Welcome back everyone. We have an exciting episode to
get into today. We're going to be looking at
this story fund and I'll be going over every single holding.
I own every single position and why I'm still invested in these
companies. Even though the market right now
does not like them. The market selling out of these
companies, I'm buying in, that's the transaction that's happening
right now. And you can see the total
returns right now, the thirty one thousand dollars of losses.
So so far this portfolios in the red.
It hasn't gone great and I'm going to show it anyways.
With complete transparency. Because as I've mentioned, we do
things differently on this channel if you're new here, this
isn't a channel where we only show when things are good and
then we kind of Fade Away into the background when things are
bad, right? I show whether or not things are
good or bad with complete transparency every single week
week by week and I'll continue to throughout now till the end
of 2025, that's kind of the end goal for this little experiment
with this portfolio. Now, right now, like I said, the
market is very difficult, this Portfolio has it's held up.
Okay? It hasn't done really as poorly
as some other ones that are extremely speculative, right.
But it hasn't done as good as portfolios that are very
conservative. For example, I have another
portfolio here called the passive income account, this is
a dividend portfolio with a lot more of these kind of mature
consumer companies that just, you know, sell the same products
they've been around for a long time, they have high amounts of
free cash flow and this one's held up a lot better over the
past year. It's just performed a ton
better. In fact, you can look at just
today as an example today, it's that point seven, seven percent
two thousand six hundred dollars.
Let's go ahead and compare that with the story fund story funds
in the red point six percent. So the passive income accounts
going up the story funds going down.
That's the story for the past past year but regardless, even
though this portfolio is doing poorly even though it doesn't
look good. Right now, I want to be
transparent and show the update because I feel like a lot of
people on social media when they have a bad result they kind of
Of shy away from actually showing it to their audience and
I think that that's a mistake because I'm in investing every
investor goes through periods of time of under performance.
Every single one of them in every single, drawdown, that
Peter Lynch had over his 13 years of outperformance.
Every single time, the market went down, his portfolio went
down more. He said he was 100% on with that
nine out of nine times. When the market went down over,
10%, Peter Lynch's. Portfolio went down 15 or 20%.
It was not a conservative portfolio.
Every time the market took a huge dive, Peter Lynch's went
down more but because he had a level head and he held on to his
company's when the market recovered and it went back into
bullish greedy mode. His portfolio would outperform
to a huge extent. So I look at Peter Lynch's.
And example, we also have the example of Warren Buffett in
2020. Warren Buffett was
underperforming. In fact, all the the exciting
stocks all the consumer stocks, The ark invest type of stocks.
We're going up like crazy and people said that Warren Buffett
is old news. He doesn't know what he's doing
in this new technology driven world and he underperformed in
2020. Now, Berkshire Hathaway is
outperforming, right? So Warren Buffett had to go
through a period of under performance before.
Now outperforming the market and you can see the same thing with
Terry Smith and fun Smith. They're going through a period
of under performance as well. So on and so forth.
There's endless examples of great investors that Beat the
market over a long period of time, but they have to go
through a period of under performance during that process.
Now, another thing that I've done is, I've put together a
timeline of events that I think, will be really fun to go
through. Here's what it looks like.
This is the story fun against the S&P 500 and I've gone an
annotated, every single major event that's happened over the
past year, so that's led to this outcome and I want to go through
this with you. I'll go through each and every
point and kind of give you a better idea of how we got to
this point. So I think This will be a lot of
fun. So with that said, we have a lot
to get to in this episode. And before we jump in, I just
want to mention that I do have a patreon.
It is a community of investors, where we discussed dividend
stocks, growth, stocks, crypto options, real estate, physical
real estate, right? There's lots of different chats
and discussions and people that specialize in all different
things. If you want to check that out,
there's a link in the description and the reason that
I mention it is because if you join right now, you will not be
charged today. You won't be charged today.
In fact, your first charge will be the beginning of next.
