Following my previous post on reviewing learnings from 2020, naturally with the new year I like to pen down my 2021 resolutions / goals. These are high level goals and might be pretty vague, but I shall use these as starting points to be broken down further into smaller, more achievable goals.
To that end, here are my 4 personal finance goals:
- Reduce time spent directly managing the portfolio – trading frequency & number of holdings
- Deeper analysis into individual stocks
- Improve portfolio tracking vs benchmarks – bonus: automation
- More blogging, sharing and learning from others
Goal #1 – Reduce time spent directly managing the portfolio
Due to market volatility triggered by COVID-19 causing big swings in our portfolio last year, I found myself checking in on our portfolio and stock markets way too often. I can admit to staring at my Google spreadsheet and checking Yahoo Finance at least daily, sometimes 3-4 times a day. Adding in Twitter, Seeking Alpha, and eToro, I would say I spent around 1-2 hours a day monitoring the portfolio and stock-related news.
This likely resulted in me trading thrice as many times last year compared to the previous year. That also means three times the trading costs. Our portfolio has also grown to an unwieldy 29 individual stocks and 9 ETFs.
As the number of individual stocks increase, so does the time spent on due diligence and keeping up with latest developments. This then may result in further stock additions as I come across more “opportunities”. I find myself getting pulled into this unhealthy cycle, of which I need to be disciplined and break out of.
I draw inspiration from Warren Buffett’s 20-slot rule, and shall set a goal of reducing my individual stock holdings to just 20 positions. Reducing our ETFs may not be as beneficial since I don’t spend much time on tracking those anyway, so I shall leave those untouched for now.
By reducing the number of holdings, I hope this would also translate to less time spent on managing the portfolio and hence, less frequent trading.
Goal #2 – Deeper analysis into individual stocks
Staying on top of ~30 individual stocks adequately is close to impossible while holding a full-time job and juggling family time with the wife and kid. Most of the time, I find myself just skimming the surface of company fundamentals and barely keeping up with the latest news and quarterly results. I realize that if I don’t keep up with a particular stock, my conviction wanes especially when volatility hits.
So this goal ties in with the first one. By reducing the number of individual stock holdings, I should be better able to divide my limited time to the remaining stocks and keep closer tabs on them. Minimally for each counter, I would like to keep updated with all related news once a week, evaluate quarterly results within the week (listening to the conference call would be a bonus), and read an related article or watch a related YouTube video once a week.
I also intend to keep an updated fact sheet of sorts for each of my individual stock holdings on this blog stating my investment thesis, key indicators I’m watching, the latest material developments worth keeping in mind, and my investment plan for that particular stock.
The objective of this exercise is to maintain my conviction in every single individual stock holding so that when volatility hits, I won’t be taken by surprise and can quickly formulate my response.
Goal #3 – Improve portfolio tracking vs benchmarks
For the longest time, our portfolio tracking has been really basic, tracking just a snapshot of key indicators like P&L, dividend yield, weightage, etc. Halfway through 2020, I added a macro to record key indicators daily so that I can track them over time. This proved to be really useful for me to visualize our portfolio returns.
This year, I would like to try to figure out how to track our portfolio performance versus a chosen benchmark, e.g. S&P 500, Nasdaq 100, STI 30, etc. The simplest way would just be to compare the portfolio % returns to the benchmark % returns for a given period. However, I would also like to be able to take into account cash inflows and outflows when making comparisons, if it doesn’t make the calculation too complicated.
One way I intend to whittle down my individual stock holdings is to cut those that underperform the benchmarks. Basically, my high level portfolio strategy this year is to increase the weightage of index ETFs, and only hold stocks that I think can provide alpha, i.e. outperform the benchmarks.
Automation would be a bonus, if I can dedicate time to figuring out how to do this either using Google Sheets macro or Python. My coding skills are still very basic, so that will involve quite a bit of time and effort to realize.
Goal #4 – More blogging, sharing and learning from others
I just started blogging in 2020 in dribs and drabs, but would like to take it more seriously in 2021. I like the fact that writing a blog post helps me crystalize my thought process around a particular investment.
In addition, I would like to contribute my thoughts in various forums on Facebook, Twitter, YouTube, etc. and hopefully gather thoughts and learn from others as well.
I really do enjoy the open discussions online, where many different opinions can be expressed freely. It really does help to challenge my thinking and to really refine my investment thesis and strategy.
Thank you for reading. Feel free to share your 2021 resolutions / goals in the comments. If you enjoyed reading this post and would like to stay updated with my latest posts, do sign up with your email for our newsletter.