A Consolidation of Different Thoughts

Dear Readers,

It has been some time since I wrote my last post. Thus, I will be consolidating many of my thoughts over this time in short articles below in this post.

Happy Investors Despite A Bloody Market

Picture taken from Moltey Fool
STI had went down from over 3100 points to the current 3045 points as of today. Although you still seem to notice people stating that they had exit the market with “many bloody wounds”, but its seem that there are also many people looking forward to this drop.

For myself, I basically went through excitement, panic and indifferent in a few days. Since then, I have stayed indifferent to all the market downturn as I felt maybe there are still many people looking to enter the market.

On the other hand, my portfolio has since dropped about over 6.5% since 26 Dec 2017. This is almost similar with the drop in STI ETF (including dividend). In any case, I am still not performing better than the market. But I believe I will get there.

Anyway, I have added a tab where I will be updating my portfolio performance on a weekly basis for my own tracking. You can see how the performance of my portfolio changes over time.

Summary of Big Ideas Investing Theory

As for the Big Ideas Investing Theory, the following is a short review of what have happens to the companies:
  • Big Idea 1, 2, 3, 5, 7, 8, 9, 10 – Remains in the portfolio.
  • Big Idea 4 and 6 – Sold Fully (read it here)
  • Big Idea 11, 12, 13 – After selling the Big Idea 4 and Big Idea 6, I had re-deploy some cash into these 3 big ideas. Big Idea 11 is an existing company in my portfolio that has been upgraded to a Big Idea. Big Idea 12 and 13 are new additions. I will be writing about these companies in due time.
Currently, there are 11 different companies within the Big Ideas Investing Theory and contributing to over 65% to 70% of my portfolio.

Diversification in Strategy, not Companies

Picture taken from mnacritique
This was something I shared during the last seminar organised by IN.

Previously I use to have over 25+ companies. In my view, that was one of the way to diversify being a value investor. Do note that I was having a smaller warchest to invest with at that time.

After creating the Fundamental Scorecard Website and being somehow influenced by Simple Investor, I decided to consolidate my portfolio. I sold many companies in my portfolio despite making losses.

Even with lesser companies in the portfolio, I still managed to diversify my portfolio via different strategies.

If you have read about the Fundamental Scorecard website and Moat Scorecard via IN, you will know that Simple Investor and I had create 3 different scorecards using 3 different investing style.

By understanding the theories behind each investing style, I am able to diversify simply by investing in the companies that passed each scorecard method. 

When I Sell

Similarly, during the seminar, someone also asked us a question of when I sell. For me, the answer is simply selling the number of shares that is on and above my core holdings of the company, assuming nothing fundamentally has change, when the share price increases above my intrinsic value.

For example, I have 5000 shares of core holdings for Singtel at 3.40 and I believe the intrinsic value of Singtel is $3.40. When the share prices falls drastically to $3.20, I bought an excess holdings of 3000 shares in Singtel. When the share price rises to $3.50, I sold all my excess holdings of 3000 shares of Singtel. In this way, my core holdings’ average share price will eventually get lowered every time I buy below my intrinsic value and sell above m intrinsic value.

Buy Core Holdings: 5000 x 3.4 = 17000
Buy Excess: 3000 x 3.2 = 9600
Initial Average Price: 26600 / 8000 = 3.325
Sell Excess when Share price Rises = 3000 x 3.5 = 10500
New average price = (26600-10500) / 5000 = 3.220

Furthermore, I will sell all my holdings of a company, including core holdings, in the event (1) Fundamentals has change, or (2) New and BETTER Opportunities Arises.

Basically, that's all my thoughts for now. I will be writing about the new big ideas in the next few posts. 

I hope you look forward to them. Thank you for reading.

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