Investing Is Hard

Together with:

Final Month to Invest in the Company Transforming the $19.6B Joint Replacement Industry

There are over 1M knee & hip replacements performed in the US each year, yet 10-15% result in significant complications, and almost ⅓ of patients regret the procedure. 

Enter Monogram Orthopedics.

They’ve designed a cutting-edge orthopedic solution that combines advanced imaging, 3D printing, and robotics for custom bone implants and precise surgical procedures. 

Poised for rapid growth, Monogram has already raised over $13M from 8,500+ trusted shareholders. 

Now, you can join the joint revolution and invest in Monogram before the opportunity ends on January 27. 

Learn more.

PS: Sign up here to watch Monogram’s cutting edge robot perform surgery on a human knee for the first time ever.

A Year In Review:

Hello folks.

I’m finally back after a solid month off. I needed a break to spend some time on myself, with family, and on some new things I’ve been working on in the shadows. Also Covid kicked my ass for the past few weeks so I was just in survival mode for a while but I appear to be nearly fully recovered now.

All of this extra free time has allowed me to think a little more about the future of the newsletter and what I want it to look like. At the end of the day, I want to provide value and not force something out that doesn’t represent me, my thoughts, or my brand.

That being said, I have this fear if I don’t continue to write on a daily/weekly basis that I’ll become lazy and fall into a trap with all of these thoughts and ideas stuck in my head. I’ve done it once before. I need to find the middle ground that allows me to continue producing content but also allows me freedoms to explore other opportunities without sucking up too much time.

One of the new routes I am considering with the newsletter is doing deep dives on some of the startups that I’m investing in through a few different funds. This will give the reader a peek behind the scenes from some exciting new companies building the future. Packy McCormick has had success with this model and I really enjoy reading these posts. I may see if I can emulate these albeit on a smaller scale.

The reason I like this model is there are thousands of interesting startups whose story wants to be told. We just need to find a few matches and get the ball rolling.

In other important news: WeRamp is still waiting to be renewed for a third season. For now the portfolio is just allocated to SPY until we can figure out this year’s strategy—if there is one at all.

2021 WeRamp Recap:

Now let’s see how the People’s Portfolio did this year…

Not great, Bob!

We ended up taking a small loss on the year (-1.45%) while the S&P 500 was up 26.89% and the Nasdaq 100 was up 26.63% in 2021. You can see from the chart below we got off to a hot start in February with the rise of the meme stocks and retail trader. Once that fervor went away, we consistently underperformed the entire year. Then in November/December we threw a crypto hail mary pass that fell about 20 yards short of the goal line. Or in Dallas Cowboy terms, we tried to run the ball with no timeouts left and the clock expired.

The portfolio strategy started off the year with a 100% SPY position then began trimming 10% each week until the entire portfolio was in individual stocks or cryptos. Then we continued running weekly polls and cycling the 10 week hold back into the mix for re-election.

We made 35 trades over the course of the year.

The top 3 trades were:

Nvidia (NVDA): +114.35%

Waste Management (WM): +18.15%

Adobe (ADBE): +16.16%

The worst 3 trades were:

Penn National Gaming (PENN): -42.26%

Teladoc (TDOC): -31.64%

Solana (SOLUSD): -29.33%

See the full breakdown of each trade below.

Lessons learned:

• Chasing last year’s winners was a fool’s errand. Stocks that overreacted on the way up in 2020 decided to overreact on the way down in 2021. Two of our three biggest losers in 2021 were some of the biggest gainers in 2020. In 2020, PENN was up 237.9% on the year and up more than 1,800% from the 2020 March crash lows. Yet PENN still ended up -40% in 2021 and is 67% off all time highs. TDOC was another big winner in 2020 (+138%) as telemedicine took the spotlight during the pandemic. Now it’s sitting 73% off of the all time highs. Painful.

• A question I keep mulling over in my head is should there be a point where we take profits? Maybe somewhere in the +30-50% range? Many of the stocks we bought in 2021 had significant gains and drawdowns before we were able to lock in profits. For example, Palantir (PLTR) was a name that got caught up in the meme stock saga. Only a few weeks after we purchased it, we were up 75% on the name, then a few months later we found ourselves down -11.95% and sold it for a loss. Some gains were extended, many were erased and never recovered. Block (formerly Square, SQ) also saw us turn a 35% gain into a 24% loss in only a few months. The only stock that really continued to go up throughout the year was NVDA. So taking early profits on that one using the 30-50% rule would have kept some gains on other stocks but negated gains on this one. I need to dig into this more.

• Timing is everything. Exxon Mobil (XOM) basically hovered flat after we purchased it but was up 48% on the year with all of those gains coming in the first quarter before we purchased it.

• In many of the Twitter polls there would be 2 options where the stock was going up and to the right (winner’s circle) and 2 options where the stock would be 30-50% off the highs (loser’s circle). I didn’t track it but I always felt those who voted tended to avoid buying the dip in favor of chasing momentum. Both strategies can work but it was something that stuck out to me that seemed to be a switch from last year. Possibly because of the volatility we saw in 2020, investors were more conditioned to chase momentum.

