Why We Invest, 2019 Annual Review, and a Peak Into 2020

· In December 2017, I stumbled across a free Motley Fool board named “Saul's Investing Discussion” (please follow that board's rules if you go 

Hey Investors,I hope you all had a nice holiday season and have not already busted all your 2020 resolutions. Just kidding…kinda.

David Gardner talked about “why we invest” on his Rule Breakers Investing Podcast which was inspired by the Band of Brothers episode “Why We Fight”… so David, thanks for inspiring me to think about my “why”.

That’s where we will start today followed by our 2018 review and 2020 preview.

Why We Invest…skip if you don’t like sentimental stuff

Here is a picture of my immediate family on Christmas. This is my “why” for everything from serving in the military to investing.

My mom is somewhere out of sight and my dad is over in the corner. They have sacrificed so much their entire lives to provide for my brother, sister, and me.

My dad had an abdominal aortic aneurism in 2009. I remember it like it was yesterday. I was home from college for Thanksgiving break. He and I were the only two home when it happened. I was in my old room when I heard him collapse in the living room and gasp for me to call EMS.

I called, then sat and watched him struggle to survive while I waited on the phone for the paramedics to come. I felt so helpless.

I followed the ambulance to the hospital and at some point, his aorta ruptured which normally results in death. I remember watching him roll away to emergency surgery and thinking that could have been the last time I’d ever see him alive.

Spoiler alert, he lived.

They’re the parents I want to be for our kids. They always had time for us, my dad coached my sports teams and came to every single baseball game from the time I was 6 until I graduated high school. My mom was our mentor and counselor with everything we ever needed academically. Money was always tight, but they made it work.

My big brother and his wife and my little sister, her husband, and their son are there. We have been through ups and downs like any good set of siblings, but we’ve always loved each other and we’ve grown closer emotionally as we moved further apart geographically.

And finally, my wife, son, daughter, and a keepsake on the entertainment center to memorialize our two unborn babies we lost to miscarriages. I struggle to put into words what they mean to me.

My wife is so strong, so loving, so smart…more than I could ever hope for in a mother to our children, a partner, and a best friend. We started dating when I knew I wanted to join the Air Force.

She never questioned it.

A few months after we started dating, I decided to apply for a specialized career field that would require me to be relatively dangerous and gone 50% of the time once I finished college.

She never questioned it.

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Then we got engaged and I had orders to New Mexico. She graduated from college a year before me and was working for a year as a nurse in her hometown in Florida (good job me). We planned for her to move to New Mexico in roughly 6 months after our wedding.

I got orders to Georgia which threw a wrench in all our plans and meant we would be moving there.

We got married.

The next 8 years were a blur. I was away from home for a total of 4 of those years and as hard as it was at times, I don’t think either of us would change a thing.

We moved 6 times. She had to figure out nurse licensing in 3 different states, and change jobs 5 times. She was never able to gain any “seniority” at any of her hospitals What a career sacrifice she made for our family.

She’s been pregnant 4 times. We had our son in 2015 and lived 8 hours from the closest family. Due to the close-knit nature of my career field, we were very fortunate to have military friends nearby that we consider family. I was there for his birth but left for a voluntary deployment 2 months after he was born. She took some time off but eventually went back to work 1 day a week while I was gone. I missed..her birthday, our son’s first Halloween, Thanksgiving, Christmas, New Year, Valentine’s Day, my own birthday, and countless sleepless nights for my wife and firsts for my son. I have taken care of our kids for 2 days when she was gone and it felt like the world was going to end. What an emotional sacrifice she made for our family.

