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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May 2018 Portfolio Report

Since the last update, March 2018 Portfolio Update, my portfolio has shrunk significantly; losing almost all the gains made in the past years. This is largely contributed to the events leading up to the election and post-election. Understandably, investors, especially foreign  ones, are jittery about a change of government; the first Malaysians have seen.

sarawak State Legislative Assembly
Sarawak State Legislative Assembly. Credit to http://www.thenational.ae

Companies seen to be close or somehow related to the former government were hit the hardest. Arguably, I hold shares in two of such companies: Ekovest and CIMB. I’ve sold SIME, without much of a gain or loss, to purchase Mahsing.

COUNTER COMPOSITION (%) AVERAGE PRICE LAST PRICE GAIN/LOST (%)
3A 6.53 1.18 0.945 (19.81)
AIRASIA 30.70 2.80 3.22 15.08
CIMB 26.17 5.78 6.12 5.60
DNEX-WD 9.69 0.201 0.135 (32.98)
EKOVEST 9.71 1.136 0.585 (48.53)
EVERGREEN 5.93 0.791 0.455 (42.54)
MAHSING 3.97 1.10 1.09 (1.19)
MALAKOF 3.18 0.917 0.875 (4.68)

Portfolio gain is at 6.29%.

If you have suffered the same fate as I did, try not to dwell in the past. I believe that market jitters would eventually succumb to the competency, accountability and transparency policies, championed by the new government. We can only hope that the new government will make good on its election promises.

As for now, the market is significantly cheaper, especially many mid cap stocks. Hence, how you act upon this will determined the success of your investment.

Looking forward
  1. Malakoff dividend (3.7 cents per share); ex date on 14.05.2018, payment date on 01.06.2018.
  2. Airasia dividend (12 cents per share); ex date on 12.06.2018, payment date on 13.07.2018.
  3. Evergreen dividend (1.38 cents per share): ex date on 30.07.2018, payment date on 17.08.2018.
  4. Mahsing dividend (6.5 cents per share); ex date on 12.09.2018, payment date on 27.09.2018.

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