A month. So you get a free trial from now
till next month. So check that out.
The link in the description below.
All right. Now, let's go ahead and jump
right in this again, is the story fun, it's an aggressive
growth centered technology. Focus portfolio, where I'm
investing in these companies for a minimum of five years.
That's my timeline, that's how I'm underwriting them is how I
think events will unfold over the next five years.
So these aren't like, quick short term trades.
I'm not trying to do timely Market trades of where the
market will go. The next three months.
That's not the goal of this portfolio.
Now I track it every single week week by week and show the
performance and so far, it's underperformed, the S&P 500 and
we'll get into the reasons why. Now, before going into all of
this, there is one thing I want to mention a lot of people have
said, this is why you invest in index funds.
And this is why you invest in, you know, ETFs and I completely
agree with diversification. And I think it needs to be
pointed out, time and time again.
I am Diversified, I do have another portfolio.
That is a dividend growth portfolio.
That invest in an entire By early different type of company.
So I do have companies like apple and Microsoft is Big
Holdings in this one. I have companies like, you know,
Costco Disney Home Depot Nike Target in this one that I don't
have in the story fund, and I even have large positions in
ETFs like s CH D and S CH G. So I am Diversified, I don't
have all my money in the story fund.
And in general, if you're just looking at personal financial
Financial tips, my thoughts are you should always max out your
401 k. So Your employer has a 401k
match max out that 401k match. Next, you do your Roth IRA maxed
out every single year because that's tax free money.
After that, you can start doing the individual portfolios and
even then you should have probably the majority of your
money in ETFs. There's lots of good ones.
So that's all the advice. I'd give to anyone generally
speaking, this portfolio is all individual companies, but again,
I'm already heavily Diversified. I have a lot of different
companies so I'm not taking an extreme amount of concentrated
risk. Ask with just the story fund.
That's not where all of my net worth is.
Now, let's go ahead and look at how this has worked.
So far, here is an overview of everything that's happened over
the past years, since starting this portfolio.
Let's go ahead and zoom in to where it all started.
The purpose of this portfolio. The reason that I started it was
I'm a content creator at create YouTube videos.
I have one channel that tracks the dividend portfolio and that
one has grown to be a very successful Channel.
It has about a quarter million subscribers.
It gets A lot of views every single video and it's been fun
to do that, but I have had a lot of people asked, Joseph, what
are your thoughts on these different tech companies?
These different growth companies, right?
Not just the dividend ones that you usually invest in.
So I started giving my thoughts on different growth companies
and tech companies. And I decided, you know what,
this might make for an interesting content to see my
investments in tech companies over a five-year time Horizon
and see how they turn out and that was when the story fund as
we know it was kind of kind of born.
That's Where it started. So I start off the story fund,
its 100% tech companies and at the beginning, I had many of the
smaller more speculative tech companies.
Speculation means companies that are not Blue Chip companies.
They're not your Coca-Cola's and Walmart's their companies that
don't really have a lot of free cash flow.
They might have a lot of growth, but they're deluding
shareholders there, in industries that are even more
more Niche or in general, they're just not as established,
you're speculating on your Taking more risk on them.
The outcome of them is less certain and my portfolio had
some big tech companies that were not speculation in my
opinion, but a lot of the smaller ones that were
speculation. I had a lot of companies like
Peloton crowdstrike, atlassian cltd Shopify doordash, right?
He's more, you know, they're just more speculative, they're
more risky companies, they're smaller tech companies that are
less established. And when I started the
portfolio, I had a lot of those companies, as well, as a lot of
Blue Chip companies like apple, Microsoft, Amazon On Google in
the portfolio. So I had a decent mix but a good
amount of the portfolio was speculative and again this is
this is at the tail end of 2020. At this time you could pick a
basket of speculative companies they didn't need to have strong
fundamentals and it didn't really matter at the tail end of
2020 and all through 2020. Those companies just went up
every single day right away my portfolio, even though it was
really volatile. Begin to steadily outperformed,
the S&P 500 and even the QQ it outperformed both of them for
like the first four months. So a lot of people thought I was
a genius investor than I'm investing.
