Tuesday, December 19, 2017

2017 XIRR & Overall Performance

First of all, apologies for the lack of recent posting as I had just returned from a 2 week work trip overseas followed by a week of holiday thereafter back to back.

As we are winding down this year, I would like to take some time to do a self reflection review of the performance for this year.

While we still have a few trading days to end the year, I really want to summarize and close for this year so that I can already start preparing for the new year ahead, which promises to be another exciting year.

I took some feedbacks from readers when I wrote about the 2016 performance (Link Here) last year and I try to provide as much as I can.

I don't keep a lot of tracking myself personally because most of the information are stored in my personal profile at stockscafe so I'm dependent for most of the parts. 

This is going to be a rather long post, so please bear with me.

2017 XIRR

This has been a rampant year of the bull and we see most indices worldwide goes for high double digit returns which have increased investor's networth value quite considerably.

While the Dow and S&P have returned about 23% this year, our local STI index has also returned considerably well at about 21.81% this year. What this means is that if you are just holding the STI ETF in your portfolio, your returns should track the performance of the STI, which is an incredible good performance and one to be proud of.

Unfortunately, I am one of those who did not perform better than the market as I trailed the index. My returns for this year is still a respectable 19.67% based on the last check of stockscafe as I wrote this post. I reckon the last few trading days is not going to be a lot of adjustment.

In the above tracking from stockscafe,  I also do not include the amount of cash held for investment. But if I were to take them into account by using the weighted average methodology on the percentage of cash I hold across the months, the returns for 2017 would drop to 17.45%.

Personally, I know most of my circle of friends who had done incredibly well this year so a lot of credit has to be given to them and a good job well done. If you are one of those who did not perform so well compared to the index, I just want you to know I am part of that category and we'll just have to work harder.

Fortunately, I am pretty contented and I do not mind trailing the market for as long as I am on track to meet my personal goals.

On an annual compounded returns since I started investing in 2011, my average annual return is about 17.81%. Again, this does not include the cash component portion and if it were to be included, the returns would further drop. But I am lazy to track all of that now.

On the other hand, the performance of STI since 2011 until today has been about 4.9%. So it's really not a bad thing to be just holding the index and staying vested for a long period of time.

Top 10 Profits Based on % Gains (2017)

This will be the very first time I'm analyzing it this way, which is going a little deeper into what actually contributed to my performance for this year.

As you can see from the table, I actually made some pretty crazy returns from a percentage gain point of view.

Sabana investment in the earlier year (Link Here) came out top of the notch with 53.2% return after a short holding period of 3 months. 

Micro-Mechanics was not too bad coming in second at 48.3%, but I'd be kicking in my head knowing that I could have made 100+% returns have I kept it for a while longer. This year was the year of the semi-conductor and I am kicking myself for that miss opportunity which I should have had with MM. This was a good lesson of keeping the winner in an opportune time when it matters.

Cosco, Jadason, UMS and LMIRT all contributed well too on this aspect.

The point I wanted to make about showing this is that usually a high percentage gain does not necessarily translate into a high absolute gain. At times, they are often being used for content marketing,  boasting rights and misleading the public. If you see clearly from the gains I've made on the high percentage gain, they are all small absolute amount at best and contributed nothing significant to the overall portfolio.

Most of the gains are also realized with shorter time frame, which means I locked it in as soon as possible. This could be for various reasons.

There are also a few people who've asked me if I am invested in cryptocurrency and the answer to that is I do not. 

Top 10 Profits Based on Absolute Gains (2017)

Other than analyzing it from percentage point of view,  I also try to look at it from an absolute gain angle.

This is the part that actually matters more to the portfolio.

The top 10 absolute gains are the stocks that "moves" my networth and it is vital to the portfolio. 

This year,  most of my absolute gains are coming from FLT,  Guocoland,  CDLHT and Ireit.  These top 4 contributed almost 80% of the gains.

