The big banks and the giant tech companies (AMZN, MSFT, GOOG, AAPL, FB) have already reported their September quarters. Starting with DDOG and LSPD next week, we are about to get results from the portfolio companies with 30Sep ending quarters.
PRIOR PORTFOLIO UPDATES
PORTFOLIO PERFORMANCE
| DATE | GauchoRico Portfolio (YTD) | S&P500 Total Return (YTD) |
|---|---|---|
| Jan | 3.1% | -1.0% |
| Feb | -1.2% | 1.7% |
| Mar | -13.2% | 6.2% |
| Apr | -1.5% | 11.8% |
| May | 3.4% | 12.6% |
| Jun | 28.0% | 15.3% |
| Jul | 33.7% | 18.0% |
| Aug | 73.3% | 21.7% |
| Sep | 74.7% | 15.9% |
| Oct | 100.8% | 24.0% |
The GR portfolio continued to rally into October, posting four more all-time highs (ATHs) during the month. These new highs came after seven ATHs in June, six in July, 11 in August, and eight in September. The portfolio’s peak was reached (for now) on 18Oct at +109.2% YTD. The portfolio fell back slightly to close October at +100.8% YTD compared to the S&P 500 Total Return at +24.0%. The GR portfolio’s +76.7% outperformance in 2021 is on top of outperformances in each of 2017, 2018, 2019, and 2020. GR Portfolio’s cumulative return since that start of 2017 is +2479.6% for a CAGR of 94.3% compared to the S&P 500 (TR) cumulative return of +123.0% for a CAGR of 18.1%.
Of course, we know that the market (and any portfolio) cannot continuously go straight up forever. There are occasional big drops, and such drops are likely to be amplified in a concentrated portfolio. They are further amplified in portfolios with leverage. Since I started tracking the peaks and troughs in 2018, the portfolio has seen four major drops of 35% or more. These drops happen periodically in a concentrated, growth portfolio. I wrote about these big drops in a blog post earlier in 2021. The most recent big drop began in February 2021; this drop was relatively short ending by mid-May 2021. No one can know when the next big drop will occur, but I can be all but certain that there will be another big drop at some point. I expect another 35%+ drop within the next two years, and I’m always prepared (mentally) for a huge drop of 50%+. Again, a concentrated portfolio of high growth companies will have more volatility than a more diversified portfolio with slower growing companies. Volatility comes with the territory when one invests this way.
2021 Notable Days for the Portfolio
Below are some of the notable days in 2021.
| Date | YTD Return | Notes |
|---|---|---|
| 01/27/21 | -2.2% | local bottom |
| 02/05/21 | +12.6% | new ATH |
| 02/08/21 | +14.0% | new ATH |
| 02/09/21 | +16.6% | new ATH |
| 02/10/21 | +16.8% | new ATH |
| 02/11/21 | +17.8% | new ATH |
| 02/12/21 | +18.3% | new ATH |
| 02/25/21 | -3.4% | -6.3% on the day |
| 03/03/21 | -6.3% | -7% on the day |
| 03/04/21 | -13.6% | -9.2% on the day |
| 03/05/21 | -17.1% | -4.1% on the day |
| 03/08/21 | -22.8% | -6.9% on the day |
| 03/09/21 | -11.0% | +15.3% on the day |
| 03/11/21 | -4.3% | +9.6% on the day |
| 03/18/21 | -10.2% | -6.7% on the day |
| 03/24/21 | -15.6% | -8.6% on the day |
