Strategy | Bloomwood | Bloomwood Core | S&P 500 |
Monthly (12/2022) | -1.41% | -1.77% | -5.90% |
Annual (2022) | 11.79% | 11.99% | -19.44% |
After a wild investing year that tested our skills and patience, I would like to wrap up with a simple illustration of our wins, losses, proud moments, lessons learned, and our take on 2023 and beyond. If you have lost more in the market than you are comfortable with and would like a second opinion, please reach out to billy@bloomwoodcapital.com. We would be honored to get a chance to demonstrate our value and win your business.
In a nutshell, we stuck to our principles amidst uncertainty and locked in an 11.79% return in 2022. We are proud of this result and look forward to continued success in 2023. Our most important principles this year were: "Weight your decisions on believability" and "Know the difference between opinion and fact." This year more than ever, everyone had an opinion on what was going to happen in this or that market. We have developed a habit of ignoring this "noise", and we think you should too. Listen to a few highly believable people (people who have real skin in the game) with distinct viewpoints that differ from one another. As a rule of thumb, it should require effort to extract knowledge and wisdom from these people, and they shouldn't be in the business of providing knowledge and wisdom, they should be in the business of the field that you want their opinion on.
At Bloomwood, it is our job to (a) invest in assets that will become more valuable over time, (b) make a small number of well-informed investment decisions, and (c) identify, then execute on one-way risk/reward scenarios. We are proud that we have the discipline to stick with that.
This year, we view our job like navigating a plane through headwinds to reach a final destination. The standard aviation techniques will work, and we will get there, but we will burn a lot of fuel in the process. Instead, we will look for alternative paths where headwinds and turbulence are not as strong. In market terms, this means seeking return streams in fixed income, non-U.S. equities, commodities, and other low-correlation asset classes in addition to high quality U.S. based companies.
Wins/Proud Moments
Trimming gains systematically throughout the beginning of the year and ending up with roughly 50% in cash by the beginning of April.
The catalyst for my decision to trim gains was the market action taken by Jeff Bezos and Elon Musk. By the end of 2021, both Bezos and Musk had sold billions of their core holdings (AMZN and TSLA). I am paraphrasing here, but Chamath Palihapitiya said it best on the All-In podcast regarding this signal: "If you didn't take this signal as a sign to start getting out of the market, you are either incredibly naïve or much smarter than them."
Taking a short positions in U.S. Treasuries with 20+ years to maturity in June.
Wesley Amberg, my first son, was born on December 21st.
Seeking out constructive, sometimes painful feedback from trusted friends, colleagues, and mentors.
Losses/Lessons Learned
Jumping back into the market in May without enough diligence.
I am a firm believer that anything is possible. However, I have yet to see a program or a human that can consistently profit from short-term trading that is simply based on guessing the direction of the market. At the end of the day, I gave in to FOMO. While I guessed right and ended the month with a 2%+ gain, it could have easily gone the other way. Lesson learned!
Beating ourselves up over short-term underperformance in July.
A trying, arduous year with enough unpleasant surprises (personal/family and business) for the next decade.
Helpful Reading and Resources
What I Listen to and Read
Disclosures
a. The benchmark index used to compare the Bloomwood Strategy is the S&P 500.
b. This performance data is net of fees charged by Bloomwood.
c. This performance data assumes no reinvestment of dividends and interest.
d. Past performance does not guarantee future results. All investments have a risk of loss.
e. The volatility and risk/reward profile of our strategy is fundamentally different from that of the benchmark index.
f. The Bloomwood Strategy seeks to invest in companies and real assets across the globe that have a sustainable competitive advantage and are reasonably priced. We use simple but effective algorithms and order types to maximize downside protection. Bloomwood uses tactics, order types, and algorithms that are not present in the benchmark.
k. The results of the Bloomwood Strategy are taken from John William Amberg, II’s historical investment decisions relating to this strategy throughout his career for himself and for his clients with the appropriate risk tolerance. Due to sell orders being triggered by algorithms and varying order types, performance data, as it relates to realized sales, is calculated based on the weighted average of the execution price across all accounts invested in the strategy. Results vary slightly between accounts.
l. Bloomwood Capital Advisors LLC is a registered investment advisor in the state of Georgia and North Carolina.
m. The performance depicted in this document has not been audited by an independent third-party and is not compliant with Global Investment Performance Standards (GIPS) or any other third-party investment performance standard. Bloomwood and John William Amberg, II do not claim that the Bloomwood strategy presented in this document has been audited by an independent third party or is in compliance with any third-party standard of investment performance.
n. Results shown are from January 1st, 2022 to December 31st, 2022
o. A proprietary model was used to generate the results.
p. Performance results available on request.
Please note that John William Amberg, II (Billy Amberg) is the President and CEO of Bloomwood Capital Advisors LLC (Bloomwood) and a registered representative of
Corporate Finance Securities, Inc., Registered Broker-Dealer, Member FINRA, SIPC. Any reference to mergers, acquisitions, private equity, private credit, and/or investment
banking capabilities and/or services is a reference to Corporate Finance Securities, Inc.
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