Having a bull year really helps to push the market and hence valuation higher.

Top 10 Loss based on % Loss (2017)

I'm going to be transparent with this because I believe there's always something which I could learnt about from this exercise.

Like almost anything in life, I'm going to have the good and bad things so it is now time to detail on the red side.

Comfortdelgro took the number one position in unrealized losses so far and it has been the biggest drag to the portfolio for this year.

It started with me taking a convincing look that the market was pricing it wrongly when it first dropped from $3+ to $2.40+ and that's when I started to believe it looks like a value steal. Obviously,  things start to turn for the worst and have gone south further. If there was anything I could learnt from this is that I didn't act fast enough to cut first and relook at the whole thesis again. Anyway, I feel like the valuation is rather fairly valued at this point, which is why I'm still keeping it as a keep for now.

I managed to do that with Straco,  FEO, Sabana, Katrina and ISO Team and emerge much better out of it.  The first 3 ended up breakeven while the latter they still ended up in a loss,  the amount is very immaterial and I could have made another re-entry once I have established enough justification for a re-entry.

The other unrealized position loss is M1, which I think is still bearable. 

Ho bee is another positing which I am currently sitting in an unrealized losses but am looking to add more to the position.

Top 10 Loss based on Absolute Loss (2017)

In terms of absolute loss, my concentrated strategy means that I usually win big and lost big and I need to ensure the latter is not more than the winning.

Comfortdelgro, M1 and Hobee remain my largest loss to date and they are still in my portfolio list as I am expecting valuation to bottom out.

Networth Portfolio (2011 to 2017)

I do not grow my wealth the way a fund manager grows his funds.

I went through the stage where I am single, a fresh grad looking out for jobs, then getting married, having a kid one after another and then pursuing my master degree and so on. 

What this means is I do experience a volatility of income and it becomes clear to me that there are 3 levers in this life which I would contributed it most important in my life.

Much of the dependencies has to be accounted for when I started building up my career years ago when this becomes a lever for me to accelerate the path to a financial independence. What this means is the greater I can compound and leverage on this lever, the faster I can generate the capital and put it to good use. 

The other lever has got to do with the building up of habit for savings.

While it may seems pretty obvious that we need to spend less than what you earn, it is actually not that easy until we get that habit designed in our mind and body. You'd be pretty surprised to find that there are many people who spent most of their income and left with no savings at the end of the day.

The final lever is our ability to compound the money through investing. This is done through building up years of competencies in the area of interest where we would excel most and the experience accumulated over the years would count over time.

All things equal, crazy amount of capital + high savings rate + great compounding = financial stability

I believe for as long as we excel in 2 out of the 3 levers, we can be successful.

There are different bloggers who accounted for different ways to compute their networth. My good friend, LP from Bullythebear shares his not too long ago here.

For me, it includes pretty much my equity portion and cash for investment.

I do not include my emergency funds, home equity loans, CPF, gold, other currencies, insurance and 1 month of working capital use. I also excluded my wife and children's portion in the investment as I wanted to track them separately.

I've been using this way of computing my networth since I started this blog, so I'm more comfortable with this.

As much as I had trailed the market returns for this year,  I still think 2017 was a successful year for me as not only my networth continue to increase,  but this comes at the back of higher expenses this year (second kid,  hospital fees and school tuition fees onboard).

I'd like to see that continuing into 2018 so the next post would probably see me gearing up for some of the goals and achievement I'd like to achieve in 2018.

Finally,  I'd like to wish everyone a great Xmas to all readers as we began winding down towards the new year. 

How has your 2017 returns been so far?

Thanks for reading.
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  1. Very good review! And congrats for breaching $500,000 convincingly. I think even your largest lost is still within 20% which are pretty good validation of the process in place.

    1. Thanks Kyith.

      Looking back, think I still hv rooms to work on the allocation. Losses are to be expected in our portfolio but we can reduce the risk by allocating it sufficiently. Perhaps our next few goals could shift to sort of capital preservation somehow.

