2024 REVIEW

“When life gives you lemons, ask for more.”

I was diagnosed with a brain tumor in the beginning of 2024.

A mentor gave me this advice when I told him I was diagnosed. I was honestly initially very mad at him because I felt he didn’t understand how much I was struggling. 

He explained what he meant to convey: When life becomes excruciating, lean into that pain because that’s the only way to win. During a boxing match if you get knocked down, staying down is the logical thing to do. Getting up is ‘asking for more’. In fact, to win most fights you have to sacrifice getting hit in order to swing back and hopefully deliver the knockout punch. 

That ‘fight’ I had with my brain tumor thankfully only lasted 90 days from our first diagnosis until the first surgery. There was a very long road to recovery as well but the ‘hard part’ was over. 

Three months of preparation honestly should be enough, but if you know me then you know that all I did was bury myself in work for 90 days. My wife was the true superhero who scheduled all the appointments, the CT scans, the MRI’s and all 1000+ blood draws/labs. There isn’t a human being on earth who is even close to how amazing she is. I don’t know if I would even have scheduled the surgery if it weren’t for her. 

Surgery day came on May 13th. We had just flown back from Napa Valley because I somehow convinced my wonderful wife that it was a good idea in case there wouldn’t be a ‘next time’. (Note for readers/husbands: you can get away with almost anything if you have a scheduled brain surgery for a brain tumor). 

Although I had done everything in my power to just focus on work for the previous 90 days instead of processing just what my diagnosis meant and what it would mean, I oddly was at peace that morning. My wife and church community had been praying and although I had been wrestling with the surgery and news myself, I knew things would be alright. 

By God’s goodness I survived the surgery where my tumor had even wrapped around a vein inside my own brain (as if brain surgery isn’t complicated enough). Prayer answered!

In fact, as I reflect back on this year the biggest theme has been Answered Prayers. 

Looking back on 2024 I’m overwhelmed with gratitude. There is one thing that I need to say to each and every one of you for this 2024 year and that is: We are so eternally grateful for you. Thank you for believing in us and trusting us with your investments because we know this is not an easy decision. We are so happy and pleased that this year was a phenomenal year for portfolio growth. 

WHAT WAS 2024?

My favorite movie of all time is GATTACA. (This small summary doesn’t even come close to doing the movie justice - please go watch it). If you haven’t seen it, the movie highlights a futuristic world where everyone can choose the genes of their kids before they’re born. For the main character/protagonist (Ethan Hawke) his parents actually chose to let him be born with ‘natural’ genes (he’s born without any gene intervention/improvement). The movie follows him as he navigates through life when everyone seems to have more advantages than him, including his own younger brother who was born with ‘perfect genes’. 

The main character’s personal mission in life was to become an astronaut, the profession that only the best of the best get. The movie highlights the 30 plus extra steps the protagonist had to endure compared to his peers. The movie peaks with a swimming race between the protagonist against his brother where the goal is to swim away from the beach and outswim the other and make them give up and swim back to shore. Even though he’s several inches shorter, many pounds lighter and less athletic than his younger brother, the protagonist pushes his brother to breaking who asks the protagonist, “How are you doing this? How have you done any of this?”

His answer was the whole point of the movie: “You wanna know how I did it? I never saved anything for the swim back.”

I thought about that scene a lot this year. Especially when I was laid up in the ICU for a week post surgery stuck with a dozen different needles/tubes. The big scary surgery was over, but there were some issues/complications to deal with. There’s definitely a change in attitude when things get harder but to just ‘dig deeper’ is so opposite of what I naturally wanted to do, which was just give up. Now my health immediately after surgery wasn’t in a life or death situation thankfully, I just had to mentally and emotionally endure the several complications and added surgeries/treatments. 

However, during this time in the ICU we became friends with patients in neighboring rooms. Reality checks came real fast. One friend 5 rooms over had a massive tumor on their brain stem. He’s 19 years old and had to have surgery twice as long as mine and a medically induced coma and stay in the ICU for over a month. 

‘It can always be worse.’

In the midst of my worst week this year, I was constantly reminded that I was significantly in much better shape than several other people within feet of me. Gratitude isn’t really the right word for how thankful I am for surviving the surgery and post-surgery issues. 

