As from April 2013 my Journey in Investing is to create Retirement Income for Life till 80 years old for two over market cycles of Bull and Bear.

Welcome to Ministry of Wealth!

This blog is authored by an old multi-bagger blue chips stock picker uncle from HDB heartland!

"The market is not your mother. It consists of tough men and women who look for ways to take money away from you instead of pouring milk into your mouth." - Dr. Alexander Elder

"For the things we have to learn before we can do them, we learn by doing them." - Aristotle

It is here where I share with you how I did it! FREE Education in stock market wisdom.

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Important Notice and Attention: If you are looking for such ideas; here is the wrong blog to visit.

Value Investing
Dividend/Income Investing
Technical Analysis and Charting
Stock Tips

Sunday, 25 December 2016

Measuring Our Investment Portfolio? (2)


Read? Measuring Our Investment Portfolio?

Why measure as closely as possible to commonly accepted measuring methodology?

This is to indicate to ourselves that we are active or DIY retail investors/traders who are continuously looking to revise our strategies and methods to achieve better performance than investing in some ETFs or Funds or doing CPF Top Up; otherwise why waste our time, energy and resources doing it.

For true performance measuring; cash as war chest is obviously part of our portfolio. When cash as war chest is fairly large and hold continuously over several years during the whole measuring period; it will drag down portfolio performance under current low interest rate environment. Bo pian!


Another way to wow our readers and to inspire them is to show them large number!

Did you see that landed property or Ferrari behind me?


Few will question how?









17 comments:

  1. Can we look at cash rotting in the bank as a "separate" asset investment from stock portfolio?

    Cash: A Call Option With No Expiration Date.

    http://www.investopedia.com/articles/investing/042613/cash-call-option-no-expiration-date.asp.Can the

    Can The Average Investor Benefit?
    ////////////////


    Holding cash has an opportunity cost, which is equal to the difference in returns between other better-performing assets and the minimal return on cash. For example, if you decide to stay in cash and opt for a certificate of deposit paying 1% annually instead of investing in an equity index that subsequently returns 10%, your opportunity cost would be 9%. But if the equity index returns 2%, your opportunity cost is only 1%.

    This opportunity cost should be viewed as the option premium paid for staying in cash, or the cost associated with having cash as a call option. The “cost” of such call options fluctuates over time. It is low when investment opportunities are few and upside is limited, at which time investors are better off holding cash as they await better entry levels. But at other times – typically during the uncertainty that reigns after a market crash – when downside is limited and investment opportunities are both abundant and compelling, the opportunity cost of staying in cash is too high. At such times, investors should consider aggressively deploying their cash holdings into assets that offer potentially higher returns.


    ReplyDelete
    Replies
    1. In Singapore's context (presuming you only invest in SGX) which Equity Index should we compare to as Opportunity Cost for our Perpetual Cash Option(rotting in the bank)?

      Any one like to share some ideas?

      Delete
    2. My emergency cash, one year cash reserve for household expenses, household maintenance & repair and gifts are separate asset marked for expenditure not included as cash (call option) as war chest.


      War Chest as an call option can be nasty too.

      Read? Does Experience With Past Market Cycles Made Us Wiser and Profitable???


      Delete
    3. Those investment bloggers with several years experience in the stock market whom I know them can do at least 4 to 5% CAGR.

      Delete
    4. Can lah 4 or 5% even for 20 years to 30 years CAGR

      Especially cash war chest (opportunity cost) has been separated from Stock portfolio CAGR.

      My has been separated since beginning so it show much more than 4 or 5 % lol (

      Do you use "cheat sheets" sometimes to make your life easier?

      i have but at the end of the day what is your Total Assets(Total Return On Investment since day one till now) is the Real Thing".


      Delete
    5. If we are not "cheating" Bei Kambing to conduct courses to create wealth by manipulating numbers; then by all means cheat ourselves in whatever way when it makes us happy. No unintentional harms to anyone else. It is morally alright. Just do it. The Story of The Man, his Son and the Donkey. The Man and his son can also carry the Donkey. What wrong with it? The Last Ritual for the Donkey. Let Donkey enjoy his last journey. LOL!

      Delete
    6. If consider the equity index returns of 2010-2016 as the STI ETF's dividend yield P/A from 2010 to 2016, then the opportunity costs for cash option or option premiums paid for staying in cash is not too costly.

      Still want to stay in CASH?

      Delete
    7. If you use CPFIS CPF fund as cash option for the above years, you don't lose much at all.

      Delete
  2. CW,

    Very simple.

    How would you feel if you invested money with a professional money manager with excellent track record only to find out he has his own proprietary (euphemism for made-up) way of measurement:

    1) Unrealised gains and realised gain are counted. Mark-to-market accounting. So far so good.

    2) Unrealised losses are not counted - the manager does not consider unrealised losses "real" losses??? Only the entry price is used for measurement.

    3) Only realised losses are counted. (That's how buy-and-hope and I invest to break-even one day started)


    Sounds familiar?

    That's what bei kambings do for their own portfolios.


    Which is fine. We all need our Ah Q moments... Fully understand.

    I've caught myself more than once consoling myself that my "Italy" makes me "look more" prosperous!

    LOL!

    ReplyDelete
    Replies
    1. 2017 resolution is to keep "Italy" out of World Cup?

      Delete
    2. CW,

      I don't do New Year resolutions.

      I've stopped lying to myself.


      If I really wanted to get rid of my "Italy", it would be gone by now...

      That's not way I get up in the morning ;)


      Delete
    3. Opps! I meant "why" I get up in the morning ;)

      Delete
  3. what is "Bei Kambing"?

    obviously this is a post with reference to some other blogger's recent article, i'm surprised to see that someone counted the RR only over his/her invested part, but doesn't include cash position, that is simply self-deceiving. for especial an investor whose majority of wealth are in the market, how can cash and its return not be counted?

    ReplyDelete
    Replies
    1. Let SMOL explains what is Bei Kambing as he may have patent it. :-)

      Delete
    2. Bruce,

      Bei Kambing is singlish for 小白羊。

      闽南话指凯子。

      上海话-戆大。


      I miss my 4 wonderful years in Shanghai :)


      Delete
  4. Start a virtual bank with $1,000,000.00 virtual cash that has zero interest rate of return.
    All B & S of stocks related to this virtual bank.
    This is the "cheat sheet" for CAGR stock portfolio without ever need to inject new cash and zero interest rate of return.
    In this way, CAGR OF Stock Portfolio is purely stocks only.

    ReplyDelete
    Replies
    1. LOL!

      So we are all millionaires with this cheat sheet if we can just live on air only.

      Delete

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