2nd quarter report 2023
2nd quarter report 2023
Maximum drawdown and the great tech growth cycle into which Pilane Capital is invested
Quarterly performance reports for Pilane Capital are compiled from broker statements net of expenses, and publicly available information on the S&P 500.
Results for the Pilane Capital v the S&P 500 for the second quarter of 2023 are as follows:
The Pilane Capital: 5.21%
The S&P 500: 8.30%
Maximum drawdown: 1.04%
Review
I will include maximum drawdown moving forward now that enough data exists for you to draw some early conclusions about performance since inception.
Maximum drawdown measures how much the portfolio loses money from peak to trough before a new peak in total equity is obtained.
It’s measured on a quarterly basis and is meant to show how much money a fund or strategy loses expressed as a percentage.
I Googled ‘what is a good maximum drawdown’ and figures of between 20%-25% were all over the first page of results.
From the Investopedia website:
Maximum drawdown is a specific measure of drawdown that looks for the greatest movement from a high point to a low point, before a new peak is achieved. However, it’s important to note that it only measures the size of the largest loss, without taking into consideration the frequency of large losses
Adam Hayes, Invesopedia
At 1.04%, I’m happy that losing money is not part of Pilane Capital’s real-world/real-money results.
There were four purchases in the quarter primarily to ensure that the portfolio is fully invested whilst taking advantage of reasonable prices for stocks before prices started to run away.
Bank of America
Alphabet Inc
Berkshire Hathaway
Vanguard U.S. Equity Index
Only Alphabet remains underwater since its inclusion due to ongoing struggles with AI; the market believes that it is behind its closest competitor in terms of R&D.
Interestingly Alphabet reports after the market close on Tuesday so investors will be looking for any references to improvements to Google Bard.
Outlook
It is widely expected that Jerome Powell will increase rates by 25 basis points this week which is choc full of quarterly earnings announcements. This was the case last quarter in which the FOMC decided to keep rates steady.
Despite higher rates throughout 2023, stocks have continued to climb higher, especially in the tech space due to tech’s integral role in the global economy.
Tech execs have also shed headcount and focused their energies on the next big thing: AI.
My expectation is that stocks, tech in particular, will continue on their upward trajectory for the remainder of the year which would have a positive influence on the portfolio.
Pilane Capital portfolio
Alphabet
Apple
Bank of America
Berkshire Hathaway
Diageo
GSK
Vanguard US Equity Index
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