Since we're doing this and since I want to be transparent, I finished my first full year down 25%.
All in all, I'm not that disappointed given that I was down around 40% in March/early April.
Have learnt big lessons about leverage in small-cap companies and changing expectations surrounding mid-cap companies. I suppose in a weird way the lessons compensate for the losses - provided I don't make them again.
And in the last few months I've been considerably better at it - although, if I'm being raw, Fed cuts, falling energy prices and general speculation have no doubt aided me.
As for 10%, it works if you have something to lose and if it's just passive income.
Atm, I'm trying my strength and figuring out the do's and don'ts with the market. When I feel I understand the basics and I start to put my parent's hard earned money (i.e savings) into the market, perhaps my expectations will have changed. Pocket money would really be spent on clubbing, going out etc - I've never done that so if I lose it all, I'll live. At least I can say I tried.
And if I fail, maybe the S&P 500 is the right choice because I wouldn't want to waste my time looking at companies when I could do nothing and achieve around 9%/yr until I die.
BUT, the reason why I think 50% is possible is because I made some terrible decisions and with some minor tweaks, 50% was on the table this year. Firstly, I kept too many stocks in the portfolio this year (average was 6) - should be one or two. Secondly, I sold winning companies to fund my losing companies - does that even make sense?? Thirdly, I kept way to much cash on the side doing nothing - year average was about 30% of cash was uninvested. Why? In case the market crashed. With a small portfolio, at least 80% of the portfolio should be invested at all times. Fourthly, I was stubborn at the wrong times and humble at the wrong times. Fifthly, I chose companies that were too complicated. Broadcasting, for example, is not predictable. I have no way of accurately forecasting earnings or cash flows. Coupled with leverage, I deserved to do worse.
And yet, by some miracle, I only found myself down 25% at year-end. I know 2023 was a brilliant year but that means that in a more normal year there will be more value to be found which means that I probably will have better choices! Call this naivety, perhaps, but I still think 50% is on next year. |
