March 2021 Update - A Small Experiment

Background:

Dividend Portfolio - Dividend Growth Stocks.

Speculative Portfolio - Good companies that are richly valued high growth companies.

Both portfolios were started with 10% of my liquid assets each on Jan 1st 2021.

March Update:

From the February post - I wonder if strong gains in the dividend portfolio in Feb is in fact a ill omen for the market as a whole in March.

It is not really bear territory for the market as a whole, but it certainly was deep recession for the Speculative portfolio.  It lost almost 30% from its peak, losing heavily almost every trading day of the month.  The funny thing is that it is still 14% up since Jan 1st.  I would have been better off sitting out March.  But I am not better off than if I had not started investing at all in January.  In fact, in my sedate index portfolios, I would have been delighted to be up 14% in 3 months!

See my notes below from March 8th, right at the beginning of the month, when the writing seemed to be on the wall:

3/8 - In just 6 trading days, the Dividend Income portfolio overtook the Speculative Portfolio.  The speculative portfolio went down more than 25% in that time, while the Dividend Portfolio went up by 10%.

CNN Fear and Greed Index not helpful in predicting bear market for Speculative portfolio

Neither the CNN Fear and Greed Index, nor the S&P 500 YTD chart (both showing positive momentum) are even remotely capturing this profound shift.

In the midst of the carnage, I have decided to take the brave (foolhardy?) stand of sticking to my original decision to be 100% invested all the time.  Just as the bull market makes you seem so smart, the bear market makes a fool out of you, regardless of how smart you think you are.

But the interesting thing for me was the Dividend growth market.  It is up 20% since the start of the year and is paying out a 6% average yield on originally invested capital!  I have not bought or sold a single share in this portfolio since the beginning of the year.

If my question in Feb was whether the Dividend Portfolio even had a chance (it was sitting at 12% growth compared to almost 35% for the speculative portfolio), now the question is whether the Speculative portfolio even has a chance.  What a difference a single month makes!

None of this churn was detectable in the headline S&P or NASDAQ indices.  I now really wonder if the relative performance of these two portfolios is a better indicator of market inflections than Fear and Greed or other commonly used sentiment indicators.

Stock of the Month:
ABCL for both breaking my wallet by falling steeply, but then rewarding my faith (I bought more as the stock fell) by shooting up in the last two days of the month.  I always wondered how a company that made $11M in revenue can be valued at 10B.  Now I know.  Revenue climbed 1908% to $233M in 2020.  The company also made 53c a share.  Meaning you are paying 60x multiple on real honest to goodness profit for a company that has grown 20x in the last year.  I think this stock has a lot more legs under it.

Numbers since Jan 2021:

S&P 500: 7.36%

Nasdaq Composite: 4.32%

Dividend Portfolio: 21% (up from 12.5% end of Feb)

Speculative Portfolio: 14.7% (down from 35.5% end of Feb)


The Long Read for the month:
Aging on Nautilus: Yes, Life in the Fast Lane Kills You
Click baits:
  • Anti-oxidents are bad for you.
  • Cells can repair themselves, but mitochondria cannot.  Aging is propagation of bad mitochondria in the cells of your body.
  • If you replace damaged neurons in your brain with new neurons as a means of prolonging life, are you still you?



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