Hope everyone is doing well.
It has been a while.
Covid has been terrible but my family is doing well and healthy.
Although my work has been keeping me very busy I have been feeling the Covid fatigue.
Days seem the same everyday. Working, eating, taking care of baby, sleeping then repeating for 5 days then weekend which is pretty much the same without working part. We are very outdoorsy people but winter makes it a bit more challenging with baby and all.
So I wish Covid ends this year and we get to do things finally without fear.
Anyway, let’s get into 2021 performance.
Very interesting year.
Overall, the overall GARP portfolios with some growth stocks did pretty well this year but this is the year that TSX finally kicked my ass. It never happened since 2014 but 2021 is the year that it did it.
TSX did 22% VS my portfolio of 21%. Considering GARP portfolio did many 40% during the year, it is a bit discouraging. However growth stocks have been under pressure since Feb 2021 so it makes senses.
Oil, natural resources and financial heavy TSX did well in 2021 but would it continue in 2022?
We will see.
Next one is growth stocks portfolio. It did over 90% early in the year then it has been downhills since then ended with 27% or something.
Many mistakes on this portfolio. I jumped onto Chinese stocks too early and doubled down on some of growth stocks that have been under pressure then watching them to go down way further.
I have been taking many measures during the year to protect the returns by selling some of Covid beneficiaries like Peloton, Zoom, Sea while keeping 50% of growth stocks in the portfolio. The growth stocks have been further pressured towards the year end and killed the performance. You know tapering, interest rate hikes, high inflations all those narratives really killed the growth stocks.
It ended the year with 28% return but one critical lesson here.
Investing in growth stocks aren’t for everyone. These are 3-5 times more volatile than the markets. It can go down literally 50% in a matter of a month.
Many active traders protect their gains with stop loss.
Many growth stocks only investors endure stomach turning 40-50% drawdown period.
I am definitely not one of them. I can’t allow 40-50% drawdown. That will literally kill my mental.
I like to invest in GARP stocks with predictable returns with fairly moderate drawdowns but I understand there are growth stocks that will reward investors very handsomely if you 1) buy at the right time 2) hold onto it as long as it grows going through many draw downs.
So it comes down to weight allocations. Allocate whatever amount that won’t kill my mental then hold on to dear life as long as growth is still there. When you look at 3-5 years, the great growth stocks performance really shine VS GARP stocks that grow 10-20%. It is purely numbers and multiples game with many gut wrenching drawdowns.
Again, the most important thing is find investing styles that work for you.
What has been working for me in 2020 did not work very well in 2021 and biggest lesson for me in investing growth stocks is learn how to protect gains with proper stop loss while monitoring really closely.
Anyway, that’s it for me for now.
Good luck to your 2022 investing year!
Looks like the markets are giving us bargains already. 🙂
Sorry to hear Covid impacted your family. Hope 2022 brings better health, personally and financially! AFFJ