A Decade In The Making…a 10-Bagger & a 26.0% pa Investment Track Record

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Alphabet, annual review, benchmarking, buy and hold, COVID, crypto, Donegal Investment Group, GARP investing, growth vs. value, KR1, multi-bagger, portfolio allocation, portfolio performance, track record, Universe Group, VinaCapital Vietnam Opportunity Fund

Looking back, I must admit I never imagined reaching this kind of anniversary…but yeah, the Wexboy blog turned 10 years-old earlier this month! A journey that kicked off with this Sirius Real Estate buy (at an astonishing 0.31 P/B!) in Nov-2011. Which was obviously a stock-picking tour de force – noting SRE‘s been a 7-BAGGER+ since. Well, except I somehow managed to distract/scare myself out of the position two years later…for a mere double-digit gain! And maybe that’s where this post should abruptly end, because:

The one BIG lesson most investors still need to learn is how to HODL!

But let me be clear up-front – this is not intended to be some lessons-learned victory-lap post. As investors, we never really know what’s coming down the road…next year could be a celebration, or a total humiliation. And we all make dumb mistakes, we repeat them, we live with them & we finally move on – great investors just make less mistakes. And we can’t afford to get disheartened, or to rest on our laurels – great investors (should) never stop learning & adapting ’til the day they finally exit this great game. To assume/pretend otherwise is to tempt the gods, which makes investing such a uniquely weird mix of confidence…and humility.

That said, this year & last year have been an accelerated learning experience for me – as is presumably true for all investors (& everyone we know). And yes, I know I’ve promised to write about this – and hopefully share some positive learnings & useful advice – particularly in light of my actual FY-2020 & YTD-2021 performance. But I gotta admit, I keep putting it off…because now I desperately want & need it to be a final epitaph for this (Zero-) COVID hell we’re still stuck in. [Despite most of the world getting vaxxed since!?] So yeah, that’s obviously something I gotta work on…

But meanwhile, I’m thrilled I’ve actually managed to deliver that unique & rarest of beasts…a public/auditable 10-year investment track record via the blog (& my Twitter account). I obviously don’t disclose the actual euros/cents of my portfolio, albeit my long-abandoned career & my family’s security/future clearly rely on it – which means return of principal is just as important to me as return on principal, in true family-office style – but readers & followers have always been able to assess my level of conviction/risk tolerance via my specific % allocation in (disclosed) stocks, and via (essentially real-time) tracking of my (rare) incremental buys/sells in those stocks.

And in return, I’m far more interested right now in seeing readers draw (& even share) their own conclusions – privately, or publicly – from my stock-picking & investment track record to date. To facilitate that, here’s my annual returns…complete with links to my annual performance review & actual stock-picks/investment write-ups for each year.

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FY-2019…Hella Surprise Of A Year!?

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absolute valuation, Alphabet, annual review, buy and hold, coronavirus, Cpl Resources plc, Donegal Investment Group, Ebola, GARP investing, growth stocks, isolationism, KR1 plc, populism, portfolio performance, Record plc, relative valuation

It’s still January…so by now, I’m sweating to wrap this up by month-end (at the very latest!), while you’re probably feeling besieged (& bamboozled) by the media’s parade of talking heads who seamlessly re-write their broken #2019 narratives & still pitch their #2020 market prognostications with undaunted confidence. Which is a tad discouraging when I’m busy trying to come up with my own unique version & perspective…albeit, in the wake of a fantastic year (talk about looking a gift horse in the mouth!).

Seriously…name a market/asset class that actually declined!?

But rewind a year & check the gamut of their 2019 predictions, and (once again) you’ll remember/realise they’re full of highly paid shit! So before I even start – let alone, God forbid, pontificate – I’ll share the only piece of market wisdom you really need to know, above all else:

‘Nobody knows anything…’

And that quote’s about the movie business! Granted, for anyone who cares, Hollywood probably seems like the most impressive Rube Goldberg contraption in the world…but frankly, figuring it out is a total cake-walk compared to grappling with & predicting what might actually happen next in the markets & the global economy! But unfortunately, that’s how we all step up & play the game:

Like useless office work expanding to fill all available time…useless market forecasts expand to fill all available airtime & news holes!

