Joey's Investment Journey - Equities (Dec-2021) & some thoughts on 2022

Full article on Substack can be found here.

Equity Portfolio Breakdown

Blue: Current value as % of my portfolio

Orange: Cost as a % of my total cost invested into equities

No hard rule on % cost allocation for stocks yet, nor a threshold where I will trim them. This chart simply visualises the divergence between my investment thesis and the current market expectations of the company.

*Raised cash this month & hence showing it as a % of my portfolio.

Equity Portfolio Performance

Time-weighted returns (IRR)

CAGR* Performance

*Note: Brokerages and most investors use IRR (time-weighted returns) as that is what most platforms provide. Practically speaking though, you’d want to know what 1$ of your investment (if all invested since inception) will be worth today. It’s a crude metric, but to everyday people, this is more relatable (since if I liquidated my $1 portfolio right now, I’d get $1.XX over my total cost invested).

Getting massacred over here.

IRR stats

Portfolio Changes

Bought: $ROKU $CRWD $TDOC

% of Net Worth (exclude fixed assets) in:

Stocks: 18%

Crypto: 76%

A Word

December is a special month. It’s the only month where you are more likely to reflect on the past 11 months. As they say, the final hour (month) is always important. What lessons have I learnt this year? What have I done right? What have I done wrong? What can I improve on next year?

For my earliest friends who’ve read my monthly article from Feb 2021 (oh how time flies), thank you. While the original intention of this article was simply to be transparent, it has evolved to more of a online journal for my monthly self reflection exercise. This came in handy in December as I need only read my articles to reflect on the past year.

I also didn’t intend to have 100 views of my November 2021 writeup. That is a heartwarming achievement that I genuinely appreciate. It brings a smile to my face that there are people willing to join me in my investing journey. 🙂

Again, thank you.

December is a good a time as any to reflect and prepare for the oncoming 2022, I’d like to do a special edition of this monthly writeup. I will read through what I’ve posted for each month in 2021 as well as my investment decisions (have tracked each purchase and holdings across crypto and stocks).

The reflection will be posted separately as another article. Keep a lookout on my Substack page (or your inbox if you subscribed) for it (titled Lessons of 2021). I will also post it on Seedly.

I wanted to do this to evaluate my past thought processes and decisions. In doing so, I learn and improve.

My long-term investment objective remains the same:

Achieved outsized returns over the long-term.

To do that, I need to put in more effort than the average investor. Plain and simple.

Nothing in life matters more than the effort you put into pursuits you genuinely care about.

Stocks Portfolio Commentary

Depending on which stocks (indices or high growth stocks) you own, December will save or kill your portfolio YTD performance.

Markets don’t move in a straight line, but boy do they give you a run for your money. The first half of December (unsurprisingly before the 15th Dec FED FOMC meeting) was marked by heavy corrections in growth stocks. Some part of it were due to the overextension from frothy valuations. The other part was the broader market fear that the FED is too conservative with its tapering plan (due to sky-rocketing inflation).

I tweeted some time ago that I had a wish list of stocks I wanted to add to (having removed the more speculative positions in my portfolio $DNA $LMND $NVTA) in a defensive response. I’m happy to say that some of the orders have been hit (though was a consequence of my slightly moving up my orders). Funny how FOMO played a part in this. I was so certain that price will go down to my limit orders. I played blink with Mr. Market and I blinked first.

Investing is NOT easy, amirite?

Elsewhere I also wanted to start a $TSLA position at $850 (my brokerage can’t buy fractional shares). Price dropped to $886 as Elon Musk was selling his shares and funds were front-running. It is now $1056 (Dec 31st) per share. This time I didn’t blink. But I didn’t manage to start that position as price never hit my limit order. That was frustrating. We don’t always get what we want; That’s OK, but we need to learn from any mistakes that could’ve prevented us from doing so.

Markets then proceeded to go green from the crash earlier in the month. S&P made a new ATH as many of its constituents were already below their 200DMA. Chart from Callun Thomas' weekly chartstorm here.

The market leaders are supporting the market right now via the market-cap weighted price performance. Can we expect them to roll over? Unsure. Will they continue to new ATHs while the rest of the market languishes near its 200DMA? Unsure. Will FED being more aggressive with its tapering/hiking change anything in terms of stock prices, given that the market may have priced it in? Unsure.

