The past week has been a bit hectic (and the coming week looks to be even more so), so I haven’t been able to cover earnings season as much as I would have liked, but I wanted to get something quick out even if it was entirely too short and inadequate.

A number of Freedom Portfolio companies reported earnings this past week and while there were a few blemishes (looking at you, Fastly (FSLY)), I was ultimately very pleased with what I saw at of those companies. I was particularly encouraged by the incredible results from the eCommerce plays: Shopify (SHOP), Amazon (AMZN), and Etsy (ETSY). I’m really looking forward to seeing what these companies can do over the coming holiday season.

So why did nearly all of the companies which reported great results drop on earnings and fall a ton on Friday? It’s always hard for me to predict short term market movements, but some of it is undoubtedly due to pessimism surrounding the increase in Coronavirus cases around the world and the new lockdown measures being enacted. I believe some perspective is also in order:

• Shopify (SHOP) is up roughly 140% YTD
• Novocure (NVCR) is up roughly 40% YTD
• Teladoc (TDOC) is up roughly 140% YTD
• Livongo Health (LVGO) is up roughly 350% YTD
• Fastly (FSLY) is up roughly 200% YTD
• Etsy (ETSY) is up roughly 170% YTD
• Amazon (AMZN) is up roughly 60% YTD

That is incredible performance across the board for under a year. It is not at all surprising to see some profit taking after even the best of earnings reports after run-ups like that. Contrary to popular belief, stocks don’t always go up and I am absolutely not concerned to see some of these stocks pull back a bit after the amazing run they have had. Not only is the long term thesis still intact, but I think these earnings reports have largely confirmed them.

Between Coronavirus, the US Presidential election, and the holiday season, I expect a lot of volatility in stocks over the coming months. My plan is to be laser focused on what the companies I have invested in are doing and to do my best to tune out the noise. I do not plan on doing any buying or selling based on who wins the election or weekly Coronavirus numbers or other macro conditions. If something happens that fundamentally changes my investment thesis in one of my companies, then I will act.

With that being said, I do have one tiny allocation change to report on. I am trimming my position in Tesla slightly (it remains a Babylon 5 level position) in order to add slightly to my Teladoc position (keeping it at a Serenity level position, although with the merger with Livongo going through, the joint company will be an Enterprise level position). It is a small tweak, with the change in allocation representing roughly 1% of the portfolio. My thinking was largely based around valuation. I love the optionality and runway for Tesla, but the valuation is somewhat crazy right now and it seems to already be priced for total domination of the car market. I still think it will be a market beater going forward, but wouldn’t be surprised if the growth was a little more muted in the coming years.

Originally, I hated the Teladoc / Livongo merger, but I have done a complete 180 after being convinced by some very smart people on Twitter who had some great insight into how the companies can complement each other going forward. Despite the growth that both companies had already seen in 2020, I think much of that momentum can and will continue over the coming years. As such, I wanted to slightly increase my position. I’m not thrilled over a lot of Livongo management leaving the newly combined company, but I also don’t think it is a deal breaker and I do trust Teladoc management to be able to integrate the new acquisition. Really interested in seeing what kind of growth numbers the newly combined company can put up in the coming quarters.