I got back from my deployment and shortly after we moved to Washington state.. you know, all the way across the country from any of our family in Florida. Washington is a beautiful state and it was awesome to see the differences in geography, the people, and the economy between the Southeast and Pacific Northwest. But it’s also extremely grey and depressing during the winter

A few months after moving, she was pregnant again. She had her first ultrasound scheduled, but I ended up going on a trip for work so she considered going alone…but decided to reschedule it. We found out the baby had no heartbeat at that first appointment. I’m so thankful we were there together because it was one of the hardest days of our lives. We had each other….and we had our close military friends, but we felt so isolated and alone during this experience. We didn’t really open up and talk to any friends or even family about it for a while. That was a tough period for us. Roughly 6 months later, we were pregnant again and things progressed along well. A few months before our daughter was due, I was on a training trip and got a call from my Squadron Commander. I was on the shortlist for a 365-day non-voluntary deployment. I had a couple of days to talk it over with my family but I had 2 options.

  1. I could take the deployment and I’d be leaving a month or two after she was born, missing all those firsts again (including her first birthday).

  2. I could turn down the deployment because my initial commitment was up, but if I did, it meant I would have to separate from Active Duty that year. It also meant I wouldn’t be getting a $100k re-signing bonus in a couple of years and that I’d have to figure out how to get a civilian job. Something I hadn’t done in over 8 years.

This is where investing comes in. This happened towards the end of 2017. I started investing in 2012 when I found out about The Motley Fool through a military mentor who was a subscriber to their Stock Advisor service. He told me he had made a ton of money from a few of their picks. The most being from Netflix (NFLX) which had turned the roughly $6,000 he initially invested into something crazy like $75,000.

Starting in 2012, we tried to save between 15-30% of our income and we signed up for Motley Fool Stock Advisor and Rule Breaker subscriptions. We started investing and I was fascinated by learning about the world’s most innovative businesses. I spent hours combing The Motley Fool forums, soaking in as much as possible.

The conversations I had with that mentor and the decision we made to start investing were the most powerful decisions we ever made. We weren’t “rich” but in 2017, I think we had around $250,000 across all our investments and money in the bank.

That decision gave us the flexibility to prioritize our family over career stability and signing bonuses.

Don’t get me wrong, as hard as it was, we both loved being in the service. But we knew our family couldn’t do another extended period away from each other at that point. We decided to separate from Active Duty.

It’s been about two years since we made that decision and I still in the Air National Guard and in the same career field I was in on Active Duty, but we get a lot more stability because we don’t have to move, we live in our home state, and there’s still a chance I can deploy (which is something I am proud to do when called on), but deployments are less common.

An additional benefit from investing and subscribing to The Motley Fool was that it provided a free education in business and innovation along with their stock recommendations because of the way they teach you about the companies they recommend. That education improved my ability to find great jobs in the civilian world.

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I invest to have the financial freedom to prioritize spending time with my loved ones.

I invest to hopefully grow enough wealth to make a positive impact on the world and the lives of others (I know that doesn’t always require money, but it helps).

I invest to learn about the world and about the world’s best businesses.

And finally, I invest because it helps me meet so many other interesting people who invest as well.

I started this newsletter…and I share my returns so transparently because of the impact investing has had on me and my family. I hope to help others’ experience that as well. Then I hope they teach and inspire others and the cycle repeats itself.

From the bottom of my heart…if anyone is still reading this… thank you for being a reader. So many of you reached out when I shared information earlier in the year about my mother in law battling breast cancer, then more recently when we had our second miscarriage.

2019 has been a wonderful year. We moved back to Florida, bought a beautiful home in exactly the place we dreamed of living, I somehow ended up at one of the coolest, most missioned-based companies in the world, my wife loves her job, we’ve seen our parents more in 2019 then we did from 2012-2018 combined (almost)… and they have been able to see their grandkids more this year then they had in their entire lives previously.

But it’s also been extremely dark and challenging at times.

You all helped me through those times. I can’t thank you enough.

2019 returns and lessons learned

On the chart below, you can see the performance of my “portfolio” which is actually 3 portfolios, my wife’s Roth IRA, my Roth IRA, and our non-tax advantaged joint brokerage account in blue and the performance of the SPX which tracks the S&P 500 or “the market” in green. I have a Family Advisor account which lets me control all of these with one account as well as get consolidated reporting (how I track performance).