Probably my greatest investing achievement in the last year was switching off the financial media – and yeah, I stopped paying attention to brokers years ago – is it any wonder I reported such negligible portfolio activity? [It’s a real travesty seeing #buyandhold investors re-classified as chumps over the years (& decades)]. And in reality, markets are primarily focused on trying to discount a 12-18 month time-horizon, which means a diet of narrative manufactured to simply explain yesterday & today’s market/stock zig-zags is just irrelevant & misleading anyway. And so, I recommend you do the same: Go on, just switch off that guy on the box, you know the one…he just happened to attend some ‘school in Boston’, and is now an instant expert on epidemiology and up & to the right #coronavirus charts! Again:

‘Nobody knows anything…’

Wexboy Portfolio Prospects – Part II

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Alphabet, Applegreen, bubble thesis, Donegal Investment Group, GARP investing, Google, growth investing, KR1 plc, Kryptonite 1, portfolio allocation, portfolio performance, QEInfinity, Record plc, stock picks, stock tips, value investing

Ugh, collywobbles!

Sure, we can all breathe easier now, but still feels a little bumpy out there, eh? Though maybe you should ignore the incipient nausea…just relax & embrace the ride! ‘Cos I’m perversely encouraged by these fresh mini-bouts of panic we’ve been seeing this year. They’re a useful reminder investors still have a real wall of worry to climb here. Which is probably the most important & necessary pre-condition underwriting the durability of today’s bull market. [And yes, it’s only a bull market…when investors (esp. the man in the street) go from hoping they’ll make money, to knowing they’ll make money, that’s when we enter bubble territory]. However, we still need to see whether my macro investment thesis eventually plays out here – a thesis I express via a question:

Globally, we’re still conducting a truly unprecedented monetary (& fiscal) experiment…could we end up ultimately inflating the most incredible bubble ever?

If you think that’s ridiculous, we really don’t need to debate it here. Or rehash a complete litany of facts & figures which prove history must repeat itself – the ever-flattening US yield curve being the latest bogeyman. But I have to ask, what’s so bloody alarming about entirely average market P/E ratios…when interest rates are still anything but average?! And despite their trajectory, we’ll obviously continue to enjoy ultra-low long & short-term rates in absolute terms, while central banks (in aggregate) also continue to print money:

Yep, there’s the real boiler-room of this market – in every sense of the word – as this chart nicely demonstrates:

FY-2017 Wexboy Portfolio Performance…Crackin’ The Code

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annual review, benchmarking, blockchain, bubbles, bull market, cryptocurrencies, Fortress Investment Group, GARP investing, Kryptonite 1 plc, Newmark Security, portfolio performance, relative performance, Zamano

Hello. Why yes, it’s me…

Happy New Year!

Admit it: You thought I’d bloody well scarpered, to become the Wild Eyed Crypto-Boy from Freecloud – didn’t you?!

Well, not quite…

Though I did a mini-grand tour of Xmas dinners & meetings, and was bemused how often the conversation ended up in crypto-territory. Ha, so it’s not just me!? And even though I enjoyed some lighthearted crypto debate (best to avoid people who get too emotional about investing), I’m also left wondering how high #CryptoFOMO levels are running out there right now?! My new portfolio mantra may be dead on target:

Doesn’t everybody deserve a little crypto pixie dust?!

But anyway: I was actually 100% committed to an incredibly brutal training regime – preparing for my first naked solo New Year’s Day Iron Man Triathlon. Yeah, I know, just about anything to get out of the house…

Haha…again, not quite.

In reality, life simply got in the way, as it has a habit of doing…albeit, sometimes in great ways! But after all, isn’t that precisely what my life’s designed for & supposed to accommodate? Next time you fear dying chained to your office desk, keep your eyes on the prize & remember money isn’t really about buying things – which is just another form of indenture – what it really buys you is freedom!

