Howdy! As always it is good to be back.
Embarrassing that I am updating 2019 performance on 19th day of January. Oh well… I did not care that much of the performance in 2019 rather, I have been purely enjoying stock picking bets that I made in 2019 that helped me keep up with the performance of other great performers (I saw some did over 50-60% of returns in 2019- Hats off to them!)
2019 has been a fantastic year from a performance perspective.
If you did not perform well in 2019 by picking stocks, I would just stick to ETFs holding markets such as Nasdaq or S&P.
I would certainly do the same if I am not enjoying the process of picking stocks.
It is quite addictive, as you would know especially when your bets eventually paid off after many months or sometimes years.
Again, I do not know whether the markets are expensive or not and where the markets will be headed (Too difficult for me) but certainly the markets got significantly more expensive now than the beginning of 2019.
I observe messages or tweets from smarter investors to get a sense of macro environment.
Someone I learned a lot from initiated a small position of shorting SPX to balance out just in case even though he thinks he is likely lose some money.
But again, that’s what having an insurance is like.
I am not shorting the markets just because they seem expensive and regardless of what the mainstream opinions are, I would likely stay invested and slowly paying down debt to get ready for next downturns rather than selling great investments that I have been building up over the years.
I would love to add more when the time comes with available cash and possibly help of leverage. I am fully ready for it.
Without further ado, let’s get into how I did in 2019.
Performance in 2019
I did 26.75% in 2019 from one of my brokerage account.
and I did 46.74% on the other brokerage account that opened in January 2019.
Why are performance so different between the two accounts (26.75% VS 46.74%)?
Well… I did not buy or sell any stocks on the first brokerage account in 2019 whereas I have been adding funds into the second brokerage account every month in 2019 and have been buying whenever opportunities presented and selling the investments that I no longer like anymore.
Stocks that I sold out are
CRH after doubling out,
Linamar, a cyclical stock with overpaid greedy founder family and
one microcap stock that I still like and love almost everything about them but operating in a cyclical market.
What’s interesting for me is both of graphs are shaped almost identical to each other.
It showed a severe drop from towards October then it jumped a bit.
Performance since inception
I did about 110.39% since inception more than 5 years+ 3.5 months of time from my first brokerage account.
My annual average return is barely above 15% so passing rate for me.
As you may remember, my simple investing goals are
1) beating the markets
2) 15% average returns over time
3) enjoying the process
I have been successful at achieving my 3 goals so far.
I beat the markets every single year since I started managing my own portfolio rather than investing in mutual funds and achieved (barely) average annual return of 15% and I, for 100% certain, am enjoying investing process.
If you took away this fun from me, I really do not know what I would have done or would do with my life.
This is my passion project and helps me get through day by day.
Within 4-5 years, I can certainly say this will be my full time thing whether I set up my camp in a mountain and manage our own family funds or stay relatively close to the city and manage funds for others.
As 100% of the investments from the first brokerage account are Canadian stocks, the comparable markets are of course TSX.
That being said, I totally understand TSX has been terrible last 5-6 years so I have been easily winning.
But when you look past many decades, Canadian markets did better than or very comparable to American markets so let’s not kick myself here.
Let’s talk about what I learned in 2019 whether from by making mistakes or bets that paid off
Lessons I learned in 2019
1. Seize opportunities whenever present
This is by far the most important lesson I have learned in 2019.
I loved Apple and always have been and I knew I really wanted to buy the stocks.
I have been using their products for years and never bought its stocks ever since I started managing my own portfolio for last 5 years…
Does it make sense?
It does not and I am an idiot by not buying the stock.
There were 2 chances of buying the stocks and of course both of the chances were made by ……………………the MEDIA headlines.
December 2018 and May 2019.
The stock was around $150-$175…
It is now $318.
More than doubled from then.
What about Facebook?
Everyone hates Facebook…
But fundamentals? Jesus… The numbers have always been outstanding!
From a value standpoint, it was dirt cheap around $125-$130.
It is now $222. Almost doubled from its low.
Why didn’t I buy them?
Because I did not have USD at the time and even though I knew that was an easy money to be made, I did not do anything and it took a long time to get ready having USD.
Just combination of being busy at the time and my laziness just killed my opportunities.
2. Cheap stocks with headwinds- No, no, no VS Expensive stocks with tailwinds- Yes, yes, yes
Do not fight with the headwinds… You gotta use many times of your brainpower and need to do homework with perfect timing then you need lots of luck to be successful.
It is much easier and relaxing to just buy the great companies with tailwinds even though they look expensive.
3. Take advantage of mispriced broken stocks but not broken companies
Stock prices get reset every quarter or sometimes it takes multiple quarters for markets to realize its true prices. Fundamentals eventually prevail.
I bought about a thousand of Enghouse stocks when it was around $30-$32 less than a year ago.
It is now $52 and I seriously think they just re-kicked their growth engine by deploying their cash that they had been hoarding.
I knew it was mispriced and jumped right in (as I had canadian dollars unlike not having USD at certain times)
4. Cyclical stocks
Avoid cyclical stocks most of the time or buy when they are really cheap and sell when they get expensive.
Yes, I am talking about trading not investing.
Historical valuation should help formulate your buying and selling decisions.
5. Be flexible and curious
I have been changing my minds and investment philosophies many times.
If I stuck with my first, second, third, fourth or fifth etc. investing strategies, I would have never performed how I performed.
Almost once a year on average and this time again, I have further enhanced my investing criteria.
I think I am trying to see bigger pictures and slowly intermingled my strategies into it.
The ways to see bigger pictures are all learned from many growth investors in 2019.
I just tweaked a bit to fit into my strategies.
I can cautiously say that it has been working so far and am getting comfortable with it.
I am looking forward to learn in 2020 from other great minds.
Hope your 2019 was great and you achieved your goals.
You should be happy about and take credits on things you did well and objectively criticize yourself for things that you did not do well and learn from your mistakes.
If you do that every year, I am quite certain you will benefit many years down the road.
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Impresionante! I am very grateful finding you and only wish that I discovered you early. You have changed my perspective on investing and helped me finding other investors in your blogroll.
Can you share your top 5 stocks?