The Year Ahead - Review/Reflections for 2010 and Investment Strategy for 2011

2010 had been a decent year for stock market investors, though not as good as 2009. It has also been a stock-picking year and investors had been rewarded handsomely if they had picked the right stocks. Personally, for my portfolio, I had done quite ok this year. So, here is my review for 2010.

What has done well:

1. Adopt value investing strategy and overweighting undervalued stocks. I had bought in more small and mid cap value stocks this year, while also adding onto existing ones. This strategy did paid off in the 2nd half of the year as STI peaked and the market re-rated some of these value stocks. The downside of this strategy is of course, being unable to participate fully if growth stocks rallied further.

2. By avoiding IPOs and participating in rights issues, I had been adding more into existing stocks rather than introducing new ones. Rights issues are normally priced at a discount from the market, and I managed to add onto some of my core existing holdings like MapleTree Logistics Trust, Ascott REIT, First REIT etc via excess rights shares as well.

3. Minimize sell trades. I have only done one sell trade this year and that reduces turnover rate of the portfolio and in turn reduces brokerage costs.

What has not done well:

1. Only attended a few AGMs. I started the year aiming to go for more AGMs, but it didn't turn out well as I was occupied with work.

2. Less time to go through annual reports. I did not allocate more time to go through some of the annual reports this year and as a result, I didn't finish some of them. I also did not have a system to keep track of those reports that I had not finished going through, until I realized it when doing some random checks.

3. Minimize buy trades. I had a lot of buy trades in different stocks at different times throughout the year and that had got to do with limited budget and dividend payouts at different times. I might want to reduce these small buy trades to save further on brokerages.

Investment strategy for 2011 - I do not like to predict where the market will move. Rather, I would like to position my portfolio accordingly so that it can adopt to different market conditions. I had been positioning my portfolio defensively since the 2nd half of 2010 and will continue to do so in 2011. I suspect 2011 will also be another stock-picking year whereby stock selection will play an important role. I will continue to overweight companies that are undervalued, delivered good cash flows and reward shareholders consistently. Rights issues had been one of the strategy that I adopted in 2010 and I will continue to apply for excess rights shares on selected issues in 2011. I may also want to add onto some of my STI component stocks in the portfolio if opportunity presents itself.