What I Purchased During The Market Sell-Off

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The stock market has been irrational for quite some time now. One day we see a huge greedy rally and another day we see investors fearing inflation hikes or afraid of Fed’s policy tightening measures to short squeeze sagas like Gamestop and AMC. The stock market is truly a dynamic environment filled with long term investors and short term gamblers and speculators alike.

With so many factors at play and infinite number of permutation as to what can happen in the next month or next year in the stock market, just how should we allocate our portfolio to achieve the highest Sharpe ratio (risk-adjusted return)?

With so many asset classes to invest in: Stocks, crypto, bonds, commodities and more, how did I make up my mind with my current portfolio?

Personality, Time Horizon, Goal

It all boils down to what make each of us tick. Do you spook out if your net worth drops 1% in a day? Or are you still like a rock even if your portfolio plunges 50%? This has to do with our individual risk appetite and time horizon.

For myself, I am 22 years old this year, no liabilities in at least the next 3 years as I am still studying in NUS and thankfully, I do not have student debt.

Since my time horizon is more than 20 years and I have a high risk appetite, it make sense for my portfolio to reflect who I am and what I can handle: 100% equities + crypto for maximum returns (risk-adjusted of course)

The important thing about risk-adjusted returns is such that you take the most acceptable risk in regards to the returns potential.

If you take a high risk of 90% drawdown in return for 8% return, you should stop investing and think about your odds again.

In the next 5-10 years, I am aiming to double or triple my investments as soon as possible, allowing myself to get a head start financially without having to get into debts which will settle on later in life (mortgage, car etc.)

So with that cleared out of the table, what did I do during the recent market turmoil?

Stock Market Shopping Spree

During the market pullbacks and corrections in late Feb and March, I re-adjusted my portfolio, cut my losses on lower conviction stocks and recycled them into my higher conviction holdings (exactly what Cathie Wood did as well).

Before the sell off, I was lucky enough to take profit of $5000 capital gains from Syfe Equity100, bolstering my war chest further which I was lucky to execute and allowed me to “buy the dip“.

While I am no expert myself, I saw the opportunity and bought into these stocks/ETFs:

1. Square Inc. (New Position)

2. Alibaba (Average In)

3. Taiwan Semiconductor (Average In)

4. Wisdomtree Cloud Computing ETF (New Position)

With these additions, I solidified my DIY portfolio with strong tech stocks and blue chip names such as Alibaba and Taiwan Semiconductor.

Overall, my DIY portfolio consist of 7 positions (3 ETFs + 4 individual stocks) at the time of writing this post. When coupled with my Syfe Equity100 portfolio, I essentially have a total of 19 positions and here is how I am performing compared alongside other investors so far:

Side by side comparison vs other investors. As of 17 March 2021 (StocksCafe)

I would say, having Equity100 portfolio really does spread out my overall risk as the portfolio’s smart beta approach is an efficient way for me to diversify my holdings and at the same time reduce concentration risk from my DIY portfolio.

Crypto Shopping Spree

Aside from my stocks DIY portfolio, I also took advantage of the headwinds in the crypto market and bought more crypto!

When Bitcoin hit a high of $52,000 a few weeks ago and retracted to the $47,000 level, I saw it as an opportunity to load up more crypto. If you don’t know already, Bitcoin is the reserve currency in the crypto market and when bitcoin falls, all the other coins will follow suit. (and vice versa)

During the whale dumping period, I accumulated more:

1. Bitcoin

2. Ethereum

3. Polka Dot

4. Nexo Token

5. Converted Cash to Dai (to earn 10.51% APY in** [Celsius Wallet](https://investingbeanstalk.wordpress.com/2021/02/20/why-you-should-diversify-into-crypto-and-my-strategy-ahead/))**

At the point of writing, my crypto allocation is taking up approximately 25% of my entire portfolio, which is my target allocation for the asset class and it is sitting at a handsome unrealised profit in my Nexo account, quietly accruing compound interest daily up to 6% :)

Conclusion

Growth stocks took a huge slap on the face as their sky high valuation saw a correction of approximately 20%+ on average.

While some of their valuations are still sky high, some represent huge opportunities for accumulation and a few things I have learnt from this sell off are the following:

1. Stocks will get cheaper, but act quick and load up some in case it recovers

2. Be happy when the market is red, because it represents a potential buying opportunity

3. High conviction is extremely important, if not, you won’t know why you are owning the stock and might lead to irrational decisions. (eg. Buy high sell low)

4. Preparing a war chest and a “crash list” for shopping spree is also important, wealth shifts from the impatient to the patient during these events

5. Hold, hold and hold. If the stock is good, why should you sell?

As always, I use StocksCafe to keep track of all my investments (include Robo) + research on stocks. You can also view my portfolio as well as many others so you can compare your own performance with other investors. If you are interested in signing up, you can use my referral link to sign up and access premium features for 1 extra month for new users. (3 months)

The Power of Low Fees

One huge advantage I have as an investor is paying very minute fees which can really eat into returns in the long run because I am using Firstrade to buy US Stocks which has absolutely $0 fees and extremely fast wire transfers for deposits and lightning fast trade executions. Aside from paying $0 commission fees, Syfe also has very low fees each month of 0.65%/12

Ever since I switch to Firstrade and Syfe last year as my main investment vehicle, I saved up on a ton of fees and hence able to achieve way better returns than before. I saved up more than 5 times the fee paid in 2018, 2019 and 2020 this year due to the switch and I am really happy thus far.

Of my entire investments in 2020, fees only take up 0.1% of my entire portfolio! (2018+2019+2020 combined across all brokers and Robo)

Syfe Promo Code

For people who are interested to invest into Syfe and wants to open an account, you can use the promo code below as a bonus!

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Note: Bonus is applicable on the first deposit made only. The bonus will be automatically credited to your portfolio and invested along with your existing investments

Seedly Personal Finance Festival 2021 Promo Code

Oh yes, for those who want to improve your financial literacy and gain insights to some of the best investors of the world or learn more about personal finance, with speakers such as Cathie Wood, Jamus Lim and more, you can join the Seedly Personal Finance Festival which is happening on 10 April 2021 at the price of 1 Nasi Lemak 🙂

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If you are keen to buy the ticket (while stocks last), you can add in my code to enjoy 40% off your tickets. Simply key in the promo code shown below and checkout.

If an error occurs, simply switch the incognito/private browsing mode and the problem should be solved 🙂

Do act fast while stock last! Good luck!

Disclaimer:

The content here is for informational purposes only and should NOT be taken as legal, business, tax, or investment advice. It does NOT constitute an offer or solicitation to purchase any investment or a recommendation to buy or sell a security. In fact, the content is not directed to any investor or potential investor and may not be used to evaluate or make any investment.

Do note that this is not financial advice. If you are in doubt as to the action you should take, please consult your stock broker or financial advisor. (Or contact me!)