Friday, January 1, 2016

Happy new year 2016 and review of 2015

First of all, happy new year to all my dearest readers! May 2016 be a successful and rewarding year for all of us!

As many of my readers would know, the equities market did not fare too well in 2015. The local STI fell -14.3%. Having asked and looked around (the various investment blogs and forums), I daresay a large majority of investors lost money last year 2015. So, how did I fare? I would like to say that my portfolio grew y-o-y but unfortunately, I lost money too. For year 2015, my portfolio shrunk -0.6%, my worst yearly performance since inception, with the only consolation being I did not do as badly as the STI.

Year
My Portfolio
STI
2010
+11.7 (annualized)
+10.1
2011
+35.3
-17.0
2012
+25.9
+19.7
2013
+32.0
0
2014
+53.7
+6.2
2015
-0.6
-14.3

Looking at my portfolio performance over the years since inception, what a dramatic turn of fortunes it has been! I recall writing this post last year, ecstatic and jubilant that I have had my best performance/personal record and that my portfolio broke the 6-digit mark... and then in 2015, I recorded my personal worst performance. Admittedly, I am severely disappointed with my portfolio's performance this year. Yes, the market was bad and it moves in cycles (up and down) but to be very honest, I made many, many unwise decisions in 2015.

Actually, during the middle of 2015, my portfolio registered a very healthy double digit gain. I divested some (but not all) of counter A, making a good profit on the shares I divested. Therein lies my mistake, if I had decided that counter A is fully-valued, why did I not sell all my shares in counter A? As expected, my remaining shares of counter A fell sharply in the second half of the year, and the unrealised profit diminished (it actually became a loss early this month but ended the year with a small unrealised profit)
*btw, counter A was a concentrated bet

Another mistake (a very terrible one) was to use the money made from mid-2015 divestment to make a concentrated bet on a fundamentally sound, conservative company B. And yes, I loss money on that company too. In such a broad-base decline, share prices of good companies drop too! I should have realised that it was a bad time to enter into equities (given the turmoil in the Chinese markets which I predicted correctly) and hold cash instead (even if the company in question was a fundamentally sound one..)

And the last big mistake of the year was to make (yet another) concentrated trade (this time short term trade) on counter C. I heard it was a good counter and my research somewhat (not fully) validated it..but it was a loss-making company! yes, it had strong hands, good prospects etc but it does not distract from the fact that this company C's earnings is inconsistent, lumpy and project-based - it makes good money on some year and loses money on other years. 

Why the penchant for concentrated bets? hmmm, I hope it's not the result of my increased size of my portfolio and my desire/ego? This year 2016, I need to set and follow a limit on my exposure to any counter. It might have worked nicely in the past, (it did give me great returns in 2014- my out performance in 2014 was achieved on the back of a few concentrated bets) but it might not be a good strategy going forward..

Also, there were very few IPOs (a number on the Catalist but only one on the Mainboard), so consequently I had very little "free money" unlike the previous years. Coupled with the mistakes mentioned above, my beautiful gains in the first half of the year were wiped out completely and I finished the year with a painful, miserable loss..hiaz

Nevertheless, on a personal front, I had some achievements. I went on a overseas exchange and made quite a number of foreign friends (real friends/pen-pals that I still keep in contact and have had numerous emails exchanges over many months)! I was actually brave and daring enough to travel solo in a far-away country, where the native language is neither English nor Mandarin/Chinese dialects. And I actually survived in a foreign country for more than a month! I also attained my best semester (not cumulative though) score till date this year! And voted in an election for the first time in my life! Hmmm, I guess in life there are bound to be trade-offs, isnt it? It cant be all rosy on all fronts all the time. Count your blessings, learn from your mistakes and grow from strength to strength :)

Last but not least, to all my faithful readers, I must apologise (yet again) for my inactivity. I know I have not kept my promise of blogging more (opps..) But, like I always tell people, it is the quality rather than quantity that counts. I believe many of us know (and dislike) people who talk incessantly but raises irrelevant points for class participation marks. I guess its the same in school and in the blogosphere right? Looking back, some of my posting have been rather helpful (I hope), like the warning I gave to my blog readers to avoid Chinese equities near the peak of the China stock bull run: http://teenage-investor.blogspot.sg/2015/06/china-equities.html 
Therefore, I hope I still get a passing mark as a blogger and that you guys will still support me! 

p.s. This post came rather late; I took sometime to write (it was twice as long) as I spent quite some time reflecting, spending almost twice the time needed. But, oh well, lets hope that 2016 will be a better year for all of us! :)

4 comments:

  1. Re-investing is a risky business and may generate negative compounding return and returning us to the state that we are worse off after years of investing!


    Compounding return on investment is NOT the same compounding interest on saving.

    We must know this great difference as many investment and finance bloggers don't highlight on this difference.

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  2. Hi,

    Glad to see that u learnt from ur past mistakes of making 'concentrated bets'. Trust me, those bets are never rewarding in the long run. Besides, as u get older, ur appetite for risk will drop. So, it is better to start building a more stable, long-term portfolio for retirement.

    Cheers! Happy New year! :)

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  3. Thank you for the support and advice! :)

    Cheers,
    Ming

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