2018 is behind us and it is time for an annual review of Heartland Boy’s stock portfolio. The metric used to measure the stock performance would be Internal Rate of Return (“IRR”) and the relevant benchmark is the Singapore Straits Times Index (STI Exchange Traded Fund). Having a benchmark is important as it allows Heartland Boy to track and compare his active investment strategy. Heartland Boy will also be including his cash component when calculating his stock performance. Returns will include both realised and unrealised transactions. Without further ado, let’s get straight down to business.
Historical Stock Performance Of Heartland Boy
From the table shown above, 2018 was a disastrous year for Heartland Boy. It was his WORST annual performance in his 5 years of investing. This severely negated all the good work done previously. As a result, his overall XIRR since beginning 2014 stands at a negative -0.01%. He would be better off holding cash and gorging on Netflix, Disney+ instead. Here is the detailed breakdown of the individual equity counters that contributed to his set of disastrous results in 2018.
2018 Stock Performance Review Analysis
Now that the report card has already been handed out for some time, which Heartland Boy evaluated himself with an ‘E’ grade, he finally has time to cast his emotions aside. Here is his cold, hard analysis of the investing lessons learnt in an eventful 2018.
1. Don’t Be So Careless
Heartland Boy committed a cardinal sin which pretty much summed up his 2018 portfolio returns. As he often alternates between DBS Vickers or Standard Chartered as his brokerage platform, he made the mistake of selling a stock on the wrong platform. As a result, he short sell stocks that he did not own and the entire drama itself warranted a blog post on its own.
In short, he never recovered from this morale-damaging mistake.
2. Too Trigger Happy
In the first half of 2018, Heartland Boy was still riding high on confidence owing to the relatively solid 2017 investment returns. This optimism gave rise to a false sense of infallibility and led to impulse purchases such as Ascendas Hospitality Trust and Hock Lian Seng. These stocks were subsequently sold a few months later without triggering their respective stop-loss orders. This was poor portfolio management on his part. Worse, such frequent transactions all added up to unnecessary brokerage commissions and distractions.
Therefore, he is reminded by one of Warren Buffett’s core investing philosophies– to only swing the baseball bat a few times.
3. Did Not Cut Loss When Stop-Loss Orders Were Reached
On 5 July 2018, Heartland Boy’s portfolio experienced a black swan event of sorts. The government announced fresh cooling measures to the Singapore residential property just when a firm recovery was occurring. On the next trading day, equities exposed to the Singapore property market took a nosedive, sinking anywhere from -5% to -17%. Obviously, stop loss orders for APAC Realty and Roxy Pacific were triggered. However, Heartland Boy did not have the courage to react. In other words, he did not have the discipline to follow through on his investment strategy. He comforted himself by thinking that it was a knee-jerk reaction by the investment community. However, he was very wrong as the decline continued not just for the next few days, but the next few months as well.
Yet, he remains steadfast in his analysis of Roxy Pacific and APAC Realty today. For instance, he has been tracking the sales of Roxy Pacific and it has done really well so far. It is sitting on huge profit margins for the projects sold in 2018 as these land plots were purchased back in 2016 and 2017 before the en-bloc furore. Likewise, some developers have responded in this tepid market by increasing the commissions for property agents to drive more sales to their projects. Coupled with the tons of liquidity generated from the en-bloc craze, Heartland Boy believes that these continue to bode well for APAC Realty. He is hoping that his investment thesis will eventually bear fruit, although it could take considerable time for stock market sentiments to turn for the better.
Conclusion of 2018 Stock Performance Review
That’s it for the review of his stock performance in 2018! It is really quite disheartening because such a poor performance inevitably sets Heartland Boy’s dream of achieving financial independence by the age of 40 back considerably. However, this is also not the time to cry over spilled milk. The lessons learnt in 2018 will be ingrained in his memory forever and be put to good use in the future.
Btw, 2019 is supposed to be a good year for dragon babies! Huat ah!
Real life example of compounding investment return is never same as compounding interests.
haha, true uncle jacob!
Interesting to see this brutally honest review. Maybe just buying some diversified passive index would have been less stressful and get better results?
haha, it’s always better on hindsight isn’t it? i would still like to have a go at active investing to see if i can truly outperform the benchmark over the long run
Take heart, Alison. In the days, when even George Yeo, then Foreign Affairs Minister, talked about the gargantuan of China rise, I too took the plunge -FOMO! to ensure I too will benefit from its rise. I bought China Hong Xing for 20 lots then for $40+ K. Haha… it disappears from market and is still suspended today.
Hi, even after factoring dividends, your portfolio after a few years is still negeative -0.1%?
Yes, i have factored in dividends. it is what it is, so definitely got to improve!
The Boy who Procrastinates says
Thanks for sharing an honest review of your portfolio!
I guess those invaluable investing lessons would be the greatest and important takeaways we can have from 2018.
Thanks! Hope you didnt have as bad a year as i did!
Thanks for sharing your honest reviews.
Don’t really encourage buying IPO stocks (APAC) unless they are tech or cheap. 90% of IPO stocks drop below IPO price for the first year. Reason being
a) Entrepreneur wants to sell at the highest price per equity. Shareholders are left exposed to overvalued shares if the company does not perform. Even if they raise capital and have lofty growth plans, it will take 2-3 years to start bearing fruit from building of factory/mall to starting production and reaching 100% utilization rate.
On a case by case basis, tech stocks are slightly different if money is used to build sales teams and already have the existing infrastructure/server to support growth.
b) Watch out for escrow. Usually within the first year of an IPO, Pre-IPO shareholders are looking to cash out as they gotten the shares cheaper than IPO price. Most are rarely disciplined sellers and would just dump it in the open market, causing a crash.
From APAC’s case, i see it is likely caused by the Tan Choon Hong (Non-Executive Non-Independent Director) declaring to have disposed 668,071. CEO Chua Khee Hak also bought 311195 shares back in Jul 2018 seeing the drop and later disposed his positions at a loss in Sept 2018. And again buying 20000 shares march 2019 and holding it at a loss. Makes me wonder what this CEO is doing trading his own counter? Does not seem like a prudent investor and not a very good speculator/trader too just by looking at this trades alone..
thanks for highlighting the insider trades, didnt pay much notice until your comments!