Last year there was a post asking what folks were doing to profit from the current/upcoming recession on Hacker News. I replied that I purchased some pandemic stocks, which I started doing in April 2022.
Most of my purchasing was through summer 2022, but I’ve bought others more recently, like Carvana on the dip in December (which luckily popped since it became a meme stock), as well as Meta, Amazon and Google on the dips in October. The most recent was Allbirds on the dip in March since I had just purchased the shoes and they quickly became my favorite.
Overall, I’m up 36%, but as you can imagine a few winners (which I luckily have larger stakes in) make up for the losers. My target timeline is ~3 years, and we could still see a deeper recession from a hard landing, so I plan to post more annual updates.
Summary
There were multiple lots of some stocks, so I’ve summarized each with the overall unrealized gain/loss so far as of this morning:
- Affirm (AFRM): -11.33%
- Amazon (AMZN): +25.25%
- Allbirds (BIRD): +9.43%
- Coinbase (COIN): -34.32%
- Carvana (CVNA): +306.5%
- Alphabet (GOOGL): +29.35%
- Meta (META): +170.89%
- Cloudflare (NET): +14.35%
- Netflix (NFLX): +97.08%
- Peloton (PTON): -54.61%
- Roblox (RBLX): +25.14%
- Shopify (SHOP): +39.26%
- Snapchat (SNAP): +3.21%
- Snowflake (SNOW): +11.14%
- Unity (U): +8.91%
I know these are less impactful without the values or relative weights, but I’d like to maintain some anonymity around it.
Commentary
It’s hard to convey how much of a roller coaster the the last 12 months have been, with some pretty large negative swings that I just had to watch and not react to. There are likely more to come, especially since it seems a lot of the potential good news is already priced in.
Interestingly, in that original post I mentioned Peloton was one I regretted almost instantly, and is now my worst performer by far. Unfortunately, greed got the best of me and I caught that falling knife buying a few times as the stock dropped further. I was hoping they would get rid of the excess inventory, improve distribution and double down on subscriptions to turn things around, but that hasn’t materialized. Maybe it still will, or they get acquired.
Despite the strong gains, I still feel Shopify (improved focus and cost-cutting, strong brand), Netflix (new ad tier, other new streaming services struggling and likely to go back to content), and Meta (improved targeting post privacy changes + AI opportunities) still have good upside potential.
I also really like Microsoft due to their enterprise moat and opportunities with AI, but their stock never had the correction the other stocks did and that was the scent I was chasing at the time (right or wrong). But long-term, I also wonder if AI will negate the need for human productivity software since the AI can just do it and review/edit mode requires less bloat (e.g. video with Final Cut Pro vs. TikTok, or images with Photoshop vs. Instagram). I wouldn’t doubt if we see an AI-native productivity suite that doesn’t just integrate AI, but is predicated on simply reviewing AI generated content (editing vs. creating).
I’m disappointed to have missed Nvidia (up 3X since October) since I used to own it and have been watching it since the crypto bust created excess inventory and a predictable dip, then the AI trend led to the recovery. The valuation feels rich, but could easily grow into it given the trajectory of AI, unless the hyperscalers make their own chips.
Perhaps counterintuitively, it seems it’s more useful to read/listen to tech/business analysts than financial analysts/stock pickers since, at the end of the day, you need to make your own decisions about the fundamentals and prospects of the business. Financials are a good indicator of fundamentals, but by definition backward looking while valuation is forward looking.
I’m curious to see how these perform if the US enters a broader recession in the next 18 months. I don’t plan to sell unless something catastrophic happens and I see a better opportunity to shift to.
UPDATE: Later in Q3 2023 I sold part of my portfolio to rebalance and take advantage of the AI boom. I primarily sold the stocks I believed were done with their near-term recovery and would benefit less from AI like Affirm, Allbirds, Coinbase, Carvana, Peloton, and Snapchat. Thankfully, I was able to capture significant returns at the capital gains tax rate. When I get time I may share more about 1) the realized gains/losses and 2) how I reinvested the capital. Read more here.
