      15.08%      -3.18%   
   FUTU      6.99%      New position   
   LMND      4.21%      18.57%   
                           



Itís interesting to see the fact that not all stocks go up or down in the same month. Last month, it was CROWD, PTON which contributed the most. This month, EXPI alone contributed the most gain.  Next month ,many of the stocks will release earning reports and the prices will find places where they belong.

FUTU is a new stock I added at the end of month so itís not included in this month's return. Itíll contribute to my return starting next month..  Revenue growth has averaged about 125% per year for the past 3 years. And itís very profitable. It was founded by one of Tencentís early employees and headquartered in Hong Kong. It provides brokerage service. Revenue mostly comes from trading fees. 50% of revenue is from Hong kong stocks trading and 50% is from US stocks trading.


Portfolio comments:

Between earnings, If thereís no major news from the companies, I wonít add any comments here.  If thereís no news, itís just the movement of stock prices..

In January, all Cloud/SaaS stocks went sideways because people kept saying ď sell work from home stocksĒ.  On top of this, thereís the WSB revolution. The overall stock market is down in the last few days of January. The theory is that many big funds have heavy short exposure to GME and suffered huge loss and risking margin calls. So they are forced to sell their winning stocks which is not an indication of something wrong with the companies. The big funds loss doesnít evaporate. It just changed hands and will go back to the economy. When dust settles, stock prices will match their companies fundamentals.


EXPI:
It announced 2-1 stock split in February. I think this is a good sign. It means the management expects the company to continue to grow its revenue and market share.  The market  liked the stock split and lots of volume after the split announcement. 

Noises:


Work from home stock???

So called strategists kept saying get out of work from home stocks and rotate into other sectors/stocks. Itís no different than saying get out of stocks and go to 100% cash during the bear market. What the heck is work from home stock?  They existed way before COVID and were growing fast. Why get out of them if they are growing fast?  Selling small cap fast growers and buying big caps Amazon, Apple,  or declining business like Groupon is a bad idea. ZM is a stock I would get out but getting out of all SaaS stocks is plain stupid.

 My strategy is to pick individual companies with the fastest growth rate. I donít invest based on sectors. I donít invest based on short term trends.  I think about what the company will do in the next few years.


WSB
I got lured by the WSB stocks for 2 days and deployed 15% of the portfolio to names like: AMC, BB,BBBY for 2 days. Luckily I bought at good prices premarket before the big jump  and sold them when they started crashing because brokerages are limiting trading. I didnít lose money and made 8% and got out and back to myself. It was very exciting but I will not do it again! If I to do it, I will get in early and in stocks like GME where the payoff can be huge. And use very small percentage of portfolio. Thereís only one GME. It was heavily shorted.  AMC,BB,BBBY etc are not GME.  The funny thing is this activity showed as a blip lasted 1 day on my portfolio and back to slightly above before the blip.. My portfolio was up 10% in 1 day and then 2 days after, itís back to +3% from 2 days ago.  Itís easy to lose self watching prices go up 50% to 100% a day. my worry is that I can see the danger of the GME revolution where small percentage of people donít see the real meaning behind this and just thinking about getting rich overnight and risking money they can't afford to lose. GME is not about making money but early buyers had a good thesis about MOASS. And they had a valid reason to make some money off it.  Late coming buyers are more about support for their point and the chance of making money for late buyers are small. They may lose most of it.  Itís about a point about Wall st market manipulation. Itís a small punishment for reckless wall st behavior. Think about 2009.  The best outcome of this  is WSB saved GME and GME turned around like APPLE did.  The chance is small but still possible.  Money is not longer a concern and they can focus on turn around the business. This is exactly opposite of shorts which destroyed declining businesses which had a small chance of turn around if the stock was not shorted. High stock price helps with raising capitals.  In the end, I bought 1 share GME as a support for the movement.

 The good thing about this action is I accidentally removed 25% of growth stocks and put it in cash.  Previously I was not willing to sell some growth stocks to cash. I added this cash to cash secured put selling. I can also use this cash if there are any good growth stocks from the new IPO. Now my portfolio is divided between 50% hyper growth stocks and 50% cash secured put selling. It was 60% growth stocks and 40% cash secured put.  Cash increased from 200k CAD to 300k CAD and growth stocks reduced from 400k CAD to 300k CAD. Total value of the portfolio is 600k CAD.  On this thread, My focus is on the growth stock portion.


