Portfolio Update — June 2025

YTD: +12.08%, 1Y: +18.30%

“The stock market is the story of cycles and of the human behavior that is responsible for overreactions in both directions.” — Seth Klarman

As I write this on the cusp of June, I'm reminded that market cycles follow remarkably consistent patterns. The same fundamental anxieties that drove selling in 1929, 1987, and 2008 persist today – trade uncertainties, monetary policy concerns, and the recurring belief that current conditions represent a permanent shift rather than another chapter in market history.

What's interesting is that despite all the hand-wringing about everything from AI disruption to geopolitical tensions, markets have been remarkably resilient.

The market continues grinding higher while pundits debate whether we're heading for recession or boom. Meanwhile, quality businesses keep doing what they do best – serving customers, generating cash flows, and quietly compounding value regardless of whether the market's mood is euphoric or panicked.

This ability of both markets and businesses to function despite constant worry highlights why focusing on fundamentals matters more than trying to time the emotional swings.

The best opportunities often emerge not during obvious crashes, but in the quiet periods when solid companies trade at reasonable prices while everyone debates what crisis comes next.

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Portfolio Performance

Through May, the portfolio has returned +12.08% year-to-date, compared to +0.87% for the S&P 500.

Over the trailing twelve months, I've gained +18.30% versus +14.21% for the index.

Now, before anyone starts planning my victory parade, let me remind you that five months is barely a heartbeat in the life of a business. These numbers simply reflect Mr. Market's current opinion of my holdings – opinions that can change faster than a politician's promises.

What matters far more is that these businesses continue to execute. Their cash registers keep ringing, their competitive moats remain intact, and their management teams allocate capital sensibly. The fact that I'm ahead of the index is pleasant, but it's simply a byproduct of owning quality businesses at reasonable prices, not evidence of any particular genius on my part.

As Charlie Munger wisely noted, "The first rule of compounding is to never interrupt it unnecessarily."

I'm not trying to time the market; I'm trying to time my life to benefit from the market's long-term upward bias.

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Portfolio Positioning

My portfolio remains deliberately concentrated, with the top five holdings representing approximately 53% of total assets. This isn't laziness or overconfidence – it's recognition that exceptional opportunities are rare, and when I find them, I should back up the truck.

I've found my sweet spot sits around 10-15 total positions – enough diversification to sleep soundly at night, but not so much that I'm running a closet index fund.

At this level, I can actually understand each business at a decently high level rather than pretending to be an expert on 50+ companies while really knowing surface-level details about most of them.