Saturday, May 9, 2015

Portfolio Medical Check-Up

I saw a post by Felix, where he displayed some simple statistics of his portfolio at the end of the post. I thought it was a pretty interesting way to display his holdings, and it got me very curious to what the statistics of my portfolio would look like.

My current portfolio isn't very large at all. It is a humble $13,541.60 based on capital that I have put in.

It currently has 33 counters. The top 10 counters make up 65% of my portfolio, while the remaining 23 make up 35%. Interestingly, the top 10 counters are much cheaper in both P/E and P/B compared to the remainder.

I am using yield on cost instead of actual yield, because I have that statistic calculated in my own spreadsheet, and that comes in at just over 6.1%.

With portfolio values like these, does that make me a value investor?

I extracted my data manually using the calculated data from SGX and Bloomberg. I'm much too lazy to redo the math myself, though I have found them to be inaccurate sometimes. But let's just take their word for it this time around. I decided to just use simple P/E and P/B data since that is the easiest to extract and are numbers that most people are familar with.

On top of showing average and median values of my holdings, I think the more fair number to look at is the weighted average values. Although the weight of each holding is using the cost value, I still think it is pretty accurate and much better than the rudimentary calculation of average or median.

Now, compare this to the STI as of end April. The STI has P/E of 14.03, a P/B of 1.36 and a dividend yield of 2.64%.

Objectively speaking, I think it is pretty clear that my portfolio is the "cheaper" of the two.

As Jeremy Grantham has said before, "You don't get rewarded for taking risk; you get rewarded for buying cheap assets. And if the assets you bought got pushed up in price simply because they were risky, then you are not going to be rewarded for taking a risk; you are going to be punished for it.".

While some may rightly point out that my portfolio has a much a higher yield, I don't think that it is necessarily true that I am automatically assuming a higher risk. I have selectively expressed a preference for dividend gains over capital gains, which is why my portfolio yield is higher. 

I also have the crazy belief that things that have become cheaper are safer, while things that have become more expensive are more risky, but that could just be crazy talk from me and Jason Zweig.

Over the past year, my portfolio and the STI has moved up in lock step, both generating 9% returns. Of course, I am at a serious disadvantage because it does not show my dollar or time weighted returns, which would be much higher since I was deploying capital frequently throughout the entire year.

Anyway, this was just a fun exercise to do. It makes me feel a lot a lot more comfortable with my current style of managing my SGX portfolio.

6 comments:

  1. Will transaction cost be very high since there are so many stocks?

    ReplyDelete
    Replies
    1. Hi Lazy Cat!

      Good question!

      I use SCB's platform, which has no minimum commission for making transactions. In total, I have not paid more than $40 on commission fees yet!

      Delete
  2. Hey GMGH,

    I'm gonna turn 21 soon and would be able to start investing. A dilemma I have is choosing which brokerage to use. SCB looks very enticing as it has no minimum commission fee...but is there a risk in it being the custodian? I am also a low-budget investor, so I would not likely invest more than 1K at a time due to my financial constraints, hence taking into account $25 min. comm of other brokerages it would take a toll on my gains. I really would like your take on this since you use SCB and have a tidy sum of stocks in their custody.

    Thanks

    ReplyDelete
    Replies
    1. Hi Anon,

      Well happy birthday in advance, hehe!

      Personally, I think that in my situation, the benefits that I stand to gain is worth the miniscule risk of letting SCB be my custodian and screw me over. I am not worry about their custodian structure. In fact, I am more worried that they change the pricing structure and put in a minimum commission fee soon! I am really happy that I can trade tiny tiny position and pay like $0.40 commission, haha! I am always comfortable with the position that I take, and I am not forced to take more risk by overextending my position just to minimize my transaction costs.

      My Take on SCB as a Custodian

      Delete
  3. I have read so many articles on the topic of the blogger lovers however this post is actually a fastidious article, keep it up.

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    ReplyDelete

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