| 03/29/21 | -19.0% | close to 3/8/21 trough |
| 03/31/21 | -13.2% | +6.6% on the day |
| 04/13/21 | +4.0% | +8.0% on the day |
| 05/04/21 | -10.9% | -6.1% on the day |
| 05/06/21 | -21.1% | -9.6% on the day |
| 05/07/21 | -17.5% | +4.6% on the day |
| 05/13/21 | -23.5% | new YTD low |
| 05/14/21 | -16.3% | +10.9% on the day |
| 05/20/21 | -5.3% | +7.1% on the day |
| 05/24/21 | -0.1% | 7th consecutive up day |
| 06/10/21 | +11.3% | +5.4% on the day |
| 06/17/21 | +19.8% | new ATH (finally!) |
| 06/18/21 | +23.2% | new ATH; +5.1% on the day |
| 06/22/21 | +27.4% | new ATH; +6.2% on the day |
| 06/23/21 | +28.0% | new ATH |
| 06/24/21 | +28.5% | new ATH |
| 06/28/21 | +30.8% | new ATH |
| 06/29/21 | +31.2% | new ATH |
| 07/06/21 | +33.4% | new ATH |
| 07/09/21 | +33.9% | new ATH |
| 07/14/21 | +25.6% | -4.0% on the day |
| 07/22/21 | +34.2% | new ATH |
| 07/23/21 | +36.9% | new ATH |
| 07/26/21 | +37.0% | new ATH |
| 07/28/21 | +37.9% | new ATH |
| 08/04/21 | +41.2% | new ATH |
| 08/05/21 | +49.1% | new ATH |
| 08/12/21 | +51.2% | new ATH |
| 08/13/21 | +55.9% | new ATH |
| 08/23/21 | +56.0% | new ATH |
| 08/24/21 | +65.1% | new ATH; +5.8% on the day |
| 08/25/21 | +66.3% | new ATH |
| 08/26/21 | +68.1% | new ATH |
| 08/27/21 | +72.4% | new ATH |
| 08/30/21 | +73.3% | new ATH |
| 08/31/21 | +73.3% | new ATH; +0.05% to ATH |
| 09/02/21 | +74.8% | new ATH |
| 09/03/21 | +79.2% | new ATH |
| 09/09/21 | +82.7% | new ATH |
| 09/16/21 | +83.9% | new ATH |
| 09/17/21 | +85.0% | new ATH |
| 09/21/21 | +85.1% | new ATH |
| 09/22/21 | +88.8% | new ATH |
| 09/23/21 | +92.1% | new ATH |
| 09/28/21 | +75.0% | -5.5% on the day |
| 10/12/21 | +84.1% | +4.5% on the day |
| 10/13/21 | +95.1% | new ATH; +5.9% on the day |
| 10/14/21 | +104.1% | new ATH; +4.7% on the day |
| 10/15/21 | +106.5% | new ATH |
| 10/18/21* | +109.2% | new ATH |
Weekly Performance
| DATE | GauchoRico YTD | S&P500 TOTAL RETURN YTD | DELTA |
|---|---|---|---|
| 01/08/21 | 6.5% | 1.9% | 4.6% |
| 01/15/21 | 6.4% | 0.4% | 6.0% |
| 01/22/21 | 10.2% | 2.4% | 7.9% |
| 01/29/21 | 3.1% | -1.0% | 4.2% |
| 02/05/21 | 12.6% | 3.6% | 9.0% |
| 02/12/21 | 18.3% | 4.9% | 13.3% |
| 02/19/21 | 14.2% | 4.2% | 10.0% |
| 02/26/21 | -1.2% | 1.7% | -3.0% |
| 03/05/21 | -17.1% | 2.6% | -19.7% |
| 03/12/21 | -6.3% | 5.3% | -11.6% |
| 03/19/21 | -7.7% | 4.5% | -12.3% |
| 03/26/21 | -15.8% | 6.2% | -22.0% |
| 04/01/21 | -9.5% | 7.4% | -16.9% |
| 04/08/21 | -3.3% | 10.4% | -13.6% |
| 04/15/21 | 0.0% | 11.9% | -11.9% |
| 04/23/21 | 3.1% | 11.8% | -8.7% |
| 04/30/21 | -1.5% | 11.8% | -13.4% |
| 05/07/21 | -17.5% | 13.3% | -30.7% |
| 05/14/21 | -16.3% | 11.7% | -28.0% |
| 05/21/21 | -2.4% | 11.3% | -13.7% |
| 05/28/21 | 3.4% | 12.6% | -9.2% |
| 06/04/21 | 2.3% | 13.3% | -11.1% |
| 06/11/21 | 12.6% | 13.8% | -1.3% |
| 06/18/21 | 23.2% | 11.7% | 11.5% |
| 06/25/21 | 28.0% | 14.8% | 13.2% |
| 07/02/21 | 28.9% | 16.7% | 12.1% |
| 07/09/21 | 33.9% | 17.2% | 16.6% |
| 07/16/21 | 23.8% | 16.1% | 7.6% |
| 07/23/21 | 36.9% | 18.4% | 18.5% |
