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Today, I just want to hit on the current portfolio performance. Really, I should call it portfolio underperformance… because for us, this year, things haven’t been pretty when you look only at the portfolio level.
Our Flagship Fund started off the year quite rough. We were overallocated to software names, and boy, did we get hurt when that sector dropped all at once. We were quick to admit the portfolio was overallocated to the software sector, and we made some adjustments. Since then, we have been on the up and up, but we have yet to recover from those initial losses fully.
Had we not made that overallocation oversight, the portfolio would be up around 11% YTD; instead, we are up only 1.31%.
It is absolutely BRUTAL to look at these numbers and know that I am losing out on massive portfolio returns, but it is all a part of the process. Luckily, we have seen some great returns out of other portfolios, which have helped to offset some of this underperformance.
With that being said, I have a very strong belief that this portfolio will catch up to, or even surpass, the returns of the SPY by the end of the year. Remember, we are only 5 months into the year… there is a whole helluva lot of time for the portfolio to start performing, and I think it’s going to happen. We have a lot of quality stocks that are underperforming the market, and I don’t really see any reason why.
Our Second-Hand AI effects portfolio has not experienced the same fate. It has been performing extremely well and even outperforming the SPY by good margins. Year-to-date, we are up 19.76% — we are up 50% from last July, too; another wonderful SPY outperformance. Of course, the leader for our gains in this portfolio has been Bloom Energy (BE). Our returns on Bloom have surpasses 850% since we first invested in the company, and YTD are up 179%.
I think we are still well-positioned here, but on any pullbacks that we see, we could start adding positions here in some of the current growing sectors. We are looking at stocks doing optical and photonic work. I also would like to add some stocks doing HPC (high-performance computing). Again, I think we are looking at adding these new positions when we see a pullback. We might start adding in small allocations for the time being, but I don’t think we would take bigger positions until we see some better prices.
When will that pullback come? I have no idea, but I do know that the current inflation numbers and runaway oil prices are not making me feel like we are going to continue this “up and to the right” setup.
Here are some new names we are looking at:
LITE
CORZ
RIOT
The only place where we have been severely underperforming is on the Tech Growth Portfolio. YTD, we are down nearly 8%.
Now, this underperformance isn’t something I am happy with in the slightest, and honestly, it has been quite surprising for me. I started to integrate the monthly picks into the portfolio, and, of course, this month has been brutal. The SPY grew 5.6% while the portfolio dropped 2.2% — losing by more then 7.4% to the SPY in a month will really make your portfolio performance look poor. Believe it or not, the Tech Growth portfolio has actually outperformed the S&P 500 over the past three months. The tech growth portfolio is up 9.3% (outperforming the SPY by 1.1%) over that time period.
Really quick, here is the performance each year in the Flagship Fund since 2020 to now.
Here is the performance compounded vs the SPY.
- ¢, Founder of The Simple Side