Wednesday, December 31, 2014

Wrapping Up 2014 - Turtle Portfolio

It's this time of the year again, that most people will be heading to shopping malls, restaurants or bars to celebrate the closing of 2014 and welcoming 2015.

For me, it's time to stay at home and do nothing. My private lifestyle and investment philosophy are identical. I hate crowds. For most people silence is very frightening. They felt that they can't breathe, as if they are trapped in a bottle sealed with vacuum. It is the opposite for me, noises from the crowds will make me feel that I am trapped in a drum with somebody drumming so hard trying to burst my eardrums and head.

For most people, inactive is only for birds(small brains). They think they got to beat the index. Or only idiots will stick with risk free investment. Sitting still makes them feel that they are trapped in a vacuum bottle. They just can't breathe.

Turtle Investor Portfolio on the overall is very cash rich. It has risen to RM 79 k or 95% cash. Return on capital was RM 11 k or 15%(CAGR of 3.25%). With so much cash on hand, it will be very handy during bears hunting seasons. I am getting more excited because the bull market is getting older and older each day.

In 2014, I bought only 1 stock for Turtleinvestor portfolio, CIMBA50. It's an ETF that has exposure to China Stock market, it has risen by 25%. Though the exposure was small, I was happy because of my strong convictions about China was vindicated.

Did I regret for not able to much move cash in 2014 ? Absolutely not, on the contrary I felt the opposite way. I feel rewarded for doing nothing.  KLCI closed at 1852 on first trading day of 2014 and as I making an entry, KLCI is around 1766 or minus 4.6% return. If we look at individual stocks, losses could be even more glaring for those who had bought stocks this year. 

Even some regarded as safe stocks like Petronas Dagangan which many regarded it has many Buffett-like qualities company falling like a hot knife piercing through butter, with many bleeding hands. For those think valuation does not matter, think again. They must be licking their wounds quietly defending themselves as long term investors. I bet if the price were to drop another 20-25%, these long term investors will be selling out like nobody business, then then call themselves traders who are cutting losses.

I suddenly found many people feel their brains turbo-charged to IQ 180 talking about Black Swans. Nobody ever foresee that crude oil price can collapse in 2014. They can draw all kind of trend lines and all kind of technical indicators but when the trend reverse, gravity rules breaking so many ribs in a short time. If we don't respect random walks of markets, let's be more humble.

Even the bluest of blue chip oil and gas stock can free fall.

Let me show you another chart, our Finance sector is the process of making a downtrend and essentially it will drag KLCI lower. Over the last few years, the loan growth had been going into unproductive area such as cars and funding after ever rising housing prices. May be some will still argue that we have 83% household debt to GDP but we are also been backed by solid assets, let's not get too negatives. Just consider this, even I am sold with the arguments of many experts justified reasoning of no housing bubbles but it is also a sure sign of people have maxed out their credit. For this reason alone, we ought to leave our mind open that housing prices can reverse direction.

Please don't get me wrong. I am not in the mood of bashing or spreading bearish views.

Rather, I find the wisdom of Warren Buffett is more apparent as time goes by.

Rule # 1 don't lose money.

Rule # 2 Refer to Rule # 1.

I find the witty side of Buffett's new wisdom, Virginity can only be preserved and cannot be restored. So???? Don't get fuck by the markets. 

My posting will continue to be infrequent until market valuations are getting more attractive. 

Until then, Happy New Year!