It’s been an extraordinary year for stocks and investing. After a calamitous fall in Feb-Mar, the S&P 500 has continued to march onward. I’m lucky to have continued investing while others were waiting for that elusive market bottom, and complaining loudly that tech stocks were overvalued. I’ve been informing members of what I have bought and sold throughout the year, and most of them have worked out well.
Looking at the stock portfolio alone, its a 43% return. Some holdings I have held since 2018, such as Alphabet and the S&P 500 ETF. But most of the gains were in 2020, coming from stocks such as AMD and Tesla. The value of my stock portfolio is about $1,034,000. After deducting my margin of $185,000, the total value is $850,000.
If I look at my overall net-worth including cash and fixed income, I started 2020 with about $830,000. It’s now around $1.1 million, increasing by $270,000, an overall return of about 33%. This doesn’t take into account my expenses, which I estimate at $50,000. Taken together, I had income of about $320,000 in 2020.
I hope you did as well or even better than I have. I’m certain that many others have made even more, as I had numerous mistakes and missed opportunities.
But I am content with my gains, and don’t want to think I’m invincible and start taking greater risks. I don’t need very much, and since I don’t have an income any longer, I can’t afford to lose very much either.
Just to highlight that my portfolio usually appears green because I cut my losers if they aren’t green in a month or so. For winners, I tend to grow more convinced that they will keep going up, and I add more. This produces a large unrealised gains portfolio, while having modest realised gains. Unlike many people, I don’t see unrealised gains as “fake” gains. I can easily trade them and get back the cash in a few days. I am loathe to sell though, as I think that they will be worth even more in the future.
Posting my brokerage statements below. These are the monthly statements, which I get from the previous month. So I only get Nov statements about 10 days later in Dec 2020. I crop out my brokerage’s and personal details.
Fixed Income Portfolio
The fixed income portfolio is pretty stable. I don’t anticipate it to change much. The Pimco Income fund and Temasek bond have a market value of $182,000, with net yield of about 9.3%.
The Temasek Bond I hold has been falling in value, dropping by $15,000 or so from its peak. But I think it makes sense to keep holding the Temasek bond as the yield I’m getting is stellar at about 10%, which is unheard of for an AAA bond. It’s a 3.625% coupon with 3x leverage, using an interest rate of 0.6%. These deals are simply impossible to find now.
Besides the above, I own a $220,000 leveraged annuity, and my premium was $53,000. In another 3 years, I’ll be able to reap about $700 a month net, a return of about 6%. I’ll talked about why I believe you can do much better than CPF Life by picking up a leveraged annuity in your 30s or 40s. This is one of my most recommended wealth preservation tips for sophisticated investors in Singapore.
Total = $235,000
Looking toward 2021
Total net worth = $850,000 (stocks) + $235,000 (fixed income) + $30,000 (cash) = $1,115,000
As I have mentioned in previous postings, there are many reasons to think 2021 will be better. Covid-19 and Donald Trump will go away, giving much hope for a more normal world. Interest rates are low, which allow valuations to reach the sky.
But its exactly such rosy conditions that make me nervous. A better environment to invest money is one that many people are panicking, with the media stroking that fear. Instead, banks and analysts are encouraging the masses to rush back in.
I would still probably be fully invested, and be judicious about using margin. It’s tempting to use all the margin possible now, and I can tap 3 times more of my existing margin of $185,000. It can be very rewarding when things keep going up. But things look a little too positive, and I don’t feel the need to increase my risks and keep buying. I would not go all in.
On a related note, the USD has fallen 8% since its peak in Mar 2020, and it looks to continue. This isn’t good for me because the majority of money is in USD. But I suppose this is unavoidable to hold US stocks, and I have obviously gained more there. It’s not a bad time to convert SGD to USD now, if you have the cash.
How was your 2020? I’m keen to know how you did, and if I managed to be a positive influence for you.
Take care and all the best.