Analysis,  Investing,  Investing Strategy

How To Read My Portfolio Snapshots

I got a question the other day from a friend. He’s having trouble understanding my portfolio snapshots. Ask and ye shall receive. Here’s a brief guide for you!

StockLast Done PriceAverage Price% HoldingUnrealised Profit/Loss
Overall % P/L8.71

I’m going to explain column by column using my September snapshot as a reference. Only because it’s both the latest and the one I feel captures my holdings accurately.

I’ll skip the “Stock” column because that pretty much doesn’t need any explaining. The second column “Last Done Price” indicates the closing price of the stock at the time of writing.

The “Average Price” column indicates my average buying price of the stock over time. This number changes as time go on and I accumulate more shares. The “Average Price” changes depending on how many units I buy and at what price I buy them at. It’s a simple average calculation.

If I held 200 units of INARI at RM2.00, my average is RM2.00 per unit. Then, if I decide to top up another 100 units at RM1.80, my new average has changed based on the cost of new incoming shares:

[(200 shares x RM2.00) + (100 shares x RM1.80)] / 300 shares = RM1.93 per unit

The “% Holding” column indicates the percentage amount of that particular stock based on the overall portfolio value at cost price (original buying price).

So, for example, if my total original value of the whole portfolio was RM10,000 (meaning the total initial amount I invested), a 20% holding in INARI means the capital I used just for INARI is RM2,000.

The “Unrealized Profit/Loss” column shows you how much capital return I received from each stock. This is based on the difference between the current market price and my average buying price. This is a capital return based on increases or decreases of stock prices only. It does not include income return from dividend payouts. 

The question my friend posed to me: If I had big gains on some of the stocks, 14% on INARI, 17% on UCHITEC, why is my overall unrealized profit only about 8%?

Great question, friend that shall remain nameless (if you’re reading this, yes, I’m mocking you).

That’s because of the percentage holding factor. If the quantity I hold in the big gainers of my portfolio (like UCHITEC and INARI) is lower than the rest, the impact of those gains is lesser on my overall portfolio. For example, my biggest holding is MAYBANK coming in at about 26% of the overall portfolio value but because the gain on MAYBANK is only 1%, it is dragging down the overall return of the portfolio. How I arrive at 8% overall portfolio return is;

Total Sum of (Percentage Holding of Each Stock x Gain/Loss on Stock)

The next table shows how each holding impacts my overall portfolio return value

Stock% Holding Unrealised Profit/Loss (%)Impact on Portfolio Return (% Holding x Unrealised Profit/Loss) in %
Add them all up to get8.71%

What Conclusion Can We Draw from This?

When I look at individual stocks and see how they perform, the numbers can give me such a good feeling. Seeing double-digit percent gains on 3 out of 5 of my stock picks is fantastic. It shows that my stock picking abilities are pretty decent. But I need to take a look at the bigger picture. The overall performance of the portfolio shows that while I know how to pick stocks, my ability to correctly predict the weight or importance of each stock isn’t very good.

There are a few possibilities I can attribute this to; either my modeling could be flawed, or I’m not very good at allocating capital in the right way or I’m letting some of my biases or emotions cloud my judgment, or all of these things could be happening simultaneously, one affecting the other. I’m inclined to think they’re all interconnected.

However, I’ve set the bar low; my aim was a 7% annual return (above EPF’s yearly dividend payout). I am still exceeding my KPI, so to speak. I know I shouldn’t excuse my terrible allocation skills but let me just have this one little thing, okay?

Just based on my portfolio, we learn that the whole is greater than the sum of its parts (or in this case, lesser). When you are considering investment in a stock, unit trust, bond, commodity, PRS scheme etc, you must consider how that investment affects your overall net value.

A more philosophical takeaway would be to question how much time and energy I spend on each aspect of my life. Does the extra effort spent on specific aspects contribute to my overall growth? If the way I allocate my energy is not advantageous, what should I really be focusing on instead? Just another set of questions to ponder on.

What about you? Do you think the capital allocation in your investments is benefiting you? Do you think your energy allocation in life is at its optimal level? As always, I welcome any and all feedback.

If you liked this post, share it with your friends, on your social media feed, with strangers, print it out and mail it to your dad.

Image via Unsplash

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