2021 seems like a continuation of 2020, with the world still dominated by Covid 19. End-Dec is usually the time that I travel overseas to take a break from work for about two weeks. This time round, I didn’t make any travel plans due to the uncertainty in travel restrictions. While being stuck in Singapore for two years, I built better habits and spent more time on reading books, especially on self-enrichment and investing.
Although the year didn’t end well for growth investors like me, I did learn many valuable lessons and did some reflection on my progress so far. Many of the small caps growth stocks which are unprofitable (despite positive free cash flow) got heavily beaten down since last month, and that plunge in share prices almost wiped out all my gains for the year. Moreover, I sold my value stocks at the wrong time. Had I kept all of them through the year, my returns would have been much better. Yet, hindsight is 20-20, so there’s no way to time the market or predict when Jerome Powell changed his stance on inflation. What matters most to me this year is that I have a clearer direction on my investment strategy based on my risk tolerance and time frame. At this juncture, dividends do not matter that much to me, and I have about nine years to ride the volatility. So, when growth stocks are selling down in such a time as this, I took the opportunity for me to buy on dips.
With the new day comes new strength and new thoughts, and the same can be said for a new year.
(1) Reduce my stock count to 20
Previously, I have reiterated that I will be reducing my stock count to 40 by 2021 and 25 by 2022. As of yesterday, I managed to bring the stock count to 38 after deciding to close my HSBC HK account and so I sold those share in the account i.e. BYD, Sunny Optical and some Alibaba HK shares. As for Tencent Holdings, I will do a transfer to Interactive Brokers. Although I still love all my 38 stocks and believe they have a huge growth runway, a hectic 2021 has taught me that I lack the commitment to monitor so many companies. So, I will gradually be reducing the counters to the range of 5 to 10 in the coming years. I will be focusing on companies that can do a 10X in 10 years.
(2) Grow my Options Income to $12k/year
I started writing options in Oct 2021 and have been generating profits of $800-$900 per month. Currently, I am doing Out of The Money (OTM) cash secured put options and covered call options on Nio, Palantir and Tesla. Since my dividend income will be negligible next year onwards, option income will be a good supplement and at the same time, getting paid to wait. Since the profits are relatively small compared to the size of my portfolio, I won’t be including in my total portfolio gains.
(3) Read 5 Business Books
Even Warren Buffett agrees that the key to success is reading. While I was taking public transport to and fro, I made use of that lull time to read value investing books. While I would not say that I am already an expert in the field of investing, I have some fundamental knowledge in analysing financial statements. So for the fresh year of 2022, I will focus on reading business/marketing books to understand the business cycle and even to understand the mindset and practices of excellent CEOs, especially CEOs of the companies which I am investing in. This helps to further build my conviction in these companies and confidence to hold the stocks during bad times.
We are just hours away from 2022 and it’s raining heavily outside, so here’s wishing you a cosy year filled with much love and warmth and good things coming your way!
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