Up until now, I haven’t share anything on my blog about my personal investments. On occasion I tweet I own a stock in excitement. With the shutdowns, this ended up being my main hobby in 2020 so I decided, why not do a recap of how my stock investments performed this year.
Most of my top positions were actually purchased in previous years. I’ve been investing in the stock market for over 10 years, saving a large percentage of my salary, and focused on growing my career for the last decade. As a result, my portfolio was incredibly painful to look at in March. I was also able to enter new positions with cash I earned throughout the year. Below is my strategy for how I decide to invest, how each of my stock investment accounts performed, some of the new stocks I bought this past year, some of the stocks I trimmed / sold and lessons learned.
**Nothing on this blog is a recommendation to buy, sell or hold a stock. This information is a recap of my own investment performance in 2020 only.**
How I decide What Stocks To Invest In
If you’re looking for a formula on what to invest in, you’ve come to the wrong place. I don’t look at technicals unless someone tweets it. Sometimes I’ll browse their P&L or 10K but not often. I try to avoid trading during their earnings weeks but don’t do any trades on earnings. I’ll skim articles about a companies earnings call and the key points from the CEO or CFO. Mostly though, I invest in companies I believe in and companies I personally use. I bought $PTON, $PINS, $ZM, $WORK and $REAL in 2019 because I am a consumer of all of those products. I did not think at the time that many of these would be strong work from home stock plays should there ever be a pandemic.
Investing in Technology Companies
Now, what about investing in tech companies? Surely I don’t use all of these products? That’s correct, but my career is in tech. As a result, I am familiar enough with many of these companies and technology trends. I’ve worked in tech for the past 10 years and in cloud computing for the past 5 years. I also have been working remotely for several years and know what software I’ve used to stay connected. Not only can you make a good salary working in the technology sector, but it also helps you with investing.
Investing in International Companies
My strategy for investing in international companies is pretty straightforward. If I like a company in the US or believe in a trend (ex more shopping moving toward e-commerce) I’ll look for what companies are part of that trend in other countries. This past year this strategy has primarily focused on buying e-commerce sites that operate in other countries.
Investing In Companies Someone Else Recommends
Sometimes I’ll get a text or see a tweet about a company not on my radar. Back in mid- late March I would write it down and research it on the weekend. Clearly, I missed a lot of gains by waiting to research during that weekend or the following. Now, sometimes I’ll buy a stock without any due diligence. Yes, it’s risky but I buy very, very little so the downside is minimal.
On the trading platform I use I’m able to then click the stock ticker and see all of the analysis they’ve done on that company as well as recent news, dividends, earnings and share profile. It makes it easier to track the companies on my watch list in one place and have easy access to key information.
Investments Performance by Portfolio
I have a total of 4 investment accounts: a taxable account, a Roth IRA account, a 401(k) account through my employer and an account for my vested RSUs through my employer. My taxable and Roth I have an advisor for and we have a strategy for those two accounts combined. Most of my individual stock tickers I buy without consultation and then retroactively ask for their thoughts when we check in. Because I buy individual positions in my taxable, my advisor tends to be more conservative in my Roth to balance that out. To date, my advisors have made all the investing recommendations for my Roth which I approve. I also have several other accounts including an emergency fund in a “high yield” savings account.
- Taxable Investment Account: 41% unrealized gain
- Roth IRA: 10% unrealized gain
- 401(k): 18% unrealized gain
- Vested RSUs: as I don’t disclose my employer I will leave this only as unrealized gains were over 42%
In comparison, the Dow had a 7.3% gain, the S&P 500 a gain of 16.3%, the Nasdaq a gain of 43.6% and the Russell 2000 a gain of 18.4% in 2020. Overall, I am thrilled with how my investments did. I had quite a bit invested in Feb / March and considering how bleak my portfolio looked in March I am thrilled with this outcome. When I did my quarterly 401k check I changed some of the allocations which resulted in a better 2020 performance. Yes, if I just invested everything in ARKK my gains would have likely been higher. However, what’s the fun in that?
New Individual Stock Positions Started
Being at home 24/7 I all of a sudden had a ton of free time this past year I normally do not have. I was convinced we were in a dead cat bounce in March / April which really hampered my gains. Luckily I had a few friends that got into investing and so we were investing together during this time. I bought way too many new positions to list so here are my top 5 stock buys and my 5 worst stock buys. I never buy a position all at once which is why some of the buys are up significantly more than the whole position.
