#9 Zen 📖 Investor Diary
🏅 How I doubled my money in 3.75 years
‘How long is it gonna take to double my money?’
‘Am I even gonna make it?’
When I started my strategy back in late 2020, that was one of the biggest questions swirling in my head.
On paper, the answer was fairly simple: with a target CAGR of 15% per year, it would take 4.8 years.
But as of these days (broker’s screenshot below, sorry for the Italian), it happened earlier.
Today’s episode of Zen, my investing diary, is the perfect occasion to reflect upon how it was possible and what to expect next. In particular, I’ll walk you through:
👨🏻🎓 Some specific personal choices from the past
📈 My strategy and some key learnings
👀 How I am positioned for the immediate future
My story: an Expat Business Analyst
It might sound strange, but my journey to doubling my capital is rooted in a few personal decisions I made early on.
It was 2017 and at the age of 24, straight after graduating at Bocconi University in Milan, I moved to Luxembourg to work as a Business Analyst at a well-known consulting firm.
Why was this a crucial step?
Simple: in my first 2 years of working life, I was able to save more than 20,000 euros, which would have been impossible had I stayed in Milan (where rent weights 50% of the average salary!).
And, as you may know better than me, savings matter way more than investment returns in the infant stages of capital accumulation.
Despite the good money, I left Luxembourg in early 2019 to come back to Milan, when I joined Kering as Expansion Business Analyst for the Eyewear division.
During the 3 years I spent in the heart of the fashion world, I couldn’t save much but that’s where I grew exponentially skills-wise: the division was growing at a 30-40% clip per year and that was really a school for crunching numbers.
The third chapter of my professional life comes in late 2021, when I moved out of Milan and came back to my home city as Financial Manager at a pharma-logistics firm.
Here, I was able to save up to 1,200 per month, which ended up being super important during the 2022 bear market.
So, here’s my story of how I saved and injected 40,000 in the stock market.
No shortcuts, no legacies from rich grandparents, no magic tricks: starting almost from zero, this is everything I could do.
Trust me: the market will correct at some point, true! But now, with 82,000 on my account, let me enjoy the view for a second 😃
My Strategy & My Mistakes
If savings were the foundations, returns have been the engine.
Sure, we’ve got a bull-run of almost 2 years now and my returns benefited as well from it.
Yet my 2x was possible despite 2 horrific mistakes that cost me almost 9,000 back in 2021. And the brutal bear market of 2022.
All in all, my strategy can be summarized in 3 concepts:
Quality: I carefully select the best business plans in the world. I only invest in companies with excellent fundamentals, growing businesses in rising, need-based industries, with strong optionalities that Mr. Market may not price in yet.
Asymmetry: I only enter when risk-to-reward makes a lot of sense. Ideally, the downside must be entirely protected, with not remote odds to witness a 2x or 3x on the upside within 5 years.
Behavior: I try everything in my power to remain calm and patient. I know I cannot control my returns and stock market cycles, so I extend my temporal horizon to neutralize the risk of timing out the market.
Sounds easy? I get you. The thing is, this strategy is easy but not simple.
Here’s 4 of the key learnings that I am taking over to the next 5 years of investing.
It’s not a race for perfection
I made mistakes, I lost more than 90% in 2 deadly positions I took in 2021, yet I’m still and well alive.
Over the past few years, I’ve had multiple home-runs but I still have under-performing companies in my portfolio.
That’s how this game works: you don’t need to be right all the time. Instead, being very right once or twice can change your entire journey.
Temporal edge is a super-power
2022 was tough!
I’m not going to lie: I had this voice inside my head. ‘Just stop and buy ETFs’.
During those months, my portoflio was under the water. However, I kept analyzing my assets and I decided not to abandon my strategy because I kept seeing strong upside potential in many of my positions.
Eventually, the storm was over and I started collecting green days one after the other.
Let time swing the odds in your favor.
Simplicity is so underrated
Browsing around several investing communities on different platforms, I observe a strange phenomenon. I usually find two extreme types of investors - forgive me if I am over-simplifying:
Passive investors who only DCA into SPY or VTI and call it a day (often pointing the finger against us active investors, claiming how beating the market is an impossible mission)
Aggressive investors/tactical traders with complicated strategies: going 3x leverage on China, options trading, turnarounds, going vertical on Energy (all from real stories)
My question is: why not staying in between? Why not using our best tools to skim what global equity indexes - which proved already to work well - give us?
Sure, I will evolve my strategies in the future. But for now, I’m happy selecting the most qualitative dominant companies that either have already won or are about to with a high probability.
Selling is the hardest
Yes, selling is the most difficult activity.
If I can refer to a set of ‘scientific’ tools to decide my buy target prices, selling is much harder.
I know that if I sell at prices that ‘make sense’, I will miss out on the majority of the gains.
That’s because Mr. Market tends to be irrationally optimistic. When it’s the right time to sell? The answers can be either ‘never’ or ‘I don’t know’.
For now, I am selling portions when valuation starts making no sense with a 5-year outlook. I would sell entirely only if new major business risks come along.
What’s next: part of my Dream Watchlist!
Careful readers may have noticed how I am expecting a pullback since february of this year.
We’re in October and a serious pullback has yet to come. At some point it will!
That’s why I’m still at 16% cash or equivalents at the moment, but I’m planning to slightly increase this percentage.
Meanwhile, and I’m building quality dream watchlists to be ready to catch future opportunities.
In particular, I am setting my triggering prices for (in random order):
ZS - Zscaler
CPRT - Copart
MSFT - Microsoft
HIMS - Hims & Hers
NOW - ServiceNow
ICE - Intercontinental Exchange
AXON - Axon Corporation
DT - Dynatrace
STAA - STAAR Surgical Company
DOCS - Doximity
TDOC - Teladoc
NVDA - Nvidia
ADBE - Adobe
FICO - Fair Isaac Corporation
ENPH - Enphase Energy
ZTS - Zoetis
V - Visa
and many more.
Now question for you: do you want me to share my price targets for these stocks in the next articles?
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Thank you again for your valuable time.
Happy Investing,
Francesco - Business Invest