In these companies. They're going up every single
day. People are saying I'm picking
out good stocks because they're going up every day.
When in reality, the reality of the situation is it was mostly
momentum. These stocks just had a lot of
money piling into them pushing the prices Higher and Higher and
then it hit a peak right around the beginning, like February of
2021 speculation at this time. Those type of companies, hit an
all-time high and you can see this.
I outline it right here. This is right when the ark
invest ETF the flagship one hit, it's almost ultimate Peak that
was right here. The most speculative companies
started to correct very sharply. So like a month later you can
see the dramatic decline here in price.
And with Arc invest in, even the more speculative portfolios this
correction was even sharper. So I have my portfolio, it
starts climbing up. Above the S&P 500 because of
massive momentum. In all of these stocks in the
market starts to get a little spooked out of the valuations
and the speculative nature of these companies and the
long-awaited correction for these type of companies,
including especially the ones like in Ark, invest it finally
happened. I think that was the most
notable time period of 2021. When this Bubble at least the
first bubble of the most speculative companies started to
correct. My portfolio shot down and
performance. Quite a bit.
In fact, it went down and Oz below the S&P 500, then quickly
back up and then it started to trade more in line with the S&P
500. This is where we move on to, I
think another important part here, see this Arrow right here
is pointing to where cloud computing companies and the more
speculative companies hit an all-time low, the speculation
again, hit a peak right here. This is one like the ark ETF is
way at its Spike minute, traded down steeply.
And the companies that really got hurt the most in April of
2021 where the cloud computing companies.
But Interestingly, there is this big rally with these companies
and they moved up 40% over, just the next couple of months and
this is where things get really critical for my portfolio.
So we'll move into that in just a second but I just want to go
through and review this for a minute.
Again, I start my portfolio off the last trailing couple of
months of 2020. So right at the tail end of
2020, I started up and it has a mixture of Blue Chip, tech
companies like big Tech Plus Salesforce and Adobe but I also
have a lot of other companies that are at very lofty
valuations. They trade up with momentum to
outperformed the S&P 500 by huge extent.
I was up above spy by like 25 percent, right?
So, that is momentum carrying these smaller companies into the
green further and further every single day.
And then the big speculative bubble starts to pop these
companies shift back down. My big blue, chip companies are
not popping at this point. So my portfolio is faring, okay?
It move down a little bit but not anything.
Cool. And then we move right here
where the cloud computing companies traded down too much.
They start to Rally to the point where they again get to this
valuation of where they were at the beginning of the year.
And that's where we are throughout all this time.
Period. And keep in mind, while all of
this is happening. While all this is playing out,
I'm reading more headlines about inflation.
And the FED becoming more and more aggressive at raising
interest rates. And I know that speculative
cloud computing companies that trade at really lofty price to
sales valuations. Way above their historical Norm
are probably going to do really poorly if interest rates start
to rise like crazy. And that's what I'm starting to
think. As these companies trade up 40%
in a couple of months, I'm thinking, man they're way above
their historical valuations. What I did was I looked at all
these companies that I own that are the more speculative ones
and I look at the valuations compared to their historical
Norm over the past 10 years and these type of companies like
crowdstrike atlassian, doordash Facebook cltd.
They were trading at price to sales on average of 17, 17,
price to sales when their historical Norm is about 9 or
10. So historical Norm 9 or 10.
They're trading at a 17 and I'm starting to feel very uneasy
about carrying these companies in my portfolio.
