January was the month for catching up for my portfolio. Like I said before, some of my gains for 2012 have just been shifted to 2013, and they came just days into 2013. It was rather unfortunate that the cutoff date is on the 12/31/2012. But honestly this really doesn’t matter a lot. An investor should not look at gains on a yearly basis, but on a multi-year period. But I should have beaten the HSI return by double…at least.

Rather than dwelling on the past, 2013 is likely to be a tough year. Most stock prices have risen a lot from their bottom already, most if not all low hanging fruits are gone already. While I have not studied all the investible companies listed in HK, there is one that I like and still cheap, but that too is a little bit iffy. Talking about the HSI for 2013, if it goes up by the end of the year, the chance of finding something to buy in 2014 will be so very low. If it goes down this year, I hope some of my stocks will be mega-bull stocks this year.

The market has been flooded with too much liquidity. A lot of new players are coming in, and they do not even know what is going on. All they want is to make fast money, with no sense of impending risk they are doing to themselves. A lot of them do not even know what to buy, so they buy whatever that are expedient, i.e. the ones that are popular with positive news and have gone up a lot.  News is springing up with stories like $40k turned into $1.5million leveraging to the hilt, did they even consider $40k can also turn into -$1.5million. I don’t know how they will pay that off other than declaring bankruptcy. Another large long term macro risk is the burst of the property bubble in HK. Most of those companies lending money using property as collateral will be dead. Those hardworking savers who just want a place to live using leverage will be dead. Those property speculators will be more dead than dead. There also won’t be room for stimulus. This is real fun when the govt stimulates the economy when things are good and forced to withdraw stimulus when things go haywire. This accentuates businesses cycles and it is really good for investors like me, only if we do it right. Staying negative when times are good and positive when times are bad is one of the ways to becoming antifragile.

Positioning your portfolio is probably one of the hardest skill for an investor. It is impossible to know the optimal allocation from foresight. This is kind of redundant since no one can do it perfectly and hence there is no optimal allocation. Currently I don’t think my portfolio is allocated rightly. It is disturbed by too many small positions while large positions are not large enough. Around 15% cash is not too bad I suppose. With another year under my belt, hopefully this year will be better than last.


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