Equity Portfolio Breakdown
Blue: Current value as % of my portfolio
Orange: Cost as a % of my total cost invested into equities
I don’t have a hard rule on % cost allocation on stocks nor a threshold where I will trim them. This chart simply shows the divergence between my investment thesis and the market expectations of the company. It’s also a decent visualisation of my portfolio holdings.
Equity Porfolio Performance
Time-weighted returns (IRR):
CAGR Performance* since inception:
*Note: This is different than what is reported by the brokerages. Brokerages calculate time-weighted returns (you may know them as IRR), while practically speaking, you’d want to know what 1$ of your investment (if all invested since inception) will be worth today. It’s a crude metric, but to everyday people, this is more relatable (since if I liquidated my portfolio right now, I’d get 36% over my total cost invested).
IRR since inception: 81%
Portfolio Changes
Bought: $SE, $DNA
Crypto Porfolio Performance*
*Multiple is expressed as: Total crypto assets / Total cost into crypto. The last time I added real-life money into crypto was in July 2020. My starting point for comparison (being conservative) hence will be start of 2020. Portfolio breakdown will be fleshed out in the crypto section. I’ve included an index to track (assuming if I invested all my cost into BTC and hodl) my active investing performance in crypto.
% of Net Worth (exclude house/car) in:
Stocks: 18%
Crypto: 78% (not by choice!)
Portfolio Commentary
Equities (especially growth stocks) saw a bloody week to end of Septmber, due to <insert whatever factor news outlets say>. I’ve only added to Sea Limited and Ginkgo Bioworks. For Sea, it was right after they announced they were raising further capital via equity (i.e. dilution of shares). I added at $321 on 9th Sept, and never looked back.
This was during a time where there were rumors of Shopee launching in Poland. Perhaps I was caught up in the bullishness of it all. Haters will literally be screming right now asking why I bought at such a high price. Admittedly though, there is a certain element of momentum or uber-bullishness that makes me wonder whether I bought it at the right time.
I can’t give you the answer even though I wanted to. As of the end of Sept, its now closed lower than what I bought it at, likely in tandem with the rise in treasury yields, exuberance in growth stocks, the looming debt ceiling, and whatever headlines the news will peddle for clicks. In any case, buying stocks for the long term requires a keen understanding of their value proposition and why you think the company (and by extension its price) will be in a much greater place a few years from now.
There’s no need for me to regurgitate investment theses on companies which have been written about by probably half of FinTwit. The key here is to understand that you are your own obstacle to life-changing returns. The way my novice brain thinks about adding to a position is to evaluate the company’s quarterly performances. If quarter after quarter it has exceeded consensus estimates AND raised guidance? I think it’ll be hard to wait for a crash so you can load up the truck (with the exception of black swans aka flash crashes). Information is largely democratized, and to be honest retail has the slowest access to data vs sell-side/buy-side analysts. Many other investors would also know what a compounder $SE can be. For large funds, they are more concerned about exposure rather than buying the dip (as they earn from performance fees, usually 2% of AUM and 20% of returns).
These are price-insensitive buyers.
I often ask myself, would it be better if I were to wait for a dip then buy? The answer would only be certain in hindsight. It all depends on your time horizon and how good you think you are (ego). I am planning to put in money I don’t need for 20 years at least. As such, I (attempt to) identify companies with long runway for growth with excellent management capable of generating above-average Returns on Invested Capital (ROIC), which will lead to above-average returns. I don’t think I’m good at timing things, hence I’ll simply invest a fixed amount into stocks every month.
If you are truly a longer-term holder, then buying a stock at $100 or $120 or even $150 would not matter if the stock eventually went to $500 or even $1000. Very optimistic stuff, but I’d rather own good companies and own them for a long time. Definitely not looking to flip flop around positions anticipating the next dip.
Admittedly though, being able to prepare for correction (at least having a cash position) would come in handy. This is something I’ll likely focus in another year or so, when my full portfolio is largely built out. Furthermore, I’ll continue exploring the idea of hedges to take advantage during extreme portfolio drawdowns. The keyword is extreme, because while it’ll lose some money over choppy waters, as September has shown us, hedges are important. Definitely easier said than done, mark my words.
We’re in the new normal now yo.
I’ll keep my market commentary short this month. This is because any long-term investor worth his/her weight will tell you not to worry about market fluctuations due to hypersensationalized articles and clickbaits. In essence, only 2 things matter in your long-term investing success:
Your actions and behavior
Your invested companies
1 is infinitely more challenging than 2, and is a way larger determinant of success. We are our own competitors / devils. Make your decisions wisely. Even for a passive investor, your actions and behavior matter more. Why? You could buy the top of the NASDAQ index but with proper DCA, it is likely you’ll outperform 80% of active investors over the long-term. However, if you panic at every news headline, it’s more likely you’ll fall to the left side of the bell curve of returns. Always remember your investment goals and optimize yourself for it. Mine is simply:
Achieve outsized returns over the long-term.