Top 5 New Stock Positions in 2020
- $NIO – I started buying NIO in July at the recommendation of a friend. I am up over 165% but some of the buys are up over 300%.
- $FVRR – I started buying Fivrr in May as it was a gig work company I was familiar with from blogging. I wasn’t sure if Fivrr or Upwork was better having never used either so I bought both. I am up over 100% with some buys up almost 250%.
- $UPWK – I started buying Upwork in May. I assumed I am up over 170% with some buys up almost 200%.
- $DOCU – Docusign was one of the few stocks I actually bought on March 16th. I knew business had to keep going and contracts would need to be signed digitally. I’ve used Docusign before so I was familiar with it personally and have continued to buy as I learn more about the capabilities and direction of the company. I am up over 100% with my initial buy up over 200%.
- $JWN – Nordstrom is probably a surprise to most, including myself. I’ve held, and sold, Nordstrom stock in years past. I shop there albeit not often. But, I started learning about DevOps by reading this Nordstrom DevOps Case Study so I knew they had the culture to succeed digitally. The stock looked oversold to me so I started buying shares in August. I figured at that point they weren’t going bankrupt in the near term. The stock continued to go way down before it started rebounding and I sold a little to realize the losses. My full position is now up about 115%, with the top buy up over 160%. Both of these gains would be higher had I not trimmed some of my position at a loss.
Top 5 Worst New Stock Positions in 2020
At times, I have bought the meme stocks in 2020. I see a stock rocket up for no apparent reason and I want some of the action! I was caught bag holding pump and dump stocks. Another mistake was not buying stocks at their at the time ATHs back in the Spring. I thought it was crazy how much a few stocks ran up and waited for them to dip. The dips never came and they kept hitting new ATHs. I had to buy these high conviction stocks at a much higher cost basis, some of which are still at break even or at an unrealized loss in my portfolio.
- $NERV – I decided to start buying biotech this year. I noticed Minerva Neuroscience came out with bad news and the stock dropped significantly one day and so I bought a few shares! Continued buying shares at other times. I was down for a while, then up and recent bad news now has this position at a -42% unrealized loss. This is currently the worst performer of my portfolio.
- $INO – I also thought it’d be fun to speculate on vaccines this year! I bought Inovio Pharma and actually sold the full position at a gain of over 50%. On a drop I bought back in and bought more as it dipped. It is now the second worst performing position of my portfolio; however, if you count the previous buying and selling I’m at about break even.
- $DGLY – I bought Digital Ally during the unrest in the summer and I continued buying bits. I have now fully exited this position and overall probably took a 50% loss.
- $MARK – I bought Remark during the reopening back in the Springtime. I thought stores would need their equipment to reopen. At one point I may have been up 40% and at the low down 50-60%. I have started trimming this position and expect to take a 10-20% loss all in when I am fully out. There is still a chance the loss will be greater.
- $TTD – The Trade Desk is a stock on many best performing stocks of 2020 lists. It isn’t really fair to include $TTD on the same list as the stocks. I’m including it here though as I learned an important lesson. I got so many texts asking if I bought $TTD throughout the year from friends that owned this stock. It was referred to at least once a day on FinTwit all year. $TTD always looked too expensive all year to me so I held off until finally starting a position in Dec at $937. It is currently sitting as an unrealized loss in my portfolio. At times, a multi-bagger to some is an unrealized loss for others. When someone says they own a stock don’t automatically assume they made a ton of money on it.
Stock Positions Sold or Trimmed
Stock Selling And Trimming Mistakes
Below are my top 3 biggest stock selling mistakes this year. I think it’s important to share some of your mistakes whenever you are sharing some of your successes for context. I didn’t panic sell anything in mid to late March, but I did start selling and trimming in April because I was so convinced the market would crash again.
It’s easy to look at these stocks now and ask why I ever would have sold but at the time my thought was wow, I am finally breaking even again after ~6 months! I had cash available so I did not need to sell any of these to buy other stocks I wanted. All of these I added to my positions over a period of time when it dipped.
- $PTON – I bought Peloton in 2019 at starting at $29 and down to $21. Peloton dipped to $17.70 at the lowest in March. I sold close to 40% of my position starting in April at $31-45. I bought back a few shares starting at $85.
- $ZM – I bought Zoom in 2019 at starting at $89 and down to $64. Zoom dipped to ~$107 in March. I sold over half of my position at $111 – 202. I bought a few shares back at $345.