And more recently, I’ve taken advantage of that freedom to meditate on doing…absolutely nothing! To explain: Over the last couple of years, I’ve executed a sloowww but steady transformation of my entire portfolio: Far less value, far more GARP. [The nay-sayers will insist this is simply an excuse to pay up]. And in 2017, I finally felt like this huge effort had come together beautifully…

H1-2017 Wexboy Portfolio Performance

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Alphabet, Applegreen, benchmarking, bull market, Fortress Investment Group, GARP investing, Newmark Security, portfolio performance, Rasmala, Record plc, value investing, Zamano

Benchmark Performance:

Let’s jump right in, here’s the H1-2017 performance for my usual benchmark indices:

Move along, nothing to report here…but that’s exactly what we should focus on! Of course, the financial media’s become more & more hysterical about the markets – de rigueur in an ADHD world – but cooler & more logical heads have also been sounding the alarm bells so often, I’m sure I’ve gone deaf. But sacrilegious as it may sound, a +8.2% YTD gain for the S&P 500 isn’t all that extraordinary… Sure, it’s within spitting distance of the market’s average annual return, but that doesn’t mean much – history confirms annual returns tend to rack up in just a few months, with the market faffing around for the rest of year.

And looking back, I’m hard-pressed to find this outrageous bull market everybody’s yammering about. In reality, the S&P soared a massive 6.6% pa over the last three calendar years (2014-2016). Seriously…that’s it!? [How many readers are reacting with disbelief right now?] Even my blind maiden aunt couldn’t get her knickers in a twist over that kind of return…

Of course, the nay-sayers will argue the S&P’s trajectory is irrelevant – we should really focus on how expensive it is today, in absolute terms. Hmmm…maybe if you cherry-pick the most damning P/E multiple comparison!? But taking a longer-term perspective, the Nifty Fifty actually peaked at 42x in 1972, while TMT stocks peaked at 60x in 2000 (with the S&P hitting 29x). Except isn’t that just a greater fool approach…shouldn’t we be evaluating the market vs. normal P/E multiples? Well, again I fail to understand the alarm: The S&P today actually sports an 18.8 forward P/E, a mere 9% premium to the average 17.2 forward P/E over the last 20 years (which included the dot-com bubble, but also the financial crisis).

And absurdly, the doubters choose to ignore gravity (i.e. interest rates)! Whereas I’m perfectly happy to defer to Buffett here – aside from secular earnings growth itself, interest rates are arguably the equity market’s greatest single driver (& valuation benchmark). This one 10 Year UST chart effectively tells you more than a dozen books could about the US equity market’s trajectory over the last 50+ years:

The Inherent Contradictions of My Portfolio (or Who’s The Greater Fool..?) (Part III)

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asset allocation, bar-bell strategy, bubbles, bullish, floating world, GARP investing, macro investment thesis, Nifty Fifty, stock picking, wall of money, wall of worry

Continued from (Part I) & (Part II).

For a moment there – yeah, go on, admit it – you really did think I’d lost my mind & mutated into some kind of wild-eyed snorting pawing charging bull!? One who’d sold off his entire portfolio, plus the family silver, and blown his entire wad on a titillating smorgasbord of the past year’s hottest large cap stocks & sectors instead?

But only for a moment, I hope, mes frères?!

OK, I may be a charging (?) bull – yup, my negligible cash holdings don’t lie… And I may well believe the market ultimately loses touch with the real world (& enters the floating world). But c’mon, did you really conclude I’d lost touch with reality?

Er, no… Or should I say, hopefully not..?

Obviously, having some kind of (global) macro investment thesis is essential for all investors. Well, it should be obvious – someone who foolishly pontificates it’s all (& only) about the micro (i.e. stock picking) could be, for example, missing out on a potentially lethal big picture. But an investor who focuses exclusively on the macro is being just as foolish. Because, of course, the micro’s where you’re likely to find the best long term multi-bagger opportunities. Don’t even fight it, macro & micro are both equally important…

[OK, I’ve gotta confess, that’s pretty much a bald-faced lie – any number of studies prove asset allocation (i.e. macro) is the dominant contributor to portfolio returns. But I’ll save you from reading ’em – instead, just ask yourself whether stock picking saved your ass in the last bear market?! Er… But hey, what can you do, at least stock picking keeps me off the mean streets! 😉 ]

And the stronger your investment thesis, the greater the discipline, the conviction, and the ultimate success of your investment portfolio & returns. But an investment thesis, whether it’s macro or micro, is not a winning lottery ticket you simply collect on, it’s not a belief or principle you defend to the death, and it’s certainly not some map that’s etched in stone. It’s about making your own luck, where preparation meets opportunity…so never grow too attached to a pet thesis. Instead, consider it an evolving premise that needs to be constantly challenged & updated. Far better to aggressively ask yourself (& the world) each day why your premise might actually be wrong – rather than devoting all your efforts to constructing some tottering edifice of proof to memorialise what might be, in the end, a long-dead thesis.

