Changing Investment Approach

Before 2012, my investing approach is to buy low PE stocks and my portfolio was  concentrated in less than 10 stocks. However, in 2011, I suffer large lossess from S-chips. 

From 2012-2020, I change my investing approach to be more risk-averse. I diversified my portfolio to more stocks. I started buying stocks more for their dividends. I bought bank stocks. 

However, in recent years, I found that my portfolio returns have dampened. I am caught by a few times with large price declines in stocks with high dividend yield. This does not seem to be the direction I should be going.

In 3Q 2021, I started to change my investment approach to the following:

1) Buy growth/quality companies 

-- Buy when their prices are at recent low. 

-- Their business will be growing for the next 5 years, 10 years or longer

-- I will hold them for 5yrs, 10 yrs or longer to benefit from the compounding of their earnings

-- I will hold meaningful position ranging from 7% - 20%

-- As a result, my portfolio will be more concentrated

2) Special Situation

-- These will comprise smaller proportion of my portfolio, maybe up to 20% at most. It depends on whether I can find these stocks

-- The stocks will be kept till the price has run up (i.e. has turned around) or the event has sort-of completed.

-- Such stocks can be companies that suffer from temporarily from external shocks e.g. Covid-19 and may recover in the future. 

3) Stocks to avoid

-- Stocks with low P/B but nothing much else going for it. These are mostly property developer stocks. I find that I don't really make money on such stocks.

-- Stocks with high dividends but nothing much else going for it

It may take 2-3 years to transform my portfolio to the above strategy. My portfolio currently have 

-- small % that are dividend stocks. I will likely keep them, if I do not need the cash to buy other stocks

-- small % of 'Other' stocks. They are not really growth/quality companies, maybe just business growing at 6-7%. I will keep them for now, since I do not need cash to buy other stocks.