The Investor Diary Entry #21: March 15, 2023
My account went from -25% to become to +12.5% with the market rally in January. I was tempted to sell off and start all over as I am a supporter of the theory that says that a market crash is imminent. On the other hand, I bought my stocks as an investor and not a trader. This caused me a bit of confusion.
Finally, I decided to keep everything as is, especially that some of my stocks are bought at great value, and those were the stocks that made a big chunk of the positive jump. Therefore, if I kept those great value stocks and sold everything else, then my selloff might just break even.
Those are the stocks that today made me perform 13% better than the S&P. My account today is being saved by drones manufacturers stocks.
The new strategy that started to formulate in last year’s last quarter and today reached a relaxing maturity level relies on investing in small cap companies within new industries.
My List Of Drone Stocks
It was my partner then and my wife today that turned my attention to the Drone Manufacturing Industry. It was very logical. I started looking for a list of drone stocks to invest in. I tried to follow the value investment philosophy while studying those companies.
I was very difficult to apply value investment to a new industry. Many of those companies are still starting out. The established companies were either in the defense industry or within the aviation industry and both were overvalued.
I had to ignore the value investment rules and started looking for small cap companies within the drones manufacturing companies.
I read articles and watched several analytical videos from different sources to finally arrive at top drone manufacturing companies. I took this list and started studying them one by one. I looked at their financials, read their recent news, tried to have a look at their estimated future cashflows.
I tried to come up with a stock price that I am willing to pay for each of those companies. This was the hard part. At the end I decided to make an industry bet. I took a small amount from my investment cash reserve and invested equally in each of the small cap companies within the drone manufacturing industry.
Today I can say that I invested in all the companies that I want to invest in within the drone manufacturing companies. In a couple of cases I increase my investment when their prices fell further. This is a bet on the future.
Continuing My Bet On The Future
I liked my experience within the drone industry. The results in my portfolio supports this feeling. Today I am performing better than the market mainly and solely because of those stocks.
I wanted to make sure that I covered the drone manufacturing industry, and that there aren’t any companies left there that I did not study. Once I realized that the companies left are still private companies, I my mind started wandering on what could be another industry that is still in its infancy and could have a future.
It was out of my daily news reading that bumped into the Hydrogen industry. I gathered my list of companies within the Hydrogen industry.
This industry is much more difficult to study than the drones manufacturing industry. I couldn’t find many companies that are worth studying, and to find small cap companies is also very hard.
Making Things Harder For Myself
I made things even harder for myself, but beneficial in the long run. Since the Hydrogen industry was a hard one to study, I wanted a way that will enable me to better understand it.
When I first started investing, I wanted to get my feet wet quickly. That was a mistake. I ignored reading the annual and quarterly reports of the companies that I was studying as I saw that those reports were extremely detailed and lengthy.
I am sure there is a way to look at the important parts of such documents, but until I get the hang of reading them and knowing their parts, I would realize the important parts that I need to concentrate on. This made ignore them totally.
Once I arrived to studying the Hydrogen Industry, I made sure that this is the way that I will study a company and including the annual and quarterly reports will be part of my research and study routine.
I studied one company only and decided that this company is not for me. Yes it was a new industry and this is a new company, but the report showed me a lot of risk in that company. That was FuelCell Energy Stock.
The next company on my list to study was Westport Fuel Systems. Their latest annual report wasn’t out yet when I was studying it, but its price was at an attractive point for me. It was below the middle range of cashflow assumptions of the company.
I felt rushed again. When I wrote my diary entry about researching Westport, I said that I was going to wait for the annual report to come out before I make a move. I kept watching its price and it started to move up.
Westport Experience
When I first saw Westport (WPRT) its share price was at $1.12, the next day it went up to $1.27. My middle range assumptions of my stock analysis gave me a price of $1.26. I kept watching and the price started going down, and the report was still not out.
I stopped tracking the report, and yesterday the price fell below the $1.00. I felt excited and didn’t want to lose the opportunity. I bought it at $0.96, at the time of writing this sentence it is at $0.83.
At that same moment another company called Ouster within the Drone industry, which I bought into through a merger. I originally bought a company called Velodyne Lider (VLDR) which merged into Ouster. After the merger I found that my average stock price was at $1.20, this one was also making a move downward below the $1.00 level.
I bought more of Ouster which is another company which I did not study since I got into it through a merger and not by my own choice.
I still lack discipline.
Conclusion
I am investing in the long run, but everyone knows that investing in small cap companies has many risks. Not only I am investing in small cap companies, but I am investing in small cap companies within new industries. Double Risk.
Today I found An Australian Company within the Hydrogen industry that I also wanted to buy without studying. I wanted to put only a very small amount since it was literally a penny stock. It was in AUD and my base currency was in USD. I converted the sum of money that I needed to invest but still the broker platform says that I cannot perform the deal because I don’t have the currency. Usually I would get high tempered when such things happened, but thankfully I am fine.
I still have a long way into an investor mindset and discipline.
The Investor
Wednesday 15 March 2023
About The Author
I started to look into individual stocks in January 2022. I created this diary initially for myself to track my investing progress, and second as a place that I can share my ideas publicly hoping that others will share their ideas and learn from each other, and lastly as an online business where some links that I share are affiliate links, and if anybody bought anything by clicking those links I will get a commission based on that successful sale, which of course will not affect the price that you are buying the product or service at.
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