After a seriously bleeding May, I am happy that we got some recovery in our portfolio.
Net-Worth increase from last month: 50K SGD, 1.34KG Gold
It is a pretty good month for us.
Just looking at the net-worth increase, this is the best month in this year, though the number is very close to what we had in Jan and Feb, when we were doing really well in our portfolio.
Half of the increase was from the portfolio recovery. After the bleeding May, this was almost bound to happen.
The other half was from our salary, CPF, insurance refund, and also another payment of Freelancer pay.
I continue my freelancing work this year and get paid for my work. At the same time, the money will also count towards the money I was “owned” last year.
Not entirely fair but I guess this is the best arrangement I could get now.
The work is even enjoyable sometimes. And it is good to keep practicing my consulting skills.
Since this marks the middle point of this year, I also did a quick look at my average net-worth increase for H1 2021.
In drafting up a deck for the client, I discussed with the team and agreed on the storyline.
There were 5 slides that needed major work and 1 slide that needed adjustment.
3 of the 5 that needed major work would be hard to delegate, because I had all the information and background.
So there were 2 slides that needed major work and 1 slide that needed adjustment that I could choose to delegate.
There were 3 other members in the team.
I only delegated the 1 slide that needed adjustment to one team member and took the 2 that needed major work upon myself.
I guess I was partly trying to continue the work I had done on the 2 slides that needed major work and partly did not want to load the team more as I knew they were involved in other engagements too.
But afterwards, I regretted.
If I had delegated the 2 slides to the two other team members, there would be at least 4 benefits:
I would have less to do and could focus more on the 3 slides.
The workload of the team would be more even, at least from the perspective of this engagement. The team member that got assigned the 1 slide that needed assignment might feel a bit unfair in the current arrangement.
The deck would be more of team work, instead of my storyline and my deck.
If there would be needs for further changes to the deck, we could split the work more easily and deliver the update version faster.
I regretted over the weekend multiple times and could not help thinking about the benefits of better delegation.
In the beginning of the subsequent week, I managed to find time to complete all the slides. But I still felt bad.
However, after a few days, I found out that that could be the right decision.
One of the other team member got assigned to another engagement entirely. If I had assigned to him the one slide, I might have to take it back anyway, which would cause more interruption.
The other team member was entirely occupied on another stream of the engagement and she did not even bother me with it, probably partly due to that fact that I left her out of this stream to allow her more time to work on the other area.
Therefore, that decision could be the best one, in term of completing the work effectively without interruptions.
I never expected this post to be so long. And it took at least 5 times the time I originally planned. Checking the facts and recalling the thinking then was the time-consuming part.
But it was worth it. I took this opportunity to have a careful review of the whole journey and hopefully I could offer something of value to you as well.
And I found out that certain things were just hidden away from my sight, but they were never lost.
Three things to take note:
1. I did a more throughout assessment and found out that the “lost” returns was actually over 300K, instead of the 200K I derived from the ball park estimate
2. Certain things can be hidden or buried. But they will just jump out at the right occasion and they cannot be ignored. I realize some of the content is not very much related to the topic. They should be easy to spot. Feel free to skip them.
3. I had to stop half way last week due to lack of time and decided to split the post into two or even three. I am able to complete it now and have made some revisions to the first part too. So I have posted the completed version here for easy read.
I really hope this read can provide you with some take-away. That would exceed my expectations I have for this post!
After reading a few books, discussion forums and discussing with the friends in the industry, I gathered a few investment strategies.
After evaluating my interest, estimating the time I can invest in the area and recalling my inability to balance a balance sheet in university, I decided to take up a simple and proven one:
Use CPF as bond component
Invest all my other investable asset in stocks with 90–10 split into world index and SG index
Adopt the DCA method with monthly capital injection
Seeing the deviation from the strategy, with an empty war chest and SG index continuing to drop, I struggled between continuing to invest in SG index and switching to invest in world index, with my only cash flow — what’s left over from my salary after expenses.
I was lucky to take a rational look at that time.
The event that Creative decided to go public in HK made me realize that SG market was small and lacked the upside potential.
So I switched to world index.
That was when my return started to recover.
