Monday, March 21, 2022

What to do during stock market correction?

 Hello, hope everyone is doing fine!

The stock market has been bombarded by bad news everyday: the never ending Ukraine-Russia War, Inflation, and surging oil prices.

Not only investors feel the heat, even when my kopi takeaway at my favourite coffee shop downstairs price went up from $1.40 to $1.70! Even petrol prices went up to $3/litre, and thankfully I still have some coupons left on my Esso app.

Sorry that I have not been updating my portfolio these past few months. Instead of worrying and checking my portfolio daily and feeling demoralized by the drop (which is not fundamentally driven), I spent the time reading books on investments to build up my conviction, and I also recently started work-outs, and eat more good food to relax and enjoy.

My portfolio was not spared either yet I continue to stay invested, but divested stock with lower conviction and channeled to the higher ones. Nevertheless, I will do an update on my portfolio this week- do keep a look-out! In fact, I have been adding more positions through dollar costs averaging on a monthly basis. I have been buying stocks but did not have the time and motivation to update my online portfolio at StocksCafe.

In retrospect,I regretted buying some growth stocks at a rich valuation, but that being said, it's a lesson learnt for me, and now it's a good opportunity to add more stocks when others are fearful. I am glad that I have a full time job and a constant stream of income that I can buy shares every month. After all, my time horizon is 10 years (now left 8 years).

There has been many noises in the stock market, with even popular finance YouTubers rushing for the exit as volatility of everything surges. It's the same sort of fear during Covid-19 in 2020 where many investors showed the chart that the virus could lead to a replay of the Great Depression and recommended holding cash and waiting for things to stabilize.

However, my years of investing experience has taught me that, it's damn hard to time the lows, and it's even harder to buy back the stocks at a lower price which you have sold. Well, at least that applies to me.

Many regretted giving in to the fear and not buying stocks during start of Covid 19, and in moments like this, it may be one of those.

So, the advice for myself is to not check the stock market so often, stay calm and consider taking some creative pursuit to relax and enjoy!

Those got cash, continue to invest, those fully invested, just keep calm and '躺平'!

Remember, this too shall pass!

Tuesday, February 1, 2022

Quick Fixes during the tech stock sell-off

It’s been a difficult month for tech investors after Jerome Powell changed his stance that inflation is not transitory. Gone are the days where there was helicopter money leading to invisible hands lifting up stock prices when shares plummeted. Being one who has a basket of stocks concentrated on the tech sector, my portfolio experienced a significant drop in value. However, I am not too discouraged by it because I have learned a lot of valuable lessons in investing last year. And in this blogpost, I will share with you my execution plan.

Share Consolidation

In my previous blog post, I resolved to do a stock consolidation once the tech stocks have rebounded from their lows. However, I have decided to reduce my stock count as the tech route deepens due to two reasons. First, a majority of my high conviction stocks started to correct significantly early this year, which presents an attractive entry point. Second, since all the tech stocks are beaten down already, divesting from a beaten down stock with lower conviction and adding to another beaten down stock with higher conviction makes perfect sense to me. To find high conviction stocks, I did a deep dive on the company’s fundamentals, watched CEO interviews on YouTube, and performed napkin math to determine the valuation of the stocks.

My ideal plan for this year is to reduce my stock count to 5. But some cynics may wonder: what about FOMO (fear of missing out)? What if you miss out on the next big thing? 

Throughout my investing journey, I have learned that it’s okay to let go of tempting burgeoning opportunities. There are actually limitless opportunities and it’s impossible to capture all of them out there. With the limited amount of time I have each day, I would rather focus on a few companies where the CEO has great ambition and the ability to execute perfectly. Second, even if a generational company is presented in front of me, I lack the ability to research companies that are not within my circle of competence. For instance, it's an arduous task to understand - let alone study - the prospects of companies such as the genome sector if we lack understanding of the biotechnology field. 

“Nothing tests conviction like a falling stock price.”

