Week to Week-10

This marks the 10th edition mark for Week to Week. Though I would like to be much more consistent with my updates I just don’t have enough content to post most times and it takes me some time to develop a new idea enough to write 800 words of analysis on it.

Today I want to think out loud and accept some of the terribly stupid mistakes I have made.

The DCA experiment

This actually felt like a novel idea, much like most of the ones I have, in that there was enough empirical data for me to go on to announce that DCA’ing in a failing market was a good enough idea. The problem is that I did not want to spend $3000 on an experiment and something, which I could just test on a market simulator rather than the real world. Moreover, it would have been very difficult for me to justify to myself that it was a better idea to go from 15% to 0% liquid if say there would have been a better use of the 3 grand in the future. But like Peter Lynch says “There will always be a problem when investing and if you keep waiting for the perfect time you’ll just become a master at waiting”.

This is not a motivational quote in that I changed my thought process and actually invested the $3000; I did not and will not.

General mistakes & bad investments

I like to think that I entered the market at a bad good time if that makes any sense. I think this is a good time for new investors to begin their investment journey because prices within the market are adjusting, the problems with the FED’s monetary policy are gaping, and it is a good time for the market to self filter companies with true value from just growth stocks which had an inflated market cap as they rode the post-covid high.

I made smart trades for sure and made decent day-trading profits anytime I chose to trade intraday but my goal was always to INVEST. As a result I started investing in the future and I still probably have but the current returns are not what I was expecting.

Sure, inflation is at its highest in 40 years, consumer prices are sky-high, the S&P and Dow have reported historically poor returns for year openings, AND there was a WAR that shifted entire foreign policies and economies AND experienced traders are down 30–40% ytd BUT I am still not and should not be satisfied with some of the decisions I made.

For your reading pleasure- the mistakes

The prices I bought in for some of my ETFs were not wise. I knew I had to factor in inflation for the New Year but I still chose, rather recklessly, to invest in the future of the market- my mistake. In say 3 years I am sure I will see good returns- not great since I am not expecting good 10-year returns for the market- but this was money I could have saved and invested during 1 of the 3 dips.

The price I bought TSLA at is just stupid a very bad impulse buy that no sane investor would make. What’s more infuriating is that there was a time I was turning a profit on my stupid buy-in. I chose to wait and monitor for 2 days to see whether the price would rise further but rather the stock plummeted by 9% and I am losing a lot of money on what could have been me freeing up $2200 worth capital.

What are we doing going forward?

Well as I stated previously I wont be investing the $3000 unless there is an unbelievably good opportunity. Currently the plan is to wait for some of my prices to recover so I can free up more capital. The plan following that is to just value-invest. I need to focus on finding businesses with established business models that focus on profitability and pushing a product to the market rather than an idea. The combination of extraordinary fiscal and monetary stimulus paired with money printing led to high liquidity manifesting into bottlenecks and distortions throughout the real economy. Shortages and high asset prices led to companies becoming beneficiaries- from boon to bane- of remote work and e-commerce acceleration. The inflationary trends and war in Ukraine essentially put us all in a bad situation and one that will need a long recovery time. As cash has become more expensive we are changing priorities and growth at all costs in so longer going to be rewarded.

The idea is to invest in durable growth with improving profitability.

Fin-

Thanks for reading and following Week to Week for 10 editions. I will try to keep pumping out more of these.

Thank you,

Anuj.