Then I also see some really bad news with certain companies like
Peloton Peloton, for example, had this report that they're
losing demand and as soon as I saw the report that Peloton was
having troubles with demand, I knew We might be in a bubble at
the stock. So I sold off a pellet on
Facebook. I also sold because we had Mark
Zuckerberg spooking investors saying that he's putting
everything into reality labs and he's going to do this full
metaverse change with the name change and I sold Facebook at
350, that was one of my best cells.
All of these companies were in my portfolio at one point
crowdstrike, atlassian doordash, Facebook cltd, palette on
Shopify and Snowflake and I sold every single one of them, right?
Right around this time, period. This is around, you know,
september/october of of last year of 2021.
I'm selling out of all the speculative companies and the
only non-speculative company that I sell is basically
Facebook because I don't like the future metaverse plans.
And I explained that in a video. Now, these turned out in
hindsight to be very good cells for my portfolio.
I didn't know that they'd be so good when I was selling them.
I thought I was just being cautious and taking some gains
and companies that have run up to locked evaluation But in
hindsight, these were tremendously good, fortuitous
cells for my portfolio. I took gains and crowdstrike,
atlassian. I made a lot of gains in that
company doordash. I was pretty neutral and I don't
really lose a lot of money or make gains in that company.
Facebook, I locked in a lot of gains on at 350.
A share, that was a good one to sell cltd, I locked in gains on
that one Peloton. I even turned out to be one of
the few investors that made gains on this stock.
I bought it when it was much lower and sold it at a decent
valuation, then Shopify and I think I did okay in both of
those as well. So while I sold out of these
companies and I'm feeling good about it at this point because I
sold them, I think at a good valuation, and in hindsight,
these are all very good cells, right?
They all took a nosedive after I sold them.
So I locked into ten thousand dollars of gains.
I'm feeling good at this point. My portfolio still kind of
keeping up with the S&P 500 even though it's a tech portfolio.
So it should be under performing at during this time, but I was
doing okay. And I felt good up until this
time. But unfortunately, even though I
dodged the All the Facebook selling down 40% and PayPal
selling down, you know, 70%, there is one company I kept in
My Portfolio that would go on to hurt my performance a lot which
was Netflix and we'll get into that in just a minute here.
After this point, we have the beginning of 2020.
The end of 2021. That's right.
Where we are right now. Concerns of recession inflation
and the FED raising interest rates continues to grow the fear
and greed M moves to an even more fair.
Awful stance. At this point, sentiment starts
to become very bearish overall and technology companies in
general, start to trade down pretty aggressively the
companies that are doing good at the beginning of the year are
the Berkshire. Hathaway companies, this is
where it's buffets time to shine because he has a lot of the
consumer defensive companies. He has a lot of the oil
companies that are just going through the roof at this point.
People love the oil companies, the commodity companies, they
love the defensive consumer companies and those are trading
up while Tech companies start to sell off and this is where we
get to wear my portfolio starts to get damaged.
Okay. Now we get to Netflix before
this time period of Netflix. I wasn't really feeling too bad.
In fact, I wasn't concerned at all because you look at this,
we're like three or four percent below, the S&P 500, and that's
being invested in a tech portfolio, which I should be far
below, right? We have like Arc, invest, its
down a ton. We have tiger Global, that's
down a ton. We have cacao and all these
different hedge fund manager. Is that are down a ton when
they're focused on tech companies.
But because I'm mostly hiding out in big Tech.
My performance is doing okay, I have Google that's doing okay.
I have Microsoft and Apple is doing okay, and they're keeping
my portfolio, pretty much in line with the S&P 500.
Maybe a couple percent below it, but then we get to Netflix and
things start to change. This is a doozy.
This is where it just. I got my one that caused me some
pain hair, and everybody has that stock.
If you do individual investing, whether it's Facebook, that Is
the off guard or PayPal. Most people have a stock that it
just doesn't go the way that you want.
And for me, this one so far is Netflix.
Netflix reports their Q4 report of 2021.
And if you recall, this is when they're supposed to have a lot
of subscribers gained, they had squid game blow up.
