I’ve written a lot about Shopify over the past year or two, and with good reason. Not only has it been the best performer in the freedom Portfolio both since I bought it in 2017 (close to a 1400% increase) and since I started “officially” tracking the Freedom Portfolio returns in October of 2018 (an increase of almost 300%), but it continues to be on fire and has almost doubled just in the past month.

In fact, the performance has been so impressive that, over the past few weeks, Shopify (SHOP) has spiffy popped for me twice. What is a spiffy pop? Put simply, it is “When your stock gains more in one day than you paid for it”. From the Motley Fool website:

Spiffy-pop is a term coined by Motley Fool Rule Breakers that refers to a situation whereby a stock’s price increases more in a single day than the original cost basis.

When a stock in your portfolio becomes a daybagger — gaining more in one day than you originally paid for it — it has spiffy-popped.

Spiffy-Pop

I first bought my shares of Shopify on January 5th, 2017 for $44.55 a share. Over the past month, shares of Shopify have increased by that amount (or more!) in a single day twice. It’s pretty incredible and mind boggling to think that in a single day a stock has returned more to me than I originally paid for it.

Beyond marveling over Shopify’s performance, though, I’ve also been noticing an interesting contrast between it and one of my worst performers: Jumia (JMIA). The amount of money that I have spent buying shares of Shopify and Jumia are pretty similar, with just a little over a 10% difference between the two. But the similarities pretty much end right there.

The biggest and most obvious different is how they’ve performed / where they are now. As mentioned previously, Shopify has gained nearly 1400% and is the largest position in my portfolio (and running away with the title right now). Jumia has lost around 75% and is the second smallest position in my portfolio.

But another interesting difference is that I have only bought shares of Shopify once (my initial purchase in 2017) compared to the five (!) times I have bought shares in Jumia.

I have my reasons for this, although they’re not good ones. When I had bought Shopify, it had been roughly two years after its IPO and the stock had already almost doubled. I remember wondering if I was too late and had missed the growth. On the flip side, Jumia had their IPO in April of 2019. My first purchase was within the first month and all of my Jumia purchases were made within 6 months of IPO. Did I have Shopify in the back of my mind and have fear of “missing out” of that early low IPO price when I bought shares of Jumia so close their IPO? It’s entirely possible.

It’s not just about what happened before my purchase, but also about what happened after. While it had its ups and downs, Shopify largely went up after my purchase and never dropped too far below my initial purchase price. Jumia, on the other hand, has been on a steady march downward since my first purchase, and I’ve just kept on buying as it dropped.

Shopify and Jumia are very different companies and there’s multiple reasons why one has performed so well and the other…. not so well. But it’s hard to imagine a better example of a handful of lessons which I should have already learned (but apparently not well enough to have avoided them here):

• Add to your winners / Don’t cut your flowers to water your weeds – This is the big one, but also the most non-intuitive and hardest to follow. After all, we’re constantly told to “buy low and sell high”, right? How can we buy low on something that is up big for us already? Doesn’t it make sense to buy low instead on a company that is cheaper today than it was before? The problem with that thinking is that it assumes some sort of equilibrium that all companies must return to. Great companies must eventually fall back down to earth and terrible companies must rise from the ashes like a Phoenix. That’s not exactly how things work. Instead, great companies tend to continue to excel, and bad companies tend to eventually fade away and disappear. If I hadn’t been so afraid of adding to my winners and instead took the money I invested in Jumia in May of 2019 and invested it in Shopify, I would’ve seem my money more than double instead of lose nearly 80% of its value. I need to learn how to accept that it makes more sense adding to winners than continuing to throw money at company whose stock keeps dropping.
• Be very wary of buying immediately after an IPO – There’s often a lot of excitement around an IPO, and most of the stakeholders involved have a vested interest in making sure that the stock of the company does well immediately after an IPO. At the same time, there are things like lock-up periods that can cause a stock to drop in the months following an IPO. I’ve certainly gotten caught up in the excitement around IPOs in the past and wanting to get in early on “the next big thing”, but nearly every time I’ve done that I’ve regretted it. Jumia is the biggest loser of the bunch, but Shockwave Medical (SWAV) was also bought soon after IPO and has generally been a loser so far as well. Even Redfin (RDFN), a company that I continue to love, is basically flat versus the S&P since I bought it about a year after their IPO.
• Don’t worry about being too late – This one is easy and obvious. I was worried I was too late to Shopify and it went on to become a ten bagger (and more) for me. Nearly all of my big winners so far were companies that it seemed like I was “too late” on because they had already run up too much. Don’t worry about what happened in the past, focus on what could happen in the future.
• One amazing winner can more than make up for a bad loser – I mentioned earlier on that I had invested about the same amount of money into both Shopify and Jumia. My gains in Shopify are about 20 times my losses in Jumia. This is why swinging for the fences can work even if you have some horrible losers: because the winners more than make it up.

Shopify reports earnings the morning of Wednesday, May 6th. I can’t wait to see what they have in store.