The second quarter was home to wild swings. From the start of the quarter the S&P 500 was down more than 15% by April 8th, only to ultimately recover more than 25% from that bottom to date. Over the course of less than three months, these are massive moves.
In many ways this was on par with the Covid-19 drawdown in it’s ferocity.
Coming out of the drawdown, once again, risk has been reworded with growth far outperforming value.
A few general notes on Q2 2025 from the portfolio:
This quarter featured some truly dismal sentiment as captured on this very website in late April.
As a reminder, the overall investment portfolio is ultimately mostly allocated to index funds. Additionally, we often have a cash position that is much larger than the norm. This quarter, a decent amount of cash made its way back into the market during the significant selloff in early April. It didn’t feel good at the time. Feeling near sick when an investments is made is often where the best returns are found down the road.
Ben Carlson said it well:
During this quarter the short position in the U.S. dollar was closed out. It netted slightly more than 500% return over the less than 6 months it was open.1
Among the top individual holdings, two positions were closed out in the quarter (Tesla and Tencent). These were both stopped-out during the market chaos associated with Liberation Day. This brings Verizon back into the top holdings list and introduces Alibaba to the list for the first time.
The puts expired in June providing the necessity to take profit — would not mind still being short.