Nobody knows for certain what will happen to the markets, obviously. The important point (which I’ve struggled) is how prepared are we for the different scenarios?

Let’s pretend we’re not “sophisticated” investors like many FinTwit gurus and we don’t yet know how to hedge our portfolios. Like me, we’re all mostly newer investors that started in 2020 and much of our success came from the out-of-this-world (to the moon 🚀) bull market from March 2020 onwards that brought many X’s to our beloved stocks. Here are some classic examples:

• If the market (market here refers to _all _your portfolio stocks) falls by 20% but does so over 2 weeks. _After that it's clear skies for 2022. What is your plan? Do you have a plan to add or increase exposure?
• If the market doesn’t correct 20%, and instead only corrects 10% in a day every 20% up. This means that the next correction happens at 120%, dropping prices to 108%. Will you (or can you) add exposure at 108%? Or will you ride the wave?
• If the market falls by 20%, but then rallies 25%, but drops 30%, would you have bought during the first fall or the last fall? What if the 30% drop happened only during March 2022 (i.e. markets will be ranging from 80% of current price to 100% until March 2022)?

What you do depends on a few factors. Your cash position, your future contributions, your current stock exposure, your buy list and your view of what the company may look like in 1-2 years.

For me, I realized that having a cash position, while not totally enjoyable as you’ve got cash on the sidelines as everything else rallies, helps me sleep better at night. It’s not rational for sure. Based on hindsight, my cash would have been better deployed in $TSLA and other stocks earlier in December.

Though, hindsight is quite dangerous for investing, no?

If only I had known…

Looking forward, the cash position, while <10% of my total portfolio value, will probably come in handy in the future if there’s an extended correction. If that doesn’t materialize, I still have 90%+ of my stock exposure and will still benefit if stocks resume their journey to the moon.

I’d say that covers me pretty well for the situations I talked about.

What about you?

Are you prepared for any scenarios?

Thoughts on 2022

For equities, I don’t expect another trip to the moon in 2022. Active investing is never easy. It’s just the perfect storm of macro conditions, combined with a tsunami of liquidity (thank you, Fed) that resulted in the 2020-present bull market.

I don’t have a clue what will happen next year. Hikes or withdrawal of liquidity can go brought forward (or not), and that will certainly wreak havoc on markets. Being so aggressive with dips during 2020 and 2021, I think it’s time for me to slowly ride this wave, being more defensive and conservative with my buys.

My core holdings will still be there, but I’ll only add to positions if opportunities allow for it. Every quarter, I will evaluate the company performance and depending on the stock’s reaction post earnings, I may add further. Bull or bear, I will still continue reading and learning about these companies which I hope to have a long-term position in to grow together with the business execution.

I’ll still likely underperform the indices in 2022 (and/or also in 2023), but that’s fine by me. Success in the stock markets are measured over 5 to 10 year periods. Best to keep learning, buy or increase ownership in great companies, and own them for a very long time.

Conclusion

It has been a joy writing this monthly article since February of this year. This December article is one that I’ve enjoyed writing the most. I have no clue what 2022 will bring in terms of my portfolios, but this next year is a big one for me:

• I am trying to get a new job more aligned with my expertise (data analytics)
• I will propose to my girlfriend
• I will purchase a flat with me and my girlfriend
• I will need to settle renovation for my newly purchased flat
• I will also need to plan for my marriage

All these in Singapore costs a ton of money. What’s the saying? Money can’t buy happiness? Yeah, it can’t, but it can surely buy me a peace of mind and less headaches. Let’s hope I’ve planned my expenses well such that I can leave my portfolios untouched. Would much rather have stable debt (and pay interest) than to be a forced seller (and forgo potential upside in mid to long-term).

Don’t need to get triggered, different strokes for different folks.

If our paths crossed in 2020 and 2021, thank you for adding perspective to my life. I hope I’ve added perspective to yours. Let’s keep learning and growing (both our knowledge and net worth). I’ll see you next year :)

Wishing you a joyous (and hopefully greener) 2022!

Cheers,

Joey