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Time for another year end reflection thread - a compilation of 2020 errors:
1) I was underweight tech into March. I saw SaaS valuations hitting new highs, and a lot of interest in SaaS / Semis from people I would not describe as natural holders (when 70+ year old PMs start talking LTV/CAC ratios / deep learning / "the metaverse"... I get concerned)
Admittedly, I have a near-pathological aversion to crowding.
But we were also seeing some early signs of a cyclical recovery in late 19 / early 20, which (combined with a tight labor market and healthy consumer) I thought might lead to a cyclical rotation. Which brings me to...
But we were also seeing some early signs of a cyclical recovery in late 19 / early 20, which (combined with a tight labor market and healthy consumer) I thought might lead to a cyclical rotation. Which brings me to...
2) I *really* did not expect COVID to become a big deal back in January / February. I was aware of it, I thought it could potentially spread, but I did not expect this policy response in the Western world.
Even when it did escape China - at most, I thought a few large cities might impose stay at home orders to mitigate hospital overcrowding. And even this seemed somewhat absurd to me.
But otherwise I assumed we would just muddle our way through, and accept a certain level of deaths as an unavoidable tragedy (and it would be economically manageable, because the deaths would be concentrated in the very ill / elderly). Similar to the 68-69 pandemic.
I was also probably leaning on past experience... it seems like there's a virus scare every few years. I looked at SARS, H1N1, MERS, ebola, etc. and concluded concerns should probably be faded.
3) Did not (sufficiently) embrace 1st derivative thinking.
I recall several people on here (I want to say @GavinSBaker was one of them? Could not find source) noting that, in a panic, the obvious works.
I recall several people on here (I want to say @GavinSBaker was one of them? Could not find source) noting that, in a panic, the obvious works.
I totally believe this. In 2016, I remember businesses with pipeline subsidiaries getting panic sold because they screened as more leveraged on Bloomberg. Nuance gets lost.
In 2020, that meant buying Clorox / Zoom / Peloton / etc. (I did not do this)
In 2020, that meant buying Clorox / Zoom / Peloton / etc. (I did not do this)
However, I have been surprised by the duration of this trade.
In June, if you had asked me whether PTON / ZM would be higher or lower in 6 months, I probably would have said lower. This would have been very wrong.
In June, if you had asked me whether PTON / ZM would be higher or lower in 6 months, I probably would have said lower. This would have been very wrong.
4) Even when it became clear that the consumer would be ok due to stimulus - I didn't expect spending to hold up so well. For instance, I probably wouldn't have guessed the RV industry would have a great year.
Individual security misses:
Transformation stories - should have bought http://DSM.AS , http://MRK.DE
Should have held $AVTR and http://AZA.SE longer.
Transformation stories - should have bought http://DSM.AS , http://MRK.DE
Should have held $AVTR and http://AZA.SE longer.
Should have bet more on:
(1) Consumer credit (especially since it became clear the consumer was fine)
(2) Auto dealers (like I bought a car this year... stupid miss)
(3) Online advertising
(1) Consumer credit (especially since it became clear the consumer was fine)
(2) Auto dealers (like I bought a car this year... stupid miss)
(3) Online advertising