| 07/30/21 | 33.7% | 18.0% | 15.7% |
| 08/06/21 | 46.7% | 19.1% | 27.6% |
| 08/13/21 | 55.9% | 20.0% | 35.9% |
| 08/20/21 | 50.2% | 19.4% | 30.9% |
| 08/27/21 | 72.4% | 21.2% | 51.2% |
| 09/03/21 | 79.2% | 22.0% | 57.3% |
| 09/10/21 | 78.3% | 19.9% | 58.4% |
| 09/17/21 | 85.0% | 19.3% | 65.7% |
| 09/24/21 | 88.9% | 19.9% | 69.0% |
| 10/01/21 | 73.5% | 17.3% | 56.3% |
| 10/08/21 | 76.5% | 18.2% | 58.3% |
| 10/15/21 | 106.5% | 20.4% | 86.1% |
| 10/22/21 | 103.4% | 22.4% | 81.0% |
| 10/29/21 | 100.8% | 24.0% | 76.8% |
ALLOCATIONS
| TICKER | 10/31/21 | 9/30/21 | 8/31/21 | 7/31/21 | 6/30/21 | 5/31/21 | 4/30/21 | 3/31/21 | 1/31/21 | 12/31/20 |
|---|---|---|---|---|---|---|---|---|---|---|
| UPST | 27.4% | 31.1% | 22.3% | 13.0% | 7.8% | 6.3% | 4.4% | 5.7% | — | — |
| DDOG | 15.6%* | 14.9%* | 14.4%* | 16.4%* | 15.7%* | 16.7%* | 12.0%* | 12.9%* | 10.7% | 10.4% |
| CRWD | 14.4%* | 12.1%* | 18.7%* | 19.1%* | 19.9%* | 20.0%* | 30.2%* | 27.7%* | 31.2%* | 31.5%* |
| LSPD | 11.5%^ | 8.3%^ | 9.5%^ | 11.1%^ | 11.3%^ | 12.1%^ | 13.1%^ | 13.2%^ | 4.8%^ | 3.3% |
| SNOW | 7.9% | 5.3% | 5.3% | 6.0% | 5.6% | 6.8% | 6.9% | 3.0% | 0.5% | — |
| AFRM | 7.9% | 6.5% | — | — | — | — | — | — | — | — |
| MNDY | 4.7% | — | — | — | — | — | — | — | — | — |
| DOCU | — | 6.4% | 12.5% | 13.2% | 12.6%* | 6.6%* | 5.7%* | 5.6%* | 16.2%* | 16.4%* |
| NET | — | 5.9% | 6.9% | 13.4% | 15.9% | 15.2% | 16.6% | 15.2% | 17.9%* | 17.8%* |
| DCBO | — | 1.8% | — | — | — | — | — | — | — | — |
| NEM | — | 1.3% | — | — | — | — | 1.0% | 1.1% | 1.0% | 1.0% |
| ROKU | — | — | 2.7% | — | — | — | — | — | — | — |
| GOLD | — | — | 1.5% | 2.0% | 2.0% | 2.9% | 1.6% | 1.7% | 1.4% | 3.0% |
| ZM | — | — | 2.5% | 5.5% | 5.8% | 10.8%* | 11.0%* | 12.3%* | 11.5% | 11.0% |
| PATH | — | — | — | — | — | — | 0.1% | — | — | — |
| PTON | — | — | — | — | — | — | — | 4.0% | 4.0% | 4.2% |
| BPRMF | — | — | — | — | — | — | — | 1.2% | 1.3% | 1.4% |
| Cash | 11.1% | 6.4% | 3.9% | 1.4% | 6.5% | 3.0% | -0.2% | 1.2% | 0.8% | 0.7% |
Two positions in the portfolio remain leveraged with long-term call options. I have zero CRWD shares; the entire position is comprised of Jan 2023 call options ($170 and $175 strike prices) that were purchased between 5Mar and 3May 2021. The CRWD allocation changes are amplified when CRWD stock moves up or down. The DDOG allocation is comprised of a 14.6% allocation in shares plus a 1.0% allocation in Jan 2023 call options ($65 strike price). The portfolio also contains short-term call options (bets on 30Sep earnings results) on UPST and LSPD. The portfolio contains 17.2% of its value in the form of call options, 71.7% in stock, and 11.1% in cash. In October, I sold four positions (DOCU, NET, DCBO, and NEM) and added one new position (MNDY). The cash position increased primarily due to preparation for an upcoming (non-stock) investment which will cause the cash to fluctuate for the next several months. For people who watch how I’m invested: ignore the cash position for the next few months as it says nothing about my sentiments on the companies that I own.
