At the time of writing, I have position in 33 counters, of which 29 are in cash portfolio and 4 in CPF portfolio.
Why so many? How to track? Might as well invest in ETFs?
Let me answer the second and third questions first.
How to track?
I don’t closely track every counter. I gave more attention to counters that take up a larger position. Also, once I get to know a counter well enough, the amount of time required is less as I just need to keep track of its latest development.
Might as well invest in ETFs?
I actually do invest in SPDR STI ETF with my CPF and recently I bought a bit of Tracker Fund 2800. Back to the question. The key difference between investing in ETF and what I am doing is the make up of the portfolio. So while STI ETF and my portfolio has about the same number of counters, that’s where the similarity ends.
Why so many counters?
The number of counters actually increased in recent years as my portfolio grew bigger. If I remembered correctly, I probably held less than 15 counters at any one time before I overhaul my portfolio in 2014. One reason could be that my portfolio’s value was smaller then, so any misstep could be mitigated with capital injection from my active income.
It still wasn’t something that I explicit think about after 2014 but the way things have developed over the past four years indicated that I preferred a diversified* one. Probing myself further, I think these are the key reasons for my preference.
- I am aiming for an average return of minimum 8% annually with a time-frame of at least 5 years.
- My active income has decreased which means I am not regularly injecting cash into my portfolio. So any misstep is harder to rectify.
- My due diligence is really limited to reading public available information and even for that, my depth of analysis is superficial.
* My diversification is “chapalang”. Not based on countries or sectors but just a random mix of about 30+ counters though they do come from 3 countries and varied from technology stock to consumer staples.
What do I want to achieve with this diversified portfolio?
As mentioned above, I hope to get at least a minimum of 8% return annually during a 5-year period. And it is my hope that this can be achieved by my “chapalang” portfolio with a few big winners and minimal duds. The table below shows some possible permutation of return from various category of counters to illustrate how 8% compounded return can be achieved.
Of course, the numbers are arbitrary and I could key in percentages to get infinite combination. However, the idea here is if I select my counters with due care, it is likely that only a few will turn out to be dud and with luck, I will get a few with exceptional return over a 5-year period.
Each of us deployed different strategy to achieve the goal that we set out to achieve. So it is important we find out the strategy that works for us and uses it to our advantage. I like what I am doing as it protects my downside but provides unlimited upside. And it is likely that I will continue to deploy this strategy in the near future.
My current holdings