In this issue:

1. Market recap

2. Portfolio performance

3. Plan moving forward

Market recap

Last Friday (March 27) marked one of the worst days in the market since 2022 as fear overtakes the market. Both Nasdaq and the S&P entered correction territory in March.

The narrative behind the fear / uncertainty to the market appears to be driven by a few compounding factors:

1. Fear of recession

2. Consumer sentiment rapidly decreasing

3. Uncertainty around tariffs and economic policies in general

Rather than going into the specifics of each, I’ll share a few select Twitter posts to paint the picture below.

With all these factors, it’s no wonder the market risk appetite has fallen off a cliff and the market has now been under Extreme Fear for most of March:

Is the extreme fear is justified? Before I go into my thoughts and plans for the MC portfolio, let’s first review our performance during this period.

Portfolio Performance

As of the time of writing on March 29th, Mingdom Capital underperformed the SPY YTD (-5.9% vs -5.19%) and outperformed the QQQ (-5.9% vs. -8.27%). However, we are still way ahead looking out 1Y.

Overall, I’m pleased with this performance, especially during a downturn where tech stocks were hit the hardest.

Not going to do a full portfolio review this time for the sake of time and instead jump right into my forward-looking plan.

Plan moving forward

In the last portfolio update, I wrote:

I’m glad to have been cautious at the beginning of the year and have significant cash and some hedges in place as a buffer during a market downturn. But even then, the rate of change from going from ATH to having the Nasdaq drawdown nearly 13% over a month is excruciating. It’s a painful reminder that when markets turn, it can turn sharply.

Here’s what I’m doing with the portfolio:

• Concentration: Took profit on some of the more speculative names in the portfolio and concentrated towards high conviction names with the strongest moat. The downturn really forced me to examine which companies I actually have the highest conviction in. Almost no change in the top 5 positions in terms of rank from the last update though.

• Diversification: Even as positions became concentrated, my portfolio is more diverse than ever from a sector exposure perspective. I intentionally diversified away from tech and more into finance. Companies like Mastercard (MA) for example should hold up well even if tariffs and inflation increase prices.

• DCA: I’m slowly dipping into my cash pile, I don’t think this will end up becoming a bear market with over 20% drawdowns but if it does I don’t want to be caught with 0 cash.

At times like these, it’s especially worth remembering the Investment Principles I wrote about last year. So long as I’m not over-leveraged (avoid risk of ruin) and my long term holdings are all quality names, the added volatility should bring an opportunity to outperform on the long term.

Bonus: Predictions for fun and profit

Ending on a lighter note, I’d like to make a few bold predictions. These are a few of my core viewpoints which I think make me a differentiated investor vs. the broader market. If I’m right, this should give my portfolio an edge over the long term given how so much of the market seems to be focused on the short term.

If I’m wrong… it’ll be good to have them documented so as to look back and learn to predict better in the future ;)

I’m also not going to spend time defending any of these view points, that will take too long and I have an infant to take care of.

Predictions:

1. The AI bubble is not ready to burst yet, it’s still super early and will lead to huge productivity gains over the long term. In addition, I’m betting decent chunks of my portfolio that Nvidia and TSMC will maintain their leadership positions in the semis space. This is in face of extreme negativity in the semiconductors space with the SMH now in a bear market, down over 20% from its peak value.

2. We will not go into a recession in 2025. A recession is defined by having two consecutive quarters of negative GDP growth, I bet we won’t even have one.

3. Google will emerge as one of the biggest winners from AI. Right now they are seeing as the main company to be disrupted by it since everyone is rolling out their own search engine and AI replaces the need to search with AI answers. I bet their search revenue will remain strong with moderate growth while they leverage AI to fuel much higher growth in other parts of their business.

4. Market has already priced in the worst case for tariffs ahead of April 2. This is a shorter term prediction but I think markets will actually rally after April 2 when tariffs actually go into place. I place no conviction on this one and it’s mostly wishful thinking that shouldn’t have major long term impact on my portfolio if the other predictions are right.

Remember - don’t take any of my predictions too seriously and none of this is personalized financial advice. May the markets be with you!