Performance in 2012

[CityFarmer]

I had avoided property stocks and Reits in 2012, especially those property developers. It seems it is not a right choice on hindsight

I think hindsight for which sectors we should have gone into is useless. We cannot turn back the clock.

But hindsight on why the sector outperformed is useful. For me, I was overweight property and REITs. Property because I found many property counters undervalued, and REITs because I was looking for stable yield play backed by tangible assets. Being a value investor, I simply tried to look for price to NAV discount.

In 2013, i will still avoid property stocks and Reits for the same reason. (except for Second Chance property )

[snowcap]

In 2013, i will still avoid property stocks and Reits for the same reason. (except for Second Chance property )

There are still counters trading at <80% of NAV. Wing Tai is one of them (vested). I think Hotel Royal (vested) and Haw Par are 2 others.

[violinist]

Buffett loses to STI:
[Image: 100346914-warren-buffett-watch-scoreboar...1356994434]

[tau281290]

Honestly, I think we should all stick to one method of calculation, otherwise there is no point comparing apples with oranges. I think we should have regulations on how we calculate our returns just like all the funds out there.
I think the best method is to use NAV from 1/1/2012 - 12/31/2012.
Cash position must be included.
Dividends must be included.
Inflows/outflows must be recorded properly.

[CityFarmer]

Many forummers on valuebuddies have done exceedingly well in 2012. Congratulations!

When I have an exceedingly good year marked by a substantial outperformance over the benchmark index, I ask myself ... is it due to excessive risk-taking? I think it is quite hard for us to be honest with ourselves because all of us would like to think of ourselves as geniuses who outperform by taking prudent risk-adjusted gains. A more objective test would be to compare ourselves with the benchmark index in both bad years and good years and how much we underperform/outperform during the bad/good years.
...
There are some debates over whether to use NAV or XIRR to calculate one's investment returns. I personally prefer to choose the more conservative method. If NAV gives me a poorer return than XIRR, then I will use NAV. Calculating returns for both methods can be revealing about the investment styles. Investors with styles that veer towards market timing will have a higher XIRR.

When calculating returns, always take into account cash that has not been put into use. Going into cash is an investment decision that will affect the outcome. Why should it not be considered?

I noticed that there are two major strategies been followed here, one strategy which keep cash reserve for opportunities arises (WB follower?). Another which does not keep cash reserve (Peter Lynch follower?)

For those fully invested will have better return during bull, but will expecte to suffer poorer return during bear. In longer term, performance should still be better than market average. As far as i aware, only KopiKat and me are belong to this group.

IMO, both strategies should work, and the performance will depend on individual execution.

Anyway, the reminder of hyom is valid. We should not become more "daring" after a good year. We should remains as "kiasi" if not more.

As for the cash inclusion. It is not an issue for me since i am always fully vested.

If comparing equity investment's return among us, we should include cash reserve of equity investment. Exclusion of other asset classes' investment and cash reserves should be reasonable.

[Musicwhiz]

Hi CityFarmer,

I would think my methodology is rather similar to holding through market cycles as well, usually I am about 70% to 80% vested depending on my cash levels and the market value of my securities.

That said, I think a focus on value and margin of safety would not make me "kiasu" to deploy my capital, especially during times when valuations are rising and there is optimism present in the stock market (as there is right now - positive sentiment but not yet exuberant).

I do find it exceedingly more difficult to find bargains, which is why I have held back on purchasing anything since Jan 2012. The strategy therefore would be to continue to monitor the businesses of the companies I own shares in, while at the same time looking for attractive valuations. Not committing capital at this stage is also an investment choice.

[corydorus]

Don't force to be invested just for NAV or XIRR returns. May cause more harm than good. A lost in any particular year can hit you hard and will take you long time to climb back to where you were previously.

I use to average 15%. And with growing portfolio size due to continuous cash injections and positive returns, my portfolio size doubled from 2010-2011. A negative year in 2011 bring my annualized down for 2003-2011 period significantly. Despite 2012 large return, i am still not back to 15% XIRR yet. Not sure will i ever.

[specuvestor]

SRS account is a good way to gauge the performance of a long term closed account with cash drag, asset allocation, etc without undue withdrawals like CPF

[Temperament]

i have blogged about the defunct "Microsoft Money" software before. i have to use a money management software since i started to invest and track my stocks portfolio, and my total assets/liabilities + barang, barang, annually. For my stock portfolio i realised i have to use a "Virtual Bank Account" that tracks all the money in B/S. This Virtual Bank account" starting Balance has to be large enough that it will never go negative because of my tradings. In this way, i think my tracking of my stock portfolio is much more "simplified".
NB:
As i only have basic arithmetic, i have no choice but to use a "Money Management" software for 24 years already.
All comments are welcome, provided i will learn something out of it.

---

Hi CityFarmer,

I would think my methodology is rather similar to holding through market cycles as well, usually I am about 70% to 80% vested depending on my cash levels and the market value of my securities.

That said, I think a focus on value and margin of safety would not make me "kiasu" to deploy my capital, especially during times when valuations are rising and there is optimism present in the stock market (as there is right now - positive sentiment but not yet exuberant).

I do find it exceedingly more difficult to find bargains, which is why I have held back on purchasing anything since Jan 2012. The strategy therefore would be to continue to monitor the businesses of the companies I own shares in, while at the same time looking for attractive valuations. Not committing capital at this stage is also an investment choice.

Ha! Ha!
For the whole of last year or the year before last (never mind) i only bought LIMR's nil-paid-rights to buy into the mother shares and 5 lots of reits for dividend income for my MIL. In fact, i have been selling from 2010 till now. i hope i still can keep on selling. i am actually a B/B cycle market trader. Sorry if you don't like my investment style. But i make some money and so you should to. Whatever is your style of investment, don't adopt the "PIG STYLE".
On hindsight, i should only sell now. The problem is hindsight is always correct. But it's foresight that counts; never, ever hindsight. Ha! Ha!
Shalom.

[felixleong]

I follow Peter Lynch style de, always close to 95% or more invested in equities

Always save up 1-3 months then make one purchase, cause I dunno how to time the market, usually just buy and hold nia, rarely sell also.

Currently only holding 2 stocks, Starhub and Challenger
Collected about 6% dividends last year plus a bit of capital gains, hope 2013 will be a great year ahead ^_^

I noticed that there are two major strategies been followed here, one strategy which keep cash reserve for opportunities arises (WB follower?). Another which does not keep cash reserve (Peter Lynch follower?)

For those fully invested will have better return during bull, but will expecte to suffer poorer return during bear. In longer term, performance should still be better than market average. As far as i aware, only KopiKat and me are belong to this group.

IMO, both strategies should work, and the performance will depend on individual execution.

Anyway, the reminder of hyom is valid. We should not become more "daring" after a good year. We should remains as "kiasi" if not more.

As for the cash inclusion. It is not an issue for me since i am always fully vested.

If comparing equity investment's return among us, we should include cash reserve of equity investment. Exclusion of other asset classes' investment and cash reserves should be reasonable.