March 2021 Report - Cash is Trash, Bond is Trashier and my Portfolio got Trashed 😰

Yep "Cash is trash", in case you haven't heard, Money is being printed like there's no tomorrow, so in the near future your cash will have lesser purchasing power due to inflation. Inflation is inevitable and it is a necessary evil to drive up the economy, so most nations try to control it at around 2%. But what gets people worried is the fact that the Feds are printing more and more money and putting it into the circulation, which may cause inflation to go up significantly in the near future. That's why Ray Dalio says " Cash is Trash"

Simulation of $1 invested in various asset class

So I hope everyone understand why it is important to stay invested, and not hold too much cash. Please don't leave it to rot in the Bank and think it is safe, you are losing the value of your money every year. And don't just jump into any product that banker pushes, do your own due diligence. Most bankers have quota to hit and commission to earn, what makes you think they have your best financial interest in mind? 

Investing is difficult? Yes and no, with the advances in technology, investing can be done with ease at clicks of a mouse. But 'invest' without proper knowledge and risk management? You are just gambling your money away, follow the crowd, and sure you might make some money initially, but in the long run, you will not survive. The key is consistent and sustainable growth. 

Stock market March 2021

The uncertainty and volatility continues with the rising bond yield (1.7% p.a. LoL). With rising optimism of economic recovery, the ongoing sell-off continues to haunt Tech stocks as investors rotate into cyclicals . You can see the banks, energy, industrials all rising as more and more investors jump in, while tech stocks which did very well last year continues to underperform. But overall, the Bullish momentum is still intact with S&P500 having healthy corrections, bouncing off the Moving Average (50) as it makes Higher High and Higher Low.

(Finviz Sector Map) YTD performance as of 2nd April

Overall, all the 3 indexes managed to close positive for March 2021. And if you have been following me long enough, you'd know which sector I spend my money on this month. Do I buy into the sector that is flying up like finances, energy, industrial?  Well I do the opposite of the crowd, I started buying great undervalued company in the Tech sector! FB and AMZN is still around fair value. And this month especially, China Tech was under immense pressure as their government step up to try and regulate the industries, Tencents, Alibaba took quite a hit, but they are still a great company, so it is a no brainer for me, BUY MOAARR! Or you could just buy the Tech ETF in HK market (3033 or 3067) like me.

So how did my portfolio perform for this month? Well the title kind of gave it away, I did get trashed as expected because my portfolio is Tech heavy. 

March 2021 Performance

March has been very choppy for my portfolio having a big drawdown of almost -8% and finally closing the Month at +1.05%  quite far below S&P500's +4.24% which has hit a new All time High of 4000+. So looks like I have done quite badly this month. Or is it? Let's take a closer look

 

Value Stocks (+8.60% vs +4.24%)

Despite the poor performance of my portfolio this month, My Value Stock Performs quite well, as I took opportunity to buy even more of those stocks in my watch list, at good support level and managing to benefit from the rebound towards the end of the month. However I am still quite wary as my portfolio becomes even more Tech- focused, and I expect further choppy ride ahead, but in the long run, it will be fine as these are strong companies with wide moat.

I have also taken profits on my cyclical companies BAC (Bank of America) for about 40% profit, as the P/B ratio is nearing all time high of 1.4. Generally, like the name, these cyclical companies goes through cycles as can be seen from the chart. I will get back in on the wave down nearer the bottom channel. Alternatively, could always just hold for the long run, it might go even higher in the short term.

Lessons: 

• Continue buying undervalued good companies at good support levels
• Can consider to take profit on overvalued cyclicals company
• Keep Cash ready about 20% to take advantage of short term market correction

Options (-21.84% & -15.36% vs +2.61%)

Loki = My options accounts

So despite my good performance in value, the portfolio performance are way below S&P500 which means my Options play got trashed very badly this month. As it turns out, I have been too speculative with my options play for the past months, and I ended up profiting because the market keeps going up. When the market turns, my inability to be disciplined by cutting loss and managing my trades cause me to hit maximum loss on some play. 

I was forced to go back to my options study and learn more on how to manage my trades. I have since rolled some trades and manage to minimise some losses. Practiced a few rolling my trades to extend the expiration and give the trade more room to breathe. Overall, has been a humbling and learning experience for my options play.

Lessons: 

• Review regularly, Roll and manage options spread when necessary. 
• Do not force an options play solely based on premium collected. Must study the chart, check the trend, and support/ resistance level

 

2021 YTD Performance

Overall, Q1 YTD is still quite well above the index's performance (10.4% vs 5.8%). Would have to improve on my options in order to further boost my return.

Wife YTD Performance 

I am happy to report that after much pestering the Wife has finally decided to entrust a bit of her wealth into my portfolio. Her money is fully invested into my Value stocks Funds. and as of today she owns about 78 units out of 340 units of this fund.

The conditions are as follows 

1.  ZERO RISK , 
2. 100% capital guarantee, 
3. 1% guaranteed return monthly,   
4. No Lock-in and Flexibility to withdraw any amount,  anytime 

(If you know any Credible Financial institution that can offer these please let me know)

She is currently up 1.14%, but it has only been 2 weeks and too early to tell how this will go. But since this follows my Value stocks performance, I am quite confident her funds will be fine in the long run.

I cannot stress this enough! Long gone are the days where keeping money in the Bank will secure your financials for retirement (I think this only happens back in our parents' days where interest rate were like 8-10%). INVESTING IS NO LONGER OPTIONAL, and it is Compulsory for your future survival. Unfortunately, despite its extreme importance, financial literacy is not part of the education system. You owe it to future yourself to invest in yourself now by learning and studying how and where to invest your money. 

I am not able to say that my way is the best way of doing things, there are a lot of other asset classes and ways to invest. Expose yourself and choose which path you want to focus on. Or better yet, cut short your learning by finding a teacher/ mentor who is willing to impart their knowledge and experience to you, but note that  valuable knowledge rarely comes for free. Whatever it is, always do your due diligence and risk management. There are a lot of convincing scams out there. Generally if it sounds too good to be true, it probably is.

 Hope I managed to ferry some financial sense to you! Invest smartly and stay invested!

Remember Ferry is not a licensed financial advisor and he just recently managed to partially convince his wife to invest, so do you your own due diligence! Provided data are purely based on historical records and may not guarantee future results. Follow me at your own Risk!