No doubt, 2020 was a challenging year for humanity.
In 2020, we were all gladiators in the colosseum fighting for what we believe in, our values, our very existence.
Remembering that I’ll be dead soon is the most important tool I’ve ever encountered to help me make the big choices in life. Because almost everything — all external expectations, all pride, all fear of embarrassment or failure – these things just fall away in the face of death, leaving only what is truly important. Remembering that you are going to die is the best way I know to avoid the trap of thinking you have something to lose. You are already naked. There is no reason not to follow your heart. … Stay hungry. Stay foolish.Steve Jobs, Stanford University commencement address, June 2005
When I think of 2020, I reflect on Steve Jobs’ commencement address when he said you are already naked. At this point, we are already naked. 2020 peeled back the onion and revealed unexpected truths about ourselves, our neighbors, our nation, and all the implicit rules that govern how we operate within society. I like to think of this time as a gift because while 2020 seemed like a simulation straight out of The Matrix, we learned a lot about the systemic failures of government and how brutal humanity can get in times of crisis.
In this post, I am documenting my retrospective of my past year capital performance and making the necessary adjustments for 2021.
I try to incorporate the agile framework in my process where possible. A retrospective is a process to reflect on a recent iteration, which in this case is 2020 Q4/Year End.
What Worked Well
- Portfolio concentration. Concentrating an investment portfolio in a few stocks is not recommended for the majority of the retail investor community because of something we call risk. But after 20 years of investing, I felt it was now or never to step outside of the comfort zone of diversification to find magic in my own capital management and due diligence abilities. And so far so good. For the critics, I am aware that the 2020 rally (where we saw a 743% return in TSLA) is not normal, but could it be the new normal? 😅
- Ignoring the noise is easier said than done. 🤫 But I believe I’ve trained myself to understand that at the end of the day: (1) it’s my monies and (2) my conviction matters more than anyone else. Conviction requires homework (due diligence) because without it, it’s speculation, not investing.
- Invest in companies that are aligned to my core values. There are two type of CEOs out there: (1) one who focuses on their next annual bonus and (2) one who believes they’re working towards a better future.
In the former, the old guard CEO tries their best to protect their company’s moat which is constructed out of an old, obsolete business model. Their best idea for “innovation” is bundling their existing products together to increase annual billing thereby squeeze every penny out of their existing customer base. If that doesn’t work, they buy out a competitor and call it synergy － adding the newly acquired product into their existing bundled products lines. AT&T and Verizon are companies with old guard CEOs. But you’ll also find old guards in companies from the industrial age.
In the later, the new guard CEO is customer centric. You’ll find them on Twitter listening to customer pain points. Just like their customers, they are fed up with the status quo and are on a mission to change things － for the better. New guard CEOs are considered radicals by main stream media and Wall Street who often have to defend their company’s position in the marketplace. Lastly, new guard CEOs are often the Davids challenging the Goliaths.
As a technologist, I understand that innovation does not happen without iteration. I value companies that are constantly iterating, fixing pain points, and have new guard CEOs with a vision so big it knocks down the Goliaths of the world.
What Can Work Better
- Sticking to my portfolio’s target allocation. 2020 was a busy year and it was difficult sticking to my target allocation because of the market rally.
My 2020 target allocation looked like this:
I had high hopes in owning a piece of new generation platforms (healthcare, telecom/5G, banking, retail, and energy), but over the course of the year, my conviction changed and my portfolio ended the year looking like this:
2020 Actual Allocation (mess):
There are so many great companies I want to own and it’s difficult to allocate smaller pieces of the pie to each. But for now, my conviction and allocation target for 2021 are as follows:
My 2021 target consolidated allocation:
In my 2021 target allocation, the big heavy weights in my portfolio are TSLA, NET, and SQ. I’m on the fence with TDOC, which I may sell and reallocate to the heavy weight companies if the TDOC’s story goes south. I want to own 9% in ARK Innovation funds (for innovation exposure) and 1% in Bitcoin. It’s a consolidated view because these stocks are spread between my retirement and cash accounts.
Of course, this is my allocation. Do your homework (due diligence) and find an allocation that suits your risk tolerance, needs, etc. You do you. 🤪
Finding a path forward…
It is not the critic who counts; not the man who points out how the strong man stumbles, or where the doer of deeds could have done them better. The credit belongs to the man who is actually in the arena, whose face is marred by dust and sweat and blood; who strives valiantly; who errs, who comes short again and again, because there is no effort without error and shortcoming; but who does actually strive to do the deeds; who knows great enthusiasms, the great devotions; who spends himself in a worthy cause; who at the best knows in the end the triumph of high achievement, and who at the worst, if he fails, at least fails while daring greatly, so that his place shall never be with those cold and timid souls who neither know victory nor defeat.Theodore Roosevelt
In 2020, Steve Jobs reminds us that in the face of death, all external expectations, all pride, all fear of embarrassment or failure strips away to our bare naked self, our core truths, our vulnerabilities. In 2021, I wish for myself and anyone reading this blog that with our vulnerabilities in hand, we all find the courage to enter the arena and dare greatly.
Stay hungry. Stay foolish. 🖖🏼