Now, as you can imagine I was taking ‘Out of Office’ to the extreme and can only do that with our awesome team and especially my business partner Braden to keep everything running. I don’t know how I should feel knowing that I was absent for weeks and everything at work seemed to run smoother without me. (Maybe I’m the reason everything needs fixing when I work - or maybe I’m just the least talented player on the ‘93 Chicago Bulls team).

My heart is full to know that we have the best team under the sun to make this the best year yet in terms of performance.

WHAT HAPPENED TO MR. MARKET?

Speaking of performance, I wanted to talk about how we performed as a firm full of individual clients with custom allocations. (If you’re thinking “Finally you’re talking about investments, this essay is ridiculous” My bad, I can be long winded at times.)

This year our entire investment philosophy was rewarded. We believe in investing in extremely profitable companies that are extremely undervalued. Now, there are several factors that go into measuring and evaluating ‘extreme’ profitability such as free cash flow, operating margins, net income etc. We aim to find companies that not only grow in revenue and cash flow but also those that have healthy balance sheets (low debt/no debt etc). Now, ‘undervalued’ is a very hard term to define because it means assigning a stock/company a value and comparing that with the public or market price of that stock/company. We use a very complicated process for evaluating different companies/stocks but when we see an opportunity, or (as what happened repeatedly in 2024) we get handed several beautiful opportunities.

Let me highlight with a few examples. A clear massive move came on May 30th. This was actually one of the first things I started working with the team on post surgery. Salesforce, a massive company that has increased revenue for 78 quarters in a row, reported a less than attractive earnings report that shared some concerns for 2024/2025 sales and revenue forecasts (there were lots of other details but this was a big highlight). Reporting discouraging numbers  happens with some of our ‘favorites’ but the market reacted by dropping Salesforce ($CRM) almost -20% in one day. That was a complete over reaction. However, if you’re married and you tell your spouse ‘they’re over reacting’ it doesn’t go well for you - so you have to prove it. Now, did Salesforce deserve to drop in price from some ‘lackluster’ numbers? Maybe. But did it deserve to drop -20%, we believed it did not. For moves made into Salesforce on May 30th that one trade is up +52.7% since then. This includes another ‘okay’ earnings call on Aug 28 and a ‘lovely’ earnings call on Dec 3. This is a very simplified example and I’m happy to talk for hours about this investment or you could also tune into our podcast: ‘In This Economy???’

Another example: does everyone remember when every flight was cancelled in the middle of July? The big culprit was a software security company that had an internal update that crashed world wide. The news and every headline went out of their way to try to paint the villain: Crowdstrike. The result in the market? A -43.5% decrease in stock price. Now, I’m not saying this is like finding a stock on a 43.5% discount, but it’s close. So why the massive decrease? Well, people or the market assumed many clients of Crowdstrike would drop them after such a debacle/mess up. This included the biggest one: Microsoft. Most airlines and other businesses use Microsoft for everything and when Microsoft shuts down (because of Crowdstrike) then you would think it would drop Crowdstrike, however they are unfamiliar with how ‘sticky’ Crowdstrike’s service and product is for massive companies. That played a part in our evaluation for how ‘valued’ Crowdstrike was after a -43.5% decrease. Since August 2, Crowdstrike is up +64.77%.

Now, every trade isn’t after a big drop, those are just fun ‘handouts’ that 2024 gave us, we still had to investigate very fast if there was ‘upward value’. We have been very interested in evaluating companies that are ‘unliked/undervalued’ by Mr. Market like $SOFI and $PYPL. Both companies in 2024 were making significant changes to management and product offerings. They had short term ‘sacrifices’ in order to set the company up for long term success. SOFI is up +119% since July 11. Paypal is up +53% since July 25th. 

(I am aware that not everyone’s account may not show moves in some of the stocks mentioned here and that’s in relation to a more conservative approach to some accounts or your account is already dedicated to an income/dividend strategy. If you would like to talk about a new approach to 2025 then please let us know.)

As we enter into a great new year of 2025, our focus remains the same: see through the news and the noise and find investments that offer value increases. After the hardest year I or the firm has ever faced we had a great 180 turnaround and I’m not just talking about our record breaking returns, my wife and I are pleased to announce that we will be having our first child in March! If you’ve been reading this whole darn thing, thank you and I’m glad to share this world shattering news with you as I now I have to research baby products like I analyze all of these stocks. God is good. He is so so good and as you go into 2025 I pray that this year is full of growth, healing and love for God and others in your life. 

🥂 Cheers to 2025!