I thought of selling the SG index to restore my portfolio split, but I was a firm “buy and hold” believer at that time and the fee with the banks was high (there were less choices for brokers then).
For the next one year or so, I stayed the course to invest in world index on a monthly basis.
And the amount was quite consistent since my salary and family expenses were quite consistent.
So I was actually DCA-ing. This is probably the only period I really practiced DCA.
Before I deviated again from the strategy, my portfolio split between World and SG Index was only close to 50–50, still far away from the split set by the strategy.
The returns were good.
During the same period, I also took my money in China out of P2P lending and started to invest in China index.
I went from a situation where I had 2 well-paid offers to pick from to a totally different one where I was jobless. It happened two weeks before my onboarding to the new job so it was not even possible for me to keep my current job. The financial loss was much heavier than what was discussed here.
I was suddenly in a totally different state, where things I needed to worry about changed almost entirely.
Before the incident, I was worried about how to get more returns through investment and retirement planning.
After the incident, I had to worry about how to make sure we had enough to cover our expenses and how to regain that cash flow without taking a job I hate or a significant pay cut.
What worried us most was the uncertainty. I did not know when I could get another job and restore the stable cash flow and the prospects.
At that time, I felt lucky that my war chest was full.
The deep and narrow “V” surprised almost everyone.
Even some of the investment guru in big investment institutions were asking their client to sell and not to buy, I later found out.
Very few expected the market to recover so quickly.
However, COVID situation continued to worsen.
China closed borders which meant I could not onboard my new job.
I will continue to freelance. I still expected to get paid then, but knew that the pay would come much later.
So we again had to evaluate our situation.
This time around, we knew we were dealing with something much worse than what we expected. Instead of 2–3 months of no income, we could be dealing with a year or even longer.
So when the market recovered and was about 5% higher than the previous high, I decided to clear my positions in World Index and China Index, to pocket the gains.
I was really scared of a “Double Dip”.
It was not about returns any more. It was about more basic needs for my family.
I was very very busy with work leading a very challenging team on a very challenging engagement for a very challenging client, suffering from back pain due to sitting long hours under high pressure. So I had no time to look at the markets.
At the same time, I was very very pessimistic and even frightened.
You might be wondering why I cleared my positions for World Index and China Index, instead of the SG Index.
That way, I could have harnessed the 30% gain for World Index and China Index in 2020, and avoided the stagnant SG Index.
There were a few reasons:
The most important one was probably the fact that I was still losing money in SG Index at that time. This cognitive bias made me try to avoid realizing the loss.
I did not believe the SG Index could experience any significant further drop and therefore the risk of “Double Dip” was low
SG Index paid out (still do now) dividend in SGD, so it would directly help our cashflow, which was of ultimate importance.
This deviation made me lose the opportunity of another 30% gain on basically all my capital invested in World Index and China Index, which is substantial.
After I stepped away by clearing my positions in World Index and China Index, my situation continued.
I continued to freelance with the expectation for the pay diminishing along the way.
And I rejected the opportunity to re-join my previous company in Jul.
So my situation continued and all the concerns were still present.
So I kept away.
I did not make any capital injection into the market.
I was holding quite a bit of cash just in case.
Looking back now, that was too much emergency funds, enough to cover our expenses for at least 3–4 years.
I guess I was still frightened by the possibility that I would not be able to provide for my family.
My family should not suffer because of my mistakes or inability.
Also, I was quite worried about our new flat.
My wife’s salary would not get us enough loans.
So the possibility of us losing the flat and all the down payment and expenses was real.
The situation was bad.
And one thing became clear when I thought back: my approach was contradicting!
On one hand, I was really conservative with money we already had to prepare for “rainy days” — I almost laughed when I wrote this down. We were already in the “rain”.
On the other hand, I rejected the opportunity to draw a stable salary on a stable job, which was more than enough to make all my worries above go way.
I stubbornly believed that the China opportunity provided more potential. And there was “trust” and “cannot let them down” with my mentor involved.
However, deep down, I guess I was still angry and I refused to let the incident define my life in any way.
So the fact that I did what I did in those situation without realizing it was a sign that I valued my pride and career potential over more money after being able to provide enough for my family.
Under all these pressure, especially the risk of losing our flat, when the VP of my previous company reached out again, I finally “gave in”.