I’ve been developing this market bubble thesis for a couple of years now. To date, it stands up well to scrutiny & keeps getting stronger…but I’m also very aware it’s a thesis which will continue to evolve & be tested. And I certainly don’t think we’re anywhere close to bubble territory yet – leaving aside some obvious exceptions, investors aren’t exhibiting any of the usual symptoms: Yes, I’m sure you know ’em…a twisted market/valuation logic, a blatant disregard for risk/leverage, and/or a messianic over-confidence in future growth & returns.

Stock Picking…Art, or Science (Part IV)?!

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art vs. science, asset allocation, diversification, Event Driven, GARP investing, growth vs. value, IRR, Margin of Safety, Return on Market Equity, stock picking, stock selection, stock valuation

Continued from here.

Value vs. Growth:

In my last Stock Picking post, I highlighted a common value investor failing – namely, a preference for over-leveraged & illiquid small/micro-cap stocks. All too often, it seems like this kind of preference (& others like it) are simply hard-wired in…maybe you’re born to be a value or growth investor! Now, we could get all touchy-feely here & try to personality-map this out – cautious vs. aggressive, quantitative vs. qualitative, thinker vs. dreamer, and so on – but does it really matter? Far better to recognise & accept what you are – if you haven’t already, just stop reading right now & come out to your wife:

‘Um, darling, it’s time you know…I’m a value investor!’

You may even find out she knew already…

Acceptance is the first & most important step in recognising inherent investing biases, and maybe trying to curb some of the worst excesses of hard-core value investing. [Of course, the same is equally true of growth investing]. This might take years…it definitely took me years! And pride often gets in the way – sometimes it’s nice to feel different, one of a select breed of smart investors who can boast of finding hidden gems in the rubble. But this is just an illusion – true growth investors are equally select. [Yes, most people seem biased towards growth stocks (if they ever mention stocks at all!?) – but in reality, they’re fairly clueless about money & investing. At best, they’re TALT* investors…] For them, genuine growth stocks are equally difficult & just as precious to find. And let’s face it – on average, in the real world, nobody can reliably claim value investing is superior to growth investing, or vice versa.

But accepting your value investing biases, curbing your excesses, and exploiting your natural advantages, is surely the best way to maximise your comfort & your returns as an investor. Except this can ultimately prove a double-edged sword…the world you end up living in may just be a value ghetto. Sure, it may feel large enough, it may even feel comfortable enough, but if that’s as far as your horizons stretch, you’re missing out on a whole other world of opportunity out there. Forget about investment ideology – again, this is about diversification, and it’s about becoming a better investor.

If you choose to ignore growth stocks & investing, you’re voluntarily cutting yourself off from vast swathes of the available investment universe – that’s countless companies, entire sectors, new/disruptive business models & secular trends, even geographies, etc. you’re missing out on, maybe forever…how does that make any sense? And even if you heed everything else I’ve written about diversification, how meaningful will the impact be if your portfolio remains blighted by the absence of growth stocks?

Of course, the classic value objection to growth stocks is that they’re invariably over-valued. But this, my friends, amounts to nothing more than a red herring… A true growth stock always seems to be over-valued, yet its share price can subsequently look astonishingly & ridiculously cheap after the business/stock somehow manages to scale up by hundreds or even thousands of percent. The real complaint here, I suspect, is that growth investing is just too hard!?! And if you’re a value investor, there should be no shame in admitting this – because that’s exactly how it feels: You naturally take a primarily quantitative approach to investing & you always require an adequate margin of safety, but identifying true growth stocks demands a far more qualitative approach & appears to offer little in the way of safety…