Growth stocks Performance:

Last 12 months: monthly
2021 Jan: +9%
2020 Dec: +16.4%

Yearly:
2021 Year To Date: +9%
2020: +71%


Net worth change:

2021 Jan 29: 607K CAD
2020 Dec 31: 538K CAD
2019 Dec 31: 355K CAD



« Last Edit: January 30, 2021, 05:29:02 PM by CloudLiu »

waltworks

  • Magnum Stache
  • ******
  • Posts: 4864
Re: Concentrated US hyper growth stocks - Jan, 2021 - first update
« Reply #19 on: January 30, 2021, 07:17:15 PM »
Come on back in 10 years. Also post your buys and prices before you make 'em, otherwise nobody believes you.

-W

CloudLiu

  • 5 O'Clock Shadow
  • *
  • Posts: 17
Re: Concentrated US hyper growth stocks - Jan, 2021 - first update
« Reply #20 on: January 30, 2021, 08:27:07 PM »
Come on back in 10 years. Also post your buys and prices before you make 'em, otherwise nobody believes you.

-W

Hi,

I don't trade. I buy and hold. I won't be  here in 10 years.  Max few years.  I got other plans to do.  Also my portfolio won't stay the same.  I already added 1 new stock this month. It's possible in 1 to 2 years, my portfolio is completely different.  Retails investor money is fast money. Institutional money is slow money.


I posted the stock ticker and their weight % and that's all you need to verify my return. if you don't know how to do that, you should stick with indexing.  All you have to do is allocate a random portfolio size say $10000 and spread the money according the weight and divide the share price at the beginning of the period to get share number for each ticker.  Once the share number is obtained, they stay the same. Multiple the share number to stock price at the beginning of period to get initial portfolio value and multiple the share number to stock price at the end of period to get the ending portfolio value.   Divide the ending portfolio value by the initial portfolio value minus 100%, that's the return. 

here's a google  spreadsheet how to do it: https://docs.google.com/spreadsheets/d/1f1XdYDJCgL_F6jFPEF6H19-yJbLkJ7P_ntxYR3XbnFQ/edit#gid=1609940439
Screenshot attached.

 I admit my actual return of 9% this month is from Dec 31, 2020 to Jan 29, 2021, a whole month.
But I posted this portfolio just on Jan 10, 2021. A 10 days makes a huge difference.   Performance from Jan 10 to Jan 29 is just 1.73% where the whole month is closed to 10%.
I did minor adjustment but no major change to the weight so using a spreadsheet should obtain a return very close to my actual result. In January, it's 9% actual vs 10.2% from spreadsheet.



« Last Edit: January 30, 2021, 08:32:47 PM by CloudLiu »

waltworks

  • Magnum Stache
  • ******
  • Posts: 4864
Re: Concentrated US hyper growth stocks - Jan, 2021 - first update
« Reply #21 on: January 30, 2021, 10:20:51 PM »
Great story, bro. I'll be out riding my bike.

-W

PaulMaxime

  • Bristles
  • ***
  • Posts: 304
  • Age: 57
  • Location: San Francisco, CA
  • Absolute power doesn't corrupt, it reveals.
Re: Concentrated US hyper growth stocks - Jan, 2021 - first update
« Reply #22 on: January 31, 2021, 11:09:25 PM »
Hey CloudLiu-

You are going to get a lot of arguments from the folks here about how it's impossible to beat the indices.

I'm on your side having averaged over 20% per year for the past 14 years. Last year was the best year of my investing career by far however, I was up about 125% with a portfolio of about 30 stocks and a couple ETFs. I believe in buying great companies that are growing revenue quickly and holding on for the long term unless something material changes about the business. I don't expect to ever see those types of returns again but I believe I will continue to outperform.

Take a look at this message board. It has more like minded folks: https://boards.fool.com/sauls-investing-discussions-120980.aspx

Cheers!
Paul

MustacheAndaHalf

  • Magnum Stache
  • ******
  • Posts: 3677
Re: Concentrated US hyper growth stocks - Jan, 2021 - first update
« Reply #23 on: February 01, 2021, 05:32:08 AM »
You are going to get a lot of arguments from the folks here about how it's impossible to beat the indices.
I count just one person arguing that.  Personally, I've been market timing since March 2020, and have left the S&P 500 far behind.  I could easily see WCLD beating the market in 2021.. but I don't expect it to beat it's +110% performance of 2020.

