As we approach towards the end of the year, I try to look back across the things that have surfaced throughout the year and also some of the past articles I have written to do some reflection.
I started off the year with a post reminding everyone on the importance of adopting an adrenaline rush of having something to look forward to in life. This is important because while it may seem obvious to many, equally as many people are simply taking it for granted and they don’t really have any objective to aim for in life, which could be disheartening.
I then discussed about potentially having a concentrated portfolio between 15 to 20 stocks in a portfolio and imagining that you only have 20 punch-hole tickets in your investment journey. The idea behind this concept is the lesser the chances you have, the more importance probably you are willing to put in to ensure that all the decisions are made correctly. In terms of investing, this means doing in-depth research and prospecting of companies to ensure that you invest in the right companies for the long run.
I provided some general feel of the overall market valuations at different period of time in different quarters (Q1, Q2 and Q4). Although the data shows that market is somewhat overvalued based on the Buffett indicators, it is still up to the investors to decide what he is going to do with his asset allocations. Keeping cash could be a good option but psychologically it is as hard to deploy capital when the market is down. Just take a look at the Black Monday example for instance. Some people managed to get in while some did not. The important thing as investors is to try to plan ahead knowing what is your plan during a market downturn.
Speaking of liquidity, I like this post which was written as a summary from Howard Mark’s memo. According to him, no investment vehicle should promise greater liquidity than what is afforded by its underlying assets. Because if there are no sources to that liquidity, the incremental liquidity is usually influenced by a number of other factors – illusory, fleeting and unreliable. I’d encourage everyone to read his memo as it provided some really smart insight to it.
Fear of failure is something which everyone has gone through at some point in their lives. It is not a nice feeling to be on the trough of something especially when you are at the bottom of your class, peers or life. Some people use that as a learning experience and bounce back faster while others simply succumb to the devil and never came back up. On the opposite end of the spectrum, I spoke about redefining some conventional definition of success. What the society perceives as being successful, certified by luxury cars and condominium, may not be what successful is all about. There is an obvious need to define success by measures that are away from these but it can be difficult to do so.
I did a fun exercise of looking at some of the changes for my pre and post financial independence weekly schedule. While it may look entirely what I wish to be different, it’s probably not going to be a whole lot different from now, with exception probably to flexibility and working at a role that I am much happier doing. Different people would have different opinions about this and some people enjoy working all their lives. That is great. A pity I don’t have the luxury to feel the same way in my working career.
In terms of investing, I did a simulation of what is it for a portfolio to withstand a stress test for small-cap stocks. While their valuations may look more attractive than big cap companies, they may be more susceptible to withstand prolonged market downturn which may affect earnings more seriously. Anyone who had their portfolio full of small cap stocks my want to do a similar simulation to test the investing thesis when market is experiencing a slowdown. I have a couple few myself which has not done well this year.
Onto more personal, I turned 30 this year and it’s a big leap in terms of personal and family growth. My son has also turned older (1.5 years old) that we can finally take a vacation without worrying much. Alright, the last part was not true there, we were still worried as ever. I’m just glad that we are finally at a stage where he is comfortable enough to travel and he is able to learn to see live animals and fly in the aeroplane for the first time. First time experience always rock, especially when the destination is as fantastic as Thailand. I blogged my experience in my other leisure blog as below:
Last but not least, I recently wrote a subject about whether we should conceal our early retirement. The topic itself is definitely sensitive and opionated on its own, so we could have a group of people under the same radar and another sitting on the opposite end of the fence. That is all not important. What is important is it gives you hope and something to aim for in your life.
I hope everyone had a great run to the end of 2015 and wishing everyone a Merry Xmas in advance 😀