Heartland Boy 2023 Stock Performance Review

The time has come for me to perform my annual stock investment portfolio review. If someone had told me at the beginning of 2023 that major US indices would set fresh record highs, I would have immediately dismissed that as wishful thinking. Well, the only thing I am wishing right now is that I had allocated more of my portfolio towards equities in 2023. Then again, this is clearly hindsight bias.

Since 2022’s stock performance review, I have resolved to switch to a dollar-cost average (DCA) strategy via the Endowus platform. This is automated and probably one of the most cost-effective ways to invest passively. As such, I made little to no active investments except for opportunistic purchases in 2023 (more of this later). Nonetheless, a large part of my portfolio consists of legacy assets inherited from the active stock picking strategy of my past. This review will reveal that the general market has outperformed my active portfolio once again which affirmed my decision to gradually pivot towards a passive investment strategy.

Heartland Boy Stock Performance vs STI

I use XIRR (consisting of both realised and unrealised gains/loss) to track and measure my stock performance. My XIRR returns for Year 2023 was +19.9%, significantly above the benchmark Straits Times Index as shown in Diagram 1. While it looks impressive against the STI, it still pales in comparison to the S&P 500. Do also note that my portfolio performance on Endowus is not reported here since it will simply be market level returns.

Since I started investing in 2014, my running track record stands at 2.6% XIRR. Not very impressive at all considering the time and effort that I have put in. Given such a track record, I have significantly reduced the time spent on prospecting stocks in 2023. Don’t be mistaken, I am not completely out of the market as I still see investment as an important tool to achieve FIRE and fight off inflation. I still invest regularly via Endowus with a DCA approach as aforementioned.

Diagram 2 is a summary of all the investment transactions that I have made in 2023.

This is how to interpret the table:

• Profitable transactions are in green while non-profitable transactions are in red
• Prices with a range indicate the lowest and highest prices that I have paid/sold. Similarly, dates with a range indicate that the transactions were conducted over a period of time
• Those with last price and last date are investments that I will be carrying forward into 2024
• Dividends or any part cash/scrip paid are not indicated in the table

At first glance, the number of winners and losers in my portfolio are quite evenly split. The good news is that those counters in green carry far greater weight in my portfolio and this sizing strategy has allowed me to beat the STI this year. Here is a short commentary of my portfolio’s performance in 2023.

1. United Hampshire REIT and Keppel Pacific Oak US REIT

When the Fed was furiously raising interest rates throughout the majority of 2023, REITs became the bane of the town. Investors began to realise that their DPU would be crimped by rising interest rates if capital management had not been handled well by the REIT Managers. US commercial real estate was in a particularly terrible state as a rising interest rate would compel valuers to affix a higher capital rate when discounting the future cashflows of the assets. As such, a decline in the valuation of these deposited property became inevitable. The domino effect of this is a potential breach of financial covenants and contravening of MAS guidelines. This was exactly what happened with Manulife US REIT and this spooked many retail investors.

Against such a doomsday context, all S-REITs with heavy exposure to US commercial real estate suffered massive price declines. I sensed an opportunity and carefully navigated the murky waters by adding Keppel Pacific Oak US REIT and more United Hampshire REIT into my portfolio. I thought they were being unfairly punished by Mr Market especially when I felt that their solid fundamentals should help them weather through this storm. Even then, my thesis was severely tested when their prices plunged a further 30% from my purchase prices. Thankfully, I stuck to my conviction, and this turned out to be the right move as their prices quickly recovered once the Fed indicated that it was done with interest rate hikes in the current cycle.

2.Uni-Asia

With retaliatory attacks by the Houthis on ships passing through the Red Sea and the ongoing drought at Panama Canal, shipping freight charter rates soared in late December. Sensing an opportunity, I made a return to a previous stock in my portfolio, Uni-Asia. As an owner of dry bulk carriers, I thought that it might be a beneficiary of rising charter rates. As this opportunistic purchase was made late in December, time will tell if this eventually pans out well.

3. Rex International

In 2022’s stock performance review, I stated that I was undecided on REX. This has changed since as I got increasingly concerned about its corporate governance. I am also very uncomfortable with the high salaries and recent investments. Therefore, I have begun the gradual process of paring it down in 2023. I will continue to capitalise of moments of euphoria when they arise in 2024 to eventually axe it completely from my portfolio.

4. Lion-OCBC Securities Hang Seng Tech ETF

I must admit that China had surprised me once again with how ruthless it can be when it comes to policy making. It killed the private tuition industry and it now looks like online gaming is heading towards the same direction. Even Adam Khoo came out in late Dec to indicate that he is done with Chinese tech stocks.

If I need to raise cash to purchase a bigger house in 2024, I would have to trim down my exposure to Chinese tech sector (which I hate to).

5. SEA Limited

In 2022, a friend of mine told me that he sold SEA Limited around the $70 range as he couldn’t see any further upside. This turned out to be a wise decision as 1 year on, its share price had halved again. I continued to hang on but going into 2024, its fate will be intertwined with how much cash I have to raise for next house.

6. Cryptocurrencies

This turned out to be a major surprise as cryptocurrency was my best performing asset class in my portfolio. Its returns more than doubled – helped my Bitcoin’s tremendous rise in 2023.

I did the safe thing of moving all my coins into a cold wallet and gave up on staking yields (not sure if this still exists or is legit today). Thereafter, I chucked it one side and completely switched off from the scene. I am not looking to sell my cryptocurrency in 2024 as I wait to see how it will pan out in the mid-term.

Conclusion of Stock Performance Review 2023

My Eureka moment last year came when I decided to change track in my investment strategy. As I adopted a passive investment approach, my mindset also grew to accept market returns. As such, I felt no stress from having to uncover undervalued gems like in the past. Instead, I focused on other priorities in my life such as my career, welcoming a 2^nd child to my family and other recreational pursuits (usually a pseudonym for golf). This seems to be a better balance and I am pleased with the decision.

For those looking to get started on their investment journeys, I would highly recommend low-cost discount online brokerage platforms such as WeBull, Tiger Brokers or Moomoo. These are brokerages that I personally use and enjoy, especially with the excellent welcome/sign-up gifts that they are dangling.

Finally, as we commence our investment journeys in 2024, I would like to wish all readers to thread carefully. “HUAT ah!”

This article is published on 30 Dec 2023.

*Note that this article contains referral links that goes to maintain the sustainability of this blog.

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