Our first monthly update of the Compound 8 to 80 Portfolio.
The 8 to 80 Portfolio declined 0.83% (net of fees) in October.
The broad equity markets traded lower for the second straight month.
There was a long list of explanations for the recent pullback in markets, including the covid-19 resurgence, lack of a second stimulus bill, and pre-election jitters.
There’s always a “reason” in hindsight, but assigning one is not particularly helpful. Corrections are a feature of markets, not a bug. They are the price of admission for long-term investors, without which there would be no reward.
A number of portfolio companies reported record earnings and sales during the quarter.
A few highlights:
–Netflix reported 22.8% revenue growth over the last year, its 30th consecutive quarter of >20% YoY growth. Free cash flow, which had been negative for years, hit a new quarterly record ($645 million).
-Amazon now has over 1.2 million employees a 50% increase over the last year. What’s driving that growth? Surging revenues, up 37% over the past year. This was the 76th consecutive quarter of double-digit revenue growth from Amazon.
–Facebook reported 2.74 billion monthly active users, up 12% over the past year. With a global population of 7.8 billion, that means 35% off the world used Facebook at some point in the last month. This is the definition of the network effect.
The top performers during October were Tencent (+12.8%) and Alphabet (+10.3%).
The bottom performers during October were Mastercard (-14.5%) and Shopify (-9.5%).
Position size in Zoom was reduced after a strong run-up.
End of Month Exposures
Cash and Cash Equivalents: 50.9%
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Disclaimer: All information provided is for educational purposes only and does not constitute investment, legal or tax advice, or an offer to buy or sell any security.
Past performance is no guarantee of future results. Performance results are shown net of fees and include dividends and other adjustments. All performance data is strictly illustrative and may differ from actual results.
Discussion of portfolio holdings are for illustrative purposes only and are not investment recommendations. The portfolio holdings are subject to change at any point in time.
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