They had don't look up the Leonardo DiCaprio movie, right?
And it's the holiday season. So they're supposed to get a lot
of subscribers. They missed their subscriber
gains, or at least they barely match them.
And not only that they gave really weak guidance for q1 of
2022. They said that they're only
going to gain 2 million subscribers compared to the
street expecting five million because that's normally a good
quarter for them. The stock Falls 30% After Hours
the next day because of Netflix is really poor report and keep
in mind that out of all the companies reporting Netflix is
the first one to report. It's the first big company to
report which makes its report very volatile because investors
don't know what to expect. So false 30%, then Bill Ackman
jumps in with a billion-dollar by of Netflix.
It goes up like sixteen percent plus.
A lot of my other stocks jump as well.
The performance almost goes right back up to where it was
and then it starts to trade down again and I really volatile way,
but even up till this point my portfolio is doing okay.
I was still in the green. I was, you know, like 10-15
percent below, the S&P 500, but that Gap can be made up very
quickly, right? So, I'm not really worried at
this point, and I realize that in the The short term with the
FED being hawkish and interest rates going up that these tech
companies are going to have a difficult time, but Netflix was
a huge surprise. So that hurt my portfolio
Netflix. Now, I'm in the red, they had
their first really bad report stocks down 30% and I bought a
little bit of the dip Bill. Ackman is in on the stock.
Now he bought a billion dollars of it and I'm thinking okay
there's still a chance with Netflix said you know they
sandbag their guidance and they'll have an outperformance
next quarter and that's not what happens.
So Netflix at this point is still down a lot from its
all-time high and I still have it as a significant portion of
my portfolio. I have like 13 or 14 thousand
dollars in it and then they have their their q1 of 2022 report
come out and they actually lost subscribers in.
This is something that I don't care who you are, if you are an
investor in Netflix, you are not expecting them to lose net
subscribers. It's never happened in, like the
last 10 years, they forecasted to million gain and the loss.
Us 200,000 a massive Miss on their forecasts and Bill.
Ackman me the rest of the street investors are shocked at it and
deservedly the stock cells down 40%, an additional 40%.
So now overall I'm down 50, 60 percent on Netflix.
I've lost over half of my money on this individual holding.
So Netflix has hurt my portfolio, a lot, but just in
general, a lot of the companies that I was in the green on
adobe's, Salesforce Microsoft, Apple, Google.
They're starting to give up some gains as well and trade back
down. So the portfolio just at this
point with this Netflix Miss again, it just crushes the
performance right now. Now to add on to this, I had a,
you know, this is a double whammy here because right after
Netflix gives this awful report, I mean, this is just a
fundamentally terrible report by Netflix and the stock deservedly
fell 40 percent. We have Amazon right afterwards,
just a couple weeks later giving their first quarter report,
which was disappointing. Now, There is some significant
differences, here. I think that Netflix is was
really fundamentally bad, like the report was just awful,
Amazon's I don't think so. I think this street is, is
overreacting in my opinion. I think the Amazon is not
fundamentally in a bad bad position here, but regardless,
Amazon sold down 12%. And since I have a significant
portion of my portfolio on Amazon, it has an outsized
effect on my performance, causing it to drop down a little
bit more hair. So, this is what it looks like
overall. Obviously, it looks Ugly right
now, I'm under performing as of right now, but keep in mind,
this is gone both ways. In fact, the majority of the
past year, my portfolio has been above the S&P 500.
So it's gone through time periods of outperformance.
Just over the past four months, it's been hit a lot.
There's been huge sell-off in different companies and Tech in
general, is having a very difficult time because of this
Market rotation. So, while I'd like to outperform
preferably over every single time, period that would require
me to do a lot of Swing trading, a moving into different Trades
like the oil consumer defensive trade instead of just dollar
cost averaging in and focusing on companies that I think are
really good value within the tech portfolio.
So I'm not really doing that swing trading.
