Paying it Forward
While the portfolio ended the year in red, being able to invest is already a privilege. So I am going to continue to donate a very small amount of the portfolio to a good cause. This year, I have chosen the following campaigns. To all readers of my blog, I hope you would also support the cause that resonates with you.
Portfolio Performance
Though there are two more weeks to go before the end of the year, I don’t think there will be big change at the portfolio level. Finally a positive quarter to end the year. Yes, it’s too late and too little to overturn this year’s redness but still something good to end the year with.
Third year since this portfolio is incepted and its first negative year. The initial anxiousness when seeing the portfolio plummeting to the calmness or indifference towards the gyration of the portfolio are similar emotions to various negative events. Generalising that to human behaviour, it shows how resilient human beings is as a species.
The two charts above show how the portfolio has performed this year and over the 3-year period. I am definitely disappointed that the portfolio underperforms the index this year but am satisfied with the portfolio’s performance over the 3-year period.
On first look, annualised TWR of 7.9% and XIRR of 8.8% is nothing to crow about. However, given that during this period we experienced Covid-19 pandemic, Russia-Ukraine war, increasing US-China conflict, it’s a performance which I can’t complain much about. Being more nimble would probably results in a better performance but that might add to unnecessary stress. It will be something that I need to ponder on going forward.
Stock Pick for SG market and ETF for US market?
Breaking into SG and US segments provided more insight on the portfolio. It is obvious from the charts below that I easily beat ES3 but greatly underperformed SPY! Since I am doing well for SG market, there is no reason for me to change my strategy yet, especially when I still think that most counters I have chosen will continue to do well in the long term.
As for the US market, the mistake made was not reducing my stake in the SAAS segment fast enough when the valuation was insanely high! This is especially so for counters that are still burning cash. As seen from the above chart, two periods Dec’21 to Jan’22 and Apr’22 to May’22 reversed my outlandish gain over SPY. I still remembered the anxiousness felt in January, though I could not quite recall that feeling for the second period. Maybe I already had other plan in my mind then and was indifference to it.
I do not regret venturing into this segment as it was a learning experience which will shape how I will be investing in the US market going forward. I still believe in the tech segment as it is hard to fathom that the digital trend would reverse. It boils down to selection of counters to invest in and how much of the portfolio will be allocated to it.
With the spring cleaning done during April to June period, the US portfolio seems to be holding up rather well against the benchmark. I am going to give myself another couple of years to see if I can outperform SPY before deciding if I should just buy SPY for US market exposure.
Growing Dividend is the only Comfort
No matter how the market values the companies, they continue to give good dividend as long as they are still doing well. Amount received this year is up by about 12%. Projection done by StocksCafe based on this year’s payout shows similar amount next year. I also think that it will be about the same level but the reasons differ. I think that some companies might give special dividend, given that they have done well in FY2022. However as I might draw down from my portfolio, it is likely to cancel the higher payout.
Thinking Forward
There are reasons to be optimistic. Life is almost back to (new?) normal after Covid-19. Global tension seems to have eased a bit recently and hopefully the world leaders can prioritise advancement of the human species over nationality. Coming from a higher base, inflation should ease though interest rate should remain high for the foreseeable future. Consensus is a likely recession next year which I do not think is a bad thing since we tend to over consume. Recession or not, the strong businesses will continue to do relatively well even in a higher interest rate environment.
There would be minimal change in the make up of my portfolio. The current allocation is as follows and I am expecting it to stay range bound in the coming year.
| Category | Planned | Current |
| Singapore | 65% to 75% | 78% |
| US | 25% to 35% | 22% |
| Income (include Reits) | 55% to 65% | 63% |
| Growth (include US small/mid cap) | 35% to 45% | 36% |
| Reits | 25% to 35% | 31% |
| US small/mid cap | < 10% | 3% |
In the event that I am drawing down from the portfolio, as much as possible I will sell across the portfolio, with the exception of counters bought with CPF. Unless there is further crisis, I am hopeful for a small positive return for 2023.
Enjoy the last two weeks of 2022!
Towards Financial Independence 