Saturday, January 7, 2023

Strategic Investor 2022 Review

 FTSE STI ended the year 2022 at 3,251.32 compared to 3,123.68 a year ago, up 127.64 points or 4.09%.  One of the selective few market globally managed to edge out a gain for the year while stock market like US ended down double digit percentage.  Individually, a review of the various stock portfolio in holding as followed.

Investment Portfolio

Non-Strategic (Income) Unrealized Gain/Loss              +82.49%         +33.40%      +146.98%
Strategic Unrealized Gain/Loss              +9.75%         +2.88%     +238.54%
Crypto Unrealized Gain/Loss              +2.84%               --           --
Portfolio Unrealized Gain/Loss              +15.53%         +16.67%      -6.83%
Realized Gain/Loss   +18.37%   +20.05%   -8.38%
Dividend Return   +70.16%   +68.51%   +2.41%
Cash Holding   +83.37%   +54.05%   +54.25%   
Portfolio   +104.05%   +105.23%   -0.69%   
STI   3251.32   3123.68   +4.09%

  Annualized (w/o dividend)  Annualized (with dividend)  
Genting SP+2.47%  (divested)+4.03%  (divested)
CapitaMall Trust+4.37%+8.57%
SIA-SATS-2.24%  (divested)+0.14% (divested)
Kep Corp-3.36% (divested)+0.08% (divested)
MapletreeInd Trust  +7.58%+10.35%
Kep DC Reit+7.42%+10.96%
Frasers Cpt Trust+3.55%+8.01%
Lendlease Reit -- --

Investment Portfolio performance dipped marginally 0.69% for the year.  There were couple of divestment namely SIA-SATS, Genting SP and Kep Corp as part of the continuation of the portfolio restructuring which started late 2021.  With these divestment, the restructuring has finally completed and the newly portfolio is the 3rd portfolio that was being built up since started investing 3 decades ago.  There were some rearrangement of stocks between Non-Strategic (renamed to Income) section and Strategic.  STI ETF was moved to Strategic and Lendlease Reit becomes part of the Income section.  As Lendlease Reit at the moment still holding at $0 cost, there will be no statistic on its Annualized performance (with and without dividend).  In addition, a new section Crypto was added to the Investment Portfolio.  As the name suggested, this houses all the Cryptocurrency investment.  Since this involves $0 capital, the performance is measured its market value with respect the the cost of the Income section.

Due to the divestment, Cash holding was increased by 54.25%.  Unfortunately, the realized gain portion saw a dipped of 8.38%.  This is mainly due to of the 3 divestment stock (Genting, SIA-SATS and Kep Corp), 2 of them (SIA-SATS and Kep Corp) registered realized capital loss.  However, with the inclusion of dividend return all these years for the 2 stocks, the net divestment still manage to register a positive return

The positive aspect of the portfolio is that the total portfolio performance still able to maintain above 100%.

Stock Incubator

Unrealized Gain/Loss              +64.78%         +55.80%     +16.09%  
Realized Gain/Loss   +32.29%   +32.29%  +0.00% 
Dividend Return   +22.74%   +18.99%  +19.75%  
Cash Holding   +65.39%   +62.67%  +4.34%  
Portfolio  +119.82%   +107.09%    +11.89%   
STI   3251.32   3123.68   +4.09%

  Annualized (w/o dividend)  Annualized (with dividend)  
Nordic+21.30%  +24.90%  
Valuetronics   -- --
Creative-17.36%   --

Stock Incubator portfolio registered an increase of 11.89%
.  There wasn't any change in composition of the stocks in this portfolio or any restructuring (not ruling out possible restructuring in the future too).  The Cash holding registered an increase of 4.34% and this was mainly due to the cost recovery process for Creative Technology stock.  

Of the 3 stocks in this portfolio, only Nordic Group managed to close higher compared a year ago, while Valuetronics closed at $0.52 vs $0.545 in 2021, the unrealized loss is insignificant.  The worst performance was Creative Technology as it closed at $1.42 vs $2.39 in 2021, a drop of 40.59%.  The huge drop luckily didn't create a big impact on the overall portfolio performance as the unrealized gain from Nordic Group is more than enough to offset it.  Creative Technology cost was $$3.4562/share in 2021 and the recovery managed to reduce it to $3.0031/share in 2022.

Overall, the Stock Incubator portfolio continued to maintain above 100% and almost triple outperformance STI index, that the bright spot of it.

Looking Ahead

The restructuring of the Investment Portfolio has completed and going forward will be concentrating in building up the quantity in the Strategic section.   As for the Stock Incubator Portfolio, capital recovery shall continue with Creative Technology and it is also about time to resume accumulating Valuetronics, which has paused for last year.

Most were expecting a recessionary year for global economy this year.  Unfortunately, recession is not that scary and worried as past experiences had shown that within 2 years economy recovered from it.  Stagflation should be the one to be mostly concerned and worried.  In stagflation, central bankers can't lower interest rate to spur economy grow as inflation is at elevated level and the moment interest rate is cut, inflation will jump.  Central bankers can't continue to hike up in attempt to bring down inflation to acceptable level as the already low level of economy growth will sink into recession.  Unlike recession whereby within 2 years can be exited, stagflation can last for decades !!!