2023 Review II: Portfolio Returns

1) Performance of Individual Stocks Portfolio

Portfolio returns was 4.5% in 2023, poorer compared to world stock index and S&P. This is mainly because I hold largely HK shares and HSI fell 15% in 2023.

Year	% Returns	STI (incl Dividends)	IWDA ETF
2020	3.6%	-7.5%	16.5%
2021	14.7%	12.5%	22.9%
2022	-13.7%	7.6%	-18.6%
2023	4.5%	4.0%	24.5%

I hold largely HK shares, as HK market remains undervalued. My SG stock holdings rose, as my I bought more S-Reits in 2023. 

2) Position Sizing

My number of positions rose slightly, while the concentration also dropped slightly. Moving forward, my portfolio should have around 20-25 holdings, as my position sizing is 3% for starter, 5% for more stocks whom I have more confidence or more undervalued and I may add on to the position if the stock become more undervalued. 

	Number of Stocks	Top 10 position size
At end 2016	21
At end 2020	39	46%
At end 2021	19	71%
At end 2022	18	72%
At end 2023	24	68%

3) 10-year IRR

My 10-year IRR remains at 6%, similar to last year's.

As mentioned in last year's post, my IRR is higher in earlier years because

a) My portfolio was more concentrated (i.e. less than 10 position in 2004-11) and was smaller in dollar terms. More concentrated portfolio is also more risky, so I become more diversified from 2012 onwards.

b) Singapore stock market have lower returns from mid-2010s onwards.

4) Stock – Non-stock Allocation

The above are on my cash equity portfolio, which excludes my SRS, CPF monies and most of my cash. 

Including all assets (i.e. Cash, SRS, CPF), I split the allocation into 4 categories:

- Cash: Easily aacessible. Include those in IBKR and Moomoo Cash Plus 

- Monies in CPF accounts: Exclude those monies used to buy bond etf or T-bills

- Fixed Deposit / T-bill / Bonds: Restricted cash and those in bond ETF

- Equities

	Cash	Monies in CPF	Fixed Deposit / T-Bills / Bonds	Equities
2019	12%	23%	8%	57%
2020	9%	23%	2%	66%
2021	13%	21%	4%	61%
2022	12%	22%	11%	55%
2023	7%	9%	21%	63%

In 2023 I increased my equities allocation, as I found more stocks to buy in depressed HK market. The monies in CPF was reduced, as I used CPF-OA monies to buy T-Bills and bond ETF (MBH).

5) Net Asset Growth

My net asset returs is 9% this year, mainly boosted by wages and more interest from T-bills / Cash accounts.

2023 Review I: Learnings from my Stock Portfolio

This post is about the stuff I learnt from my stock portfolio in 2023

1) When you own shares of good companies, they should not be sold easily.

I bought Meta around $120 in 2022. However, I sold them too early at around $250-$270. I should have kept the shares of such good business.

Similarly, I sold half my position in Booking at around $2,500. Again, I should have kept shares of such good businesses, especially when I knew that I probably will not buy them at current high prices.

2) Maintain buying standards, especially when market is rising. 

As HK stock market is rising in Dec 2022 and Jan 2023, I become too optimistic and lower my margin of safety in buying stocks. This led me to buy stocks like Pax Global at $7.50 and HRnet at $0.81. The prices of these stocks became lower later in 2023

3) Be more selective in risk-taking

I bought Keppel Pacific Oak US Trust at $0.36 in 1Q 2023. The trust is akin to a reit holding US offices. The share priced dropped further latter to as low as $0.19, before recoving to $0.34 now. 

I sold the shares at $0.315 (missing some upside), as I decide not to partake in the risk of US offices, especially when the US office saga may need years to resolve. 

The lesson is that I should be more selective in the risk I want to take, as every stock/business has risk, be it little or large. 

4) Going back to so-so business but with low valuations

It is hard to find good/great business at good valuations. Hence, I am going back to buying stocks with low valuations but so-so business (i.e low risk, ok reward), such as  

- Hongkong Land: Low P/B, so-so dividend yield (6+%), low leverage and solid asset but with low growth and China/HK properties that are poorly perceived.

- Jardine Matheson: At 0.4 P/B, so-so dividend yield (5.6%), low gearing (12-13%), a conglomerate with business/assets in mainly Southeast Asia and China/HK. 

- Cosco Shipping International: Trading below net cash and high dividend yield

5) It is during stock price declines that you find out your conviction

I sold out of BP, CSPC Pharma and DEC (oil company listed in LSE), as their prices decline and I find that I lacked conviction in these stocks. 

The other lessons is that I should look for stocks/businesses where I have more knowledge about.

6) I do not know the future. 

My predictions are trash. I thought that China/HK market will soar in 2023 while US market will drop or show no gains. This were wrong.

I thought that oil prices will be higher in 4Q 2023. These were wrong too. 

Book Review: Same As Ever by Morgan Housel

Similar to the author's first book ' The Psychology of Money', this book talks about themes that are knowable but yet you somehow miss it. 

The book contains 20-over theme, such as:

- The biggest risk is what you don't see coming. So as Nassim Taleb noted "Invest in preparedness, not in prediction." And, in personal finance, the right amount of savings is when it feels it's a little too much. i.e. have a margin of safety

- Low expectations create happiness. 1950s was thought as the best period in US, not because it is better than now, but rather the gap between you and other people is smaller

- Calm seeds plant the seed of crazy. 

Minky's financial instability hypothesis:

- When an economy is stable, people gets optimistic. 

- When people gets optimistic, they go into debt.

- When they go into debt, the economy becomes unstable. 

- Amazing things happen when tiny and insignificant things compounds into something extraordinary. 

In evolution, time -- not the little changes -- is what moves the needle

In investing, the most important question is not "How can I earn the highest return?" It's "What are the best returns I can sustain for the longest period of time?"

 The book is available as e-book in National Library (NLB) Overdrive.