I thought I “gave in” to short term gain at the cost of long term gain, because we were always talking about how much the increment would be.
It turned out to be 15% pay reduction. And the process took so much longer than what the VP promised.
And I had to reach out to the HR to get any update.
I felt humiliated.
I thought of just walking away and leaving all these behind.
My wife was always supportive. So she had no problem if I just walked away.
But I was out of options then.
I told my mentor my intention to accept the offer even before I said “Yes” to the VP. Even I could go back to the old offer, it would not help our cash flow any time soon.
And finding another job soon would be hard.
So I took it.
Among all the bad feelings, I also felt relieved when I signed the offer.
I knew I would get some room to breath and re-collect myself. I could not do this while in the state of scarcity I had been for the past 1 year.
This was what I got for “being a coward”.
I knew I had to live with my choice and the constant and painful reminders that came with it.
To do that, I knew I had to make peace with myself and with the situations.
I think I managed it by ignoring the reminders as much as possible and distracting myself on other things.
So we all can get pretty good at self-deceiving when it comes to that.
We got our new flat without any problem. And after a few months of stable income and re-establishing some routines, I was ready to come back.
When we reviewed our financial situation, I was shocked by the returns my wife managed by investing the small amount of capital we had in spare, mainly the onshore RMB we saved from wedding gifts and my salary when I was working in China.
She mentioned to me a few times and I had the impression that she was getting good returns.
However, returns that good still surprised me.
And the logic seemed simple.
So I decided to re-enter the market with the new strategy.
At first, we were lucky. The returns quickly overwhelmed me.
So after we have emptied our war chest, I decided to finally let go of our SG Index, which was still in the red after a few years.
Shortly after, the “profiting taking” happened and my portfolio slipped into the Red, while SG Index had a pretty good run after the Chinese New Year.
So my portfolio has been in the red since then.
From time to time, I wish I had pocketed the gains of over 60K. But for the most part, I was not affected and I did not reduce any positions.
The most effective strategy is usually simple. Staying to it is the hard part.
From my experience, it definitely holds for investing. In the course of 3 years, the simple strategy could have earned me 300K SGD if I had stuck to it.
One big enemy is free time that we do not know how to spend.
Maybe the unintended benefits of staying busy with work or life is that we are forced to stick to the simple strategy.
I got some free time this week, so I did a quick review of my investment journey, including going through the transactions, the notes from discussions and my own diary.
The outcome was shocking.
I could have easily earned 200K SGD extra returns from my investments.
And the number could potentially be much bigger because it is just a ballpark figure.
I spent more time reviewing my thinking process rather than trying to get the figure accurate. The number does not matter too much now anyway.
I always knew I deviated from the simple strategy, which caused negative impact on the investment returns.
Still, 200K! I never expected the impact to be so shockingly big!
This is a significant amount, even compared to our Net-Worth now, after we both have worked for more than 10 years!
After reading a few books, discussion forums and discussing with the friends in the industry, I gathered a few investment strategies.
After evaluating my interest, estimating the time I can invest in the area and recalling my inability to balance a balance sheet in university, I decided to take up a simple one and a proven one:
Use CPF as bond component
Invest all my other investable asset in stocks with 90–10 split into world index and SG index
Adopt the DCA method with monthly capital injection
The first deviation from this strategy came almost immediately after I started.
SG index started to drop significantly and continuously and I thought that was the chance to lower my cost.
So I invested more and more in SG index.
Thinking back, that was so stupid.
I added positions so frequently that the price difference was barely noticeable between buys.
I added positions so heavily that I emptied my war chest very quickly.
And that was only the beginning of the drop.
When I had to stop to review, SG index was so heavy in my portfolio that the split was inverted.
90% of my capital was invested in SG index.
And during the same period of SG index dropping, world index was growing incredibly well.
Seeing the deviation from the strategy, with an empty war chest and SG index continuing to drop, I struggled between continuing to invest in SG index and switching to invest in world index, with my only cash flow — what’s left over from my salary after expenses.
I was lucky to take a rational look at that time.
The event that Creative decided to go public in HK made me realize that SG market was small and lacked the upside potential.
So I switched to world index.
That was when my return started to recover.
