First, I have to say that, since the beginning of the year, my portfolio had a performance of 12% VS 1% for the S&P500 and -5% for the TSX-S&P500. So, I beat these indexes by 11% and 17%, which is very good in my opinion. It's not just skill and intelligence, it's also a question of chance.
But anyway, I'm going somewhere else...
Be Smart Rich told me that his performance so far in 2020 has been close to 60%. Yes, sixty percent. That's fucking crazy. How come someone gets such good returns?
Well, I don't know the whole story, but he seems very interested by Livongo Health, Sea Limited and Mercadolibre. These three companies surged by 430%, 230% and 105% since the beginning of the year.
Plus, if you use margin, you can magnify your returns substantially.
It looks easy and simple, but who's really comfortable to buy stocks that grow their revenues a lot but for which EPS are very low or even negative? Actually, these three stocks have negative EPS. Investors bet that the revenues will continue to grow a lot and, eventually, the break-even will be reached (or margins will be increased).
It's contrary to all I've learned. And, you can't value your portofolio with that kind of stocks. There's a lot of unpredictability, may it be positive or negative.
But it works. And it works much better than what I do.