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No. of Recommendations: 8
Returns from June 1 thru June 28.
WCLD (an ETF) - 6.81%
Efficiency 9 - 7.02%
Tech_Growers - 16.96%
Saul (Saul’s Board) - 42.3%

Note:
1) Saul reported YTD for June (from 6/1 to 6/27) as 115.9%. His YTD in May was 73.6%. I subtracted 115.9 from 73.6 to get performance for the month of June as 42.3%

2) Except for Saul’s numbers, the gain calculations for WCLD, Efficiency 9 and Tech_Growers came from Foliofn’s internal performance calculator.

3) Saul’s results for the month are usually posted during the last weekend of the month. So I use his “month” of June 1 thru June 27 as the time span for returns for each of the above.

Returns for month of May:
WCLD (an ETF) - 28.65%
Efficiency 9 - 32.85%
Tech_Growers - 41.82%
Saul (Saul’s Board) - 40%

In December of last year Earslookin introduced us to Bessemer Venture Partners list of SAAS stocks called EMCLOUD. The ETF WCLD is based on the EMCLOUD index.
https://www.bvp.com/bvp-nasdaq-emerging-cloud-index

Among the data provided was the “efficiency” metric. Subsequent posts on this board discussed the "efficiency" metric, a variation of the “Rule of 40,” as a method of evaluating SAAS stocks. The question I had is how might results from using the relatively carefree tool of “efficiency” differ from results achieved by the index or Saul’s board.

My approach, though arbitrary, is rule-based. At the beginning of April 1, 2020, and each month thereafter, I have sorted the Emcloud list of stocks under “efficiency” in descending order and then selected the top nine.

I use a token real-money portfolio in my Foliofn account in which fractional shares are permitted. I use an equal amount of money for each stock. Although I will not rebalance any stock as long as it is held, I will sell stocks that fall out of the top 9 at the beginning of the month and purchase replacement stocks for 1/9th of the portfolio value. I plan to employ this method for a few months. Then, depending on comparative returns, I will determine if the strategy should continue for me.

June’s “Efficiency 9” stocks, in descending order of efficiency score, were:
Datadog, Zoom, Crowdstrike, Veeva, Altassian, Coupe, SeviceNow, Twilo and Qualys

July’s “Efficiency 9” stocks, in descending order of efficiency score, are the same as last month.

In another cloud investing venture, since May I have employed Tech_Growers from the Mechanical Investing board for a real money portfolio. Tech_Growers is the result of a sophisticated quant-method developed by Rdutt for selecting mostly SAAS stocks. It is discussed in the thread starting at post #44 on this board. It is relatively “carefree” to use if you don’t mind what so far has only been one or two monthly trades. Simply select the top five stocks from the most recent SI Rankings posted by lohill on the MI board and hold for a month. For the following month change stocks as needed and do it again.

Conclusions
The more or less Carefree Cloud methods had great results by most any investment standards. but were little competition for Saul during the month of June.

five
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five,

Great work as usual. Thanks so much for sharing!

Couple thoughts:

1) The range of results of a five stock port will be wider than the range of results of a nine
stock port. That's just because of the law of large numbers. To do an apples to apples comparison
to the five stock Tech Growers port, it would be interesting to compare to the top five Efficiency.

2) The risk of permanent loss for each of these ports is different, but it can't be measured.

Thanks,
Ears
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No. of Recommendations: 3
I'd imagine that the primary reason for the disparity this month in saul and WCLD/Efficency methods is Fastly, which was up around 100% essentially in june and out of proportion to the typical leading SaaS stocks this month. Tech Growers incorporated Fastly in june and lands itself in the middle of the 2 groups.
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That makes sense.

Welcome to Carefree, newdocinvestor.
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Note:
1) Saul reported YTD for June (from 6/1 to 6/27) as 115.9%. His YTD in May was 73.6%. I subtracted 115.9 from 73.6 to get performance for the month of June as 42.3%




Pardon me for interrupting but I believe Saul's return for June should be (42.3/173.6) = 24.37% .

His return in May was 30.23% using the same methodology.

Crawling back under my rock now...
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Fortunately we have some math literate people reading this board.

CYY and GraniteZ provided the corrected calculations for Saul below:

Returns for June:.
WCLD (an ETF) - 6.81%
Efficiency 9 - 7.02%
Tech_Growers - 16.96%
Saul (Saul’s Board) – 24.37%

Returns for May:
WCLD (an ETF) - 28.65%
Efficiency 9 - 32.85%
Tech_Growers - 41.82%
Saul (Saul’s Board) – 30.33%
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Am I correct in saying that the companies really would only change quarterly with earnings updates based on efficiency score inputs?
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Am I correct in saying that the companies really would only change quarterly with earnings updates
based on efficiency score inputs?


Yes. The Efficiency Score is composed of Revenue Growth plus Free Cash Flow Margin. The lowest
granularity for both those measures is quarterly.

If you are looking at 50 or so candidates for your nine-stock port, however, they likely will have
different reporting dates. For example, some might report Q1 in April, some in May, and a few in
June. Some may have an entirely different fiscal year calendar. So from an overall port perspective,
the ranking needs to be done monthly because you will have a different set of companies reporting
each month.

Does that make sense? Am I explaining that well?

Thanks,
Ears
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Per Ears thoughts in post #105, I'll run an Efficiency 5 this month also, albeit a day late.
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Makes total sense and in retrospect should have been apparent to me!
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I have been posting Tech_Growers results here for a couple of months. It is sort of a hybrid between Saul's Board and the Mechanical Investing Board. There is an ongoing thread on the MI Board beginning at the link below where Rdutt reports YTD results of a five stock port as 90%. Years ago I used MI until it just became too uncarefree. It is interesting to see now how some of the old time MI folks react to these "extremely overvalued" cloud stocks.

Five


https://boards.fool.com/tech-growers-june-2020-update-345496...
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