My 2017 review

I really like this quote from a book I’ve read this year – The Snowball. It goes like this:

The snowball just happens if you’re in the right kind of snow. It’s not just about compounding money. It’s in terms of understanding the world and what kind of friends you accumulate. You get to select over time, and you’ve got to be the kind of person that snow wants to attach itself to. You’ve got to be your own wet snow, in effect. You’d better be picking up snow as you go along, because you’re not going to be getting back up the top of the hill again. That’s the way life works. He wasn’t looking backwards to the top of the hill, it was a big world, and he was just starting out.

Reading it alone may not mean a lot, but having gone through 600 pages of Buffett’s life, it really sums up the whole book.

For me in 2017, I’m seeing more and more of such a snowball effect.

Business

2017 has a huge impact on my view of the business. The confluence of ideas from various sources including lessons, books and talking to various entrepreneur and businessman proved that my previous thinking was too simplistic. Even with an economy that is slowly turning around, cash flow remains tight in the construction industry. In 2018, I hope to seek efficiency improvements (and cost cutting) from within by focusing on our core competitive advantage.

For my personal business, fundamental scorecard has successfully launched. We will remain focus on adding value to subscribers and effectively utilizing internal resources to enhance effectiveness of each scorecard.

Investment

My scorecard’s performance

In a unfortunate news, google portfolio which I was using to track the results of simulated portfolio based on my scorecard, has cease activity from mid November. I had managed to record my scorecard’s result before its closure.

Portfolio A (11 stocks), based on stocks scoring 5 and above in my scorecard, achieved a result of 35.99% as of the ending date.

Portfolio B (16 stocks), based on stocks scoring 4 and above (which I use as my watchlist), achieved a return of 27.16%.

As of 19/11/17, STI would have returned 17.41%.

Points to note:

  • All returns are calculated without dividend.
  • Every stock has an equal allocation in my simulated portfolio.

Although I’m quite happy with the simulated results, 1 year isn’t long enough for me to make any improvement to my scorecard. From next year, I would be using my own tracking system to record performance of my simulated portfolio.

My performance

Recently, I have read some blogs where the authors were able to achieve astounding saving rate around the range of 70 – 90%. I have nothing but respect for them. My personal saving rate is only around 50% or so.

Unfortunately due to circumstances, I have been, and am still stuck with a below average wage (think take home pay of $2k+). I foresee myself to remain in such a situation for the near future, and thus my capital injection will be limited.

This year, I have only managed to inject a miserable $900 in total for my investment portfolio due to a substantial loan made to a good friend. In 2018, I will resume my goal of injecting $12,000 a year.

STI index has done extremely well this year, returning about 18.18%. I have out performed STI, and I think this might actually be largely due to luck. You can be sure I will do worse in the coming years even as I aim to beat the index.

Year : Result vs STI performance

2016 : 9.25% vs  -0.07%

2017 : 69.77% vs 18.18%

Points to note:

  •  STI results is based on STI opening value for the year, and closing value as of date of post. Dividends are not included. As a benchmark, I am not too concern with the slight difference whether its 21% (STI ETF) or 18% (STI).
  • All results are inclusive of all cash holdings, and any cash injection I have made. No point leaving those out to boost the result since I only answer to myself.
  • I don’t apply XIRR or any complicated forms of accounting. Results are simply a subtraction of current total portfolio value – value at start of year – capital injection, over a total base of starting value + capital injections.

My current portfolio stands at around $150,000 as compared to $90,000 at the start of the year. Next year, I aim to hit $180,000 with a stretch target of $200,000.

I have decided against giving out portfolio composition since my picks are top picks from my scorecard. Giving them away here would be unfair to subscribers. Anyone interested can deduce them from my scorecard’s top 20 – 30 picks. If you are interested, last year’s portfolio does hold some clues as well.

You can’t run a marathon watching others, you have to focus on taking your next step. Look at the cards you have been dealt and plan it out as efficiently as you can. If 2017 hasn’t been good for you, do a review and set your goals for next year. Avoid short cuts and speculative bubbles, stick within your circle of competence, read, learn and listen to quickly build knowledge. Invest simply and with facts. Keep your friends close, family closer and laugh a lot. Be grateful.

That’s what I will be doing in 2018.

 

Wish A Merry Christmas to all,

John (Simple Investor SG)

About the author: Simple Investor SG