Year 2017 In Review
Did you have a good investment return for the year 2017?
It has been a good year for me, and my definition of good is based on my own investment objective, which is consistent monthly cashflow and capital growth for the stocks I hold for the longer term.
As we step into a new year in 2018, it is a good time to reflect and ponder on the trades which you have done, what have worked and what may need some tweaking. I have similarly been adjusting my options investing strategies and my Value Investing considerations.
For monthly cashflow, you can refer to my article Using Stock Options To Generate Monthly Income. For Value Investing in undervalued, great companies with strong economic moat, I have done some tweaking.
I now believe that to do well in Fundamental Analysis and to more accurately pick undervalued stocks with good growth potential, you should limit to probably not more than 10 counters.
Stick to your circle of competence, industries and companies that you really know very well. This way, you have a better chance of truly understand if a company is of good value to own and the longer term growth potential. This means, you can’t be a genius owning companies across different industries.
Ending off 2017 strongly, the STI ETF PE ratio is now about 11 or 12 while the SPY PE ratio has reached 25.7.
At least for the US market, the bull run since coming out of the 2009 crisis does not seem to end.
Market Crash In 2018?
Forecasts and predictions will keep coming. Some will say the bull run will continue for a few more years and some will warn that huge corrections are imminent, the worst we have yet to see.
Well, the key message I want to put across is that nobody knows when the next market crash is going to happen and it is important to stay vested in the market.
To totally cash out of the market and keep everything in cash is going to have huge opportunity costs, interest on cash is pathetically low.
Personally, I like to have some cash when the market goes on sale. What percentage of your total portfolio? That could be a subject of big debate.
Others will suggest a diversified portfolio of different asset classes like stocks, bonds, gold, commodities etc (you can read about Ray Dalio All Weather Portfolio).
I have followed the asset diversification advice but call me old-fashioned or conservative, I still keep a percentage of my portfolio in cash.
I wish that the Year 2018 is going to be a great year again for you. Have a game-plan in place, whether the market continues to climb or there is a correction or the correction turns into a bear market.