Others
I’m still neck deep in swallowing Muji @ hhhypergrowth’s deep dive into Snowflake (paywalled), which was a mind-boggling 53 minute read! Madness (enjoyhis writings though). Reading thus far, the use case is pretty compelling. Its high growth and its best-in-class net expansion rate says a lot about how customers use their platform. This will be a key company to watch.
Another company I’m keeping tabs on but not yet started a position is Oxford Nanopore (ONT), which trades on the London Stock Exchange. As mentioned in my June article, I’m always interested in the picks-and-shovels of Biotech, less so the actual innovators or therapeutic companies. In Oxford Nanopore, there is a possibility that this can turn into a leader in long-read sequencing of DNA, thereby unlocking a superb amount of information previously undiscovered by the scientific community. That said, they only have the prospectus to show for, and the financial metrics are quite sparse.
Last but not least, having started a small position in Gingko Bioworks, I’ll say a few things I like about it. Recall that Gingko is an organism company (their words). DNA can be split into 2 activities; reading (sequencing) and writing (engineering). Gingko is wholly on the latter, and is helping companies to create boutique organisms that fit their companies’ needs, such as cells with increased yields (e.g. yeast). While Gingko earns revenue from this, they also sometimes take equity in the companies (especially small ones) in lieu of cash. This is quite interesting, as it aligns the interest of both customers and Gingko; it stands to benefit if the customers become big. The valuation seems lofty too, and with sparse financial information, we can only wait for earnings to assess management’s execution.
These 3 companies will be on my research list this month.
I chanced upon this tweet, and it hit me - I don’t have a hurdle rate yet. I’ve been only seriously investing for about 1 year 7 months. I’d like to think that I can surpass whatever hurdle rate I expect of my own investment performance. But this is something that everybody should think about. What is your hurdle rate?
Other updates
Lately, I’ve been writing a fair bit on Singapore’s personal finance platform Seedly. As mentioned in my August write up, I’ll now be devoting more of my time towards crypto, since that is a larger portion of my net worth. That has not changed in Septmber. Over the month, I’ve been using Seedly as a platform to drive more followers to my Twitter account. This includes providing comments to posts as well as writing opinion articles. I figured, since I’m relatively more experienced than many others in crypto (especially in Singapore, that I know of), why not write some crypto articles.
I started to write 5-minute short articles on basic crypto topics like blockchain 101 🧊⛓, scalability trilemma & layer 1s/2s, and the lightning network ⚡. I plan to write further as I see a clear gap in the knowledge of the average crypto investor. You may not believe it, but to have an edge in the crypto investing space requires an understanding of the fundamental technologies at play here. How you appreciate the technologies in crypto will position you to be early (or late) to the S-curves, of which there are many (if you know where to look). To reiterate, I’m just a decent crypto investor & have not currently “made it” yet.
I also did a deep dive as to why modern investors should have bitcoin in their portfolio. This is key, as I think there are many misconceptions around Bitcoin (especially around its volatility, adoption and comparison to gold) that prevent others from investing in it. Last article that might be of interest to you is my experience of getting scammed for $4k (~27 SOL at $160?), and 5 lessons one could learn from it.
While I started posting about equities on Twitter (& I still do), I think my value-add on Seedly comes from talking about crypto, which I hardly see people doing. I also know very wonderful outlets that write detailed articles and threads for equities; Hence it’s a little hard to carve out my own niche there.
Website
As I’ve been writing more and more, I’ve also been thinking about my personal brand. My personal opinion is that brand should be epheremal, and should not exist on just one platform, let alone a walled garden like Facebook, Twitter or LinkedIn.
Even in job interviews, my personal website will potentially make me stand out from other interviewees. In short, there’s a ton of advantages to having a personal website in addition to a LinkedIn profile. The future is unlikely to be monopolized by walled gardens (Facebook, LinkedIn); I’m just building out my personal brand for the future.
Have a look at my website if you’re interested. I mainly use it to store my threads and articles on crypto and equities, as well as this monthly substack article. If you’re someone who also likes to share thoughts on a particular subject matter, then you should also create a website. Over time, our writing (hopefully) gets sharper and we get more “popular”. Hence, the number of opportunities that may perhaps come knocking via the website will at least be greater than 0 over longer periods of time Sometimes, 1 opportunity may be all you need…
Play the long game folks - building your personal brand is more important than you think it is.
Crypto
Crypto has been choppy lately, stuck in a downward channel. Given the regulatory attacks coming out from both US (thanks, Gary) and China, I am pretty surprised crypto held up the way it is. To be honest, the China ban was quite a loud statement, with strong backing behind it. While of course it’ll be near impossible to stamp out crypto within China (have to confiscate hardware wallets etc.), its probably the last we’ll see China trading activity for awhile. There’s no point in speculating the end game here since I’m not a PRC citizen; I’m a long-term investor: none of my investment theses in crypto was affected by the China ban. Any sort of regulation (US or China) just makes the act of investing in it clearer and well-defined. The more extensive the regulation, the more funds can start gaining crypto exposure should they want to.
