I’ve been talking quite a bit about how I wanted to sell some holdings to raise cash and reduce margin, and I’ve finally done it. Had waited to let them ride, and I sold on the first red day. Fairly decent profits for holding about two months (especially for an ex-SGX investor), though for 2020 its nothing special either.
160 shares of Square at $228
110 shares of Paypal at $236.76
Had profit of about USD $7,000 and $4,425 or a gain of 24% and 20% respectively. This releases about USD $62,500 in total.
I was more eager to sell Square given the links to Bitcoin. I just wished I had sold on Friday, before the crash of Bitcoin (again). But that was impossible to predict exactly when, and I waited till the crash itself. Paypal is similar but less affected. I hesitated a bit more, but the investment is so small I don’t think it really matters. So I sold it too.
Of all my holdings, these were the ones I held the least conviction. Fintech is a crowded space, with a lot of competitors. While I do think Square and Paypal are well-run and innovative, sometimes the market itself is too competitive. There isn’t really a moat, something which competitors can’t easily replicate and takeover. It’s not out the question for another upstart to take market share or for banks to get their act together.
Plus, I’m not very positive on cryptocurrencies, and don’t want my portfolio to be dragged down by them. Last week my sis-in-law was asking my wife how to buy Bitcoin, and in turn my wife asked me. I warned her away. Again, all very familiar. When newbie investors are asking how to buy Bitcoin, its a strong sign to me that it has topped. Such people are always left holding the bag.
But I wouldn’t be surprised if Square and Paypal recover and continue to do well. They do a lot of things better than the banks, which I believe are slow and bureaucratic. But the banks have sheer size and lobbying power on their side. It will be a hard-fought battle in this space, which I won’t know who will prevail.
Happy to bow out at this stage, and wait for another good opportunity.