A reflection of 2018

To err is human…” – Alexander Pope 

To be frank, my investments, this year, is something left a lot to be desired. The majority of my investments, in equity, are in the red. However, bonds and peer-to-peer lending are in a much better position.

As i usher in the new year, I reflect on the decisions that I’ve made this year regardless of whether they are inadequate or satisfactory.

Photo by Keegan Houser from Pexels
WE CANNOT PREDICT THE FUTURE

Though, very obvious, it’s fallacious of men to assert that we are capable of predicting the future. 

My share portfolio is a victim of such fallacy. It was constructed on the premise that all the goodness that occurred in 2017 would transitioned seamlessly into 2018. And because because of that, I forgo re-balancing, or preparing my share portfolio for the worst.

Though the ramifications for my misapprehensions were kept to a minimal, I note that all of the gains made in 2017, were no longer preserved, to my disappointment.

LACK OF DIVERSIFICATION

Because we cannot predict that a government, once rooted in the very fabric of our lives, can be democratically removed, or the rising tension between two superpowers, our portfolio must be malleable and risk-averse, in order for it to be “all-weather”. The thought of not putting all of your eggs in one basket means your portfolio can withstand a downward market trend and therefore, be more resilient.

If you are stock picking, your portfolio must encompass a variety of well-established and profitable companies from an array of different sectors and industries. 

Also, to achieve a balanced and diversified portfolio, consideration must be had of other types of investments or asset classes such as unit trusts, bonds, REIT, ETF, ETBS, commodities, and even peer-to-peer lending. 

If you’re equity-heavy, like me, then its time to re-balance.

POLITICOS ARE BAD HOMBRES

Look, I try to keep politics out of my writings but sometimes the fallout from a changing political landscape is so atrocious that I’m forced to talk about it albeit in passing. 

Because of the way things are run in Malaysia, a lot of  companies and businesses are, to a certain degree, reliant on the government. More so especially when the government, through its investment arm, takes up a substantial shareholding in a company.

Having only been ruled by the one and only coalition party for more than 60 years, Malaysians are simply unable to comprehend that governments do come and go. Ideally, businesses must be free from political subversion and should never cosy up to a government for favours. 

Tony, the reluctant idiot.

However, seeing how things have unfolded since the May 2018 general election, it would be prudent to invest in businesses that would not be profoundly affected by a change in the political landscape of the country. This is especially true if your investment horizon is long (more than 10 years) as elections are generally held once every 4-5 years. 

DIVIDENDS

If it hadn’t been for dividends, my share portfolio would have been absolutely hammered. Dividends are very precious when the markets acts like a headless chicken. They act like a cushion that minimises any impact from a downward market trend. I’m grateful that I, at least, got this going for me.

Generally, you should consider companies that are, in the past, consistently paying out dividends, at an attractive yield. If you’re unsure about dividends, note that I’ve made a case for dividends in my past writing: Dividend stocks or not? That is the question. 

LOOK OUT FOR NEW THINGS

Investing can be monumentally frustrating especially where you are clueless about what to investment. I was in that situation, before taking initiatives to understand the concept of investments. The trade-off of investing without professional help is that I consumed many hours of reading and research.

If ever you find conventional investments inapplicable to you for whatever reason,  there are other types of investments which are worthy of consideration such as peer-to-peer lending or robo advisors. Both, although alien concepts a few years ago, are now licensed to operate in Malaysia. Just remember to start small until you get the hang of it.

NEVER LOSE MONEY

I think Warren Buffet has said this over a million times. Having most of my shareholdings in the red, I have a profound appreciation of those words.

Once you lose money, it’s harder gain them back.

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December 2018 Portfolio Update

“Nobody can go back and start a new beginning, but anyone can start today and make a new ending” – Maria Robinson, author 

Cold, like the performance of investments, this year. Credit to Simon Matzinger

Before I start, let me just rant a little about the abysmal performance of this year’s assets.

CRYPTOCURRENCIES

Crytocurrency has fallen from grace. No longer the poster child but an abandoned child as may types of crytocurrencies, across the board, saw their prices plunged. And because of this, everyone is staying on the sideline. 

COMMODITIES

Commodities has encountered a flip-flop years. While prices of commodities generally soared in the beginning of the year, their prices slumped towards the mid-end of the year. This is true for crude oil, in general. Gold is making a strong rally towards the end of this year due to the uncertainties in other asset classes.

EQUITIES

Equity, in general, has been hit by a series of rough patches in 2018. There was a change of government, for the very first time, since the formation of Malaysia. The USA and China are locking horns over, almost everything. And, from what I’ve gathered, many investors are in the red. And, truth be told, I am part of that unfortunate statistic.   

COUNTERCOMPOSITIONAVG PRICELAST PRICEGAIN/LOSS
3A4.82%RM1.178RM0.705(40.18%)
AIRASIA19.44%RM2.82RM2.975.17%
CIMB28.92%RM5.77RM5.71(1.08%)
DNEX-WD4.96%RM0.201RM0.07(65.25%)
EKOVEST7.30%RM1.136RM0.445(60.85%)
EVERGRN4.51%RM0.791RM0.350(55.80%)
MAHSING6.58%RM1.063RM0.915(13.83%)
MALAKOF2.88%RM0.917RM0.800(12.85%)

Cash is at about 20% of portfolio.

Regardless of the trials and tribulations, many of the companies of which stocks I own, are still making the dough. And as the market is being beaten, the share prices of many profitable companies are selling for an absolute discount. Time to be rationally irrational and seize the opportunity.

LOOKING FORWARD
  1. 3A dividend of 2 cents per share; ex-date on 12.12.2018, payment date on 27.12.2018.
  2. AIRASIA dividend of 40 cents per share; ex-date on 12.12.2018, payment date on 28.12.2018.
  3. EKOVEST dividend of 1 cent per share; ex-date on 27.12.2018, payment date on 22.01.2019.

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