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Thursday, January 01, 2015

Investment Strategy for 2015

2015 is expected to be more or less the same as 2014, at least according to experts out there. GDP growth will be muted and the S'pore economy will experience growth but not a lot. In this environment, it will be difficult to have a board based kind of rally we have experienced a few years back after the financial crisis, but rather stock picking on selected stocks which might outperform others in this market.

Therefore, my portfolio strategy for 2015 will be as follows:

1. Look for deep value stocks and overweight them. This strategy has served me well in 2014 and I will continue with this strategy. I have not avoided the downturn in commodities and oil related counters in 2014, but the overweight and focus on value stocks had somewhat allowed me to reduce the volatility of my portfolio. Many stocks in the property sector, finance, retail and hotel stocks are in this category.

2. Reduce/Eliminate underperforming and overvalued stocks. I will adopt this new strategy for 2015 as I need to reduce some of these stocks and realize some cash and also reduce the number of stocks in my portfolio. Of course, it must make sense to sell underperforming stocks such that I don't pay high brokerage as some of these stocks might not be meaningful to sell, since you would end up paying brokerage only and left with nothing. For overvalued stocks, it will be on a case by case basis as not all overvalued stocks in my portfolio need to be sold. Some of these are growth stocks and they might be able to outperform the market even with their high valuation. Of course, I will continue to monitor the progress of these stocks and will not eliminate them immediately. Rather, I would short-list them first and monitor well before taking action. I might adopt a strategy of reducing my holdings in them first before selling them off completely, if I am not sure whether it makes sense to eliminate them completely.

3. Reduce the number of AGMs, EGMs etc. I have been a full-time investor for 3.5 years now and had attended quite a number of AGMs since I turned full-time. Therefore, I had a good idea on how some companies in my portfolio will perform as I am quite comfortable with their business model and the main people behind those companies. There is no need for me to attend a company's AGM and EGMs every year and I would rather focus more time on my portfolio. Having said that, attending AGMs is still an important part of my overall investment strategy and I will not discard it. However, due to the fact that I am working alone and it is sometimes quite hectic travelling from one AGM venue to another in a single day, I would have to reduce the number of AGMs that I will be clocking for one year. I will not have an official target on how many I will attend this year, but it will be definitely lesser than the previous few years.

4. Keep healthy. I have fallen sick a few times last year and that resulted me in missing a few AGMs. I will go for quality rather than quantity this time round, with ample rest in between AGMs. As you might have known, AGMs sometimes come together especially during the period in April whereby there are so many companies holding it. I would have to pace myself better this time round so that I won't get to miss some interesting AGMs that I wish to attend. Investment is a marathon, not a sprint. It is ok to miss some meetings but I must take care of my health so that I can last this journey. The medical expenses for falling sick will also reduce my investment capital so it is not worth it.

5. The usuals. I will be interacting with my investment groups, read up on investment books/periodicals, participating in scrip dividend schemes and rights issues, look out for M&A deals etc. Yes, the usual activities that had served me well throughout my years as an investor. I will also attempt to attend some investment seminars this year.

All said, I wish all of you readers out there many more returns and a profitable 2015.

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17 Comments:

Blogger Benjy Tan said...

Hi!I have just retired and have more or lest become a full time private investor just like you. Hope to one day meet you at one of the AGMs & EGMs that I attend nowadays. The trouble with being an online investor is the lack of interactions and social contacts with other like-minded investors to bounce and share ideas on the trading and different investing strategies.

Basically I 'm into investing for passive income to sustain my expenses in my retirement years.

7:10 PM  
Blogger ghchua said...

Hi Benjy,

Great to hear that you are embarking on a full-time investor journey. I wish you all the best in your journey.

I think if you attend AGMs and EGMs consistently, you would have met some like-minded investors and you can share investment ideas with them. Some of these investors are quite friendly and willing to share, though I do encounter some hostile ones which are just there to put me down. I normally ignore those hostile ones and make friends with those that are sincere and interested in sharing ideas.

Hope to see you around at AGMs! :)

11:10 PM  
Blogger Joel Keh said...

Health is wealth ghchua, hope your strategy is profitable in the coming year as well!

7:07 PM  
Blogger ghchua said...

Hi Joel,

Thanks for your best wishes. :)

8:29 PM  
Blogger Eng Fong Lau said...

hi GH, i am in a similar industry like you - IT and still in it. I am a few years younger than you and contemplating to do the same thing as you i.e. leave the IT industry and turn to investing for full time. However for me, my kids are still young and returns in the investing world can be quite inconsistent. May I know how are you faring so far? Can you make returns consistently? Appreciate your reply, thanks.

11:05 PM  
Blogger ghchua said...

