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Podcast: Fluctuating Tides S2:E1 (permalink)
calendar icon 2024-05-20 00:00:00 +0000 UTC


Beating the market, moving to indexing

Show Notes

Tickers mentioned in this show: NFLX

Tidal River Investments will be closing most positions, indexing on S&P500 related funds, and updating trades periodically via short text notes.

Previously Long: NFLX, ETSY, SPY, TDOC, U, WK, ATVI, AVGO, JPM, PRLB, ANET, RSKD Moving to: VOO, VYM, VIG, VUSXX, and similar, mainly. Some stocks may be traded in addition from time to time.

Estimated returns: about 135% (the live money portfolio from the show) vs. 120% average S&P 500 return over the same trading period extents. This was done on $100 added per week in addition to adding to known positions occasionally and a $2000 initial investment to avoid the fractional share account issue.

Simplifying Assumptions:

A more accurate model may be available in the future using equivalent S&P500 investments over the same holding period, although TRI doesn’t currently believe that would materially change the market beating outcome significantly. Trade information with account numbers and non-trade related information redacted is available as a CSV.

Photography from Tidal River Investments can be purchased at tidalriverinvestments.com


Welcome to Fluctuating Tides, Season 2, Episode 1! I’m your host, SomeCodingGuy, and let’s get right to it!

A lot has happened since we last spoke, back in November of 2021! When I first started this podcast, I saw very few ways to learn about stock investing in podcast form, so I set out to change that with the launch of Season 1. My feeds at the time were full of “invest in crypto!” slogans, which usually meant betting that a number would go up, and not much else. It was also a time when everyone was piling into the latest stock symbol without looking, or often even knowing, that there were financial statements related to those symbols available for free for potential buyers to review.

Investing always meant a lot more to me than that. After hearing some feedback from the first season, I want to highlight something I probably didn’t give enough attention to - there’s absolutely nothing wrong to me with just buying an index fund and not studying any of this stuff at all. In the very first episode of the season, I said:

I’m going to do something more important than analyze stocks for this first show - I’m going to talk about the index, because if there’s one thing to take away from this show, it’s that the overwhelming mass of professional traders are going to lose to the stock market.

and I linked a bunch of materials in the show notes for that episode about index investing. I think index investing is great! I went into detail in the following episodes about how to understand stocks and to analyze what you were buying because in addition to indexing, I often did a little bit better with this style, but having only a few stocks versus the broad diversification you get in the 500 stocks in the index isn’t always worth it.

I also said in episode 1:

In a couple years if I’m not consistently beating the index, I’m just going to buy the index and be happy.

Well, that was a couple of years ago. By my estimate, I beat the index, but it probably wasn’t worth it. Tidal River’s real money portfolio did about 135% vs. the S&P 500 at 121% over the same period, but these are only estimates, as getting the exact numbers with dividends, the stock splits, the corporate merger, and equivalent reinvestments is a lot more work than I anticipated. I’ll post the transaction history on the website later if anyone would like to do better. For now, let’s talk about what happened and where we’re going next.

I placed the first trade publicly in Tidal River’s account nearly 4 years ago on August 19th, 2021 right after the first episode came out the day before. Wall street now calls that the “meme stock” period, during and just after the pandemic, and stocks then had unusually high valuations. It turned out to be a very bad time to be starting a real money porfolio that shows investment returns, but that wasn’t something I’d learn until later.

Over the short haul, stocks are always up and down, and I found the pressure of keeping up with stock picking and doing a weekly educational podcast to be very difficult. If I only bought each stock right after the related episode dropped, I wouldn’t have beaten the market. I ended up beating the market because I believed in all of those companies I chose, for the reasons I put in the shows and the show notes, and ended up buying more shares even as their prices fell. In the end, I beat the market by about 14%, but that’s only because 5 of the stocks washed out all of the losses on the other 8.

In the last four years, I came to recognize two problems with that approach. One, choosing a stock every week for the podcast, even if I saw only things that looked good but not overwhelmingly great in a frothy market environment is not a recipe for continued success, and Two - I have a lot less time than I used to, and a lot more things that I want to work on, so I’ve been falling behind on the quarterly filings and the analysis really needed to know if the investment hypotheses are holding up or what other opportunities may exist in the market worth investing in. It doesn’t surprise me anymore that this can easily become a full time job.

The world also changed a bit. I’m happy to say that there isn’t nearly as much focus on NFTs and Crypto as investments as when I first put this podcast together. While those things seem to have their own following, I’m glad that a lot of shenanigans around their promotion have been met with a greater public skepticism than when this podcast began.

So, like I said, I’m going to sell out of my current Tidal River holdings and move into a mix of index funds, with most of the weight following the S&P 500 or funds related to it.

I’m also going to make telegraphing my trades easier - rather than build an entire episode around what I’m doing and why, with a ton of detail that didn’t fit into the episode crammed into the attached show notes, I’m just going to write a quick text note on the trade. This also makes things easier since I don’t stream regularly on twitch anymore, so the more informal text approach on the Fluctuating Tides website will be a lot easier.

Also, with buying a bag of index funds, I don’t think there will be as much trading activity as in the past anyway.

There were many large scale events that affected public markets that I didn’t see coming when I started this podcast. The war in Ukraine, the runaway inflation, the era of high interest rates after a very long low to zero rate period, the trouble in Gaza, the global tensions - not to make light of any of those issues, but on top of all of that it’s been a very tough environment for individual investors.

With all of that said, not much of my views have changed on investing or what I find useful in evaluating stocks, but with the lack of time, I’m happy to index and get back to working on the video games I’m hoping to launch over the next few years. In the next few days, I’ll be closing most of the individual stock positions I picked up to exchange for the more self-managing market return of index funds, but I have a few more episodes coming. We’re going to look into the stocks from season one in a bit more detail, Netflix in particular, especially with how it’s trading after they posted their biggest quarter ever.

And lastly, if you found any of this content helpful, please drop by tidalriverinvestments.com and buy a photo, for not only do you get to enjoy that image for as long as you keep it, but you’ll also be a big supporter of this ad free show and the work that goes into it.

As before, Tidal River Investments and I are not financial advisors, market analysts, or otherwise in any way offering advice for or against any of the securities discussed - meet with a financial advisor for that information. Stocks and funds may not be good investments for you, depending on your financial situation.

We’re here for learning, not advice, and I wish you the best on your financial journey, and remember, tides fluctuate!