To reiterate, this is good for crypto… or is it?
September was also crazy month for the Solana ecosystem. Solana closed at $108 at the end of August. After the meteoric rise to $210 in a space of 10 days (!), it’s natural to expect some sort of profit taking to occur. I don’t have a crystal ball, and I’m more than comfortable hodling these bags of coins (and NFTs) for the long-term. Whilst every crypto investor has their ‘gambling’ coins (aka coins you buy into without much due diligence, or moonshots), the key to longevity of your crypto investments is to take a barbell portfolio approach. In Traditional Finance, the risk-free end of the spectrum is bonds (or US treasuries). In crypto, there’s really no such thing as a risk-free rate.
My implementation of the barbell portfolio is visualised in the donut chart below.
My largest holding is Solana, then some bitcoin miners (Compass Mining), then other components of the Solana ecosystem (SRM, RAY). FTT is also a blue-chip exchange token. In total, that would take up 74% of my portfolio already. The other 25% is split into thematic plays, like NFTs, other Solana coins, Avalanche ecosystem, blockchain gaming plays (YGG, PYR), as well as DEXes (DYDX, PERP).
Other assets worth mentioning is that in my Others category, I’ve got a small amount of BTC, ETH and LUNA. I plan to make Luna a long-term hold, but that will wait until I have more capital freed up from either earning bitcoin from mining or taking profits on my riskier plays.
Of course, only time will tell if the speculation will work out, and I’m often rebalancing based on what I see on Twitter (very strong source of alpha if you know where to look). To sum up my crypto monthly performance in September, we went to the moon 🚀, but crashed landed on the international space station. Still better than Earth, right?
LFG :)
Yield Farming Developments
In terms of this, nothing much has changed. I currently have my Solana token in the Sunny yield aggregator platform, whilst my SRM and FTT coins are on Saber. Longer-term, I see more potential with Saber as their road map is clear and well-defined (cross-chain liquidity) vis-a-vis Sunny (which seems to just be an aggregator). Hence, Saber’s governance token is worth farming. Alternatively, I’ll swap my earned SUNNY into SBR every now and then to rebalance between them.
Besides that, I’ve also got a long-term Raydium single-sided staking position. This provides me with exclusive allocations to IDOs as well as NFT mints, subject to winning the lottery-style allocation. Lastly, I’ve a small, small yield farm with some airdropped $BOP in an Orca pool to earn both $ORCA and the native token $BOP. Boring Protocol claims to be building a decentralized VPN. I am not smart enough to see how it will work or whether it’s grounded in reality or not. Either way, I don’t plan to increase my stake in it, so will just keep farming.
On Binance Smart Chain, I still have the USD position in Tranchess (which I am earning USD interest in their native token $CHESS). See the crypto section of my last month’s article for a more detailed writedown of what Tranchess is. Last but not least, on Avalanche, I have some XAVA staked, which gives me the same benefits as what Raydium does for Solana. You’re able to subscribe to IDOs on the AVAX ecosystem as well. I also am staking some JOE tokens in a single-sided staking pool to earn yield. I am expecting TraderJOE to capture market share in TVL as more activity is traded there. Currently it’s the 2nd DeFi app behind BenQi (1.63B TVL) with 1.29B in TVL.
Bitcoin Mining
Waiting on my Bitcoin miners to come online be like…
The current situation (if you’ve followed me on Twitter) was that the South Carolina facility (which 2 of my miners would be hosted at) ran into some trouble with permits and other stuff. As such, Compass Mining bent over backwards to try and relocate the affected miners to the new facility. As my 2 miners are slated to come on End-Sept and End-Oct, technically only 1 miner was affected. When I do start mining, I’ll post bi-weekly updates on Twitter as well as on my substack for those who are interested.
However, a lot of things can happen between now and End-Oct, and while I very much look forward to mining my own bitcoin, I would have to wait until it actually comes online before I can daydream about my own bitcoin mining empire…
A man can dream…
I’ll be honest here and say that of my crypto investment, bitcoin is the most brainless of them all. I have absolutely no trouble sleeping at night buying bitcoin at 45k, 55k, or 65k. This is a super long-term hodl for me, and also requires the least amount of attention (bitcoin community is in steady state, hard to suddenly detract from original Satoshi’s vision).
Cue the Lindy Effect: The longer Bitcoin stays in existence, the longer the future expected life expectancy of Bitcoin, aka this chart below (well explained by Vijay in The Bullish Case for Bitcoin).
Conclusion
If you’ve read thus far, thank you. My substack articles are simply my thoughts documenting my investing journey. I am already beyond happy that >50 people are willing to read my monthly thoughts :)
I plan to keep writing, and while the format of the article will keep changing, the writer will stay the same. I’m just an average joe(y) trying to get rich and to spread my knowledge to those who want to listen.
Stay Woke,
Joey