I realize I'm going to underperform As Long As interest
rates are the main headline but I'm willing to go through that
in the meantime. So I know a lot of you are
looking at this and think and thirty thousand dollars in
losses. There's no way I can put this
back into the green and catch up against the S&P 500, right?
And I don't blame you if you think that that's fine, but
again I'm going to be Rocking this every week week by week
until the end of 2025. So if you want to see how this
turns out, and if I'm able to catch up against pie, just
subscribe to the channel and you can follow along for free.
You can find out with me because I don't know the future, maybe
I'll catch back up, maybe I won't either way, we'll find out
together. Now, I want to go through what I
think has gone on right now and the valuation of the companies
that I own in my portfolio, like I said, I only own nine
companies. Now, one of which I consider to
be speculative, which is Spotify and it's a A very small holding.
So basically, what I've done is, I've moved out all the
speculative tech companies and I've piled into companies that I
consider to be a lot less speculative.
These are the Blue Chip tech companies that I think are
trading at a very, very attractive valuations,
especially considering the recent sell-off in these
companies. I think some of them have been
heavily oversold, so let me try to go ahead and illustrate this
point evaluation. The first thing that I want to
point out is again, we are in a fearful posture right now.
Everyone's afraid of drones, Alan what?
He's going to say. An interest rates and inflation
and the big recession. That's going to happen, right?
Everyone. Generally right now is
pessimistic and bearish, and that is something that is
objectively, clear? In fact, if we look over at a
time line, we're still in the fair category, and we've gone
from times of extreme greed, when companies were trading
really high down to this Fair full category.
So that's where we sit right now.
The S&P 500 on a forward-looking basis is trading at an 18.6 Ford
PE, so we can round. That up to like a 19, right?
It's trading at a 19-4 PE. Let's go ahead and look at some
companies in their valuations that aren't in my portfolio.
We have Procter & Gamble trading at a 26 forward, P/E consumer
defensive company, very mature, not really going anyplace real
fast but it's a defensive company.
That's good to hold during recessions, right?
It'll it'll maintain the amount of money that you have trading
at a 26 for PE. We have Kimberly Clark, very
similar company trading at a 24. So these are both Trading A very
much premium to the rest of the market, the rest of the markets
trading on an 18 or 19, and we have Procter & Gamble at a 26
Kimberly-Clark. A day 24, we have the Clorox
company at a 26.6 forward. P/E.
All of these companies are trading at a premium to the rest
of the market. We have McDonald's trading at a
25 for PE and we have CostCo trading on a 40 Ford PE because
Costco is the ultimate defense company that still is growing at
a somewhat decent pace, but you look at these type of companies,
Costco McDonald's Clorox, Kimora Lee, Clark.
And if you are invested in those type of companies, you are doing
fine. You're not having any trouble.
The investors that are having trouble right now are the ones
invested in tech companies because these are the ones that
you sell off when interest rates, go higher.
So, let's go ahead and take a look at some of these companies.
Amazon is my top holding my biggest conviction, over the
next five years. The company on paper still looks
expensive right now, so if you're basing this company off
of just a normalized PE ratio, if that's the way that you're
trading it, it should trade down another 50%.
That if you're just basing off a PE, but Amazon's one of these
companies that is clearly still in the investment stage.
They did massive amounts of Investments last quarter and
throughout the last year, in fact, just last quarter.
This is almost comical how much free cash flow.
They had - - 17.7 billion free cash flow in a three-month
period that is a massive amount of free cash flow.
The earnings of course were in the - a terrible headline
because of the rivi in steak, the big right down there so they
Had - 3.8 billion dollars in in earnings are the balance sheet
is fine of the company but even the EPS shot into the - because
of The Ravines takes. So this is a very scary way to
look at Amazon. But the thing that I pay
attention to and the reason that I'm still bullish on this
company is because they did over 60 billion dollars of capex
Investments over the trailing 12 months over 60 billion dollars
which is more than any other big tech company, Apple and
Microsoft included and they did that.