- $SQ – I bought Square starting in 2017 starting at $38. Square dipped to ~$38 in March. Holding for several years only to break even!! I started selling most of my position at $49-63. I bought a few shares again starting at $143 so I would at least have some position.
These are all stocks I wanted for the long term, yet I panicked at how quickly the rebounded and started selling. There are other selling mistakes such as when I sold FedEx at a loss and it basically doubled within the following two weeks. I also sold my very small SHOP position at $600 and then rebought and increased my position starting at $900. It’s hard to time the market, but with the market so volatile this past year it’s really easy to look back and wish you acted 1 week sooner or 1 week later.
Stock Selling And Trimming Successes
The top two successful selling stories I have are $FUBO and $WORK. I bought $FUBO at $29 and sold at $49. $FUBO was a stock I saw on Twitter and thought, why not. Right now I can call this stock sale a win; however, it is still a possibility I miss out on future gains here if I decide not to get back in and the stock rises above $49.
I held onto $WORK throughout it all. What a rollercoaster ride that was. At times even with my DCA I was 30% down. I bought Slack starting at the IPO at $39 per share and the lowest cost basis I got was $21. It’s easy to think you’ll buy more as a stock dips but it’s hard to see a position down almost 50% from when you started buying and continue to buy more. It was really hard to hold onto this stock in general, let alone buy more. Everyone who also held this with me sold but I stayed steady. When the $CRM acquisition was announced it finally paid off and my position shot up to over 40% gains.
Investment Lessons Learned
Care More About Taxes Throughout The Year
Short term gains are taxed significantly higher than long term gains because they are taxed as income. Usually I only sell stocks I’ve held for longer than a year so I’ve never had to think much about taxes. I had a “worry about taxes later” as I was selling stocks I thought would burst for short term gains.
Come Nov I realized how not only did these stocks rise significantly after I sold, even if the stock stayed the same price it may have made sense to hold for a little longer for tax reasons. One stock I even accidentally sold 2 days before I held it a year so I now have to pay short term gains instead of long term gains. I need to really give some thought to my tax strategy in 2021.
Do Not Benchmark
One thing I learned trading stocks in 2020 is to not benchmark. If you’re going to make data driven decisions learn about the technicals, read the 10K, listen to the earnings report. Do not make decisions based on what you bought a stock for or a recent low and compare that to the existing stock price. For example I bought Peloton in the $20s. It then dropped from almost $30 down to $18! Then, quickly rebounded to $30! In my head I was like phew, it’s now doubled from the low and I am a little over break even on my highest cost basis. And I began selling quite a bit because I thought the whole market was going to crash again. We all now know now how bad that decision was.
I also made a spreadsheet of all of the stocks I wanted to buy around March 20th. But, I put in the spreadsheet what the low was in March for each stock ticker. And then, put my target at or below that price. Obviously we did not hit those lows again and I had to buy the stocks I wanted at way higher prices. I kept waiting and those lows never came!
Its OK to Buy at All Time Highs
I first found out about $LVGO from a fun stock picking contest Dividend Farmer ran on Twitter back in May. $LVGO was up an insane amount every time a contest update was posted. I finally threw in the towel and bought a few shares even though it was at a ATH. And then the next day it hit another ATH and the next day another ATH! You get the trend. So, I started buying it in bits after learning more about the company during the weekend and every new buy was pretty much a new ATH for the stock. Even though I always felt unease buying at an all time high it kept rising and those initial buys were still at great prices.
Don’t Sell Your Winners
Why, why, why did I sell so much of my Peloton, Zoom, and Square shares? Some of those shares would now be up ~500% from when I sold!!! I believed in these companies way before there was even a pandemic and the pandemic accelerated their sales. I continued to believe in them and buy more shares while they dipped 20%+ in 2019 while there were a ton of naysayers out there. Flawed logic convinced me these stocks would struggle in the short term, the market was going to crash again and I could sell and get back in at a cheaper price. Then, I didn’t want to buy back because I had sold at a lower price. Expensive mistakes.
Don’t Time The Market
This is advice given everywhere, but I tried to time the market with some of my winners and failed miserably. It’s been a good reminder to keep my day job and not try to become a day trader. Moving forward I will not sell positions I really believe in with the intent to get back in when they drop.
And that is a wrap on my investments returns in 2020. I’d love to hear how you did and what your favorite tickers are for 2021 and beyond!