Hooray for Shopify!!
Our largest stock holding, Shopify ($SHOP), has gone ape-shit crazy in a good way
Hooray for Shopify! This stock move is better than when those Girls Went Wild in New Orleans back in the day. It was already our largest position in the Smidlap Misguided Portfolio of Individual Stocks but this move up during a global COVID-19 pandemic is astounding.
This article today outlines that Shopify has just become Canada's Second Largest Stock. They also announced today that they will be offering cash advances to some of their hard hit small business customers. How do you like a move like that to build loyalty to your platform? I sure like it. They seem to be firing on all cylinders during the pandemic with merchants moving more selling functions to e-commerce. Do you think those same merchants will ditch the platform once all the dust settles and life returns towards a pre-virus "normal?" I don't think so either. I think they'll find out they ought to have an e-commerce channel for sales in addition to their brick and mortar operations if they ever had physical stores in the first place. Times are changing.
Why are investors saying "Hooray for Shopify"
The whole rally seemed to start a few days ago with a tweet from Shopify's chief technology officer looking to hire more talent.
That looks like a nice increase to me. But why did I want to write this in the first place? I am proud to have selected a good investment here but this isn't to puff my own peter. I wanted to demonstrate my process for stock buying. I'll bet a lot of you out there might think "Hell, that dumb bastard Smidlap puts down a large position in one stock and thinks he's some kind of guru?!" I just wanted to replay the strategy that One Big Winner can Supercharge Your Returns.
Why do we own so much? Only because of the gains and not oversized buys
I was curious myself about the size of the positions I bought in our best performers so I looked back at how many times I purchased certain stocks and the average amount of those buys. The average buys I show are not absolute amount but proportional to the largest single buy I ever made which was Berkshire Hathaway, which I only bought once and set at an arbitrary 1000 for comparison purposes.
These are our top 14 holdings as of April 20, 2020. Hooray for shopify!
How did we buy our stocks?
You can see our average buy was around a relative 500 and that goes for the bottom of the portfolio too, which is not shown. The reason the top 7 stocks make up 71% of the portfolio is twofold. First, I bought relatively the same amounts as I did for the not-so-great-yet performers. Secondly, once the top stocks showed some promise I bought them again and usually in the earlier stages and usually several times.
The only name I bought several times that has really sucked a big moose pud is Kinder Morgan ($KMI). So myth number one is busted that we got lucky with one big risky buy. It's just not true and it's more a case of adding to our winners helping the cause. Those top 7 are all new economy winners in my estimation. That's not to say they will all keep going up but I wanted to give a glimpse inside the mind of a truly misguided investor who thinks he can beat the beloved #VTSAX.
Myth number two is that once a stock has gone up several times its initial value it's too late to buy it. Sure, I was fortunate to start buying Shopify in 2016-17 and got our shares at an average price of less than $47. However, in the For Beginners: The Malevolent Missy Investment Series we just had our gal buy Shopify about 5 weeks ago for around $310. Here is the post: Malevolent Missy Invests, Stock Series #7 We bought Shopify (SHOP) at a Discount! Today those shares were as high as $640/share so doubling her money in a month doesn't sound too bad. If you are new to this saving and investing thing go ahead and check out the Missy series for some valuable 4-1-1. The series is meant for those just starting out with investing.
Wrap Up
Once again, this is not to say our way is the one and only way and everyone else is an idiot. We let the Bogleheads do all that kind of talk in the deep end of the Reddit cesspool. They'll tell you how smart they are by parroting some information based on something a "guru" said once. So, this is only "a way to do it" and far from the only way. It might not be the best but it's what we're doing and we'll see how it goes.
Remember, this if for your own big brain to chew on only and should not be considered advice but just some stuff to think about. It is also not a recommendation to buy or sell any securities. I am not a professional and you would be loco to want to listen to my. Just keep checking in for the entertainment value. Maybe next week I'll fling some dung at a board with some ticker names on it and buy that like a monkey in a cage.
What do you think? That move up is really something isn't it? Did you ever add to any of your winners? How long before we're back to dining on roadkill and cat food because we lost it all?
Late edit: Today (Feb 4.2021), almost 2 years later $SHOP is selling for over $1200/share. I'm glad we held on. Hooray for Shopify!
These are frugal stewed chickpeas. You should make some.