The Rookie Lineup - Reviewing 2023 Performance
Disclaimer: This is NOT investment and/or financial advice and shouldn’t be used as such. This is for entertainment purposes only, and NOT real money.
Highlights
Total Rookie Performance was 67.88%. This beat the SPY 0.00%↑ whiched returned ~25% in 2023. Let’s go.
After a horrendous 2022, software companies bounced back in 2023 TEAM 0.00%↑ , ZS 0.00%↑ , SHOP 0.00%↑ , CFLT 0.00%↑ , DDOG 0.00%↑ all had wonderful years.
COST 0.00%↑ continued to be our beachhead and rock throughout 2023. It is the calm and consistent superstar in the portfolio
Lowlights
DIS 0.00%↑ and HD 0.00%↑ have not behaved like a calming balasts in the Rookie Lineup, and instead, have had huge swings throughout 2023. The purpose of HD and DIS was for their brand, consistent and reliant growth, and to counteract the volitility of high-growth software companies. But I overlooked their dependency on macrotrends (e.g. Home Depot is directly likely to a growing housing market and lower interest rates), and their requirements for high-levels of capital in order to fuel growth / fight competition.
U 0.00%↑ is an absolate dumpster fire. They changed their pricing and business model in 2023, and in the process, directly loss creditibility and trust from their consumers. Management has been inconsistent, and disappointing. Adding insult to injury, their 2022 aquisition of IronSource has been a $4.4B disaster thus far, and provided little value in 2023.
Meh
COIN 0.00%↑ had a great 2023. It is up 453.48% since the start of the year, but they continue to fail in diverisify their business model and revenue streams. The majority of their revenue is from transaction fees, and this is a narrowing and fragile moat. Coinbase is TOO heavily linked to the crypto boom and bust cycle. We need to see real efforts in diversifying revenue streams in 2024.
CFLT 0.00%↑ and DDOG 0.00%↑ had okay years. I expected more especially since the B2B SaaS recessions seems to be easing. 2024 will be a critical year for these two companies.
Overall
2023 was a great year in terms of performance, but we have weak links in the portfolio: COIN 0.00%↑ , DIS 0.00%↑ , and U 0.00%↑ are definitely in the ‘cut’ region, and likely will need to be dropped in 2024.
Things to Watch for in 2024
Is the B2B SaaS recession over? Things are looking better, but across the software industry DBNRR has remained flat-to-slowed for most companies. The two charts below by Jamin Ball at Clouded Judgement summarize it nicely - it’s not great, but the rate of ‘worsening’ is slowing:
Is 2024 the year for Crypto? Are we out of the Crypto-Winter? $BTC is up ~158.02% over the last year. The Crypto bulls are back - get ready for those Steph Curry commercials and NFTs again.
Is Inflation over? What will the Fed do with interest rates? Will the Fed cut or keep rates higher for longer? I don’t know, and generally, I don’t care. BUT — I don’t see why the Fed would cut rates: unemployment is low, consumer health/spend is ‘managing’, inflation is getting better. Why would the Fed cut rates and risk having inflation come back…especially since they spent the last 24 months cutting inflation down. Why undue all of that work? Having said all of that, I will likely be wrong and incorrect.
Performance Since Inception Feb 25th, 2022
Reviewing Performance Since Inception
Highlights
COST 0.00%↑ is a truly wonderful company. It is able to perform and deliver results through any type of macroenvironment. It is a unicorn that serves quality pizza and hot dogs. #puremagic
The Rookie Lineup is too heavily weighted and connected to the B2B SaaS / Software cycle. The Rookie Lineup needs more uncorrelated positions to become more anti-fragile.
Lowlights
Since Feb 25th, 2022, SPY 0.00%↑ is up ~9%. Compared to the Rookie Lineup at -11.15%, we are underperforming the benchmark. This is bad. The Rookie Lineup is still in the hole even with all of the gains from 2023.
Too many of the Rookie Lineup companies are too fragile. We need to look for more resilient and anti-fragile companies.
Favorites in 2023
Music
Content (Posts, Podcasts, etc)
Podcast: Charlie Munger - A Conversation with Charlie Munger & John Collison By Invest Like The Best
Podcast: Little Black Holes Everywhere By Radiolab
Podcast: Butt Stuff By Radiolab
Podcast: The 10 Most Important Financial Skills by Morgan Housel
TV Shows: The Glory / The Righteous Gemstones / Succession / Beef / The Last of Us
Movies: Oppenheimer / Air / Kill Bok-soon / Ballerina / Killers of the Flower Moon
Stuff
Asics Novablast 4
Kensui Swissies Pull Up Handles
Lululemon Surge Shorts
Features Running Socks
SF City Football Club Store
Plans for 2024
Write more. I’d like to aim for quarterly updates on this Substack.
Physical goals: Sub 6:30 mile. Sub 1:45 half marathon. Break 850 Club (250 Squat, 250 Bench, 350 DL)
Visit two national parks: Lassen National Park and _not_sure_yet_