𝗪𝗲𝗲𝗸𝗹𝘆 𝗥𝗲𝘃𝗶𝗲𝘄: 𝗔𝗻𝗮𝗹𝘆𝘇𝗶𝗻𝗴 𝗩𝗼𝗹𝗮𝘁𝗶𝗹𝗶𝘁𝘆 𝗶𝗻 𝗢𝘂𝗿 𝗖𝗼𝗿𝗲 𝗛𝗼𝗹𝗱𝗶𝗻𝗴𝘀
Hello everyone,
Welcome to our review for the first week of July, which was shortened by the US Independence Day holiday. The portfolio finished the week roughly flat at +0.17%, which trailed the $NSDQ100 (+0.82%) for this brief period.
This short-term underperformance is a textbook example of how our high-beta, tech-focused portfolio behaves during volatile periods. It's worth doing a deep dive into the specific dynamics of the week to understand why this happened, and why it doesn't change our long-term conviction.
𝗧𝘂𝗲𝘀𝗱𝗮𝘆'𝘀 𝗧𝗲𝗰𝗵 𝗦𝗲𝗰𝘁𝗼𝗿 𝗣𝘂𝗹𝗹𝗯𝗮𝗰𝗸
On July 1st, the first trading day of the new quarter, the market saw a significant rotation out of the tech stocks that had led in Q2. This was likely driven by institutional funds taking profits and rebalancing their books after a very strong first half of the year.
Our portfolio felt this acutely. High-beta, high-momentum stocks that were top performers are often the first to be sold in such rotations. Our largest holding, $NVDA , which had a phenomenal H1, was a prime example and saw a drop of approximately 4.5%. Other high-beta semiconductor holdings like $MRVL (-4.2%) and $AMD (-3.8%) also underperformed. This is a classic example of short-term, market-driven volatility, that is disconnected from the companies' strong fundamentals. Our strategy is to hold our positions through this kind of market noise.
𝗧𝗵𝘂𝗿𝘀𝗱𝗮𝘆'𝘀 𝗦𝗼𝗳𝘁𝘄𝗮𝗿𝗲-𝗟𝗲𝗱 𝗥𝗲𝗯𝗼𝘂𝗻𝗱
Market sentiment turned positive on Thursday, driven by cooler-than-expected inflation data. However, the main driver of our portfolio's outperformance was company-specific news.
Our new position, $DDOG soared by +14.9% after the major announcement that it will be joining the S&P 500 index. This move requires index funds that track the S&P 500 to buy the stock, creating significant demand. It provides powerful, early validation for our recent strategic decision to add the company to our portfolio. This positive momentum also lifted other software names in our portfolio, with $CRWD (+4.5%) and $MSFT (+2.8%) also finishing the day with strong gains.
The US market was then closed on Friday for the Independence Day holiday.
𝗧𝗵𝗲 𝗟𝗼𝗻𝗴-𝗧𝗲𝗿𝗺 𝗣𝗲𝗿𝘀𝗽𝗲𝗰𝘁𝗶𝘃𝗲
A volatile, four-day trading week does not define a long-term strategy. Our conviction is built on a multi-year thesis, which is why our outperformance over meaningful periods remains significant and intact.
YTD: Our portfolio is up +23.27%, more than double the return of the $NSDQ100 (+8.04%).
Last 12 Months: We have delivered a +34.48% return, again, more than double the $NSDQ100 (+12.69%).
Thank you for your continued trust. Understanding the "why" behind short-term volatility is the key to maintaining long-term conviction.