1) Selling Option
I felt that it was a bad idea to sell options to earn income. Nonetheless, I continue to sell options, as I was greedy for some small income.
I sold put options this year, in hope that if the option was exercised, I can buy the stock at lower price. If the option was not exercised, as share price went up, I earn some small income. The downside is that it robs me of buying at lower price when price falls. It also robs me of the option of not buying the stock if there are bad news subsequently.
Nonetheless, I managed to earn slightly more than $11K selling options (and not exercised subsequently). More than half of the profits are due to the sale of FUTU call option (at $120 strike price) during early Oct bull market for Chinese stocks.
2) Unexpected best performer
My best performer was Oiltek. Bought at $0.24. Sold half at $0.66 and the other half trades at $1.05 now. The large gains were unexpected, as I did not expect the price to quadruple.
The bought position then was around 2.5% of my stock portfolio. I kept the allocation small, as I was not familiar with the business Oiltek was in.
3) Aggrieved Loss
I bought China Overseas Property (COP) at average prices $5.7 in Jan. Then, it traded at around 14x PE but with good growth and 36% ROE. I was perhaps too eager and built the position too quickly to 10% of my stock portfolio.
However, its earnings growth dropped subsequently and share price decline. On hindsight, it was in an industry I was not very familiar with.
Later, I sold it at average prices of $4.7, taking 18% losses.
Due to above incident, I built my position slower, and did not buy enough of Trip.com before prices ran up.
4) Buy what you know. Have stricter criteria and smaller position on what-you-don’t-know
Due to (3), it is very important to buy what I know and what I know is very small. For what I don't know much, I started to have more concerns / stricter valuation criteria before I buy and have smaller position.
5) Two/three strategies in 2024
My purchases in 2024 mainly falls in 3 categories:
A) Quality / Growth plays with maximum 20 PE.
I am pivoting from buying cheap/yield to buying quality. Over the years, I find that buying cheap / high yield can turn out to be buying craps.
B) Value plays where net cash / short-term investments is a large proportion of market cap, has high dividend payout ratio and has positive earnings.
This ensures that even when share prices fall, I am comforted by significant liquid holdings in company's balance sheet. The high dividend payout ratio reduces the risk of value traps.
C) Yield plays These are of a smaller proportion compared to (A) and (B).
6) Best investment blog encountered
I like the writings in the blog: https://buggyhuman.substack.com/ very much. The author is a co-portfolio manager with the Pulak Prasad (author of 'What I learned about Investing from Darwin' book).
The blog preaches (A) buying quality business at reasonable prices and (B) hold them for long, long time.
I found (B) difficult, as I sold off my IBKR position earlier when I found the valuation too expensive.
7) Most interesting Twitter/X post encountered
"Larry - if all you ever did was buy high-quality stocks on the 200-week moving average, you would beat the S&P 500 by a large margin over time. The problem is, few human beings have that kind of discipline."
Source: https://x.com/Convertbond/status/1832206028697407641
After I saw the twit, I looked at a number of charts on quality stocks. I found that it is not a bad idea to buy quality stocks on 200-week ma. I bought a small stake in LVMH earlier using this rule.
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