2021 Investment Results

How our portfolios performed in 2021

📈

All portfolios incl. Crypto: +181.8%

All portfolios excl. Crypto: +30.17%

[

2020 results: 112% & 39.8% respectively

]

Dear Subscribers,

I hope that you and your loved ones are well.

Some of you may remember that I started Penny Mountain newsletter in October 2020. It then transitioned to Wealth Cortex in January 2021, where we now share a year's worth of investment experience together.

The journey would not have been the same without you. I find it important to feel gratitude in my association with you all and appreciate you continuing to follow my work.

Research is a pretty unique business: I work for the subscribers without investing or managing their capital. It's the subscribers who really own the business that is built on trust and that trust is important. I have some investors who have been following my private portfolios since 2017. They have followed me throughout these years because there are three foundations to my work:

1. I provide analyses, not mere opinions. Sometimes it is easier to simply say "this is what I think about X" without the details but it's always backed by some data point. The subscribers can then formulate their own opinions and invest according to their circumstances and risk-profiles.

2. I am long-term orientated. I do meta-analysis to find opportunities that can last a decade and beyond, not just a trading session.

3. I am reachable amidst bull-runs and market mayhem alike. They don't have to go through the institutional hierarchies to get a TLDR from me. If they find me on the wrong side of the market or I have missed something, I accept evidence that is contrary to my opinions and process it diligently.

I do not believe that my approach is the most superior investing approach and find no joy in peddling that mistruth to others. My approach is simply an approach that has worked well for me over the past seven years and suits the common ground between skillset and mindset. In fact, I would be utterly incapable of investing any differently.

I remain humbled by the conviction of all subscribers to invest alongside me and strive to remain worthy of it by channelling the bandwidth and focus to investing and research-related activities that improve the odds in our favour to remain profitable in the long-run.

Without further ado, let's look at how we performed this year.

Top 10 stock picks from 2020

Performance: +49%

1. Coca-Cola

2. CVS Health Corp.

3. Walt Disney

4. MSG Network Inc.

5. Sysco Corp

6. Eaton Corporation

7. Apple Inc.

8. Alphabet Inc.

9. Viacom CBS Inc.

10. Twitter Inc.

How our portfolios performed in 2021:

📈

All portfolios incl. Crypto: +181.8%

All portfolios excl. Crypto: +30.17%

[

2020 results: 112% & 39.8% respectively

]

Breakdown:

The Winners:

This year’s market-beating returns came from residential construction, energy and semiconductors. Decent gains were also to be had in commodities, blockchain, capital and real estate markets.

The standout here is small-cap value/quality stocks. These are companies that actually generate profits, unlike many of today’s hottest meme stocks. But they fly under the radar.The second stand out is companies that produce strong free cash flow. There’s overlap with the first group, of course; many of the stocks in the small-cap value/quality area do exactly that.

The Losers:

Almost anything involved with next-generation technologies and innovation got hammered. So did SPACs, IPOs and other newly arrived tickers. Investors seem to have lost their appetite for companies promising big things far in the future, but no profits now.But sectors with strong secular tailwinds also got nailed.Big losers came from undeniable future growth markets like pharmaceuticals, biotech, fin-tech and payments, renewable energy and cannabis stocks.Still, there is a link between those two groups. Basically, the market lost faith in companies that aren’t producing earnings and cash flow right now.And because many of those companies had become absurdly overvalued towards the end of last year and the beginning of this year, their fall from grace has been particularly steep.

What's next?

With yet another profitable year behind us, the news surrounding it matters less.

I will be writing a separate post on my Macro Outlook for 2022. Following that, I'll keep you updated on a weekly, monthly and quarterly basis with market movements throughout the year.

I believe 2022 will be a troublesome year (as if 20 and 21 hadn't done enough) for the markets. It'll require less offensive and more defensive play until the latter half of 2022. For now, I'd like to leave you with the following:

Key Takeaways

Every subscriber is unique, especially as it pertains to your risk tolerance and the lens through which you view the world. But we are all susceptible to the same behavioural biases and learning from those can help us improve.That’s why I want to share my own takeaways and how to manage your portfolio when it feels like there is little control over your external environment.

1. Accept that control is an illusion. It doesn’t make sense to stress over variables that are beyond your control. It only leads to poor decisions. Our job is to calculate the known variables, factor in the unknown variables to the best of our ability and then be disciplined in money management. Quick wins are not important; the long-term is what truly matters.

2. Be flexible in your approach. It’s perfectly okay to change your mind when the facts and situation changes. As an investor, you'll be wrong 50% of the time. If you can just shift the odds in your favour by even 1%, you'll be profitable.

3. It’s OK to do nothing. When it comes to investing, cash is also a position. If the stars don’t align, step aside until a clearer picture emerges. When in doubt, stay out!

So that sums up one of my key lessons looking back on 2021 and I hope it serves us well into the new year.Now that I’ve gotten my reflections out of the way, be sure to check back next week for my key predictions for 2022. The big picture is important to securing big profits.

May we all have a prosperous 2022.

Best Regards,Abdul Samad

PS Speaking of new year resolutions and lessons from this past year, what are yours? What are your investment goals? Do you have any questions or comments for me? I'd be eager to know! Please email me at [email protected]