2018 Review II

This is the second part of 2018 review

4) Performance

My stock portfolio has -11.9% in 2018, which underperformed STI index (-7%). The reasons are noted in the earlier post, which is due to buying low quality stocks and not holding more cash when market is very optimistic.

Looking at my $1 invested in 2004 to 2018, my average return of the $1 in 2004 is 14.4%. However, on internal rate of return (IRR) basis (i.e. accounting for cash additions to portfolio at different time points), the IRR is 11.3% for 2005-2018.

I expect my IRR to drop in the future, as I am holding more Reits which is more stable but gives lower returns.

5) Portfolio Breakdown

Currently, I have 23 stocks. 26% are in Reits/trust, 23% in property stocks (exclude Reits/trust), 23% in China Banks and the rest in Others.

The Reits/trust are held for stability’s sake. I have bought more property stocks in recent months, as the property counters such as HK Land, City Dev and Hang Lung Property are trading at low price-to-book ratios. On China banks, I think that they are trading at low valuation and hence they are kept in my portfolio.

6) Outlook and plans

I think the market may get lower in 2019.

Currently, I am 55% stocks and 45% non-stocks. If STI fall to 2,900, I will increase my stocks percentage to 60%+. If STI falls to 2,700-2,750, I will increase my stock percentage to 65%+.