Hi Eng Fong,

I guess if you want to do investing full-time, you must not quit your job and immediately step into it. Rather, you should be doing some part-time investing on the sideline while holding onto your full-time job. Only when you are experienced and comfortable enough in your investing results and then you can make the switch over.

Also, you need to build up your start-up capital for investing before going full-time while working. Start-up capital is really like starting up a business. You need at least a decent capital to start, and I recommend at least $500K or more if you are serious about it. Too little and you might not be able to do much even if you have double digit returns.

Yes, returns from investing can be inconsistent but you can have a buffer by having invested in a diversified portfolio of companies. Though dividends might varies every month, it should still be able to offset your monthly expenses on a whole.

As I've said, I didn't exactly compute my returns every year but I roughly know where I stand. My dividends from my portfolio is able to offset my expenses for the year. Last year was not too good as my portfolio value is roughly the same as the previous year. But it doesn't mean I made zero return as I didn't re-invest all my dividends. Some of it had been spent on my expenses and therefore on a whole, it is still ok.

Having said the above, my portfolio has grown since I turned full-time 3.5 years ago. I guess from my top holdings list every month for the past few years, you should roughly have an idea how much my portfolio had grown throughout the years.

12:27 AM  
Blogger Destiny said...

hi GH,

I am a newbie in stocks investing & greatly inspired by your blog & investment activities.

Need some advise.
Where can you find the calendar for all listed companies' AGM, EGM etc? I am keep to attend. Thanks. TY

3:19 PM  
Blogger ghchua said...

Hi Destiny,

You can find the list of AGM, EGM dates at SGX website:
http://www.sgx.com/wps/portal/sgxweb/home/company_disclosure/meeting_schedules

9:26 PM  
Blogger Seth Seth said...

Hi GH,

I will like to check if you are keen on any collaborations.
Will appreciate if you can drop me an e-mail at seth@summitmy.com so that we can discuss further.
In the meantime, you can check out my website (http://fgsasia.com/) and (www.summitmy.com)

Look forward to receiving your e-mail.

9:09 PM  
Blogger K said...

Hi GH,

Thanks for sharing your portfolio/views. I have a similar background as you; age and "tired of the IT/engineering industry".

I have collected a range of stocks over the years but have not actively managed them.

Would you be making any significant changes to your portfolio given the forecast of the oil prices in the next 18 months.

Thanks.

5:43 PM  
Blogger ghchua said...

Hi K,

I don't think I will be making significant changes in my portfolio due to forecast of oil price. If you look at my top holdings, only Keppel Corp in my CPF Investment is deem as a oil related stock. All the others in the list are not involved in the sector.

My strategy in managing my portfolio is not to react based on market noises. I believe that oil price is just one of the variable components in which there are obviously others as well such as currency movements, government policies etc. There are too many unknowns which affect the markets which makes it difficult to predict.

So, just stay safe, invest in undervalued stocks, diversify and collect dividends along the way. Of course, I do make minor adjustments as and when it is necessary but that is because of portfolio decision rather than reaction to market news.

1:12 AM  
Blogger David said...

Hi GH, happy new year to you. I have been following your blog for a long time. Please take care of your health. Hope to read more of your thoughts on stock picks (e.g. overvalued/undervalued) and your AGM reviews in future.

7:35 AM  
Blogger ghchua said...

Hi David,

Thanks for your comment and happy new year to you too.

Indeed, I would love to share more of my thoughts on stocks but I will do it more like a monthly portfolio update rather than a post on individual stock, unless there is something really interesting. I certainly hope to cover more new companies in the new year but might have to slow down my pace as I am attending too many AGMs.

Will definitely pace myself better in this new year.

9:57 PM  
Blogger Everlearning said...

Hi ghchua,

I just got the computer fixed and working. It is just hard to tell when and how long it can last. Anyway, it is nice to be able to comment in your blog again.

Thanks for sharing your investment strategies with your readers. I have always enjoyed and agreed with your views. I think I am not very well-versed in equity investment. But, somehow, this is the one that gives the best dividends thus far.

The Lunar New Year is approaching. May I wish you a happy and prosperous Chinese New Year. I am looking forward to the reunion dinner this year, meeting up and feasting pot-luck dinner with my loved ones.

11:22 PM  
Blogger ghchua said...

Hi Everlearning,

It is always good to hear from you again.

Wishing you and your family a happy and prosperous Year of the Goat.

8:01 PM  
Blogger honweng said...

Hi GH,

Please take care of your health as well.

HW

11:16 PM  
Blogger ghchua said...

Hi HW,

Thanks for your best wishes. Indeed, I have take note of it and cut down on my number of AGMs to attend this year. So far, I haven't visited the doctor this year so I think my action plan had worked.

7:42 PM  

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A self-directed investor, looking to invest for retirement needs and bypass all those expensive financial planners/insurance agents. Investing is fun, profitable or most important of all, knowledge gained is useful for the rest of your life!

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