The last 2 months have not been so good for my portfolio, losing 2.6% in June and 4.7% in July but still over 150% YTD. Meanwhile, the S&P 500 $SPX500 is at all-time high. What's happening?
The last time my portfolio had a rough patch was in the first quarter of 2020 when I was down 20% with the market losing 35%. Then, of course, we had a recession and bear market but my portfolio started falling a little earlier because some uncorrelated stocks were having a bad time. For example, GameStop $GME had bad earnings and crashed and oil prices were falling affecting my oil stocks. This is exactly what's happening today. Uncorrelated stocks are doing poorly together.
I tend to invest in stocks with low correlations with each other. For example, Freeport-McMoran $FCX is a bet on higher copper prices because of the supply gap while UNFI $UNFI is taking advantage of a market inefficiency. They have a low correlation with each but both of them are having a short-term pullback. Sometimes, it will happen. Besides investors are scared of the Delta variant causing many of the stocks I invested in 2020 to have a bad time. For example, Alaska Airlines $ALK .
The 2 stocks which did the worst in these two months are DouYu $DOYU and Qudian $QD . It is because of more regulations in China. All the big profits I made on DouYu were lost in just a couple of weeks. And here, I have to admit that maybe I should have taken some profits.
Overall, it is normal for a stock portfolio to be volatile. Volatility is not risk. And 2 months are nothing. What matters are long-term returns and we've been making over 60% a year for the last 5 years. Some might say, it is because of GameStop. Well, at some point, I was down 60% on my GameStop position. I held and bought more because I believed in the company and the stock. I was right. We had a short squeeze and I made over 3300% profits. Always focus on the long-term.