One Year of Asymmetric Investing

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One year ago today, I launched Asymmetric Investing with this deep dive on Spotify.

Only 72 people opened that email, but it was a start.

Today, nearly 2,000 subscribers have joined Asymmetric Investing and anyone who bought $1,000 of Spotify a year ago would have made a cool $975 profit.

Today, I want to look back at a few of the stocks I’ve covered over the past year, celebrate the wins, and learn from the losses. Thank you for supporting this research, whether you’re a free subscriber, a premium member, or getting this email for the first time.

Let’s make more money together!

This space is usually reserved for a look back at the week in the stock market. Today I want to look back at all of the stocks I’ve covered on Asymmetric Investing.

This chart shows stock returns since each spotlight article was published from the worst performers to the best performers. Notice the shape is starting to look an awful lot like the Asymmetric Investing logo…

Another look at the Asymmetric Portfolio comes from SavvyTrader, which I now use to track the portfolio performance. This is a short snapshot of under 2 months, but over time it will show if the real-money Asymmetric Portfolio that I run can beat the market over time — which is the goal.

In Case You Missed It

Here’s some of the content I put out this week. Enjoy!

Celebrating Asymmetric Wins

A year and over 200 articles into Asymmetric Investing, it’s time to celebrate some wins and share what I learned.

1. Spotify: It’s great that Spotify stock has nearly doubled since the spotlight article and is one of the top performers in the portfolio. But I’m most pleased that the business is playing out as I hoped. Spotify’s market share is increasing and its power as an aggregator is improving. At the same time, management has figured out that operating costs need to be controlled and cuts haven’t seemed to slow growth. The next step for Spotify will be to turn the advertising business into a major business and if that happens this stock could easily 10x in value. I learned to trust my thesis, despite what the market says, and double down if a company continues to perform well operationally and strategically.

2. Coinbase: The shocker so far is Coinbase. Shares are up 317% as the crypto market has come to life and the USDC token has begun to contribute nearly $1 billion in annual revenue. But the bigger story long-term is Coinbase winning most of the Bitcoin ETF custody market and testing new products like blockchain bonds with Blackrock. It won’t be a straight line from here to there, but Coinbase could be the most important company in the Web3 revolution. I wish I had bought more Coinbase last summer, but I learned that I should invest more in companies with limited downside (backstopped by cash) and nearly unlimited upside. Asymmetric Investing is a concept for the portfolio and for the risk/reward profile of the companies I cover.

3. GM: I thought Cruise could make GM an asymmetric stock. That’s been the wrong thesis, but part of the attraction to GM was the stock trading for 4-5x earnings, meaning I got a value stock with Cruise thrown in for free. Buying companies with upside you don’t have to pay for gives optionality for even the asymmetric thesis turns into a value play.

4. Celsius: Shares of Celsius were expensive when I bought them. They’re even more expensive today. However, owning companies that are growing at tremendous rates with massive untapped markets is where I want to be and will ultimately pay off for investors.

There’s a reason I write 2,000-3,000 word spotlight articles and do the research behind each stock. I have learned that I need to trust that thesis more, even if it doesn’t always work out as I hoped.

Asymmetric Lessons

Five of the six stocks with negative returns are unprofitable. I’m not a “value investor” so I’m not seeking profitability alone, but there are some lessons from the underperformers in the portfolio.

1. It’s OK to be late. I think the future for companies like Virgin Galactic, Peloton, and Owlet could be great, but I could wait for them to prove profitability before investing. Celsius is a great example of being late on a profitable company and still doing well as an investor. For most of the underperformers, I could have simply waited to invest.

2. Position size matters. Losses thus far have been limited because I hold relatively small positions in stocks like Virgin Galactic, Peloton, Owlet, and Sony, which I will keep in mind with higher-risk investments.

3. Don’t chase. It’s easy to buy a stock after it drops, thinking you’re getting a deal, but that’s often a mistake. When stocks fall there’s a reason and I don’t want to chase a stock. As Peter Lynch said, “Water your flowers and cut your weeds.”

4. Lean into uncertainty. Most of the big wins in the portfolio were from factors that were unknown when I wrote the spotlight article. Crypto’s recovery, GM’s massive buyback, and the National Association of Realtors’ lawsuit provided gains that I couldn’t have predicted. Uncertainty can be good when your downside is limited.

I continue to learn in public and will share in real-time with you over the next year.

Disclaimer: Asymmetric Investing provides analysis and research but DOES NOT provide individual financial advice. Travis Hoium may have a position in some of the stocks mentioned. All content is for informational purposes only. Asymmetric Investing is not a registered investment, legal, or tax advisor or a broker/dealer. Trading any asset involves risk and could result in significant capital losses. Please, do your own research before acquiring stocks.