Portfolio Review - Jan-2022 (Equities)

Link to my full Substack post here.

Link to Dec-2021 review here.

Equity Portfolio Breakdown

Green: Value as % of my portfolio

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

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

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

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Equity Portfolio Performance

Time-weighted returns (IRR) - Past 12 months

Cumulative IRR returns

CAGR* Performance

Note: Brokerages and most investors use IRR (time-weighted returns) as a metric. A crude but also widely used measurement is CAGR, which is basically value as a % of cost, annualized (i.e. $1 invested at the start will be $x now). Given our monthly DCA strategy that isn’t as accurate.

In any case, it’s a good measure for non-investment savvy folks who just want to know how much money they take out vs they put in. Value over cost. My chart is an attempt to simulate this by using MoM returns of classic benchmarks to compound my cumulative additions into stock markets. I’m doing this bc investment calculators for NASDAQ & SP500 isn’t as accurate I would like them to have.

That’s more for my own analysis. You just need to know how underwater I am right now 😭😂

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Equity Portfolio Changes

Added:
$NET $SNOW $U $DDOG

Started:
$TSLA

Trimmed: nil

Sold:
$MP (for rebalancing into other stocks, not due to fundamentals)

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% of Net Worth (direction change from previous month) in:

Stocks: 17.1% (🔼)

Crypto: 74.6% (🔽)

Net worth excludes fixed assets (e.g. house)

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Equities

Welcome to the start of the end. The bubble has definitively popped. The people left on FinTwit are: Puru Saxena (repeating that bubbles have popped & that DCA-ing over next 1-2 months will be good long-term IRR, all whilst sitting comfy in his hedge), Jim Cramer (advocating retail investors to buy $SARK which I’ll bet those plebs (including me) won’t even know the risk behind it), Chamath “below my line” Palihapitiya (don’t know the reference? See here) and Gary Black (wondering why $TSLA isn’t at his 6-12 months $1600 PT yet).

Some sell-side analyst from Bank of America just put out a note saying that they expect Fed to hike 7 times this year?! My portfolio is down 20% this month alone. Bubble does not seem like it is done deflating. Earnings for many of my portfolio companies (which are still relatively expensive) yet to come.

Wyd?

Bull markets teaches bad habits. Bear markets teaches good habits. Young investors (including me) gushing with the high-adrenaline of stock market pumps from 2020/21 sometimes forget that market cycles are ever present. Proudly claiming valuations doesn’t matter (as I once tweeted a long time ago) doesn’t make it irrelevant for the other investors. Indeed, valuations doesn’t matter until it does. Not even your beloved companies which will surely change the world.

While I’m happy to admit that valuations _do _matter, it’s an entirely different thing to use that as a starting point to evaluate any investment. In the near term, stock prices track investor’s sentiment about stocks and broader economic environment (macro). In the long-term, stock prices track intrinsic value pretty well. Pretty sure well-read investors can spot the reference to Benjamin Graham.

Anyway, here’s an example to put things in perspective. Here’s FinTwit darling $SE limited (with my buys overlaid w icons).

Market sentiment changes pretty damn fast these days. Taking the staircase up, then the elevator down. Ring any bells?

While we’re at it, let me show you my first mistake(s) of 2022:

Well, I actually did have a limit order at $150. I think at that time it only dropped to $180 and then a short squeeze rallied the price up to $206, before dumping Forrest Li and his band of 兄弟 into oblivion (now at $124 as of 28th Jan). You can’t catch them all… right? Fears of FF growth stagnating + broad recovery of economy (i.e. less ecommerce boom) + rate hikes are perhaps the holy trinity that finally brought this goliath to its knees.

Any further movements on this stock can only be evaluated during its Q4/FY21 earnings. For me, I am currently balls deep and will probably add to it (if I even have the spare cash) if it dips below $100 or $80. Will I blink again? Find out in next month’s article.

To add salt to my wound, my first $TSLA purchase was at $1144 on 3rd Jan 2022. Talk about timing. There were many instances where I pondered over selling this share (& incurring fees) and then buying lower. Being honest here, I think my ego got in the way. I was only thinking how selling now would somehow make me a more discretionary trader (aka like Puru who has high portfolio turnover) which isn’t necessarily my long-term investing objective (which is to buy good companies and hold for the long-term).

Reality happened. I would have been able to buy $300 dollars lower ($TSLA went briefly below $800 as of 28th Jan). I would also have been able to fill my limit order of $850. But, I blinked. This journal serves as a historical account, as well as my reflection. If prices moon from here, it’ll be my mistake to bear. Otherwise, it’ll be a lucky opportunity. Also as $TSLA briefly dipped below $800, should I have added another share? Or should I have waited?

Again, only time will tell.

Mistakes define who you are. Only you can decide whether to let the mistakes destroy you, or to make you stronger. Like they say, pain only makes you stronger.

I’m in Spain without the s… 😤

The market conditions serves as a timely reminder for you to assess how emotional you are from such market gyrations. Are you sleeping well at night? How do you feel when you look at your portfolio or check market prices? Do you feel uneasy? When you see jokes being made on FinTwit about your _precious _stocks, do you feel anger? Do you feel like replying in the heat of the moment?

If you generally feel downcast (or worse) when markets are having a bad day, perhaps it’s time to consider a different investment strategy (or maybe you’re investing too much without a safety net). If its sound and long-term in time horizon, pretty likely you’ll beat inflation (and then some).

$VOO (Vanguard S&P 500), $QQQ (NASDAQ) or even one of those MSCI world indices can offer great returns (relative term) without the emotional burden of active portfolio management. Especially with routine DCA, I think you’ll beat most of retail investors that try to be active (like me). Active investing requires time & effort. Both of which are in finite amounts.

For me, I’ll give it my all for the next 5 - 10 years in both stocks and crypto. At some point in the future, I’d have to square with myself if my performances underperform the benchmark. If I can’t outperform, I’ll simply be a passive investoooor and that should also free up more time for me to spend with my family (would have had kids by then 🤩).

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Conclusion

Thank you for reading thus far. I do apologize for ranting in the articles I’ve written, and I acknowledge that it could have been more concise. I’m still only 11 months (wow) old in my writing pursuit. Hopefully I’ll evolve into a better writer (and thinker) in the future.

In the meantime, if you learned something from my journal, or if you have any strong comments, feel free to let me know :)

Your words of appreciation (currently measured in article views) means a lot to me.

Thank you again.

Happy Chinese New Year! 🧧🧧 💰💰

Joey