Oh My … My Portfolio Is Down Big Time! | 7investing
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Oh My … My Portfolio Is Down Big Time!

May 10, 2021 Advisor: Anirban Mahanti
Industries: General  
Advisor Update Date: May 2021

My Charles Schwab account was down 6.5% today. 

That portfolio is also down 10.3% year-to-date and a solid 21% over the past 3-months. 

It is actually worse when I compare the above with the S&P 500 index in the same period.  

Last 3-months Year To Date
S&P 500 9.3% 13.3%
Anirban’s CS Account -21.1% -10.3%
Alpha or not! -30.4% -23.6%

Ouch!

The thing is — all the hyper growth stocks I own have been punished hard by the market. Many reported excellent results, but they weren’t good enough to satisfy the already high multiple. 

Then, there’s supposedly inflation starting to show its ugly head. 

There’s perhaps even the potential of the Federal Reserve starting to tighten monetary policy. 

Hyper-inflation is terrible. But a little bit of inflation is good. And companies with competitive products, must-have software, and services can pass on cost increases. 

So, none of this actually fazes me. It doesn’t. 

As I have tweeted out a few times, I am dusting my watchlist and looking at my allocations, and buying my favorite ideas on sale. 

But what gives me confidence? 

Stocks regularly pull back. Sometimes they pull back a lot. And even the best companies, those that deliver multi-bagger returns tend to experience big drawdowns. We can’t know when these “corrections” happen. 

So instead of trying to time my entry and exit into the market, I just rely on time arbitrage. I don’t need to make money now. As long as I can generate alpha over longer timeframes, my family will be fine. 

So when I look at the 3-year data on my account, it is very reassuring. 

Last 3-years
S&P 500 19.2% annualized
Anirban’s CS Account 64.3% annualized
Alpha 45.1%

I don’t expect to maintain that 45% per annum alpha. 

I expect it to come down. 

But I know that even a 2 to 3% win over the S&P 500 makes a humongous difference. 

In topsy turvy times like this, I remind myself that volatility is the price paid for generating alpha over the long term. 

So, I am riding out the volatility. 

I am incrementally adding to stocks. 

If you have been investing for a long-time, this is not news to you. You can channel your experience to ride out the volatility. 

If you are new, I would suggest riding out the volatility. Investing is a lifelong journey. It is a roller coaster ride. Once you get used to it, the ups and downs won’t phase you. You might even be amused and enjoy the down days!