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2020 Year in Review
In this week's edition, I am reviewing my year from an investing perspective. I will take a look at how my portfolio performed over the course of the year, list some of the things that I have learned during the past year and some of my goals for 2021. I have already reviewed my portfolio returns for December 2020 if you have missed it. Note that all returns quoted in this edition are based on data at 31st December 2020.
My returns for my first year were 33.9%. When I say year, I really mean from June onwards (7 months) as this is when I properly started to invest and established my current portfolio. If you had offered me these returns when I started I would have snatched your hand off.
Interestingly, my Compounded Annual Growth Rate (CAGR) for the 7 months was 125.9%. CAGR takes into account the timing of the cash invested in the portfolio and is favourable to me as I Dollar Cost Average (DCA) each month. Of course, this is such a short time frame that the result is distorted and of little relevance. Moving forward this will be a more meaningful indicator of my portfolio performance in the years ahead.
On reflection, I would have loved to have started around March or April (who doesn’t wish they had started earlier) for two reasons:
After the crash there was a hell of a lot of bargains to be had during this time and I could comfortably be sitting on double my current returns.
This would have been my first experience with a proper crash and it would have been a really good test of my mindset. Would I have continued to hold and buy on the way down or would I have got spooked and sold out. I’d like to think the former!
Here are my top 5 returns on a DCA basis:
NIO $NIO +310%
Cloudflare $NET +68%
Sea $SE +44%
Brookfield $BEPC +33%
Hasbro $HAS +28%
I adopt a DCA method to investing which means I invest a regular monthly contribution and add to my winning stocks each month.
Here are my top 5 returns based on a single investment:
NIO $NIO cost per share $8.98 +443%
NIO $NIO cost per share $14.40 +238%
Cloudflare $NET cost per share $39.00 +94%
Sea $SE cost per share $102.80 +93%
Fiverr $FVRR cost per share $129.50 + 50%
Here are my top 5 worst returns on a DCA basis:
Gan $GAN -18%
iRobot $IRBT -5%
Walmart $WMT -4%
Facebook $FB -0%
Realty Income $O +1%
Of these worst returns I do not have any regrets in buying and I have no intention of selling any of them. I still believe that better days lie ahead. My only regret is not adding to them when they were trading at even lower prices. For example, my cost basis for GAN is $24. When the price dipped below $15 (went as low as $13s) I should have doubled down because the investment thesis had not changed in any way and I still believe in the company.
What I Learned
Play the game by your own rules
Lots of people are out there investing. However, no one is investing under the exact same environment and constraints as you. The best piece of advice I could give any investor is to write down your investing goals and strategy. This will help you to execute investing activities that will get you to your goal and not have you swayed by what somebody else on Twitter is doing. Establishing this blog has massively helped me in doing this.
You can’t own them all
There is always going to be a shiny new stock that has got all of the hype and appears that it can do no wrong. Don’t get dragged into this type of bandwagon investing. Do your own due diligence and remember that quality is better than quantity. If you really want to own them all then maybe invest in an ETF.
There will always be someone with a better return than you
This is linked into point 1. There will always be someone out there with better returns than you so do not compare yourself to others as they are playing a different game to you. It serves no purpose other than have you make impulsive decisions and copy cat investing.
Don’t chase stocks
When you have done your research and due diligence on a stock that you like it can be easy to just jump on at the current price. I learned this with GAN. I saw the price going up and up so I ended up buying at the highest point just before it pulled back. After this I decided to study technical analysis particularly trading volume to allow me to make better entry points in the future. Just remember that there will always be a pull back or period of consolidation, no matter what stock we are talking about.
Winners keep on winning
When you first invest in a stock and see it do really well it can be a conflict of interest. I want to add more but I don’t want to dilute my beautiful return %. This is something you really need to get a handle on. No one cares about your return on an individual stock. Winners keep on winning and this can be proved in top 3 returns YTD in my portfolio:
NIO $NIO - I added in two tranches
Cloudflare $NET - I added in two tranches
Sea $SE - I added in four tranches
Social media often gets a bad rep (for justified reasons) but the small corner of Twitter where #fintwit resides is a wonderful place. I have had the pleasure of interacting with and learning from some of the best investors out there. So many people share their thoughts and ideas for free. Be a sponge and absorb everything. I’m not saying take things as word for word but use all of the free information and analysis available to point you in the right direction when performing your own due diligence and analysis. Some of my favourite posts from the community over the past year include:
Goals for 2021
Become a better investor than I am today
I am far from the finished article and in the grand scheme of things I am a novice. I never want to stop learning. The day I stop learning is the day that I stagnate. From emerging trends to technical analysis, I want to keep building my knowledge and challenge myself to be a better investor.
Keep dollar cost averaging
No matter the prevailing market conditions or environment, I want to keep contributing to my portfolio each month. Consistency is the key to building long term investing returns.
I set up this newsletter at the beginning of November and have been writing weekly ever since. I want to keep this up and continue to provide content that challenges me to be a better investor but also is of value to everyone that reads it and helps you on your own journey.
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Wolf of Harcourt Street
Disclaimer: I am not a financial adviser and I am not here to give specific financial advice. The opinions expressed are for general informational purposes only and are not intended to provide specific advice or recommendations for any individual or on any specific security or investment product. The information is based on personal opinion and experience, it should not be considered professional financial investment advice. There is no substitute for doing your own due diligence and building your own conviction when it comes to investing.