John Bogle famously said “the idea that a bell rings to signal when investors should get into or out of the market is simply not credible. After nearly 50 years in this business, I do not know of anybody who has done it successfully and consistently. I don’t even know anybody who knows anybody who has done it successfully and consistently.”

After a high performing year in 2020 that ended with a 41% return, Q1 saw a significant market downturn that echoed the message we’ve always preached at Risevest:

  1. Investing is a long term game
  2. In the short term, expect a lot of volatility
  3. You cannot time the market.
  4. Dollar-cost averaging always pays
  5. Staying invested in all markets is the best investment strategy and 
  6. A diversified asset portfolio provides the best risk-adjusted return.

In Q1, the stock market experienced a lot of volatility and at different points it was down by some double digits, wiping out most of the gains of late 2020. It then swung back into the green as the global economy reopened and vaccinations picked up speed before dropping back into the reds on fears of inflation and continued China-US tensions, then bouncing back with continued strength in the tech and energy sectors. It’s been topsy turvy but the team and the process we use to select investments for you did their job and delivered a strong return for the quarter. 

Plans Performance

On Risevest you have access to 3 different plans at the moment, the Stock, Real Estate, and Fixed Income plan. Brought together in our portfolio mix, they made a return of 6.33% in Q1, with Stock contributing 7.3%, Real Estate 6.01%, and Fixed Income 2.5%.

Stocks Plan

In Q1, we added two new stocks (Bumble and to the portfolio. We wrote about why we added Bumble here.

The top 5 performing stocks in Q1 were: Twitter (TWTR) up 45.52%, Extended Stay America (STAY) up 37.92%, Granite Point Mortgage Trust (GPMT) up 29.92%, Google (GOOG) up 28.56%, and Apartment Investment and Management (AIV) up 28.42%.

Broadly, the drivers of the overall performance have been our bet on companies that benefited from reopening the economy and tech companies’ continued growth. Stocks like Extended Stay America ($STAY), Granite Point Mortgage ($GPMT), and Apartment Investment & Management ($AIV) for instance are connected to the real estate and hospitality industry. Twitter and Google are two tech stocks that made the top 5 high-performing stocks in this quarter.

The bottom 5 performing stocks were (JD down -14.53%), CrowdStrike (CRWD down -11%), Trade Desk (TTD down -9.40%), Fiverr (FVRR down -7.36%) and TransDigm (TDG up 1.68%)

A lot of our bottom-performing stocks are a combination of valuation correction for tech companies that had a lot of run ups in 2020 and some other tech companies were affected as a result of reduced online spend from the optimism of the economy reopening. 

Outstanding among our bottom-performing stocks is remains a company with solid fundamentals and we have reasons to believe in its future growth potential. The current decline seems to be driven partly by increased regulatory scrutiny by the Chinese government into its tech sector. However, we believe this is a temporary situation and with showing a 29% increase in revenue year on year and 45% increase in operating income, all the signs point to this as an opportunity to buy more of the stock at a cheaper price. 

Overall, the Risevest portfolio is up 7.3% year-to-date (YTD). This is slightly below the S&P500’s 10.26% return in the same time period, which is expected given that we had a number of high flying tech companies whose subsequent correction pulled down our performance significantly. However, our goal is not to stay above or below S&P 500 at any or all times but to constantly buy great companies at cheap prices so that our long term performance will be rewarding for our investors and we succeeded in this. It is highly probable that our focus on quality stocks will lead to outperformance but that is not an explicit goal.

Real Estate Plan

We wrote here that we believe that the best an investor can do for themselves is to maintain a diversified portfolio of assets. And that’s why we have the Real Estate plan.

In Q1, the Real Estate index returned 6.01%. We sold one property at the beginning of the year and added a new one in early March keeping us at 11 properties. We also started exploring new acquisitions in the Dallas market which should be done soon. The US real estate market has been on a massive streak, causing home prices to soar and rewarding Rise portfolio investors while making it slightly more difficult to find great bargains. However, we remain confident in our ability to surface off-market deals that will bring great returns to our investors.

We are committed to doing the work required to add new properties that will return even more income to our customers with no additional significant risk.

If you do not have a real estate plan in your portfolio, you should consider opening one.

Fixed Income Plan

Our fixed income plan remains solid, returning 10% per year and 2.5% in Q1. That’s one of the best available in the industry for a dollar-denominated investment.

SEC Circular and Our Response To It

While we were drafting this report, the Securities and Exchange Commission circular was released to the public. As we’ve written in our communication to you earlier, we are on top of it. We are having communications with the regulator and we are always in compliance with all rules. Rise does not enable direct trading by retailers, in compliance with the law.

Read our response here if you have not.

The Journey Ahead 

The year is still young, of the 12 months that we have to spend, we are barely 4 months in. Recall that this time last year no one could have accurately predicted what the market would look like. Yet, we ended it in a very rewarding way.

We do not make attempts to predict the future. We simply make decisions today that we are convinced will help you compound your wealth over time. And we are certain that if you go on this journey with us, and leverage all the resources we are making available to you, you will build wealth. Oh, did we just make a prediction? Well, we are allowed to just that one.

2021 is still young, remember to automate your investment, have an emergency fund, sit still catching fun and doing what you enjoy doing while we work to make your money work for you.

All of us at Risevest wish you well.

Risers Resources:

  • MoneyRise Blog
  • MoneyRise Newsletter
  • Rise Investment Club
  • Risevest Social Media