Looking back at the four 5-year periods Part 1

2019 marked the 20th year I am in the market. As mentioned in last year’s end of year review, I would end the tracking of my current portfolios this year and will track the restructured portfolio from 2020 onwards.

As part of the exercise in restructuring the portfolio, I have decided to look at my past four 5-year periods performances. I believe by writing them out, I will be reminded of some key learning that should be useful as I restructure my portfolio. The reason of using 5-year period as I believe that duration provides a better picture of my portfolio performance.

2000 – 2004 Initiation

My first year in the market was greeted with the dot.com crisis, plunging my portfolio down by 21%! What an introduction to the stock market. A lost sheep in the market, I did lots of buying and selling in the next few years based on gut feel on price movement. I considered myself lucky that my portfolio was only down 21% after 5 years. It was somewhere in late 2003 that I started to learn more about investment through an investment forum known as Wallstraits.com and that definitely changed my view points of the stock market.

Notable Gains and Losses during the period

Largest percentage and absolute realised gain – China Aviation Oil (195%, $3.7k)
Largest percentage realised loss – I-Comm (-59%, -$1.3k)
Largest absolute realised loss – Beyonics (-$1.3k, -39%)

Takeaways

Even with little diligence, I was able to have three years of positive return and scored a two baggers.  So yes there is an element of luck. The key is to put in the due diligence so that lady luck smiles on my more frequently.

It is not easy to go back into the black after a major setback. It took the portfolio 3 years to recover from the initial year’s drop. Diversification with good companies should be able to reduce the risk and even if they are not spared from a crash, they will recover much faster.

2005 – 2009 Value Investing, S-chips and GFC

With new knowledge obtained from reading investment books, I had better understanding of the stock market. Influenced by the books by Philip Fisher, Peter Lynch, Benjamin Graham and those on Warren Buffet, I learned and made buy/sell decisions with the use of PE, PEG, ROE ratio and even attempted DCF method.

With the increase in the number of listing of China companies in Singapore markets then, many of them met my screening criteria and I had made good profit from them. That was before the fall of the S-chips where many had fraudulent accounts. I was lucky to get out of most of them before they collapsed and only had two major casualty Celestrial Nutrifood and Fibrechem Technologies.

Another experience that was unforgettable was the Great Financial Crisis. As seen from the chart, my portfolio dropped by a whooping 39%. My CPF portfolio went down by 49%! It was probably scary (I could not recall how I felt then) but with income higher than expenses, I survived the crisis and ended the 5-year period with a 98% return.

Notable Gains and Losses during the period

Some of the realised gains that I am proud of were Food Empire (71%, $3.7k) and Pokka (57%, $2.7k).

Some of the S-chips that made me money were Biotreat (111%, $3.4k), People Food (78%, $8.7k) and Hongguo (60%, $2.0k) and one that cost me a near 5 digit loss Celestial Nutrifood (-$9.5k, -29%). All the above counters no longer existed in the exchange.

The following are my realised loss during GFC – Pacific Andes (-58%, -$6.4k), Koda (-57%, $4.2k), Inter Roller  (-47%, $3k),  SIA Engineering (-35%, $4.4k).

Takeaways

This period has defined the way I look at the stock market and that has not changed till now. I am still using the same tools with the exception of DCF to make buy/sell decision but now avoid S-chips completely.

The GFC experience had strengthen my mentality in dealing with a stock crisis. And in the last strategic review, I have decided on a 30:70 cash to equity asset allocation, so that I will always be in the market and also take advantage of any market correction along the way.

Originally only intended one post but it got longer than expected. So am splitting it into 3 parts.