• Holding time and period. In 2020, we tried a 5-stock portfolio and in 2021 we tried a 10-stock portfolio. The volatility was dampened more with the 10 stock portfolio as expected. Looking back, I think the 10-stock portfolio is still a solid option to spread risk across sectors while still being able to capture alpha. It also helped liven up the weekly polls so that the same stock wasn’t in 10 polls throughout the year. Because we were on a 10-stock rotation, this meant the portfolio was on a 10-week minimum hold. As mentioned in a point above, this may be fine if we can optimize where to take profits on some names if a certain gain threshold gets hit.

Best Trades of the Year (Personal Account):

While I hold a lot of different assets (many boring boomer index funds), I like to dabble trading individual stocks in my Roth account. Every once in a while (never) I get lucky on a few trades—the buy near the low and sell near the top ones. This year I had two great trades that I wanted to highlight and my reasoning for selling.

Lemonade (LMND):

The first stock was Lemonade (LMND). Lemonade, Inc. is a holding company, which engages in the provision of insurance services. Its products include renters and homeowners insurance, and pet insurance. It offers insurance coverage under the homeowners multi-peril, inland marine, and general liability lines of business. The company was founded by Daniel Asher Schreiber and Shai Wininger on June 17, 2015 and is headquartered in New York, NY.

Lemonade went public on July 2nd, 2020. It essentially peaked within the first week then subsequently went on to fall approximately 50% in the next two months. In that time I started accumulating shares in the $50-60 range. Then in December of 2020 the stock broke out of its sideways trading range between $45-65. It happened much quicker than anticipated and I was able to trim some at $98.65 on 12/7/20 and held the rest in case of further upside.

From the chart below you can see further upside occurred at blinding speed. Lemonade went from $46 in late October to over $180 the second week of January 2021. I had zero plans of selling even though I was up more than 200%.

That was until I saw the following tweet come across my Twitter timeline:

The tweet from co-founder and COO Shai Wininger was deleted but Keubiko recaptured it in the tweet below. Just as he mentions, any time a C-suite comes out and attacks people online the red flags should go up.

A day after the tweet attacks from the COO, Lemonade filed to raise $830 million in a secondary offering. That was the day I sold the remainder of my shares at $169.50 and locked in a triple.

From that day, the stock is now down over 80% and trading at all time lows.

Lucky or good or both? Yes.

Canopy Growth Corp. (CGC):

The second great trade I made was Canopy Growth Corp. (CGC).

Canopy Growth Corp. engages in the production and sale of medical cannabis. The firm operates through the following segments: Global Cannabis and Other Consumer Products. The company was founded by Bruce Linton on August 5, 2009 and is headquartered in Smith Falls, Canada.

CGC was just one of the many plays one could make to get exposure to the marijuana market. These stocks started picking up steam 4Q of 2020. A nice bull flag was forming in December 2020 and I was already holding long.

Then, in the first week of January, pot stocks were off to the races again. CGC closed 2020 at $24.64, and within the first 6 weeks of the year, it had jumped over 100% to $56.50. At that point, based on the upward velocity alone, I decided to trim half of my position that was up roughly 100%. I decided to leave the rest on forever since I was playing with house money at this point.

I ended up selling half of my position at $43.56 on 2/3/21. While I didn’t call the top (missed it by a week and $13), you can see from the chart below that it turned out to be a heck of a sell.

My reasoning for trimming was just to sell into strength as it was hitting its former resistance around that $50 area from late 2018, early 2019. Now seeing it trade at 4.5 year lows and in single digits, I can only look back and wish I had sold it all. But the overall trade worked well. Had I not sold any shares, I’d be down more than 60% on my position.

The beauty of both of my trades is I somehow never bought the dip on the way down as both have sustained 80% losses from the peaks. Don’t ask why or how. I just didn’t. I guess I’ve learned not to be married to certain stocks or stories and when the facts or situations change you also must do the same.

Bonus Content:

Apparel Launch:

We (Dr. PP and I through the Bullish store) launched some Ramp Capital apparel with Rhone earlier in the year. It was fun trying something new and now I have some of my own products for giveaways and marketing materials. Thanks to everyone who purchased some Ramp gear and posted it online. We hope you enjoy it. There’s still some gear remaining. Check out the Ramp store.

Book List:

I put together a quick list of my top 3 books from last year and got a bonus pick from Michael Batnick and Morgan Housel. Check it out at The Pursuit by Rhone.

2022 Resolutions:

The beginning of the year is a good time to reset and set some new achievable goals. I set a few myself and published under Rhone’s newsletter The Pursuit.

Reach Out:

If you’re a new startup and interested in a deep dive, please reach out to me at [email protected].

Thank you to everyone who follows along and subscribes. Best of luck to us all in 2022.