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No. of Recommendations: 73
In trying to understand what's happened recently to the companies we follow, it's important to make sure you look at the whole picture, so you don't take away the wrong lesson, like I believe bashuzi did here: (Sorry to call you out, bashuzi, but saying "the market is trying to tell us something" is the perfect example of what I want to discuss below.)

Here are the pieces as I see them:

1. I've talked about how much the prices have dropped. That is the first and undeniable fact.

2. We also know that when companies report a quarter with revenue growth of 50% or 60% or more, the PS drops by more than the share price has dropped. It's a multiplier of the "bargain" or let's use neutral language and say "less expensive price."

3. We also know as Saul points out that these companies haven't faltered, and that the business models these companies have will make them MUCH more valuable in the long term.

4. We also know that as several on the board have discussed at length, these companies are leaders in their spaces -- innovators that are changing things. Sure, some will slow down faster than others, but in general this is a burgeoning space to be in, where continued exceptional growth is more than possible.

5. We also know that this is not a market panic or recession -- the S&P is within a few percent of all time highs. What we've seen is a re-evaluation of the multiples people (financial institutions) are willing to pay for these companies. We can theorize, but we don't know exactly why, why now, how long it will last, if it will stabilize, if it will get more intense, or if it will reverse.

Those are the facts. Let me discuss some possible conclusions and courses of action:

1) We're at the bottom, and we should leverage up to the hilt and buy buy buy!

2) "The market is trying to tell us something." These companies are suddenly going to stop attracting customers and maybe go bankrupt. And/or a recession is coming which will drag everything down and our stocks will fall further! We should go to cash.

3) We're not very good at figuring out tops and bottoms, or predicting recessions. We should realize the valuations of our companies are at a relative low point, but that things can always go lower. The thing is, if we were sitting on cash "waiting for a drop," we got our drop. So it makes sense to be fully invested and hope for the best. But be ready come what may.

Spoiler alert, I think #3 is the way to go. One thing I always try to do is think, "What if I had just found this board today? What if I read the entire 60,000+ posts and realized what had been going on here, and I wanted to decide what to do about it?" Well, in July, I know what I would have done. I would have dipped a toe in probably, but I would have been terrified at AYX with a PS of 32 or whatever, and ZS with a PS of 40+. Etc. Etc. That's changed now. If my money were in bonds or funds or anywhere else but exactly where it is now, I would move it as fast as I damn well could. I caught myself looking around the house yesterday wondering if there was anything I could sell.

I'll stop. The part of this that's an evaluation of how or whether we should time the market is completely off topic. The part of this that's a reminder of what special companies we've found and how we should view them going forward is completely on topic. Please allow me some latitude -- I want to give the board a balanced and long-pondered perspective. Not an emotional crutch, but a reasoned position that perhaps will help you resist reducing your exposure to what I believe is exactly the right place to be.

I do not know how the market will react when our stocks report on their quarters in a few weeks. I suggest that you don't primarily pay attention to that, but rather pay attention to the company results and outlook. I think we'll see what we've seen for several quarters now: extremely impressive strength.

Good luck.

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