Out the Looting, the shareholder at all.
Their shares outstanding didn't go up at all.
Meaning they invested 60 billion dollars into growing their
Network, to double the size hiring, hundreds of thousands of
new employees to keep up with demand and they did that without
diluting the shareholder at all. That is pretty incredible.
And in my opinion, I think that Amazon will be one of the
biggest free cash flow generating machines over the
next five years that thesis has not change because they're doing
lots of Investments over the next couple of quarters.
Has or they've done them in the past year, that doesn't change
the amount of free cash flow that they'll generate in the
future unless it's to the positive.
So I see the Investments to Amazon's doing even though it
causes short-term pain, and investors are running for the
exits. I see it as an opportunity and I
remain very bullish on this company.
Over the next five years, I feel very confident personally and
again, you don't have to follow me into these Investments but I
feel very confident personally that I make a lot of money on
this company. I will not end up in the red
with it and I'm using This dip, this opportunity to buy more
shares of the company. So I'll continue adding to my
position as Amazon trades down this year.
Now, just to go over these next ones quickly.
My next biggest bet is Google, which I also think is heavily
undervalued and it's being sold off.
In these basket of tech companies.
Google trades at a 24 and PE ratio while the S&P 500 trades
at a 19-0, paying one PE ratio higher for Google.
Knowing that it's a company that has a massive moat, they're
doing massive amounts of share BuyBacks.
They have 100 billion dollars of cash, over the amount of debt
they have. And again, keep in mind that
Kimberly-Clark Procter & Gamble, McDonald's.
All these companies that are Laden with debt, and they don't
have much growth are trading at almost double the PE ratio of
Google. So, when I look at this, I think
this company is probably undervalued.
We have Microsoft another company that I think is
undervalued, Microsoft is my third biggest, holding it trades
at a 26, P/E ratio. It grows its free cash flow
consistently while buying back shares consistently and I see a
lot of growth in the future of my Soft with their cloud
service, growing up, 50% year-over-year, we have Netflix.
This is the one that struggling right now, Netflix is story has
been terrible for the past year. It's traded down like crazy.
I'm in the red, and it would be easy just to sell out of this
company, but have to keep in mind that now it trades that an
18 forward P/E ratio. So it's literally cheaper than
the S&P 500, your pricing this based on a price to earnings
basis. I think this company is just,
it's just too cheap for me to sell out right now.
And even though I expect a very Terrible earnings report next
quarter. I could easily see Netflix
trading down even more. I think that over the full year
basis, they might actually be able to grow subscribers when we
factor in Q4. So right now, this company looks
like, you know, a broken company.
Lots of competition, it's no longer growing.
But again, it's priced at an 18 now.
Next up, we have Ali Baba. This company has just traded
down, basically, on General fears of China, and the Chinese
government and the whole conflict with Ukraine has not
helped this. Action.
It's not helped investors become more confident and investing in
Chinese companies and you can see that by what it's being
priced at its being priced with a forward P/E of 10.6.
So right around 10:50 and this is a company.
Again that's being priced at around half of what the average
company is in the US while growing around twice, the speed
of the average company in the u.s.
So this is a very cheap price company on paper, but I think as
long as the the issues with China Loom over investors, I
think that will overshadow The company and what the
fundamentals are doing. So, this is one that I've just
held onto. I haven't doubled down on it.
I don't have the guts to just continue pouring money into this
company. You know, I am putting more
money on Amazon, but not Ali Baba for right now.
I'm just holding on to it. I think there's a good chance
that it will recover over time, but I just don't want to risk
more and more money on this company.
Now, there are two companies that I've up my positions in
which are these next to Salesforce and Adobe because I
considered these companies to be very much blue chip technology.
