Tuesday, January 1, 2019

Strategic Investor 2018 Review

FTSE STI ended 2018 at 3068.76 compared with 3402.92 a year ago, representing a loss of  334.16 point or 9.82%.  It was never a good year for global stock market not just STI.  Most of the year STI was in correction mode with a high of 3641.65 in May and a low of 2955.68 in October.  The following summarized my Investment Portfolio performance for 2018 vs 2017

Non-Strategic Unrealized Gain/Loss              +34.89%         +68.72%      -49.23%
Strategic Unrealized Gain/Loss              +22.20%         +21.29%      +4.27%
Portfolio Unrealized Gain/Loss              +36.59%         +57.69%      -36.57%
Realized Gain/Loss   +10.73%   +10.73%   +0.00%
Dividend Return   +57.15%   +51.79%   +10.35%
Cash Holding   +33.13%   +33.13%   +0.00%   
Portfolio   +104.48%   +120.22%   -13.09%   
STI   3068.76   3402.92   -9.82%

  Annualized (w/o dividend)  Annualized (with dividend)  
Genting SP+5.16%+6.31%
First Reit+4.63%+9.79%
CapitaMall Trust+7.60%+12.07%
Kep Corp-2.85%+0.13%
MapletreeInd Trust  +10.73%+14.65%
Kep DC Reit+10.64%+14.61%
Frasers Cpt Trust+14.59%+23.63%

With no surprise as STI fared worse than 2017, the investment portfolio also fared worse than 2017.  Not only that, investment portfolio also under-performed STI (-13.09% vs -9.82%).  Probably, that the first time since 2009 the performance of my investment portfolio lagged behind STI.  Some key points for 2018 performance :-

1. The main contributor for the drag in the portfolio was First Reit.  Price of it was $1.39 in 2017 vs $0.985 in 2018, a drop of 29.14%.  As Firs Reit is the largest holding in the overall portfolio, the return (including dividend) also fell from +232.61% to +114.82%.

2. SingPost became the 3rd stock in my portfolio to enter negative annualized return (excluding dividend) compared with 2 in 2017 (SIA & Kep Corp).

3. Dividend return increased 10.35% for 2018 but that was not enough to offset the drop in capital gain in the portfolio.

4. The other positive for the portfolio was Strategic Unrealized Gain increased by 4.27%.  This was helped by addition of those units at $0 cost

5. Overall portfolio return still maintain above the 100% which was first reached in February 2017 (+100.63%).  It hits a highest of +125.65% in January 2018.

The following summarized the Stock Incubator portfolio performance for 2018 vs 2017.

Unrealized Gain/Loss              +48.82%         +81.53%     -40.12%  
Realized Gain/Loss   +32.29%   +32.29%  +0.00% 
Dividend Return   +12.36%   +9.06%  +36.42%  
Cash Holding   +55.99%   +83.41%  -32.87%  
Portfolio  +93.47%   +122.89%    -23.94%   
STI   3068.76   3402.92   -9.82%

Key points for 2018 performance :-

1. Creative Technology was added to the stock incubator portfolio in October at initial holding price of $5.69 but was later reduce to $5.66 and $5.4838 by strategic mean at $0 cost.

2. Cash holding was reduced from 83.41% to 55.99% due to the addition of Creative Technology to the portfolio.

3. Dividend return continued to grow by 36.42% in 2018 was the only positive event for the portfolio.

4. The fell in unrealized gain and overall portfolio return resulting in under-performing STI was due to the drop in stock prices for the holding.

5. The other positive event was the holding of Valuetronics increased by 60% at $0 cost.

Based on 2018 performance, the following conclusion can be derived from it :-

1. The Strategic section of the Investment Portfolio still insufficient to provide the much need cushion for the Non-Strategic section as the building up of that is still ongoing.  This would mean for 2019, much work would have to be done to speed up the build up process.

2. For Stock Incubator portfolio, apart from Creative Technology, Nordic Group and Valuetroncis were in a much safer hand as themselves are providing the self-cushioning with their "freehold" status.  Initially, was quite contempt to put in capital for the investment in Creative Technology.  However, seeing the volatility of its price movement the past few days, it just fire up my desire to make it to $0 holding.  In just 1 single attempt the holding price was reduced from $5.66 to $5.4838, so it is not something impossible for me.  That probably shall be the top goal for 2019 for Stock Incubator portfolio.

On the surface, the performance for Investment and Stock Incubator portfolio were not something to cheer about but behind the scene should I add in those amount of gain that was achieved by flipping with those holdings, things will be totally different.  However, will not be doing that as was trying to maintain the original status for archive purpose.  In addition, by doing that will imply the main purpose of my investment in those stocks are merely following metric (eg XIIR).  Investing in a stock is like investing in a business, the forever metric tracking will not allow me to appreciate the business the I have invested in.  Moreover, since adopting 孙子兵法 in investing, whatever metric like XIIR is meaningless already as holding can be reduced to $0.