Portfolio Update - Q1 2023
Portfolio returns (in €)
2019: +30.2%
2020: +41.8%
2021: +47.4%
2022: -29.9%
2023 YTD - Q1: +19.2%
"We're a 156-year-old company. We're investing in this accordingly. We're not trying to win a week or a month or a quarter. We're investing long term."
Sherwin-Williams Q4 2022 Earnings Call
I have always admired people who are capable of ignoring the noise and can play down the temporary day-to-day concerns, because they know that many of these concerns are fleeting and won’t have a significant impact in 5 or 10 years. Not only in life, but also in investing, this ability is very important to navigate any struggle. 2023 has begun reminding everyone that: 1) the market will always worry about something, 2) none of those worries will be there in the next few years and 3) nobody knows anything. The macroeconomic predictions of those who call themselves “experts” remain as accurate as usual. For these same reasons, and as cliché as it sounds, I’m still doing what I think I do best: identify and research good businesses and invest selectively only when the opportunity arises. A quote that sums it up quite well from James Clear comes to mind: “Focus is the art of knowing what to ignore. The highest level of mastery is simplicity.”
The blog somehow forces me to read about a wide variety of businesses and different management teams. In some of these businesses I will feel comfortable investing. The others will help me appreciate that, although the universe of listed companies is vast, only a few ideas are really going to resonate with me. Don't get me wrong, it's a very personal matter. Some investors, in their legitimate right, might think that this is a handicap in itself, as fishing in the ocean seems to make more sense than fishing in a pond. The chances of catching something are very different from one to the other. The big difference is that when it comes to investing, quantity matters much less than quality.
The number of companies I feel comfortable investing in is rather small. I have a portfolio of 30 companies and a watchlist with less than 100 names. Sometimes I find certain aspects that I was previously unaware of and that makes me rule those companies out, so the list gets reduced even more. Sometimes I find out about other new ideas and the list grows. The turnover rate is way higher in my watchlist than in my portfolio.
There are many ways to understand investing, and everyone must find what they feel comfortable with. I have found mine, and it allows me to spend time with family and friends and not worry about how the stock market is doing. I have come across a fascinating intellectual game and I am rewarded for being patient.
In hindsight, I think I did my homework in 2022. Now and for years to come will be the time to reap what has been sown. During the first quarter of 2023 I made two trades (1 sell, 1 buy). I explain both in more detail below along with some comments about the portfolio.
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