I thought of selling the SG index to restore my portfolio split, but I was a firm “buy and hold” believer at that time and the fee with the banks was high (there were less choices for brokers then).
For the next one year or so, I stayed the course to invest in world index on a monthly basis.
And the amount was quite consistent since my salary and family expenses were quite consistent.
So I was actually DCA-ing. This is probably the only period I really practiced DCA.
Before I deviated again from the strategy, my portfolio split was only close to 50–50.
The returns were good.
During the same period, I also took my money in China out of P2P lending and started to invest in China index.
The return was also good.
To be continued!
Note: This is much more time consuming than I thought as I had to flip through my notes and transaction history to confirm my memories and get the facts right.
I definitely do not want to rush this entry, as I believe this could be a good summary for both you and me.
I had to stop here as the rest of my day is filled with meetings.
I will split this into two posts or even three if I have much thoughts to share after the journey.
Sorry for this and hope you can stay tuned. I really hope you enjoy the read and at the same time, take away my lessons to avoid mistakes in your lives.
Yesterday afternoon, when I saw that the stock was halted in the pre-market, I just assumed that the trading will not resume until the restructuring was completed.
Feeling not happy and still a bit nervous, I took my mind off by doing something else.
And then, all of a sudden, I received a notification that my positions were sold at 60% loss.
Until then, I realized:
The trading was still ongoing. It was only halted in the pre-market
I forgot about my “Stop-Loss” order, which I always do in this kind of trading and which is supposed to be a good habit.
And pain and remorse and anger about myself filled my mind, as I watched the stock regaining its ground rapidly.
When I woke up this morning, I saw the peak of the price yesterday was almost at my “Stop-Loss” price, which is about 10% loss.
Get to the most basic aspect. Growth potential should only be based on the strong foundation that the company wont be bankrupt.
Know the facts. Be really clear on different arrangements. If I knew the trading will resume, I will probably remember to cancel my “Stop-Loss” order, especially when I was ready to wait.
Never hold heavy positions in speculation. I wished I bought more on that 44% gain and I was certainly relieved that I did not buy that much for this 60% loss.
I made 9 transactions last week and spent close to 100SGD in trading fees.
This is a record.
I have never made such frequent trades in any week of my investment journey.
Some trades have already generated gains and the others still remain to be seen.
Here are my transactions for the last week, for your reference!
Capital injection: ~90KSGD
1.BYDDY
This is my first try in the electric vehicles sector.
I have always been unclear on what is going on in the sector. And I am not a fun of the concept of Elon.
So I have been staying away.
But recent news about BYDDY spurred my interest.
So on top of electric vehicles and phone assembly (probably many people do not know this, but they assemble tons of phones), they now entered e-cigarette field with technology and production capacity. And there is rumor that Apple may be purchasing batteries from them for Apple cars.
It seems interesting and the portfolio seems diversified enough.
So I made my entry.
2.RLX
The top up is simply a response to the drop of stock price and I did not manage to control my own hand.
As a result, similar to YALA, the holding is too heavy in my portfolio.
So I might look for opportunities to let go of some of my positions. I have not seen any yet.
Worst case, I will hold it for as long as it takes.
3.AHT, MOSY, ROOT, FAMI, IVR, WPG
These are my speculative trys with small positions.
All the investment books I read ask me not to speculate.
Well, I guess I am among those people who have to try themselves before they will give up.
I will keep you guys updated on the outcome.
But if you are like me, I guess my lessons wont help prevent you from trying.
2.For the first time in a long time, I spent 2+ hours creating one slide
I could have done it much quicker, but I decided to spend the time to make it solid work, no matter whether that is necessary or not and no matter whether that would be appreciated or not.
I happen to have the time also.
So after a bad meeting, I spent half of my afternoon doing that slide. Considering the time spent in mentally drafting that slide, it was well over 2 hours.
2 hours for one slide. That is slow even with consulting standard.
I am pretty happy with it.
However, whether the person this slide is created for will be happy with it is an entirely different story.
But that does not stop me from feeling good.
It has been a long time since I spent this much time and thoughts on one slide, or anything for that matter.
I feel pretty good. I guess I am the type of person who would derive good feelings from dedication and commitment.
