Portfolio @ January 2021

Cash / SRS / Crypto Portfolio

Performance Indicators / Dividends (TradFi Portfolio only)

• YTD Time weighted return: 4.94%
• XIRR since portfolio inception in 2013: 17.85%
• Dividends collected YTD: SGD 191.40

Note: I don’t provide details or returns metrics on my crypto portfolio publicly.

Amazing Start to 2021

I am kinda speechless with how 2021 started for my investment portfolio. Never have I gone through a period in my investment journey where my investments melted upwards. Plenty of meltdowns and methodical increases, but nothing like this.

To illustrate, my overall portfolio value more than doubled to $1,437,065, easily blasting through the $1 million mark and then some, in 1 month. Gains were largely contributed by the crypto portfolio, with the traditional portfolio providing a small bump up.

The funny thing is that I didn’t do much this month, just doing the usual maintenance work on my crypto portfolio.

Is crypto a bubble? In certain parts yes. Just look at Dogecoin.

However, there are pockets of cryptoassets that were so severely undervalued (due to a lack of awareness/understanding) that a re-rating creates a significant bump to price. That’s certainly what happened with my portfolio this month, something I expect to continue over 2021.

While becoming a millionaire is an achievement often celebrated in life, I remain a paper millionaire for now. As such, vigilance remains important.

Not going to pop the champagne until the fat lady sings.

Monthly ramblings

There are some news in the past month that I wish to cover.

1) r/WallStreetBets vs GameStop shorts

The pump on Gamestop’s share price has been so well known that non-financial media has covered it. If you don’t understand what is going on, here’s a quick summary.

Summary

• GameStop is a legacy physical retailer for video games and consoles.
• Understandably, market dynamics (eCommerce) have shifted against GameStop. As a result, GameStop have suffered falling net profit over the years.
• Seeing this, a bunch of Wall Street hedge funds decided to overextend themselves by shorting GameStop.
• A group of reddit users notices this and decides to punish these hedge funds by buying the stock, pushing up the price of GameStop.
• This causes a short squeeze in GameStop, driving prices up even further to these astronomical levels. The hedge funds lose astronomical amounts in the process.

Fallout

The reaction from Wall Street, financial media and some trading platforms has been quite illuminating. You have Wall Street and CNBC commentators slamming this behaviour as “market manipulation” or “gambling”. You have trading platforms like Robinhood and TD Ameritrade restricting trading of GME in the aftermath.

Pot calling the kettle black

I find it disingenuous that professional managers are belittling retail money for executing a legitimate trading strategy that they themselves have deployed many times. While there is probably an element of dumb money piling on to generate such ridiculous price action, one cannot fault the logic of the trade.

Also, short sellers who advertise their short positions should be well aware of the potential to be squeezed. The fault for mismanaging your short should fall solely on the person who made the trade, not the catalyst that made it happen.

Censorship and Centralisation

In recent months, the cascade of examples demonstrating the issues with centralisation of power just keep coming.

You’ve seen this in the, while justified, belated bans by Twitter and Twitch on Donald Trump after the insurrection. The outcry over the changes in Whatsapp’s privacy policy. The arbitrary banning of GME stock from trading. Not to mention the continued market power demonstrated by big tech like Google, Facebook and Amazon.

It seems like a perfect storm for people to push for a fairer and more decentralised system. A trend that might push more people towards crypto and Web3.

Will be interesting to see this play out.

2) Concentration vs Diversification

Since articles emerged about people retiring early thanks to the price surge in Tesla, debates and conversations have once again emerged about whether one should concentrate or diversify their portfolio.

There are some good and simple articles by fellow bloggers like InvestmentMoats and My 15HWW on this topic if you need an overview of the arguments for or against concentration and diversification.

This debate struck a chord with me in 2 aspects:

• I’ve always ran a fairly concentrated portfolio of about 10-15 stocks since I began my investment journey in 2013. Some might argue this is diversified, personally I feel 20 stocks is when you get really diversified as each stock only takes up 5% of your portfolio.
  The level of concentration has only gotten “worse” since my shift over to crypto.
• Readers regularly ask me about concentrated strategies when I get the sense that they are not ready for it.

My personal take on this topic is that most retail investors have no business running a concentrated portfolio. This is because they generally lack the time commitment and knowledge to run such strategies.

Diversification essentially serves as a hedge against ignorance. The only sustainable way to run concentrated portfolios is to take the requisite time to gain knowledge and perform due diligence to reduce your ignorance towards an investment.

This is why I recommend most readers who reach out to adopt a index fund focused strategy.

That said, it is rare for diversified investors to become really rich quickly

If you study the richest people in the world, they generally fall under 2 categories:

• Great entrepreneurs and business owners
• Great capital allocators and investors

Entrepreneurs and business owners essentially run concentrated portfolios as their single largest asset is share ownership of the company they founded. They are able to do this as they pour their heart and soul into that single investment by running it as its founder.

As for great investors like Warren Buffett, they tend to run fairly concentrated portfolios given their size. This is only possible due to their ability to deep dive into companies to sift the wheat from the chaff.

Knowing one’s limits

Personally, I don’t feel that I’m at that level. I view myself as an informed retail investor that probably has an edge over most retail investors and some professional fund managers.

This is why while I was supremely confident in my crypto investment picks, I did not throw the kitchen sink at it. I chose to retain about 40-50% of my traditional portfolio when I transitioned to crypto.

That 40-50% has since become a measly 12% of my portfolio lol. And getting smaller by the day.

Anyway, the bottom line is, make concentrated investments if you feel you have the fundamental edge. For most people, you are probably better off sticking to diversified portfolios.

As usual, this is not a call to buy or sell securities and its just sharing my own thought process for your information. Also, crypto is dangerous AF. Please do your own due diligence prior to investing.

Endowus CPF OA Portfolio

As you may know, I’ve started investing my CPF OA funds with Endowus. I’ve been sharing my portfolio performance for readers’ reference to evaluate product performance for themselves. Nothing much special here, just the recurring top up.

If you want to learn more about Endowus, do check out my review (Cash/SRS/Fund Smart portfolio details to be updated). Also, if you’re interested in opening an account, do feel free to sign up through my referral link. We will both receive $20 off access fees per referral.

Reader Appreciation

As usual, to the 2 and 4 people who liked my Facebook page and subscribed to my blog respectively since my last portfolio update, welcome. Feel free to reach out via email or Facebook. I’m usually quite responsive as readers can attest to. Hope that you have found my blog content useful 🙂

Past updates:

2020 Performance Scorecard
2019 Performance Scorecard
2018 Performance Scorecard
2017 Performance Scorecard

Happy Hunting,
KK

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