Crowdsourcing - the vb portfolio

[thor666]

Inspired through gzbkel's work:
http://www.valuebuddies.com/showthread.php?tid=5514

I was wondering if fellow valuebuddies' declared vested stocks will outperform the general STI, and by how much. (also wondering if it will outperform my personal portfolio). I would like to track this portfolio, complete with dividends reinvested through this coming year.

If any other forummer would like to post their own crowdsourced portfolio for study, by all means, please do so!

So without further ado, here is a portfolio based on a known list of stocks with a high number of vested stocks from fellow forummers.

Crowdsourced vb portfolio by thor666:
1.Ums (16 vested) - 0.53 * 19lots = $10070
2. Kingsmen (16) - 0.94 * 11 = $10340
3. Sph (14) - 4.28* 2= $8560
4. Saizen (11) - 0.90*6=$5400
5. Low keng huat (11) - 0.66*8=$5280
6. King wan (10) - 0.32*16= $5120
7. Neratel (10) - 0.76*7 = $5320
8. Popular (9) - 0.24* 21 = $5040
9. Fcl (9) - 1.67*3 = $5010
10. Stamford (9) - 0.55*9= $4950
11. Thg (9) - 1.95*3= $5850
12. Wheelock (9)- 1.81 * 3 = $5430
13. Cmhp (8) - 0.99*5=$4950
14. Ara (8) - 1.69*3=$5070
15. Boustead (8) - 1.88*3=$5640
16. Guocoleisure (8) - 0.94*5=$4700
Total: $96,730
Cash remaining: $3,270

Assumptions:
- Starting portfolio of 100k on 17 November 2014, stocks purchased at zero transaction costs, but only in whole lots.
- stocks selected are those with 8 or more vested.
- portfolio will remain between 10-20 stocks at any one point of time.
- for stocks with 14 or more vested, weighting is ~10% each. the rest are ~5% each.
- I assume forummers remain vested as of the list that gzbkel had updated. (Understood it is inaccurate but, this is about statistical likelihood)
- due to the pricing of the stock on the day, the value of stocks is rounded up or down nearest to the weighting.
- there is a stock Vicom which i have excluded as 1 lot is over 5% of weighting. Will consider this as reinvestment once cash portfolio reaches enough to buy 1 lot.
- I note there are cases where the stock is highly speculated - e.g. Ums holding. The methodology may also be flawed and inefficient in many ways. However, the purpose of this portfolio is not to maximize profits. Rather, based on limited knowledge of what is on public domain in valuebuddies, I would like to find out if vb opinions generate overall alpha compared to sti.
- I will try to update this on a quarterly basis as I will not be able to monitor all these stocks actively.


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[specuvestor]

Would be interesting... nice work!

[thor666]

One quarter has passed!

Quick updates:
- Popular's delisting was a great news that pushed the portfolio up by ~1.4%.
- Received UMS, Low Keng Huat, FCL & Boustead dividends of $548. For easy calculation, no scrip dividends taken from Boustead.
- 3 for 1 stock split from Hour Glass.
- Added 500 shares of VICOM since had exactly that amount, and a significant dividend coming in May.
- Price dips on SPH, Saizen, Boustead. Price increase from Low Keng Huat, Popular, HourGlass, Wheelock.
- Total portfolio including dividends up by 2.64%. Not bad for 90 days of holding
- Future actions - wait for completion of Popular delisting, further investment in VICOM prior to XD.


Attached summary in Excel. Sorry, I didn't adjust the portfolio allocation chart, but roughly it remains similar.

[vesfreq]

Just my 2 cents. The portfolio mentioned seems to have quite a number of counters. Some of which, the holdings are 5k sgd or less.

