Wednesday, December 24, 2014

Mistakes of 2014 and year-end portfolio tinkering



Hey guys, there has been a few changes to my portfolio recently. I increased my position in Biostime International and Alpha Natural Resources (a coal company). I took a new position in SandRidge Energy (an oil & gas company). I also sold my shares in Boardroom Limited and EBay to raise cash. Both Alpha Natural Resources and SandRidge Energy are in cyclical industries and could still drop significantly as we may not have hit a bottom in the cycle yet. But I don’t need to use the money I set aside for my investments for many decades to come, so I’m not really worried about price volatility (I’m only afraid if a permanent impairment to the business happens). You haven’t seen articles about my newer positions as I can’t seem to find the mood to write lately, and a lot of you don’t give a shit about my non-Malaysian investments anyway. I hope to finish articles on my newer positions in the not too distant future, but I think I might want to write about a few Malaysian companies before that to get back some interest in my blog. That’s assuming I can find some more Malaysian stocks that I would like to invest in. If any of you know of potentially lucrative Malaysian investments, please do give me a heads up.      

I certainly made a few mistakes since I started writing about the “Greedy Dragon Portfolio.” I made a number of investments in average companies at just reasonable prices. While this isn’t really a mistake, it’s not how I’m going to really make the big money. You can make a lot of money investing in either great companies at average prices or average companies at significant discounts. When you invest in average companies at average prices, odds are you will be earning average returns. Average returns aren’t really bad at all (it’s sure as fuck better than what a lot of “investors” out there earn). But average isn’t going to cut it for me as I’m aiming for fucking greatness when all is said and done.

Another mistake I made was not having enough patience. I always felt that I needed to put more money to work right now or miss out on opportunities. This led me to pouncing on a few stocks that just barely met my criteria in terms of business quality and/or valuation. Of course the market eventually served up better opportunities and I was forced to sell some of my existing holdings to get the cash to make other more attractive investments. This has led me to incurring unnecessary transaction costs and even taking small losses once or twice. If you think that my first and second mistake sounds related, it’s because they are indeed related. But I’m too lazy to go back and edit stuff. The moral of the story is to have high standards when it comes to investing and to never compromise on them. Eventually Mr. Market will go full retard and you’ll get your chance to put your money to work.

Thank you for following my blog and listening to what I have to say. Have a merry Christmas and a happy New Year! Hopefully the New Year brings us more opportunities to profit. Take care and stay rational.