We each have a couple of other smaller investment accounts that may hold some stocks I don’t talk about as “owning” but these three accounts make up the majority of our investments.

I moved our accounts over to Interactive Brokers in 2014 which is where the performance tracking begins.

I’m not sure how readable the chart is but I was about even with the S&P 500 until July 2017. Since then our portfolio has drastically outperformed the market.

Underperforming during my first 5 or so years investing makes sense. I was learning how to invest..and about myself and my emotions while I was investing. I was also invested roughly evenly in 75 companies which basically created an index of the market itself by being too diversified (to outperform).

In December 2017, I stumbled across a free Motley Fool board named “Saul’s Investing Discussion” (please follow that board’s rules if you go there!) which is led by Saul, one of the best investors I’ve ever known.

He lays out his lessons learned so clearly and it’s inspiring to me because he is a retired medical professional…not a “professional investor”.

The foundation of his style is to invest in a concentrated group (10-15) of the best companies he can find. I adopted that style…and I’m still learning (and making tons of mistakes) but there is a clear difference in my performance since I adopted this style.

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The next chart shows the same thing in bar chart form by year.

2017 and 2018 were great for our portfolio, 2019 ended up being pretty bad because of a pullback across many of the companies I own (while the market performed well) and I didn’t do myself any favors by flushing 5% – 10% down the drain during the year “betting” on earnings results. It’s embarrassing…but I did it.

2020 is off to a nice start as were beating the market by 16% but I certainly don’t expect that pace of outperformance to continue.

My big lesson learned from 2019 is to stop over-trading. That sounds simple, but it’s probably the leading cause of destroyed returns in the stock market.

That’s my goal for 2020. Stick to my plan and own the best companies I can find.

I’ll get back to sharing all of my positions in future emails, but I need to get this email out.

My top 5 positions total 65% of my portfolio and will drive most of the returns. Here they are by size.

Alteryx (AYX): 23%Datadog (DDOG) 14%The Trade Desk (TTD) 11%Crowdstrike (CRWD) 10%Roku (ROKU) 7%

How this newsletter will change in 2020

I will be more respectful of your time in 2020. I sent too many emails with daily trades and other noisy stuff in 2019. Most weeks I will send a single, weekly update (probably on Fridays) covering the high-points from the week.

This will include, any important news from the stocks in our portfolio, trades I made throughout the week, and anything important coming up next week (earnings for our companies). I’ll also continue monthly performance and complete portfolio reviews.

If you are interested in some of my random stream of thought updates, Twitter is a great place to get that. You can follow me at this link:

Additionally, I’ve followed some “Investing” or “Finance” channels on YouTube and I absolutely hate most of them. Some are good but some are downright awful. So I’m starting a YouTube channel and making myself get in front of the camera this year. That’s a bit uncomfortable for me, but I think it’s an important skill so I want to work on it and… I’m not happy with most of the current options out there. Here is a link to my channel if you’re interested in the YouTube: Link

Finally, I have plans to create a community for investors who are looking for a quiet place to focus on long-term investing. This newsletter will certainly still exist, but in the coming months, I have plans to create a place (not Facebook, don’t worry) for people to come together and interact with others.

In the 7 years I’ve been investing, I have not been able to find that type of community. There are some places that are close, but nothing checks every box for me. I want to create the type of investing community that I’d encourage my kids to join in 10+ years.

I’m not ready to announce any more details yet, but if you’re interested in something like this, please reply to this email and let me know.

Please end this email already..

Okay, that was a lot. If anyone is still reading… thank you…and I’m sorry! Sharing this newsletter on your social media feeds and hitting the heart at the top of the email are great ways to help more people discover this newsletter. As always, free virtual hugs for anyone who starts a “paid” subscription for this free newsletter.


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