Looking back and taking stock

As we are approaching the end of another year, I think about the roller coaster rides and ask myself whether I could have done better.

I had been probably waiting for a correction like what happened in the later half of the year for four years. It was a case of increasing opportunity cost as the wait lengthened. At a certain point, I actually decided to stop waiting and bought some shares for income. After buying in Dec 2014, the market rallied and peaked in April before the sharp correction came in August. I regretted a little, but learnt an important lesson -- always be consistent in a strategy. If the strategy is to wait, then wait. If the strategy is to stay invested, then stay invested. I wavered and switched strategy while waiting and got a little burnt.

I used to time-the-market. I told myself that as long as I sit out and wait, one day I will catch the boat (the market crash/major corrections). My patience paid off and I caught the boat a few times, and I thought that it was the way to make money. I missed a few other boats too. What I realised this year is that time-in-market is a much much better way to make money. What I did was to continuously buy on every 5% dip or when a share price reaches a new low, but I stucked to just one strategy. I spent lots of money though because sometimes it feels like catching a falling knife.

Fortunately, because I had been waiting for two to three years, I had the warchest to spend. Unfortunately, I feel a little broke now. Some companies' prices were still higher than they were three years ago even after the market correction. It is really hard to time-the-market. Who will know the oil price will drop so much? What will think that the China market will crash by itself without impacting the rest of the world that much? Who will know that European Central Bank (ECB) will actually have negative interest rates? It is a crazy world.

After going on a spending spree, I have 20 different share counters in my portfolio now. Before that, I only had 4. My overall portfolio market value is negative though, -12%, but I am getting about 6% yield for it. The yield rates range from 1% to 10%. I decided to build my own "index fund" with a wide-range of businesses, but only selecting those I like. I cherry-picked the companies that I like and belong to the Straits Times Index (STI).

I still feel the need to have sufficient warchest to buy more if the market crashes anytime soon. After factoring in the additional income from half a year's work and the dividends collected from the new shares, I probably still have some buffer to buy a few more shares if they are really worth it.

Warchest allocation ratio based on a fixed sum.

Snapshot of portfolio distribution from CDP in Nov

Overall, I am quite satisfied that I had the guts to buy when market sentiment is bad. This gut feel is always backed by my own stock reviews (detailed analysis of the financial reports) and knowing that my warchest is sufficient, i.e. if the market crashes 40% tomorrow, I still have the money to buy even more.