JUST ASK: 'Why doesn't ghchua track his investment returns?'

[Private Investor]

JUST ASK: 'Why doesn't ghchua track his investment returns?'

Written by The NextInsight Team
Saturday, 06 March 2010


In this weekly series titled JUST ASK, we invite readers to send in questions on stock investing, and personal finance. We will ask an expert (or experts) to provide answers. Below is a set of questions from a reader after we published last Saturday's topic "Is it silly to just buy and hold, instead of trading?"

The reader was intrigued about some investment details of ghchua, who is well-known among some investing websites. 'ghchua's' investment holding period is unusually long (for retail investors). If you missed last Saturday's article, please click on the URL at the bottom of this page. Read on!

http://www.nextinsight.net/content/view/2153/60/

Last Saturday, I read the interesting answers given by 'ghchua' and I seek to learn more from his investment mindset.

a) 'ghchua' doesnt seem to track the returns on his investments & his portfolio. Is that the case?

If not, what is the return on his stock portfolio to justify a buy-and-hold strategy? Would he mind revealing the size of his portfolio?

b) Why does 'ghchua' invest in unit trusts when he has the capability and experience to pick stocks? Unit trusts have too high a sales fee and an annual management fee, in my view.

c) What is the return on his investments in unit trusts?

[hnw]

Maybe he does track his returns but is uncomfortable showing it to the world ..

[ghchua]

Hi hnw,

I don't really track my return in the sense that I am not tracking it via a spreadsheet or something like that.

But I do have a rough idea of how well (or bad) I am doing every month from those CDP statements. I guess that should be enough for me as my focus is really to select good stocks to invest in every month, rather than tracking its return.

As an Engineer, I believe in making things better and therefore I focus on the process and let the result take care of itself.

[hnw]

I always thought engineers want to make things better and therefore do monitor the results (Where even 1SD discrepancy from intended output is not acceptable) to tweak it to the optimal output given a certain set of inputs.

Anyway, just thought it's personal preference to keep things private.

[ghchua]

I always thought engineers want to make things better and therefore do monitor the results (Where even 1SD discrepancy from intended output is not acceptable) to tweak it to the optimal output given a certain set of inputs.

Anyway, just thought it's personal preference to keep things private.

As I've said, I do roughly know how well I have done via those CDP statements that I have received every month. What I am not doing is to track every inflow and outflow in and out of my portfolio every month, and computing the returns based on all these. If I am going to get an accurate return number, I would have to do all these and since I have not done detailed calculation, I don't want to mislead anyone by just coming out with a number.

To be very frank with you, by not focusing too much on returns allow me to concentrate my effort on picking stocks. At least I know roughly where I stand, and that is enough for my purpose at this moment.

[meatball]

bro ghchua, don't mind me being frank or get offended, but i think you already owned shares in many companies, still need to spend time picking stocks? ::|
btw just asking, do you invest in stocks listed overseas?
like US, HK?

[newbie_george]

sifu shall be our next sg investment idol man!!!

[ghchua]

bro ghchua, don't mind me being frank or get offended, but i think you already owned shares in many companies, still need to spend time picking stocks?
btw just asking, do you invest in stocks listed overseas?
like US, HK?

Nope. I don't invest in stocks listed overseas. Just those listed on SGX.

The process of picking stocks is more of deciding which stocks to add every month into my portfolio. Yes, I already own a list of companies, but that doesn't mean that I will anyhow add them into my portfolio. I need to see which are the ones that are still reasonable to add, and which are the ones which need to be skipped this time round as their valuation is not right. Some of the stocks I gave them a miss because I do not have enough capital to initiate a position or add them as I could not find sellers in the unit share market. Some are of reasonable valuation, within budget but I gave them a miss because they are already quite overweight in my portfolio. But the story point is really to be fully invested every month, and therefore the process is to select stocks that can achieve this objective.

If you are into software development, it is more of an agile methodology. The aim is to invest all the capital within a sprint (as defined as one month in this case) and in order to complete this story, I need to pick out stocks from the backlog. I also need to know my velocity (which is how much capital in this case), which means estimation is needed to roughly know how many tasks that I can complete within the sprint. In this case, it is which stocks/how many stocks to select and whether they can fit in to complete my story. Remember the objective is to invest all the capital this month, and stocks selected must be of reasonable valuation, within budget and also not to be too overweight in my portfolio.

The above process repeats itself during the next sprint. So, there is a process involved and not just suka suka add.

Sorry if I sound quite technical here. But really, I have integrated some of these Engineering concepts and best practices from Software Engineering into my investment portfolio, because I felt that some of these interesting concepts are applicable in finance too.