"Peloton CEO warns of months of order delays, as overwhelming demand sends sales skyrocketing 172% and rattles supply chain"
https://www.businessinsider.com/peloton-ceo-warns-of-months-order-delays-overwhelming-demand-2020-9
You are mixing stock price performance vs business performance. I keep my attention to business performance, most importantly the revenue growth rate.
Valuation wise, they are richly valued but not over valued.
I think we're talking past each other, but I did learn that you have a structured approach based on fundamentals of these companies.  If you stick with earnings growth long enough, the stock price should reflect it.

I was going to make the point you can't buy earnings - you buy the stock.  If your goal is to be... "Cloud Buffet", then I would still emphasize prices matter.

I expect vaccines to allow a lot of people to visit theaters, travel, and get away from home.  I expect people to over-compensate for lock downs, which will take business away from Netflix, Facebook, Amazon - businesses that rely heavily on cloud services and hardware.

Other investors who want exponential growth at the same pace... they could be disillusioned that 2021 performance didn't match their 2020 expectations.  I'm guessing late summer/early fall will involve quarterly earnings reports that disappoint, and maybe give a buying opportunity.

CloudLiu

  • 5 O'Clock Shadow
  • *
  • Posts: 17
Re: Concentrated US hyper growth stocks - Jan, 2021 - first update
« Reply #24 on: February 03, 2021, 01:34:09 PM »
Re: MustacheAndaHalf

I fully appreciated that you can argue with rationality unlike many people here that use strawman arguments. It's very rare to see.

I do agree some companies benefited from lock down.  If looking at the same companies, their 2021 growth won't be as good as 2020. So I agreed WCLD may not have the same return in 2021 as in 2020.

 However, My expectation of  my own investments return depend on what I own in 2021 vs what I owned in 2020. I repeat again I owned close to 200 stocks in first half of 2020  WITHOUT too picky about growth rate then starting getting picky and reduced in second half of 2020 to 30 stocks then to 6 stocks in the last month. Despite this, I still got 71% return in 2020! 

It's highly possible I can exceed 71% return in 2021 because I own some of the fastest growing companies in the world.   I  used higher and higher revenue growth hurdle to reduce  the number of stocks.   There are too many opportunities. We don't have to own them all. Owning too many stocks will dilute the return. e.g. Open Lending(LPRO) and Upstart(UPST) are both good investments in the same industry but I decided to own just Opening Lending instead of owning them both.

Growth stock investing doesn't look at earning. In terms of financials, we mainly look at revenue growth rate,profit margin,debt etc.  In fact, many of the hyper growth stocks have net loss. They prioritized grabbing market share than showing profit.   In contract, IBM prioritized profit vs growth so it's not investing in R&D, lacking behind competitors and it's been in a decline for 10 years even it makes lots of net profit. I agree valuation do matters for growth stocks. I paid too high a price for SNOW and my return is not good from Snowflake as of today. So it helps to pay a lower entry price. I will try to be more patient on next great IPOs.

I am not trying to be next Buffett. I don't want to open a business or hedge fund. I am happy with several millions in net worth. It's enough. My investment is now performing as I expected since I reduced the number of stocks. The return has increased.   It's up another 7.5% since last month in just 3 days. No, I am not  bragging. I am just stating the fact.  As of today Feb 03, 2021, My net worth is up another 6.6% from 607K CAD  report to 647K CAD from January 29 report. There's a good probability I will surpass 1 million CAD by the end of 2021. That means at least another 55% increase from today to end of year.

 I am sharing growth investing here because I got into concentrated hyper growth investing in-directly through a member of this forum even though MMM preaches indexing.
I hope so some people can benefit as I did if they do decide to own some individual stocks.  I mean Indexing is safe but you can't get very rich starting with a negative net worth with student loan and having a low paying job which I did. I had minus -27k net worth in 2008 and the job paid me 30k per year.  Cash is even safer than indexing. Why not put your cash under the pillow like my parents did? Well, they are uneducated and that's what they believe is the best way to protect money only to guaranteed losing 3% per year in inflation.  BTW, if indexing provides good return, you don't need donation from members. Period.  It's a matter of competency to obtain a higher return.  I've owned ETF, Dividend stocks and growth stocks. I didn't know what I know today when I owned just ETF or dividend stocks. So I know more than I knew 10 years ago.  Growth stocks offer the best return.  BTW, volatility is not risk. Real risk of buying the wrong investment or selling at a loss in unfavorable times. Many of what they teach in school about investment are wrong. What they teach apply to all audiences but all audience means average return. Above average return  has to be a small percentage of people. They can't teach a method to let everyone to be the best investor.  It's physically not possible for everyone to buy the best companies in the world because if everyone chase the same investment, the valuation will be insane! and at one point, people are not willing to pay the insane price.

