2020 In The Rearview Mirror, Looking Forward To 2021

So, I guess you are wondering what the hell any of this has to do with investing?

I think, everything…

We have had some amazing success this year and at the same time, admittedly, some abject failures. Over the years we’ve had our collapses and our 40-baggers.

In March when the market tanked we were very opportunistic and bought shares that have had had fantastic results. Our buying was primarily in three stocks, Williams Companies (WMB), Kinder Morgan (KMI), and Innovative Industrial Properties Inc (IIPR). While the combined WMB/KMI have been very good buys both in terms of stock appreciation and dividend yields  (10% plus locked in), IIPR was a stunning success with both 300% plus appreciation and the same double-digit yields).

On the flip side, Chesapeake Energy Corp. (CHK) was a complete failure (the bonds we bought might make up for this but time will tell). We also had the perfect thesis on Lumber Liquidators Holdings Inc (LL) but bailed too early and missed the surge we always thought was coming. Both of these are what Buffet calls “unforced errors” meaning everything we needed to do the right thing was there, we just didn’t see it or ignored it because “we know better”. In either case, it’s a failure.

Overall for the portfolio, it was a good, not great year and I am sitting on plenty of cash going into 2020. I really like what we hold and love the cash our investments are throwing off now. It’s free money to invest again.

Back to the main point. What does the first half of this point have to do with the second?

Simple, we have to be unemotional when investing. We cant “hate ” or “love” a company for some arbitrary reason as both emotions lead to bad results. We have to try and remain “numb” and see each for what it is, not what we think it is or what we hope it can be.

FYI: 1 hour 33 into the concert is Layla… he plays it both acoustical in the very beginning and electric at this point. Amazing…

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The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests ...

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