Here is a little trick that I play on the world. Instead of entering the new year blazing hot and then crash and burn by Feb 1, I hold tight. Don't change too much. No big plans. Expectations have been lowered. And I hear them say, "I guess he isn't doing anything spectacular this year". Then, when everyone else is done with 'dry January' and starts drinking again, I execute on a 7-month sprint to kick butt and leave all of you all in my dust. Seven months because we know nothing gets done during the holiday season of November and December plus July and August are vacation months. I’m sure I have the persistence to carry out a plan for 7 months. Who's with me? (…looks back…anyone there?...ok, let's go!).
Performance Results - January Update
Clean energy companies that came public through a SPAC in the past two years exploded out of the gates going 0-60 as fast as a Telsa. Our newly organized equal-weighted portfolio of 38 companies ripped for +30.7% in January. The Top Picks portfolio trailed at +22% as we had positioned more conservatively with a 30% cash balance to take advantage of any early year downturn, which certainly didn't happen in the first 21 trading days. The portfolio of seven clean energy ETFs was up 12.8%, or about twice the rate of the S&P500 index which was up 6.2%. Telsa, a new “benchmark” in our table, increased over 40% from $123 to $173 by 1/31/23.
Risk assets in general performed very well as Bitcoin and Ethereum rose 39.9% and 32.2%, respectfully. The crypto portfolio was up 42.7% while the NFT index was up similarly to ETH at 33.9%. Solana (SOL) was the star moving up from $9.97 to $23.93, for a 140% increase in price.
The Bond index was up 3% for January, which is a nice move for bonds. Combining bonds with the S&P500 index, the traditional 60/40 portfolio gained a respectful 4.9%, but pales in comparison to all other numbers on the performance table this month. The DT-Mix portfolio was up 8.8% while the aggressive portfolio finished ahead 15.5%. Overall performance by portfolio was exactly as one would expect when the markets were on fire (in a good way). See my last edition for more explanation of the new Portfolios in the table.
Top Picks news: Luminar and Polestar
On February 2nd, Business Wire published a press release announcing an enhanced collaboration between two companies in our Top Picks portfolio - Luminar and Polestar. These firms announced plans to deepen their partnership by expanding the integration of Luminar’s technology on the Polestar 5 – the electric 4-door GT expected to launch in 2024 based on the Polestar Precept concept car. This expanded partnership provides a foundation to further collaborate on lidar integration and design on Polestar’s future vehicles. Luminar LAZR 0.00%↑ and Polestar PSNY 0.00%↑ were up significantly Thursday on the news, as much as 15% for LAZR and 13% for Polestar.
Luminar is a global automotive technology company ushering in a new era of vehicle safety and autonomy utilizing advanced lidar technology. Polestar is a Swedish premium electric vehicle manufacturer founded by Volvo Car and Zhejiang Geely Holding Group Co. in 2017.
Founder of Nest working on next big idea
Agricultural emissions make up between 15-20% of all emissions each year. And 30% of the food brought home from the grocery store is wasted (this section is an excerpt from my twitter thread published last week).
I thought when I put food waste in the garbage/ landfill, it would decompose --> almost like composing. But this is not how it works. When food rots, it produces methane in the landfill, a gas that is ~80x more potent than CO2.
Now this sounds like a problem worth solving.
I hate wasting food as much as everyone. Heck, I gained 20 pounds as a young father after eating all the food on our kid's plates when they were young because I didn't want to throw it out.
Ex-Nest founder, @MattLRogers, has started a new company to take on the challenge of Food Waste. Their research shows that emissions from food waste would rank third, as compared to countries, only behind China and the US.
If people could 'right size' their food buying to consumption, there would be less land, water, fertilizer, energy, and effort needed to supply our needs. But this isn't quite as easy as it sounds. There must be a better way.
Introduce you to Mill. They believe the best way for reducing food waste is to keep food, food. Waste food can be repurposed for animal feed. And they make it easy. Like the Nest product for controlling HVAC.
One household could avoid about a 1/2 ton of greenhouse gas emissions per year with this solution. Big numbers as this idea scales.
I learned about this new company and its’ service from the Catalyst Podcast by Shayle Kann of Energy Impact Partners. If you listen to podcasts, check this one out.
What’s Coming Next…
On February 1st, Fed Chairman announced another 0.25% increase in interest rates which was expected. His tone was still hawk-ish (increase rates), but not as bad as in previous months. It seems like the market was looking for any excuse to buy and it took the opportunity to do so. S&P finished up 0.77% after being down most of the morning and the NASDAQ ended the day +1.5%. On Thursday the 2nd, markets opened up higher and stayed in the green with the S&P gaining ~1.5% and the tech heavy NASDAQ up over 3%.
As I finish off this newsletter on Friday (the 3rd) morning, labor market came in on fire → U.S. economy added more than 500,000 jobs in the last month, double the expectations leading to a 3.4% unemployment rate, the lowest in 50 years. Markets didn’t like the good news (because it gives the Fed ammunition to continue to raise rates), so futures are pointing 1% lower or more.
Everyone is trying to figure out whether the bottom is now in and can safely go back into the water (buy stocks). Instead of the day-to-day gyrations of the market (see the previous two paragraphs), let’s step back and look at a longer-term chart.
This is a chart of the S&P500 using daily candles, so it shows about 16 months of price action. Notice the yellow, downward trend line going back to the all-time highs on January 4, 2022. The index rallied several times, in April, August and December, and every time it got stopped at the line. Each high was a “lower-high” and each low was a “lower-low” —> definition of a bear market.
About 10 trading days ago, the index broke through that trend line and has stayed above it. The index has created a new, higher-high and higher-low. These are all good signs that we might have turned a corner and the low of the bear market could be behind us (October 12, 2022, when it hit as low as 3,681). There are no guarantees when it comes to market prices, but the signs are good that we are forming a bottom. For instance, it would be perfectly reasonable for price to go back and test that trend line. In fact, it would be healthy for the market to do that as long as the line holds. This would be a 6-7% drop to roughly 3,900 over the next few weeks.
Only time will tell. The best strategy is not to guess, or gamble, on which way we think the market will go, but to continue to invest a little bit every paycheck into an index fund or ETF (my twitter thread on dollar-cost averaging). And invest 10-30% of your portfolio into your key investment thesis to provide a kicker to your average return rate. For this newsletter, we believe in the clean energy transition. Good luck!
Efficiently Yours,
DT