Please Salesforce and Adobe are two companies that again,
they're blue chip tech companies that will post good earnings in
any Market environment, I think, even during recessions, and even
though they trade at a high P/E ratio, keep in mind what you're
buying is the free cash flow from the company, the amount of
actual money, they're able to generate and free cash flow and
Salesforce knows how to grow free cash flow.
Look at this free cash flow growth over the past five years,
they've grown their share count. It's true that they've diluted
shareholders by around 40 percent.
But over that same time, period, that they've deluded
shareholders over 40%, they've grown free cash flow over a
hundred and sixty percent. So, on a per share basis,
they're growing your free cash flow at a rapid pace, and I
think they'll continue to do that in the future.
I consider this company to be undervalued right now.
I think again, the sell-off is largely due to macro Trends and
I feel the same way about Adobe. Adobe is a company that trades
at a 28 forward P/E ratio in line with companies like
McDonald's and Clorox. Kimberly Clark even cheaper than
a lot of them and it's growing its Revenue faster, much faster
than those companies, it has a bigger motor in my opinion, a
better balance sheet and it's a free cash flow generating
machine. This company is growing, its
free cash flow like crazy. Literally five Xing it over the
past five years and it's doing that while doing share Buybacks.
In my opinion, Adobe is an outstanding deal right now in
the market and to me it makes perfect sense.
That during this time period, even q1 at a higher price than
It is right now fun Smith. Terry Smith has added Adobe to
his portfolio. So he thought this was a high
quality company to add to its portfolio and I agree with him
here and I would not be surprised if Terry Smith bought
more Amazon after the sell-off is.
Well I think in fact there's a very good chance you will.
So Salesforce in Adobe are two companies.
I'm very bullish on right now. I like the valuation and I
consider them to be very dependable.
Blue-chip free, cash flow growing companies.
I think they'll grow consistent free cash flow in the future
Apple obviously, Already know this company is a great company.
We look at the valuation of it, even apples traded down to a
price where Warren Buffett just recently, bought more of it.
You bought six hundred million dollars, more of Apple at 150
dollars a share. So this company is trading at an
attractive enough price that even Warren Buffett is upping
his stake in it while owning 40% of his portfolio just an apple
and that's creating out a 2006 Ford PE there's no validation on
the value of a company other than Warren Buffett upping his
It's taken it after you already has 40%.
I don't know what it is. I think that's pretty good,
validation, that apples, attractively valued.
Now, the last one I have is Spotify and this is one.
That's a very small holding. I've decided to keep it into the
portfolio as my only speculative play, meaning this one is not a
very established free cash flow generating company.
In fact, Spotify generates roughly, no free cash flow.
And by that, I mean, if you look at their free cash flow, it is
positive quarter-over-quarter but they're delicious.
Loading the shareholder at a faster speed.
So if you adjust for dilution this company really is not it
not making any free casual gains for the investor despite that
the company continues to grow. I think that they have a
long-term thesis. So I've decided to hold on to
this one but honestly Spotify is a very difficult company to
hold. I've considered selling this
one, along with the rest of the speculative companies and moving
the money into Adobe, or Salesforce or Microsoft one of
these companies. So overall excluding Spotify as
the only remaining speculative small bet in my portfolio
outside of Spotify, every single company in my portfolio is
focused on companies that are blue chip.
Technology companies that generate meaningful amounts of
free cash flow and I think they'll be able to grow their
free cash flow. They generate considerably over
the next five years. I look at Amazon as an example
of that, investors are concerned about how much free cash flow.
This company can generate. And I feel very confident over
the next five years you'll see that number go up considerably,
so that has been the major focus in the change over the past six
months. Is moving my portfolio from the
more speculative tech companies into the more free cash, flow
generative ones and focusing on that.
As being the major output free cash flow is a major output that
I'm putting emphasis on. So there's a little look at the
performance and what's happened so far.
I'll have more of these updates out in the future.
So, again, you can subscribe and follow along for free.
That's all for this time. See you in the next one.