The allocation table (above) shows how much the portfolio has changed since the end of 2020. There were ten positions that I owned at the end of last year or at some point during 2021 that are no longer in the portfolio. Furthermore, only three of the stocks owned at the end of 2020 are still in the portfolio. Today, the portfolio is down to seven positions, the fewest since the Spring of 2020 when I briefly consolidated the portfolio down to five positions.
PORTFOLIO CHANGES
Changes since 30Sep2021
- Sold all DOCU shares: Sold all DOCU at various days in October to buy SNOW, LSPD, and MNDY.
- Sold all NEM shares: Sold all NEM shares to buy MNDY.
- Sold all DCBO shares: Sold all DCBO shares to buy MNDY.
- Sold all NET shares: Sold all NET shares to raise cash for a non-stock investment.
- Added more to SNOW: Added to SNOW position.
- Bought MNDY: Bought MNDY using proceeds from DOCU, DCBO, and NEM.
CHANGES EXPLAINED
DOCU: In my past several portfolio updates, I wrote how dominant DOCU is, how profitable (cash flow) DOCU is, how DOCU has a great strategy and great vision, and how DOCU still has plenty of room to run within its target markets. So why would I sell DOCU? It really wasn’t an easy choice to let DOCU go. I do still believe all the above about DOCU, and I don’t think that keeping DOCU in the portfolio would have been a poor decision. My portfolio has outperformed for the past five years in large part because I’ve kept my capital invested in what I believed to be the best of the best. This has meant redeploying from good or even great companies to even better companies. It has meant not feeling too attached to the good and great companies and ruthlessly moving the money to the very best. This is what I think I did with DOCU. We’ll see if the decision turns out to be for the better.
NEM: NEM is a gold (and other metals) mining company and was never a growth stock. I had it in the portfolio as a cash substitute and also as a hedge against the very unlikely (unlikely in my opinion) scenario that paper money would become increasingly worthless. In October, I decided to sell it mainly because I wanted to buy a mid-sized position in MNDY. I also didn’t want to pull from my other holdings.
DCBO: DCBO was a trial position in my portfolio. I decided that the risk/reward for MNDY is better than for DCBO.
NET: I started trimming NET a few months ago. I had felt that the stock price and the business results had started become disconnected when NET was over ~$100/sh. The stock price, in my opinion, was overly valuing NET’s revenue growth. The flurry of new product announcements that began in the Fall of 2020 still haven’t shown up in significant revenue growth acceleration. I would expect that this acceleration is still coming and other investors seem to think so too because the stock price’s rise has be relentless. I had slashed my allocation all the way back to 5%, and I really was intent on letting this remaining allocation ride. That was my plan. So why did I sell the rest? It had nothing to do with my desired allocation in NET but rather a life decision unrelated to my stock portfolio. I needed some cash to purchase a non-stock investment. The only long-term holdings in my portfolio were NET and DDOG; yes, all my other positions I’ve held for less than one year! I definitely didn’t want to let any DDOG shares go so NET was my best choice to raise cash.
SNOW: I’ve heard that my decision to own SNOW has baffled some other investors. And adding to my position in October may come as an additional surprise to them. I’ve said before that I own SNOW to a large extent because SNOW benefits from growth in data, and data’s growth is very fast, perhaps limitless. I also own SNOW because of the Company’s efforts with data sharing. I see data sharing as a very strong differentiator, a moat, and a capability that will not only keep customers locked into SNOW but also led to a virtuous cycle of customer adoption. SNOW’s recent progress on data sharing (see remarks during the Q2 earnings call) and the release of data sharing ecosystems within SNOW’s vertical (advertising and media data sharing ecosystem was recently announced with hints of more data sharing ecosystems for SNOW’s other verticals coming soon) are signs that SNOW’s strategy is unfolding nicely. Thus, I’ve added to my allocation.
MNDY: I was at first not interested in MNDY. The company operates in a space that seems less than mission critical than I’d like for an investment. Also, my failure to make much return in SMAR (another company in the space) had me biased against MNDY. SMAR had good growth but wasn’t making progress toward becoming profitable. I took a closer look at MNDY after Saul and some other great investors showed such great enthusiasm for MNDY. Indeed, the hyper growth in revenue, the blistering customer additions (particularly in enterprise), high gross margins, and profitability all line up to make MNDY a likely great investment. I need to thank Saul, StockNovice, Bear, and Ethan for getting me to take a closer look at the Company.
