Did you anticipate a strong performance out of stock market in the first quarter of 2023? If you are like most investors, your answer would probably be no. Despite several alarming developments that could have foreshadowed impending doom, markets continued their steady climb throughout the quarter.
Let’s review a few of the big ticket items from the past quarter that could have caused a market downtown. The most significant event of the quarter was the collapse of Silicon Valley Bank. It has been written about endlessly, you can find a much better synopsis of the situation elsewhere. The rapidity with which the bank failed was staggering and highlighted the fragility of the current economic system. While the banking system managed to avoid calamity, the event underscored how quickly things can unravel.
Meanwhile, the Federal Reserve maintained its commitment to raising interest rates in an effort to curb inflation. These changes may not be immediately apparent, but they will have a significant impact. In my opinion, the Fed is acting a bit recklessly. Such a sudden increase in rates could throw the entire economy into a deep recession, with untold ramifications. A more gradual rise in rates which would would be preferable to avoid any catastrophic shocks. This could result in a bit more inflation, but that is preferable when compared to the destruction of the economy.
Moreover, there were numerous tech layoffs during the quarter. Seems like everyone’s favorite tech company has decided to do some spring cleaning this year. Alphabet, Meta, Amazon, Microsoft, Salesforce, Dell, Uber, Twitter… the list goes on and on. Tech companies have made a major commitment to cutting costs, which will leave hundreds of thousands left without high-paying jobs. This will subsequently lead to a drop in their consumption habits that will ripple through the rest of the economy.
Despite all of this upheaval, the market somehow managed to keep chugging along. These events serve as a reminder of the intricacy and unpredictability of the market. As a result, I choose to remain invested for the long term and avoid making unforced errors. I let my companies do the work and continue to compound.
Anyway, let’s take a look at my first quarter results investing results:
Q1 Performance
As of 4/1/2023, my 10K portfolio was worth $16,521.79. When I started on 8/19/18, the SPY had a price of $285.06 and my account started with $10,000. As of 1/1/2023 the SPY had a price of $409.39. In reality, the SPY has done even better due to dividends given out, so I have accounted for dividend reinvestment in the return calculation
| 10K Return(1) | SPY Return(2) | Difference(1-2) | |
| 2018(8/19-12/31) | (13.95) | (13.71) | (.24) |
| 2019 | 37.33 | 32.6 | 4.73 |
| 2020 | 21.22 | 17.59 | 3.63 |
| 2021 | 38.55 | 28.43 | 10.12 |
| 2022 | (27.25) | (18.65) | (8.60) |
| 2023(1/1-3/31) | 14.58 | 7.04 | 7.54 |
| Since Inception(8/19/18) | 65.22 | 55.37 | 9.85 |
| CAGR | 11.50 | 10.03 | 1.47 |
My investment portfolio experienced a robust start to 2023, exceeding the S&P’s returns by over 7.5% thus far. While it would be fantastic to replicate such a feat every quarter, I don’t think I can count on it. I remain pragmatic, but appreciate the strong performance. In particular, I saw a resurgence in some of the Mega Cap tech names such as Alphabet, Amazon, and Microsoft. However, my best performer was Meta. After a never ending stream of bad news, Meta’s stock fell to $120.34 at the end of 2022. By the conclusion of Q1, Meta had risen back up to $211.94. That’s a 76.11% jump in only a quarter. Congratulations to anyone who called the bottom and made a purchase, I unfortunately was not smart enough to have doubled down at a basement price.
Transactions
I only made two transactions of note during the quarter. First, I bought an extra share of InMode in early January with a tiny bit of cash I had leftover. I continue to be amazed by the company’s impressive performance. The stock currently trades at just about the same price, so it is too early to determine whether this was a wise decision.
More interesting however was the spinoff of Lumine Group, the newly formed company spun off from Constellation Software. Constellation enacted their second spinout, following in the footsteps of Topicus. I received three shares in the new company for every one share of Constellation. This now gives me six shares in the newly formed company. Too early for me to judge the company, but I consider it a bit of a lottery ticket. This comprises a tiny portion of my portfolio, so will be interesting to follow over the years.
Finally, I continued to DRIP into my dividend paying stocks. These are tiny transactions, but every little bit counts. I’m only scooping up thousandths of a share at a time, but one day these DRIPS will be significant. They will play a big part in the overall returns of the portfolio.
As always, I would like to thank you for taking the time to give this a read! Feel free to leave some comments or questions. Best way to reach me is on Twitter, follow me @TheGarpInvestor.
The GARP Investor 