Portfolio Performance as of March 2022

Portfolio As of March 2022

Our portfolios have gone down with the market since the highs in November 2021.  We had an aggregate decline of 16% and the market has gone down about 8-10% during that time, depending on which benchmarks you use (US / Europe).  We had some stocks that were hit particularly hard, so let’s go through them.

The Chinese stock market has been hit hard.  We have two stocks in the portfolio, Alibaba (BABA) and Pinduoduo (PDD).  China has cracked down on big tech and foreign listings in particular, although recently these stocks have done better since the government has now reversed and promised to support these companies (likely because they started laying off thousands of workers in China).  Rather than trying to understand the Chinese market, it is time to sell unless you are in it for the long haul (Alibaba in particular is a large and successful company).

There were a number of technology companies whose prices went down a lot.  These include Meta (FB), Snap (SNAP), Cloudflare (NET), and Okta (OKTA).  Meta and Snap were tied to a broader issue on social networking and the fact that Apple changing its tracking made ads less accurate.  Cloudflare is trading for a very high multiple of revenue (not profits) so any bumps along the way in forecasted growth can cause a significant drop in the stock price.  Okta was also hit and tied to an acquisition but the core numbers remain strong.  The story behind these stocks generally remains strong but they will likely continue to face a lot of turbulence.

PayPal (PYPL) was maddening.  This is a well run company whose price went down an unprecedented amount without a significant challenge to their business model (unlike SNAP and FB who were impacted by the Apple tracking change).  They did announce reduced future guidance but I was surprised by the fall. 

We have other stocks that have gone down for various reasons, including Appian (APPN), Rocket Mortgage (RKT), Block (SQ).  Block seems like a long term holding but APPN and RKT may be for those willing to ride out volatility.

We use the Vanguard Total Bond Index ETF (BND) rather than the money market fund which essentially returns almost zero.  But with interest rates rising, we actually lost money on BND – about 3% (after netting out the interest we received) – so perhaps it is better to go back to the money market (VMMXX) instead and get maybe a .5% – 1% return with no risk of loss.

 It wasn’t all bad news.  Many of the portfolio stocks did well, especially the non technology stocks such as manufacturing and commodities.  We had a buyout offer for Activision (ATVI) from Microsoft, so we might as well sell at that price.

Many of the core stocks bounced around and were down but not as significantly, including Mastercard (MA), Nvidia (NVDA), Tesla (TSLA), and Taiwan Semiconductor Manufacturing (TSM).  We likely got in too early for Intel (INTC) but that seems to be a solid long term play at this price.

We are going to update the individual portfolios and as we do we will consider which stocks (if any) to sell per the above logic.

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