EARNINGS ARE UPON US
Earnings season is back and many companies have already reported their results. Banks have shown that the consumer is very strong, banks are increasingly willing to lend, and consumers are opening their wallets. To me this is a strong signal that consumer spending will be very strong in Q4. People will want to buy things and go on trips, especially after being locked up for most of 2020; I think that people will borrow to do these things even if they don’t have the cash. All of this bodes well for LSPD, AFRM, and UPST. These three positions are tied to what I see as a boom in spending and borrowing that’s probably going to accelerate strongly and stay elevated for some time. Together, UPST, LSPD, and AFRM comprise almost 47% of the portfolio. The rest of the portfolio is comprised of cloud software companies (DDOG, CRWD, SNOW, and MNDY). The 30Sep results from AMZN’s AWS (+39%), MSFT’s Azure (+48% in cc), and GOOG’s GCP (+45%) demonstrated that the digital transformation and the move to the cloud is continuing very strongly. For these behemoths to continue to grow this fast at scale is a strong signal for the smaller cloud software companies to continue their hyper growth. Thus, I think that portfolio’s companies are all well positioned to report another great quarter. It all kicks off next week with LSPD and DDOG.
| Earnings Date | Rev Growth Guide (top) | |
|---|---|---|
| LSPD | 4Nov (BMO) | |
| DDOG | 4Nov (AMC) | 60.3% |
| UPST | 9Nov | 229.0% |
| MNDY | 10Nov (BMO) | 76.1% |
| AFRM | 10Nov (AMC) | 43.7% |
| SNOW | 24Nov (or 1 Dec)* | 80.3% |
| CRWD | 1Dec (est) | 57.1% |
EARNINGS OPTIONS BETS
When I see opportunities, I make bets on the outcome of my portfolio companies’ earnings result because the results can provide a catalyst for the stock to move. For the upcoming earnings season, I currently have two options bets in place. I may decide to place additional bets but thus far I have not. The two bets that I’ve made are described below.
LSPD Q2 (30Sep)
LSPD will report their Q2 2022 results on 4Nov before the market opens. LSPD suffered a short attack in October that sent the stock price from an all-time high of ~$130/sh down into the low $90s. While I believe that the main points that the short sellers made are misleading and unwarranted, LSPD had some role in making itself a short seller’s target (e.g. sloppy facts, investor presentations). I believe that it’s highly likely that the cloud over LSPD will clear after LSPD reports their Q2 (30Sep quarter) results on 4Nov. My bets were to buy 19Nov $95 and $100 call options financed by selling 19Nov $105 put options. I have since bought back some of these short puts. The current value of these 19Nov call options equals about 0.1% of my portfolio. In addition, I still hold 17Dec $95 call options that equal 0.2% of my portfolio.
UPST Q3 (30Sep)
UPST will report their Q3 2021 results on 9Nov after the market closes. Last quarter, UPST reported a blowout quarter in which the Company delivered 60% sequential revenue growth. The stock has since soared from about $135 just before that spectacular earnings result to as high as $401. I believe that the stock price rise is deserved but only if UPST continues to deliver outstanding results going forward. I discussed what investors might expect UPST to deliver in Q3 with jonwayne235 (Motley Fool alias) and some other investors. jonwayne235 has been diligently tracking Google search and other metics, and from these data, I believe that UPST (and its partners through UPST) originated between 375,000 and 475,000 loans during Q3. This is a wide range so I think the possible outcomes for the quarter are also in a wide range. On the low end of this estimate (375K loans), UPST should deliver $254M in revenue representing 30.7% sequential revenue growth; this should result in revised FY2021 guidance of $825M (up from $750M). Note that this estimate is without any contribution from auto loans which seem to be ramping faster than expected. On the high end of the estimate (475K loans), UPST should deliver $321M in revenue (without auto loans) for 65.6% sequential revenue growth; in this case the revised revenue guidance for FY2021 should be raised from $750M to $950M. I think the most likely Q3 result will fall between these two estimates, perhaps $295M in Q3 revenue, 52% sequential revenue growth, and revised full-year guidance to $900M. I think that even the lowest estimate (outlined above) would send the shares higher.
