The Unforeseen Bull Market and My Shift in Investing Strategy
Choosing not to follow the traditional advice of “sell in May and go away” proved to be a sound decision. Despite June typically being a weak period for the stock market, we saw an unexpected bullish season, with Nvidia leading the way and Tesla not far behind. This contrasted starkly with 2022 when my stock portfolio took a significant hit due to my ill-timed shift from dividend stocks to growth stocks, right at the tail end of the bull market.
As part of my adaptation strategy, I consolidated my portfolio, focusing on stocks that I have greater conviction in. This process led me to reduce my holdings to just eight stocks and one ETF, with Tesla making up 50% of my portfolio. This journey taught me that investing is not about jumping at every promising opportunity, but rather about building conviction and understanding your comfort level.
Developing Confidence and Conviction: The Tesla Story
My interest in Tesla was piqued by watching videos on the YouTube channels of CGS i.e. pakpakchicken and Dave Lee on Investing, which detailed their experiences and insights into Tesla’s prospects. My growing understanding of Elon Musk’s ambitious goals and relentless execution bolstered my conviction, even when Tesla’s price plummeted. Instead of panicking, I used the situation as an opportunity to deepen my knowledge about Musk and the company.
Portfolio Restructuring and Valuable Lessons Learned
Over time, my conviction didn’t waver, and I stayed the course, viewing the portfolio downturn as a necessary phase for time to work its magic. I also learned to resist FOMO during a bull market and the importance of building a solid belief in my chosen investments.
|Total Growth Portfolio value= $399k
Lessons Learned and the Nostalgia of Dividends
Switching my strategy to hold purely growth stocks has been a significant shift from the past, where I derived considerable satisfaction from seeing dividends effortlessly credited to my bank account. Regardless of their size, these dividends represented a form of passive income that I greatly appreciated. It’s like paying to wait, a pleasure that I find myself missing.
The rough ride through a bear market served as a learning experience, making me more aware of my comfort level in investing. The saving grace was that the divestment of my dividend stocks occurred when their prices were higher than their present values. This has allowed me the opportunity to rebuild my dividend portfolio.
Looking ahead, I’ll discuss my plans to update my Supplementary Retirement Scheme (SRS) and dividend portfolio in a separate blog post. Despite the ups and downs, the lessons learned from my journey through the stock market have been invaluable. Not only have they influenced my investment approach, but they have also played a part in funding other ventures, such as my new condo which will serve as a source of additional passive income.
Maintaining Conviction Amidst Volatility and Embracing Life Beyond Investing
I have learned the importance of not being overly anxious about my portfolio’s daily performance. In the world of growth investing, volatility is a price one has to pay. Short-term disruptions like a disappointing quarter or a surge in inflation, which may lead to a 50% drop in value, can actually present opportunities to strengthen positions. During such times, it is your conviction in your choices that enables you to hold on to the stock, add more shares, and remove the emotional component from investing.
The bear market cycle of 2022 was a valuable teacher, emphasizing the importance of investing only in companies I truly understand and the necessity of comprehensive qualitative and quantitative analyses. During those tough times, when Tesla was at its yearly low, I found solace and balance in other passions, like photography. I’ve gathered some photos from that journey which were taken right on my phone. I hope you enjoy the view as much as I did! Please note that the quality may not be as high as the originals since they’ve been compressed.
For those who are interested in following my investment journey more closely and joining me in these learning experiences, you can follow me on Twitter. My handle is @makesmewonder.
Through investing highs and lows and everything in between, I’ve discovered that life’s portfolio is about more than just financial growth – it’s about learning, experiencing, and appreciating the richness of the journey itself. Let’s navigate these exciting waters together!