Considering that there are unavoidable brokerage fees and transaction costs with buy/ sell of securities, would it not be more meaningful to narrow the portfolio to a more concise range of counters? While diversified portfolio reduces overall investment risk, the absolute size of each counter seems to result in rather less than meaningful stock gains. Just my view

20 bucks of brokerage fees is immaterial if investment in a counter is like 50k sgd rather than 5k sgd. Just my thought. Some may have a different preference. Personally, i limited my holding to lesser than 5 counters also cos its too difficult to review all counters at the same time or any other time.

Feel free to share your views.

[corydorus]

When i first started, i play with many counters and then i narrowed to a dozen. After a decade, i realised that even a counter can be sizeable even though it can constitutes less than 5%. And so i start to expand to 20. Transaction cost has never been my consideration rather the risk of not getting enough attention to each of them and having too much risk concentrated on any of them.

The transaction costs do add up and can be sizeable. But the problem is not the cost itself but the rationale behind the needs for transactions (symptoms) and wrong resolution can worsen the investment situation if there is needs for it. Is more important to understand the problem and plan it from there. Don't be penny wise pound foolish.

[funman168]

my personal pref is to based my portfolio like a soccer team playing in the world cup, 11 main players, 4 subs.
during inital stages of the bull run, adopt a more attacking formation.
towards the end of the bull run( which i reckon is currently), be more defensive

[weijian]

Just my 2 cents. The portfolio mentioned seems to have quite a number of counters. Some of which, the holdings are 5k sgd or less.

Considering that there are unavoidable brokerage fees and transaction costs with buy/ sell of securities, would it not be more meaningful to narrow the portfolio to a more concise range of counters? While diversified portfolio reduces overall investment risk, the absolute size of each counter seems to result in rather less than meaningful stock gains. Just my view

20 bucks of brokerage fees is immaterial if investment in a counter is like 50k sgd rather than 5k sgd. Just my thought. Some may have a different preference. Personally, i limited my holding to lesser than 5 counters also cos its too difficult to review all counters at the same time or any other time.

Feel free to share your views.

It does matter in practice, but as this is just a hypothetical exercise, it should be ok. My guess is that threadstarter used 100k for ease of calculation and also it feels closer (than let's say 1mil) to identify for the average retail OPMI? More companies also need to be captured into the portfolio for a better statistical representation of the 'aggregate wisdom' of VB - this is how indexing actually works (eg. would u prefer S&P500 or DJIA?)

[CityFarmer]

20 bucks of brokerage fees is immaterial if investment in a counter is like 50k sgd rather than 5k sgd. Just my thought. Some may have a different preference. Personally, i limited my holding to lesser than 5 counters also cos its too difficult to review all counters at the same time or any other time.

Feel free to share your views.

My personal guideline is the $25 minimum brokerage rate, is immaterial for a transaction of >= $9K. The total transaction cost should be around 0.3%, which is close to the typical cost of passive fund management fee.

Even with a transaction of $5K, the total transaction cost should be slightly more than 0.5%. It should be acceptable for value investors, who have much less buy/sell calls.

In short, IMO, transaction cost shouldn't be the major consideration for portfolio planning, at least in SGX for value investors.

I am not so sure on the limitation of $50K?

[BlueKelah]

my personal pref is to based my portfolio like a soccer team playing in the world cup, 11 main players, 4 subs.
during inital stages of the bull run, adopt a more attacking formation.
towards the end of the bull run( which i reckon is currently), be more defensive

Rofl, good comparison, pass me the tiger.
Similar pattern here, but now quite a few sold or loan to other club (overvalued), so have to out of next game.. Those get injured will take care of them (buy in more) and wait for recovery( collect div)

End up always starting 11 or less...

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[thor666]

good to have so many replies. By and large I agree with most vb observations.
Just a bit of clarity on a few points:
- weijian is right, this portfolio is a crowdsourcing index. Ideally, it should reallocate based on collective wisdom. (If this works to be better than sti etf, we should start our own asset management firm to give spdr and Nikko am a run for their money )
- yes, 100k is simply for ease of calculation and likely an attainable number for many in their 30s.


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