I messed up. I do it all the time. I don’t get down about it, I try to learn from it. Below are five stocks that have been on huge runs and my reasoning behind not owning them. Hopefully we both can learn something from reviewing this.
$SNAP – up 191%
I love owning social networks. They are cheap dopamine. I just missed on owning Snapchat. I didn’t fully understand it (still don’t). But Snapchat has a lot to love. AR/VR driven company. Clear monetization path. Young founder-led business. Young user base.
$FTCH – up 416%
Farfetch is a match made in heaven for me. I LOVE marketplaces, founder led businesses, e-commerce and high margin businesses. Yet, I don’t own Farfetch. Farfetch has so much going for it, but I just don’t get the luxury market. I keep thinking “what if people stop buying these stupid expensive things?” which is a dumb thought. It is dopamine driven and a part of our culture. But, I just can’t pull the trigger… yet!
$TSLA – up 551%
The ultimate enigma. I think it is a bubble, but I’ve been wrong before. Tesla is disruptive and if they do show huge optionality, valuation metrics can flip quickly. But the risk reward just doesn’t make sense now. Betting against Elon is generally a bad idea.
$LMND – up 164% since IPO in June 2020
This stock has gone up so much that Citron shorted it in order to hold on to their bear card. Lemonade has a strong brand, is data driven and growing like crazy. My problem is that I can’t tell what is legit. Every insurance company is data driven, is Lemonade really worth the high premium?
$ROKU – up 250%
Roku is the kind of company that gets more and more impressive as you look into them. At first Roku sort of seems like just another hardware company, but it’s so much more than that. The problem is that Roku is a middleman with an extremely rich valuation. Given Roku’s past, I’d guess this problem is overblown.
Across these stocks, I see some commonalities in why I don’t own them. The first link is valuation. All of these stocks are expensive in really any way you look at it. I don’t mind buying expensive stocks, but everything has to be in its right place. I don’t mind paying up for Shopify, because everything checks out. The second commonality I see is that on most of these, I didn’t fully get the business ($FTCH, $SNAP and $ROKU). In some ways, this is good! You shouldn’t own businesses you don’t understand. I can understand these businesses, I’ve just chosen not to put in the effort. I was lazy and missed out on the gains.
I didn’t make this list to make you feel bad about yourself if you don’t own them. I don’t own any of these. These are interesting businesses that deserve your attention. Great businesses run longer and faster than you could ever imagine. Just because a business has been on a wild run doesn’t mean you are too late. I probably should own at least one of the stocks on this list and in time I think I will. Let’s learn from our mistakes. You aren’t too late. In fact, you are probably early.