It’s been a minute. Apologies for being MIA for the past 6+ months. So much has changed since my last post.
Inflation is now on everyone’s radar, and it’s running high. At SFO, they are selling a can of Diet Coke for $4! A basic to-go chicken salad is $23! Granted, these are airport prices… but that’s just bonkers. Below is a text from my Real Estate Agent about a nearby house sale:
“We appreciate each offer we received. In a more ordinary market, we would have been happy dancing over any of these great offers.
Here’s the scoop so you can tell your clients…
We had nearly 100 showings, with 25 excellent offers. The top three offers were only smidgens apart in both sales price and various terms.
Once again, thank you for showing this lovely home and submitting an offer. We wish we could make everyone as happy as we did one set of buyers.”
25 offers! Weren’t higher rates supposed to slow down demand?
Since my last article, the SPY is down ~7%, the Nasdaq ~14%, and the ARK Innovation Fund is down a whopping 48%! We’ve also had multiple accumulation attempts, but all of them have failed so far. The percent of Nasdaq stocks above their 200-day moving average (a common indicator representing stocks in an uptrend) is only 22%. What’s even more concerning is the round trip from the low-20s up to 50 and now back down to 22% in just a month. When markets lose lift, that is when they are most vulnerable.
Having said that, of course, no one knows what will happen next but it sure feels like the market is unlikely to see sustained upside as long as the Fed is raising rates and removing liquidity from the system, or at least until something “breaks”, whether that’s valuations reaching more reasonable levels, a problem with the bond market, or perhaps even a recession.
Introducing: The Playing For Doubles Fund
The good news however is bull markets are born out of bear markets, and volatility creates opportunity. As I’ve said before, to win at investing, you either have to do something that other investors aren't smart enough to do, or do something that other investors aren't willing to do. The second is much easier. And most investors aren’t willing to embrace volatility. So that is what we must do. It takes courage to invest when there is great fear and pessimism in the market, but such times can present great buying opportunities for patient investors like us.
As a result, I am happy to share that I launched Playing For Doubles Fund 1, LP during Q1. We have $600K invested so far, and are off to a nice start. The Fund was up +2.59% in Q1, while the SPY was down -4.6%, a difference of +7.19%.
Below I have shared my first investor letter, which covers the following topics:
Q1 2022 Results
The Goals Of The Partnership
How To Beat The Market: A Framework
How The Fund Plans To Invest (at a very high level)
If you read it, do send me your feedback. Specifically, I’d love some suggestions on what content/information you would find valuable to be included in such letters. I can take that into consideration when writing the next one.
Thanks!
Congrats on starting the fund! Wishing you great and continued success