You said you do market timing and succeed in it. Great!  I don't personally engage in market timing. That means I don't sell out my growth stocks completely and hope to get back at a lower price. EXPI actually dropped 23% soon after I bought it! But I am in the green now with 50% gain.  If I own the fastest growing companies, there's no need to jump out and in of them. It's like riding a fast train. There's up and down. Volatility is high. It's common for them to correct 10% each month but just stay on board for the journey.  The end result will be satisfactory.

Re:PaulMaxime
Sorry I confused you. This is Cloud72. I've decided to come back under a different ID. I will keep this ID.



To the rest of the board,
I will continue to post monthly update for at least one year until the end of 2021.  If some one get what I am saying and benefit from this thread then great! and please shout out don't be shy.
If it seems nobody gets it, then I'll stop posting after 2021.  Don't tell me to come back in 10 years.  Some people been brain washed and repeating the same slogans.  I've been in dividend stock camp so I know what it feels like stuck in one camp and refuse to venture outside.

I divide my stock portfolio into two brokerages to diversify risk.   Around half is in Interactive Broker and half in Itrade. I spread the stocks randomly between the two brokerages so both have similar rate of return. The result I posted here is a combination of both accounts.

See attached screenshot:
I've attached  the account net value in Interactive account from I started in 2014 to Jan ,2021.  You can see the massive and consistent increase in value starting 2020. No it's not because of COVID, it's because I switched from dividend stocks to growth stocks.  I was in dividend stocks from 2014 to end of 2019. As you can see, the account value didn't increase much from 2014 to 2019 and it looked like a flat line. Only starting in 2020, the account value starts to pick up.  In 2021, the portfolio continues to increase at fast rate. I deposited and withdrew small amount here and there, but the majority of account value increase came from the increase in stock prices.  Since 2021, the portfolio grew to such a point that it provides far more than I need to pay bills so I'll be only take out money than depositing money since I am no longer working at a job since end of 2019.






« Last Edit: February 03, 2021, 01:50:48 PM by CloudLiu »

CloudLiu

  • 5 O'Clock Shadow
  • *
  • Posts: 17
Re: Concentrated US hyper growth stocks - Jan, 2021 - first update
« Reply #25 on: February 04, 2021, 05:32:08 PM »
I am out of PTON  and added the funds to EXPI, LPRO, FUTU.

Negative signs:

-Guided $1.10 billion total revenue for 2021 Q3 only 3.3% increase from last quarter. 
-Gross Margin is going down hill.
-Revised Full FY 2021 guidance  4.075 billion or more total revenue. That means revenue of 1.152B for next quarter. That means a 5% sequential growth. Ouch! 

I know there's seasonality in PTON's business. I am afraid PTON is having a ZOOM moment.  This is due to drastic slow down after COVID and shipping problems which will last several quarters. This will put negative pressure on PTON stock.  If I have better options, it's more productive to move the funds somewhere else.   

Here's the current holdings and weight as of Feb 04, 2021:

Ticker   Weight
EXPI   27.88%
LPRO   22.48%
CRWD   19.80%
SNOW   15.57%
FUTU   10.31%
LMND   3.97%





**Edit Feb 25, 2021:



Feb, 2021: Growth stocks took a beating because of multiple factors: 1. GME squeeze. 2. Rising bond yield.
Result for month of February as of Feb 25, 2021: Up 5% .   Accumulated return since I went  concentrated hyper growth style on Dec 1, 2020 is: 1.164X1.09X1.05 = 33% for 3 months. Not bad! 

I no longer want to post my portfolio online. 
There's too much peer pressure: the pressure to perform, the pressure to explain why I make changes.
I want to do whatever I want with my portfolio and no explain a single word. I want to get out of any stocks anytime I want.   
Also, nobody is replying to this thread so I assume nobody is interested/understood.
Sorry, I've changed my mind. I am not going to post monthly updates as promised for the next 10 months.

My current style is like Peter Lynch. Moving from stocks to stock depending on better prospects. I own far fewer stocks than him.
Now I am very satisfied with my net worth of around 0.5 million USD.  I want to take it easy and put most of portfolio in cash. I'll keep probably at least 30% in cash and only buy stocks with huge upside and high probability of getting that upside.

The one stock I am bullish at the moment is : Slinger Bag (SLBG). It's in early stage of growth and worth investing in. 


Take care.

« Last Edit: February 25, 2021, 08:32:48 PM by CloudLiu »