Given the above, I’ve decided to make some pretty substantial options trade bets. When the shares were trading at about $365/share, I bought 12Nov $360 and $365 call options financed by selling 29Oct $370 put options. This past week, I rolled those short put options forward to 5Nov for an additional credit. When UPST shares fell sharply on 26Oct, I took additional actions that added to my earnings bet. I sold about 7% (not 7% allocation but 7% of my total shares) of my UPST shares at $335 and later at $315. I used the proceeds from these share sales to purchase 19Nov $335 and $315 call options. Thus, the number of shares sold were replaced by about 8x as many controlled shares in the form of short-term call options. Yes, these call options could end up completely worthless if UPST doesn’t deliver another strong quarter and/or if the stock price doesn’t rise sharply after earnings. In aggregate, the UPST call options comprise about 1.5% of my total portfolio. However, the stock has dropped since I purchased many of these options so I had initially paid more than 2% of my portfolio for them. I don’t often invest this much of my portfolio into a single earnings bet.
FINAL THOUGHTS
On one hand, it seems crazy that the portfolio has continued to rally into October after great results in June, July, August, and September. This rally actually started in the middle of May so we are well into the sixth month of the rally. I know there will be another big drop at some point (it’s inevitable). On the other hand, I have some reasons for continued optimism (see below).
- Portfolio shift to FinTech: Some may have noticed that a large portion of the GR portfolio is no longer invested in SaaS. UPST and AFRM together comprise more than 35% of the portfolio. These companies, both non-SaaS, are disrupting personal lending (UPST) and the way that consumers pay for goods and services (AFRM). Both companies are operating in target markets that are enormous, yet they have hardly scratched the surface on market penetration (lending products. Thus, they can continue rapid growth without tailwinds. But the tailwinds are getting stronger. The expiration of the PPP government support will push people to borrow for the things that they want. Borrowing to get what you want today has been a long-standing American way of life. This isn’t going to change, and it creates a big tailwind. Meanwhile, banks are loosening up their willingness to lend which enables consumers to borrow. So we have an increased demand for loans along with an increasing willingness by lenders to lend. Prior to September, UPST has been operating in a headwind environment because PPP dampened the demand for personal loans. AFRM also benefits from the phenomenon described above, but AFRM has also been on a tear in signing up new merchants including Walmart (expanded partnership), Target, Home Depot, American Airlines, and others. Leading into the Q4 holiday season, AFRM now has well over $1 trillion in annual consumer spending through its merchant partners. Continued supply chain woes could soften Q4 consumer spending (for hard goods) to some extent, but the President’s focus on alleviating this bottleneck problem will help normalize things sooner. The supply chain clogs are clearly a temporary problem that won’t deter me from investing in companies like AFRM and LSPD.
- Economy reopening continues: Coronavirus cases continue to plummet which will lead to more and more reopening of economies. During the first half of Q3 when the pandemic roared on, sales of products and services were likely lower than they could have been. LSPD could have been (and likely was) negatively affected, but the Company has growth from its acquisitions and from transitioning its customers to Lightspeed Payments. I believe LSPD’s 30Sep quarter will be good enough, and I think Q4 will be particularly promising given that lower COVID-19 cases mean more retail and restaurant business activity. The continued reopening should similarly benefit AFRM.
- U.S. fiscal policy: At the start of last week, the prospects and composition of the two large fiscal spending bills seemed quite uncertain. The negotiations between progressive and centrist Democrats continued, and on Thursday, President Biden revealed a new outline that was quite a bombshell. First, it seemed much clearer that finalized legislation for the two packages (now together $2.75T) might soon pass. This realization means that there is a ton of stimulus (in the form of new fiscal spending) coming. Of course, more spending means more growth which is good for stocks in general. Second, the $2.75T in fiscal spending was previously thought to be funded by substantial increases in taxes (corporate, personal income, and capital gains). This was all outlined back on 12Sep. On Thursday, it was revealed by Biden that the additional fiscal spending would be paid for by a 15% corporate minimum tax and a 5% surcharge tax on annual income over $10M (additional 3% surcharge on annual income above $25M). Wow, that’s really benign compared to what was proposed a month earlier. It now seems that the Trump tax cuts are going to be left in place with no increase in the capital gains tax rate which is a big positive for stocks. Finally, since the new spending seems to be entirely paid for by new revenue, fears about additional deficit spending leading to more money printing and inflation have been further alleviated.
That’s it for October. I plan to post the next portfolio update after CRWD reports earnings in the first week of December.
The opinions, thoughts, analyses, stock selections, portfolio allocations, and other content is freely shared by GauchoRico. This information should not be taken as recommendations or advice. GauchoRico does not make recommendations and does not offer financial advice. Each person/investor is responsible for making and owning their own decisions, financial and otherwise.