2018 Portfolio Recap

January is almost coming to a close and I’m finally getting around to doing a summary of my portfolio for 2018. Better late to the party than never, right?

Believe it or not, my portfolio is still relatively new. I started my long-term investing approach sometime in August 2017. Throughout 2018, I slowly built a modest equity portfolio comprising of five stocks. If you’re an avid reader of this blog (hah, it’s probably just me), you might be familiar with said stocks by now from my monthly(-ish) portfolio snapshots.

I’m going to share the actual numbers from my portfolio. In the past, I hesitate to reveal them because I felt it wasn’t necessary. But if I’m being completely honest, I’m a bit embarrassed about how little (or much?) I’ve set aside for investment. In any case, like my 2018 Income and Expenses post, I’m just gonna throw caution to the wind and come clean.

Let’s see if I can cut it as a fund manager, shall we?

Benchmark Index

FBMKLCI as at 4 August 2017 (at portfolio start) = 1774.53

FBMKLCI as at 4 January 2019 (18 months later) = 1669.78

FBMKLCI Return = – 5.9%

Portfolio Return

Net Investment (including fees) as at 4 January 2019 = RM35,712.51

Market Value of Investment as at 4 January 2019 = RM31,065.00

Net Capital Gains from Trading = RM1,381.63

Dividend Income = RM2,695.25

Unrealized Portfolio Return = – 13%

Net Capital Gain Return = 3.9%

Dividend Yield = 7.55%

Net Total Portfolio Return = – 1.6%

Unrealized Portfolio Return

[Market Value/Net Investment] – 1 = – 13%

For starters, my current portfolio value is suffering at the hands of a volatile and uncertain market. Being in the red by 13% is a brutal hit to both my confidence and my wallet. Especially knowing that during a more robust period last year, the portfolio’s unrealized return climbed as high as 15%.

Fundamentally, I believe these companies will continue to be profitable and be able to distribute dividends accordingly.

Since I’m in it for the long haul, I am planning to keep holding these stocks and accumulate more or other stocks in 2019 if prices become more attractive.

Net Capital Gain Return

[Net Capital Gain/Net Investment] – 1 = 3.9%

I did very little trading in 2018. I’m self-aware enough to know that when it comes to short-term trades, I tend to let my emotions cloud my judgement.

As it stands, I made four trades in total since the portfolio’s inception. 3 out of 4 of those trades yielded capital gains. The one “bad” trade was a cut loss trade.

While I’ve noticed plenty of trading opportunities on penny stocks and warrants, I stood on the sidelines largely because I can’t trust myself enough to make the right call in those instantaneous moments.

Going forward in 2019, it’s highly unlikely I will do much trading. Given that I literally have no time during the day to monitor the price movements, I’m going to have to sit out on short-term trading. I will have to learn how to build a strong heart, thick skin and tough character elsewhere in my investment journey.

Dividend Yield

[Dividend Income/Net Investment] – 1= 7.55%

The dividend yield is probably what saved my overall portfolio, to be honest. The primary factor in my decision to accumulate these shares was to reap the benefit of a passive, consistent income.

At this rate, my portfolio has a higher** yield than the current fix deposit interest rate (3% – 4%), EPF annual dividend payout rate (6.9% in 2017) and also the holy grail ASB payout rate (7% in 2018).

As I try to accumulate more equity in 2019, I am hoping to find new opportunities to build more passive income.

**This is an unfair comparison because I’m basing my yield on 17 months while the other rates are based on yearly payouts but I can’t be bothered right now to break that down so this is the caveat you’re gonna have to keep in mind.

Net Total Portfolio Return

([Market Value + Capital Gain + Dividend Income]/Net Investment) – 1 = – 1.6%

Okay lah, outperform the index at least.

Final Thoughts

Breaking down the results like this, I’m able to see where, how and what went right or wrong during the course of 17 months.

Markets cycle up and down, that is always a given. Such is the nature of investing. We may not be able to control it but what we can do is control how we react to it.

I take the last 17 months as a learning experience. Even with my background in finance, frankly when it comes to investing it’s hard for me to separate myself as a person from my money.

There are questions I ask myself every single time I look at my portfolio. Am I making the right decision here? Can I withstand this loss? Should I sell at this price? Will this be a good price to buy? Can I sleep at night knowing this or that might happen?

Each time I make a decision, I am accountable for it. Every single time a decision is made — be it buy, sell or hold — the amount of anxiety attached to that decision reduces.

I don’t think the constant tug of war between my logic and my emotions will go away anytime soon. But as I switched to a long-term perspective last year, it becomes easier to listen to the voice of reason over the cacophony that my emotions make.

Furthermore, I have to consistently try to strike a balance between being too cautious and taking a risk.

If you look at the short term, you will always be fearful and make rash decisions. However, you also need to be realistic, avoid falling in love with stocks hoping they’ll bounce back when there are signs they may not.

The lesson here is practice, learn from your mistakes and to always be mindful of your biases.

I still envy those investment gurus and their keen ability to make excessive amounts of money investing. But they are a small subset in the vast majority of people who are also slowly accumulating wealth.

As I share this with you, I hope you will see that investing isn’t an intimidating venture but a learning process.

Just like everything else in life, it’s okay to lose some as much as it is okay to celebrate the wins.

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Image via Unsplash.