From my 2018 end of year portfolio review:
“Within the next six months I won’t be surprised to hear good news from:
- Asterias (under its new ownership of BTX) as their treatment for damaged nerves progresses,
- Geron as it makes progress through its cancer treatments.
- MicroVision because CES 2019 is near and management guided towards cash flow positive or profitability sometime this year.
I don’t expect startling news from AMSC or NPTN because their technologies have already been developed and introduced to the market, and both are selling to commercial, not retail, customers that are more likely to grow without press releases or customer testimonials.”
The ones I didn’t expect anything from delivered the nothing I expected, and even less. The ones I expected something from did the same; and true to form, MVIS failed to deliver again.
Welcome to my semi-annual portfolio exercise. As others have advised, it makes sense to regularly revisit investment decisions to see if they continue to make sense. It’s too easy to buy and forget. Congratulations on investing, something so few do; but not following through is simply being forgetful, not something insightful. Of course, since my Triple Whammy about eight years ago, I can’t point to great success from attempts at proper attention to my portfolio.
Back then I had a more diversified portfolio of about eight stocks. That was down from a dozen or so, but that number was reduced by my divorce. For several years, the portfolio was growing again; but then trouble hit DNDN (despite FDA approval for a cancer vaccine), AMSC (as a customer decided to steal the product and become a competitor), and MVIS (as a key supplier decided to supply materials for smartphones instead of pico-projectors.) So it goes. So it went.
My portfolio now is based on AMSC, BTX, GERN, MVIS, and NPTN. Even that is less diverse in some regards because I have BTX because they bought AST that was spun off from GERN; and I have NPTN because I bought back into an industry I was cut out of when GGOX which bought LMRA which was spun off from MVIS was bought out by a larger company just as MVIS’ technology became profitable. Basically, my portfolio is AMSC, GERN and spinoffs, and MVIS and spinoffs.
This exercise, however, has helped me understand why I own what I own. This exercise makes it easier to keep track of those histories, and this exercise makes it easier for me to track whether my original rationales have changed. In general, I own these stocks now for the same reason I bought them then – but with some shifts.
My investment strategy worked for decades (details in my book that’s the basis for this blog, Dream. Invest. Live.), buy stock in small, positively disruptive companies that are overlooked and possibly undervalued, then sell when the companies succeed and the stocks trade at a premium. It worked with AOL, PIXR, SBUX, and several tech stocks. It almost worked with AMSC and DNDN. Despite being in green technologies, it didn’t work for GAIA and RSOL. It may yet work for all five of my current investments, hence my continuance of Long Term Buy and Hold (LTBH).
In the meantime, however, each of these aging startups have seen drastic dilution and encroaching competition. A 50% dilution drops the potential gain by 50%, and some of these stocks have seen twenty-fold dilutions which continue. Encroaching competition means less market share for technologies that may finally be coming to market.
The most common quick response to my portfolio performance is that I obviously did something wrong, but such responses are easiest in retrospect. Other possibilities are that the nature of investing has changed thanks to high-speed trading, rabid short-sellers, and an investment community drawn to mega-caps instead of micro-caps. It’s also possible, as some investment friends pointed out, that I simply had a perfect storm of bad luck. Statistically, it has to happen to someone. Oh goody. Maybe it’s me. Maybe it was me.
Maybe it won’t be my case forever. AMSC has lined everything up for profiting from improving the efficiency of electrical grids. AST’s (oops, BTX’s) proof of helping accident victims regain control over some of their limbs helps a powerful unmet need. GERN’s progress in fighting cancer slowly progresses, but it hasn’t stopped, either. MVIS was supposed to have very good news in June. Maybe they’ll post their press release while I’m typing and posting this. NPTN was undermined by a tweet and a trade war, which should be temporary.
Eight years ago my portfolio was sufficiently large enough to re-retire me. Now, dilution and selling to pay bills has diminished my expectations. Yet, simply returning to my original cost positions would provide me with years of living expenses, a comforting cushion as I continue to regain financial freedom.
“Perseverance pays” versus “Doing the same thing but expecting different results is a form of insanity.” I’m a fan of nature. I see evidence of waves eroding cliffs, and forests sprouting from a few seeds. I’m a patient person with a tendency to endurance endeavours. (Check out some of my other books for some examples.)
I also understand arithmetic. Investing is basically trusting to simple yet un-intuitive ideas like compounding principal. Several times I’ve built savings, spent them, then built them again. Save up, go back to college and get a masters in Aerospace and Ocean Engineering. Save up, and get a house. Save up, and retire at 38. Save up, and finally buy a home instead of a house. Save up – and oops, hit a Triple Whammy and a Great Recession. There has been a slight – nah – significant delay. I am now working back to making enough that I can spend less than I make so I can have enough to invest. I won’t be starting from nothing. I have a wealth of experience, a very clear understanding of my wants and needs and resources, and a clearer knowledge of what the world may compensate me for and with.
A regular review reviews more than its superficial goal. Whether it is stocks, or something else, conducting such an exercise becomes a catalyst for reviewing a life; and an examined life is truly living. Now, excuse me before I start typing about “Why are we here?”. I may be thinking it, but that’s a bonus I enjoy for myself – for my self – for now.
Here are the links to the discussion boards I use. Those discussions are less philosophical and hopefully more practical. Feel free to comment here or there, and to pass along links to others. The bigger the discussion, the better the chance of valuable insights (as long as the trolls and flamers are moderated appropriately.) Pardon the paywalls. If there’s enough interest, I can repost those posts here.
The Motley Fool