I was only planning on giving annual updates but opted to give this 18-month update, given the changes I made a couple of months ago to rebalance my portfolio.
As a recap, I bought several ‘pandemic stocks’ following the dip in 2022. I gave a 1-year update in mid-2023 here.
I planned on holding all of them longer, but 1) the recent boom in AI forced me to consider a rebalance and 2) strong (IMO somewhat unjustified) continued appreciation gave me a good opportunity to exit. The timing was fortunate since there was a correction after I sold.
Below is a summary of what I sold and the realized gain/loss.
Summary
There were multiple lots of some stocks, so I’ve summarized each with the overall realized gain at the time of the sale in Q3:
- Affirm (AFRM): +18.09%
- Allbirds (BIRD): +6.89%
- Coinbase (COIN): +6.42%
- Carvana (CVNA): +845.57%
- Peloton (PTON): -71.51%
- Snapchat (SNAP): -1.99%
All realized gains/losses were long-term (capital gains rate) except Carvana (CVNA) and Allbirds (BIRD).
I know these are less impactful without the values or relative weights, but I’d like to maintain some anonymity around it.
Though Peloton lost a significant amount of value, it was a relatively small investment and was more than offset by the unprecedented gains with Carvana (saved by the meme).
How I reinvested the proceeds
The AI boom drove this sale, and I reinvested the proceeds mostly in NVIDIA (NVDA).
This was hard for me personally since I initially passed on buying NVIDIA at ~$110/share in October 2022 (I don’t know why), and at the time of the purchase, it was in the $400s following the strong run-up in 2023.
Why NVIDIA, why now
Most analysts said it was overpriced and it’d have to perform perfectly to achieve anything near that valuation.
But I think that fails to grok that AI is another secular trend like PCs (Windows, Mac), the internet (browsers, search, social) and mobile (iOS, Android, wearables). The difference is that new technology like AI can now spread faster than ever before and get used in new ways. Every new epoch uniquely benefits from the past, potentially bending the growth curve in new ways.
The other difference is that NVIDIA has a monopoly position on the core technology driving this innovation. Therefore, the ~350% run up over the last 12 months doesn’t make NVIDIA the stock of the last year, but rather it’s the stock of the next decade. The recent 3X gain will be a blip compared to what’s coming thanks to NVIDIA’s CUDA (moat), among other things.
So I pulled the trigger and purchased a significant amount of NVIDIA stock (all proceeds, plus more) and a smaller amount of Taiwan Semiconductor (TSMC). I passed on the Arm IPO.
The hard thing about investing is you must be contrarian and right, so we’ll see where we end up. I tentatively plan to give the 2-year update in another 6 months, plus or minus. For reference, the 1-year update from earlier this year is here.
UPDATE: A few days before the end of 2023, I sold a significant amount of other holdings, using the gains to double down on NVIDIA again. I tentatively plan to give a full update on realized and unrealized gains so far in the 2-year update post in mid-2024.