I used to do very comprehensive valuation methods to determine the company’s valuation on growth stocks such as Fiverr, Pinterest and Square; however, I began to realize that such methods may not bode well for growth stocks. After all, my calculation is so complicated that it can be challenging even for myself to follow up and re-evaluate the valuation of the companies whenever they release their financial reports. Doing up research on a company consists of qualitative and quantitative analysis, and in the past, I have been more engrossed in the numbers and intrinsic value. These days, I spend more time reading on S1 filings, as well as watching CEO interviews on YouTube. It has become one of my hobbies as I begin to enjoy the learning process of understanding the CEO and the company on a deeper level to build my conviction in it. Hence, when stocks such as Coinbase dipped and news that RobinHood is stealing Coinbase’s lunch in lowering their fees, I am not concerned at all. Coinbase is a software company with competitive advantages such as being simple and easy to use and focusing on compliance by pursuing a license even before it is required for them to do so. Unlike Robinhood, which focuses on developing a commission free app, Coinbase has a grand ambition to disrupt the banking industry by creating more economic freedom for every individual and business. 

Do Nothing

Doing nothing is seen as an activity that is associated with being unproductive; however, in investing, doing nothing is actually a strategy: it is a discipline that requires the equanimity to simply buy and hold. When Nasdaq turns volatile, it can be very tempting to check your stocks every now and then and determine your next move. Being invested in the stock market for 11 years, I have undergone a few market corrections, and each and every time it has rebounded in a v-shaped manner and ended up with higher highs. Fidelity did a recent study and found that a certain type of investors consistently did the best in investing returns. Guess who? 

Dead people. 

If you want to do well in investing, it’s advisable to forget you have an investment account. Instead of checking stock tickers which give you jitters every now and then, channel that energy to be more productive by researching the next 10X companies.

Many skills are needed to do well in investing, such as the ability to value a company or even predict the next market trend, but nothing beats having a good investor mindset. These are the three simple and reliable psychological steps which I have been applying in times like these.

Thank you so much for spending time reading my blog and I really appreciate you. If you enjoyed reading my blog, hope you can support me by liking my Facebook page here or sharing my post. You may also follow my Twitter account here, where I post my buy and sell transactions. Currently, I do not earn any fees through any affiliate programme or sponsor. If you have any queries, feel free to post them and I am happy to take questions! :)

Friday, December 31, 2021

Portfolio Update (Dec)

I have finally come to the last post for the year. Although my portfolio didn't end too well, I have learned many valuable lessons in investing. I spent the last few months listening to podcasts on investing, and Tesla, and gained priceless insight on how successful people invests- by (1) having a concentrated portfolio (2) doing a deep dive research on companies to build that conviction. 

As I have mentioned in my previous blog post, I will gradually be reducing my stock count to 20, or even 15 if possible. At this juncture, growth stocks has entered into an oversold territory and it is not really the right time to divest for the sake of reducing my stock count. But I am pretty sure there will be a time when these stocks will regain their glory and market presents an opportunity for me to divest them. Even if they don't rebound in the near term, I am not too concerned either as all of the companies I am holding have strong fundamentals, it's just that some of their valuations were quite stretched back then. After all, volatility is the price that every investor has to pay when it comes to investing in growth companies.

Honestly, I am feeling tired as I write (age is catching up), so I will keep this post short and just to update my overall portfolio.

Growth Portfolio

Dividend Portfolio

Crypto Portfolio

Total Portfolio Value

Stocks and Crypto portfolio= $509,824

Cash on Hand= $73,076 

Total Portfolio Value= $582,900 (-$97,489)

Although there is a significant dip in my portfolio value, the actual dip was around $60k as I took out some funds to max out my CPF contribution and CPF top-up as a self employed because I forsee that I will be paying alot of taxes.

Achieve 78.71% of 2023's Goal

Achieved 14.91% of 2023's Goal

Also just to share that I will be migrating this blog to a new website which I have been working on for the past few months. It was my goal to have it live by the end of 2021, but due to work commitments, I was not able to launch it in time. It will be sometime in Feb 2022, and I will keep you updated.

Thank you so much for spending time reading my blog and I really appreciate you. If you enjoyed reading my blog, hope you can support me by liking my Facebook page here or sharing my post. You may also follow my Twitter account here, where I post my buy and sell transactions. Currently, I do not earn any fees through any affiliate programme or sponsor. If you have any queries, feel free to post them and I am happy to take questions! :)