  2. Hi B,

    Just like you. I've just published my review of 2017 performance. Fortunately, I'm minutes later and drop-by your post. We actually used the same "2017" image.. Hahaha!

    However, after seeing your post, I quickly changed it.

    Btw, wonderful review and very respectable returns you have for 2017. Congratulations too on hitting your 500k milestone. Coincidentally, your "biggest lost" & "biggest investment" is also my "biggest lost" and "biggest investment". Nonetheless, I believe that time will be able to reverse the situation.

    Fingers crossed.

    1. Hi Sleepydevil

      Thanks for your comment.

      I left my comment too on your post.

      I think there are a few camps this year where one super huat with crypto, another so so huat with banks, and lastly one which suffers with cdg. We belong to the last camp haha.

  3. This is incredibly good.

    "annual compounded returns since I started investing in 2011, my average annual return is about 17.81%. "

    Well done !

    1. Hi Cory

      Many thanks for your comment.

      I'm still trying to up my dividend income like you do and I think that will eventually be my long term plan.

  4. Congrats on achieving such a high rate of return in the past 7 years! That is incredible and far exceeds my target!

    May I understand how you evaluate when it is time to sell a certain stock?

    1. Hi FM

      Thank you for your well wishes. My expectations were lower myself so I had to wait for the full business cycle peak and trough to measure realistically over the full cycle.

      The selling is a little tricky because I tend to generally sell my winners too early, but the good thing is I also tried to cut my losses pretty fast so I dont keep my losses too much. The only exception this year was cdg because I still believe the market is pricing too much pessimism at the moment. But time will tell if its the correct decision.

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  6. HI B

    Interesting way to present the top 10 series. Looking at you hits and misses, I think you have really did very well.

    Looking at the holding periods, I think you can put some "traders" or "fund managers" to shame.. LOL

    All the best, I like your guts that go with your judgement.

    All the best to 2018 and may you enjoyed the rest of the 2017

    1. Hi SI

      Thanks so much.

      In a year where the crypto, semi conductor and banks and o&g have overtaken the rest of the industry, I think I might just hv to settle with what I have. Just glad I managed to keep up with my own personal goals thats all.

      Are you still keeping around 50% of cash as bullets? You might be able to make a killing should the tsunami caught everyone by surprise. The general mood going into 2018 is nothing can do wrong. Hahaha.

      Have a great year ahead too with your family :)

    2. Hahaha B,

      I not holding 50% cash anymore. I holding 65% cash. Might buy some counters soon. There are a few I am looking at ... but will not go below 50% unless I smell a bear.

      I remember how it felt like it’s never too low enough to sell to cut loss?

  7. I think that you are doing very well!
    I have added more of CDG on monday too. In fact this dec, it looks like a christmas sales on STI - Singtel (at 52 week low since XD), ST Eng, SIA Eng, Wilmar.

    Ironically, while the interest rates go up, Reits are hitting 52 weeks high.

    1. Hi MIM

      Indeed, I'm so happy with the xmas shop list that I have more that I wanted to buy than the cash I have.

      I guess I would hv to be very patient and add position slowly.

  8. Been following your blog since your Sunday Times feature earlier this year. Impressive track record since 2011!

    Here's to a awesome 2018 for you and your family.

    1. Hi risknreturns

      Many thanks and have a great year ahead too for you :)

  9. Hi B,

    As with the others, I feel you've done very well! As always, thanks for sharing.

    Wanted to ask about Guocoland. During the recent price dip to below 2.10, were you considering initiating another position based on your previous thesis?

    1. Hi Anonymous

      Yes Guocoland is back in my radar but I'd prefer Hobee and HK Land, both of which is in my priority list before Guoco :)

  10. Congratulations! You managed to beat the market consistently by over 12% per annum, a record that would put warren buffet to shame ;)

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