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5 most important lessons I learned in 2022
And how you can use them for yourself
Neues Jahr, neuer Start! Wir haben uns entschieden, von nun an auf Englisch zu schreiben. Damit können mehr Leserinnen und Leser unsere Beiträge nutzen. Außerdem bietet sich Englisch an, da wir nun vermehrt Portfolio Summaries und Unternehmens-Reviews schreiben möchten - und dabei zitieren wir regelmäßig aus den englischen Quartalsberichten und Conference Calls.
Wir freuen uns, euch weiterhin - auf Englisch - neue Inhalte bereitzustellen. Lasst uns gerne per E-Mail wissen, falls ihr Gedanken dazu habt.
There is no way of sugar-coating it: Investing in 2022 was brutal.
And while we cannot control macro and market sentiment, we can control our sentiment and our portfolio choices:
Owning the best companies we can find.
The biggest investing challenges in 2022 were not inflation, rising interest rates, or geopolitical conflicts. But our psyche and mindset.
Wrong decisions. Misguided learnings. Or doing the right things for all the wrong reasons.
I distilled my 2022 learnings and tried to steer clear of wrong assumptions.
Take these 5 lessons which will help your investing journey as you enter 2023, and beyond.
Lesson #1 Focus on what you can control
What is the Fed gonna do next? How long will inflation persist? These are relevant questions.
But: Can we answer them? Can we control them?
There is no added value in obsessing over what’s not in our hands. I found that I feel much better off focusing on what I can control. And acting accordingly.
That starts with finding the right investment style. It is not the right investment style for you if you cannot sleep with a concentrated, volatile high-growth portfolio.
You need to feel good about your choices. Otherwise, you are not going to stick with it in tough times.
I can take a lot of volatility and still sleep well. Still, I must know: What I own. And why I own it.
I want to own the highest quality, fastest-growing companies in the world. And I invest my time and energy in identifying them and following them closely.
This way, I feel at ease. Even with my year-to-date return being disastrous.
Pick an investment style that fits you and own it
Check in with yourself regularly, if you still feel good about your choices
Follow your companies closely and know why you own them
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Lesson #2 Be prepared and get the basics right
If the past 3 years taught me anything, it is that we cannot predict anything.
Covid? The war and energy crisis in Europe? Inflation? Rising interest rates after decades of non-existent interest?
Sure, we can have expectations about the future: How might the IT budgets develop in 2023? What is the fed going to do?
But, there is no way of predicting anything or timing the market: Every time I thought I bought at the bottom, the market proved me wrong.
We cannot extrapolate the future from the past. Rather, we need to stay nimble, react and adapt to new circumstances, and never put everything on one card. The world is not predictable enough.
Be prepared for the unprepared.
Acknowledge new situations and paradigms. The past doesn’t dictate the future
Always maintain a comfortable emergency fund and don’t invest money you might need
Diversify your portfolio and your income
Invest regularly instead of trying to time the market
Lesson #3 Don’t draw the wrong conclusions from tough times
In gloomy times, as in hype phases, we are especially prone to drawing misguided learnings from the events of the time. Here are 3 misleading conclusions:
The Stock and Tech “Bubble” had to burst
High-growth stocks and SaaS businesses are doomed
The world is going to end
In tough times, it is always easy to say “I told you so”. The market is going to crash. The Tech bubble is bursting.
Well, yes, after over a decade of a bullish market, a correction is only natural. And, enhanced. Due to several challenges of the time:
A global virus and its after-effects
Decades of loose fiscal politics
Supply chain shortness
The way I’d like to think about it: in 2008, we witnessed a market crash. In 2022, we saw very steep corrections again.
A bubble? More likely, a normal market cycle. They happen.
Today’s ups and downs will be tomorrow’s almost invisible bumps along a continuous upward trend.
The market is down. Then improves. People get FOMO: Prices get a bit hot. Then they correct. And everything starts over again.
And no, I don’t think this time will be different. Why?
Because humanity is still here. After countless wars, natural disasters, and market crashes. Humanity found ways in the past, and I believe it will continue to do so in the future.
Regarding the “doomed SaaS and Tech” industry:
Yes, SaaS companies have some steep valuations and covid effects behind them. Prices might have gotten a little salty.
But: The best SaaS companies still grow > 50% year-over-year, have gross margins close to 90% and address large markets with a scalable business model.
It is hard to believe, that they are all doomed.
Besides, it is easy to forget that many other “safe harbor tech” and consumer companies were hit just as hard, if not worse, than high-growth companies. Think of Tesla, Meta, Amazon, or Volkswagen.
Lesson #4 Invest in your environment
You become who you surround yourself with.
It sounds cliché, but it is powerful. Remember, you not only surround yourself with people offline, but also online. If you find yourself being dragged down, it is time to take action and find a more positive environment.
In life in general, but also in investing: There are always the “I-told-you-so-folks”, creeping out of their holes in bad times and telling everyone the world will end.
Sounds like a bad influence? Well, it is.
Make it a great group this year.
Audit your real-life and online environment:
Do you enjoy the people in your life?
Do they have a good influence on you?
Which groups, channels, and communities add to your life positively or negatively?
Do they provide you with open-minded, well-intended, and sometimes, critical thoughts?
Then, take action:
Find people who are positive, great sparring partners with good intentions, people smarter than you
Steer clear of the Naysayers and doomsday prophets
Reduce exposure to negative people and communities
Lesson #5 Invest in yourself
The stock market can yield great results and make you wealthy. However, wealth and money can fade.
Something, that no one can ever take away from you:
Yourself. Your mind. Your skills.
Invest in yourself by learning new skills and increasing your work’s worth.
But also, don’t forget to invest in your well-being, your happiness, and your loved ones.
No one ever talked about their net worth on their deathbed — something I like to keep in mind when setting my priorities.
Choose one skill you always wanted to learn and start today
Don’t be cheap with yourself, invest in the quality of life
Identify one area in your life, where you can improve your well-being. Ideas:
join a sports membership
participate in a coaching program
reduce your workload
Focus on what you can control
Be prepared and get the basics right
Don’t draw the wrong conclusions from tough times
Invest in your environment
Invest in yourself
These are the 5 most important lessons I take with me from 2022.
I hope they help you as much as they helped me.
May 2023 be a better year for us than 2022!
Until then, let’s not stick our heads into the sand.
Have a wonderful, healthy, and prosperous New Year!
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**Disclaimer: This text is for entertainment purposes only and does not represent any investment advice, stock buying or selling recommendation, or any other financial advice. Please see our disclaimer for more details.
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