I have been investing since I was 16 years old. Since I was too young for my own account, my mum would help me buy the stocks I wanted. I had early success in counters like Keppel, Cosco, Singtel, Starhub, and Cerebos. The excitement of making money helped to grow an obsession with personal finance. I devoured books of investing, including classics like the Intelligent Investor and One Up on Wall Street. I even earned a degree in Finance.
But my timing is and always has been, horrible. All those names above, with the exception of Cerebos, have crashed. I sold out of them all in 2018, disgusted with the returns from the STI.
I have put my funds into US equities, with slightly better results. But again, bad timing and emotional selling have led me to buy high and sell low, and my realised returns have been lacklustre. After almost 20 years of investing, my returns are a negative $35,000. I would have been better off putting it into CPF and never touching it.
I was doing well up till Feb 20, where it looked increasingly expensive, and good returns were hard to find. Everyone was chasing yields and driving up bond and stock prices.
The Tide Turns
How things have changed in just a few short weeks. We are now in the greatest buying opportunity in a decade and I find all my spare cash being used in the margin account to protect me from a loss. Since my bonds are AT1 and the European banks are in trouble, there is risk of it being converted to equity and me then taking a huge loss. I’m looking to get out, but the bid prices being offered are ridiculous, with spreads about 5%-10%.
I used to look forward to the next crash, reasoning I had enough cash to seize opportunities. I had about $250k in cash and cash-equivalents by my estimates, about 30% of my portfolio. But the AT1 bonds have fallen lower than anyone’s expectations, and I have had to put up nearly $100k to support my margin. That goes my ammunition for buying good companies at incredible prices.
Even safe assets like gold and US treasuries have been dropping. The Temasek bond I hold has been dropping. This is an AAA bond, guaranteed by the Singapore Government. It is rock solid. Very soon I will be forced to sell it too. It was a good bond, with a great leveraged return of 10%, and grew from 102.2 to 115.5 now. It’s a profit of about $40,000. It is a great shame to part with it.
Buy and hold looks increasingly retarded. I could have cashed out about 25% 2 weeks ago, and redeployed. But once you see your stock go up to 30%, you won’t want to accept 20% for it. But I have also sold and seen the stock zoom up to unbelievable heights. Take a look at what price I sold Tesla at.
I can’t seem to settle on a strategy and stick to it. Too often I hesitate, and due to FOMO, go in and buy at the wrong price and time.
So what I have learned on my investment journey?
Probably nothing at all.