2020 was one horrible year. It wrecked havoc across the globe, ruined peoples lives and in my own life it ruined a lot of plans and chances of achieving goals in many areas of my life but like many others one thing I can not complain about is how it affected my investment portfolio.
As they say “A picture is worth a thousand words” so I will let one start off the conversation.
This is my portfolio going into 2021. I will explain my logic behind the composition in the next post and thus today I will focus solely on how my portfolio did in 2020. I will mostly be talking about the column called “XIRR 2020”. If you do not know what XIRR is then you can get an understanding about it here.
Right off the bat the stock section looks off the charts to put it mildly but in all honesty this does not give the best overview of actual returns as many of these positions I have held less than a year and as a seasoned investor would know in those cases XIRR can display crazy numbers. To get a better understanding of actual gains then we could use a bit more information.
This should clarify things quite a bit. To be even more exact one would have to take into account the decrease in dollar price compared to euro which would lower the gains even a bit more. In all honesty even these slightly lower gains are more than I would have ever hoped for.
Each of these stocks that popped had many positive catalysts but I would not have believed in my wildest dreams that they would translate to stock price increases so fast.
The only stock I could complain about is CHRS as when I bought it in January I had to make a very hard decision between it and PSNL. The latter if you look it up has also increased 200% +. You can not catch them all as they say. Also the same played out in reverse when I bought CDLX as I was very close to buying EVER stock instead. Despite the initial success after May by now it has fallen back to right were I would have bought it from.
EVER is one stock one might want to take a look at if looking for purchase ideas but I have not kept myself up to date with it to be able to say if I still like it.
Even more CHRS still has a lot of positive potential and it could totally happen that 10 years from now I will look back on it as one of the best purchases I ever made. Only time will tell.
If I had to recommend stocks from this selections then I would probably recommend the last 2 as the high flyers have become a bit too expensive. For the coming year I would not be surprised if all 3 underperform the market yet I think MWK is the most likely out of the 3 to deliver a positive surprise.
I guess the next most noticeable row is the one that belongs to crypto currencies. The reason why I am not going into more details on what coins I have is because this is the level of detail that I am planning to use to cover this part of my portfolio in the future as well. But in order to be transparent I will write a dedicated post soon that will reveal the make-up of the collection of coins I have and what are the principles I am following.
In short I am buying whenever there is blood on the streets and holding or even selling when crypto is going to the moon. So at this point of time I am in the purely holding stage.
I have been investing into crypto since 2017 and until just a few days ago I had no idea if this endeavor has been successful or not. I mean I made some really good gains when I was selling some of my positions into the Christmas rally of 2017 but around the bottom in 2018 I started buying again and I have not kept track of how much I have bought.
Well to write this post I did some “research” and finally found the answer. The XIRR value for the entire period starting with 2017 has been 115% which was a rather positive surprise.
So this is what I would advise to others as well. There is nothing wrong with buying a very speculative asset even if you do not believe in it which partly is the case with me and crypto as long as you keep the position small and follow the idea “Sell high, buy low”, In that case you might even have a chance to make some money no matter how horrible the underlying asset is. At the same time buying at this point of time after the strong rally we are seeing at the moment is like asking for someone to take your money away.
This last part is not aimed at the crypto believers and enthusiasts who have been buying hand over fist through out the low season as maybe they know something about this technology that I do not. I have strong doubts about it but who knows. Rather I am saying this to anybody who has developed an interest in the last months while seeing those yummy looking price graphs on TV. Buying in now would just be enforcing the habit of being late to the party. It might work out once in a while but on average by the time you arrive the booze will be gone and you are left to clean the toilet and trust me. “YOU DO NOT WANT TO CLEAN THE TOILET”.
On the ETF front the most note worthy thing to mention is that this year I corrected a mistake. It was at the end of 2019 after I had decided that I want to include a small-cap ETF that I bought the ETF with the ticker ZPRS. I was quite happy with it until I realized that it was not the cheapest in it’s class. It has an expense ratio of 0.45% yet there is the ETF IUSN which has almost the same diversification yet the expense ratio is lower 0.35%. In all honesty although I know that expense ratios are important I still believe in the grand scheme of things 0.1% difference does not play a role. There was although one encouraging factor which is that I had only made a single not such a big purchase. Thus I decided as I will probably be buying into this ETF for years to come then it makes sense to switch it. So I did. I did sell ZPRS with a loss of around 6% which is not shown in the tables above but as the position was so small then the effect should be non noticeable.
Also in the end of last year I opened a position in a REIT ETF which in retrospect was not the best time as when Corona virus hit these type of ETF-s got hit really bad. That is why despite having added to my position near the bottom I am still carrying a minus there but I do have slight hope that because of this next year this position might exceed the average market return.
I also have a small bond ETF position which I was hoping would increase when crisis hit and it did until things really got out of hand with the lockdowns and probably the risk of countries defaulting rose in the eyes of the investors but I still ended up with a very small win so I would give it a C for it’s performance during this crisis this year. Not bad but also not great. Just a slight disappointment.
There was one more positive surprise that I found out this year which might have been even more significant then the performance of my portfolio. It was my total detachment from my portfolios performance.in the times of stress. I had had a small glimpse of that when I rode on the crypto waves in 2017 both up and then down but the positions that I had back then were significantly smaller but to my surprise I did not have any emotions at play this time as well.
Most notable example of this was the stock ACMR which shot up 300% in the beginning of the year yet I stuck with my plan of not selling. Soon after it fell back to ground zero when the virus struck and I basically had nothing to show for it. Yet most I thought was that this was an interesting experience. Soon after the stock shot back to an even higher level and despite having gone through this roller coaster I still had no intention of selling.
I mentioned in my first post that I do not attach my ego to investing which at first sounds like not the best way to achieve success. At this point I would like to bring up another view point. Is it not the case that very often us doing our investor stuff like looking for the right moment to sell and then selling cuts short our biggest winners. Also the research shows that the most successful investors are the ones who are dead or have lost access to their accounts thus people who buy and hold.
This trying to figure out when is the right time to sell a stock and then pretending that we actually have arguments which hold up in the long run to support our views is quite often nothing more then a self delusion as nobody can predict the future. So why not look for the best dice you can find and then just let them roll without putting your hand in their way and let destiny decide what should be the outcome. Statistics seems to show that this is your best bet.
I know this last point can be taken to the extreme where it becomes flat out stupid. As with everything moderation is the key and I feel like embracing the idea of letting the dice just roll just a little bit more would make the investing experience a lot more pleasant for many investors out there and that is what I am propagating. #LetItRollJustALitlleBitMore
I will end this post with sharing one last image.
This is some statistics that my broker provides. I have no idea how these values are exactly calculated but I guess they are similar to XIRR. The general idea I am reading out of this is that for this year I managed to beat the infamous S&P 500 index (IVV) and even more I was not far behind Nasdaq (QQQ) which was on a tear. Of course this excludes crypto currencies which might have helped me with catching up with Nasdaq but at the same time it also does not include my savings or Twino which both would have weighed me down.
Based on my own calculations the XIRR value for the entire portfolio including absolutely every position I have as can be seen on the first image is 39.27% for this year and that is a number I am more then happy with obviously as I managed to achieve it while holding very large and diversified ETF positions.
This is what I am going to end with today. Next post will try to explain the different positions I am holding and what plans I have for them in the future and I will also touch upon the way I am going to spend my savings in January.
If you have any questions then feel free to leave them in the comments section and I will try to respond to them as fast as possible.
I hope your investment journey will be as or even more successful then mine was this year but there is only one way to make it happen.
Stay tuned, stay awesome and stay invested
The Hobby Investor that could