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Investing Portfolio Updates

My Stocks Portfolio Strategy For 2023

Calvin Lo

Time flies and it’s already March but I thought I’d share my stocks portfolio strategy for the year ahead anyway.

Let’s talk about the macroeconomic situation to set the stage. We are still in a bear market despite the recent rally. S&P 500 is around 15% above its 52-week low (rejected right below 20% resistance). Inflation is stubbornly high although of its peak, and in response central banks around the world continue to raise interest rates.

As additional background on my family and personal situation to set the context, I’m 37yo this year and we’re a young family with 2 kids below 5yo. My wife and I are still some ways from retirement age so we’re currently in wealth accumulation stage.

I’ll share my plan upfront, followed by the underlying core principles and nice-to-haves that drive this plan. Lastly, I’ll share briefly on our current portfolio.

Plan for 2023

Increase exposure to quality dividend stocks/REITs. High inflation will reduce consumer discretionary spend. High interest rates will increase borrowing costs. This macroeconomic environment may even persist for many years to come. Companies that have pricing power and strong balance sheets will prevail over weaker ones. These tend to be mature, well-run companies with strong brands and wide moats, and tend to be those that pay consistent and growing dividends (not all do). For 2023, I plan to add more dividend growers to the portfolio. For now, I plan to do this through an ETF, specifically the Schwab US Dividend Equity ETF (SCHD). In addition, I expect S-REITs to also do well, so I’ll also be looking to add to the CSOP iEdge S-REIT Leaders Index ETF (SGX:SRT/SRU).

Accumulate index funds and growth/tech stocks. High inflation and interest rates will continue to be challenging for growth/tech and even Big Tech (which are the top constituents of the S&P 500 index). However, I see this as an opportunity to accumulate at lower prices assuming prices will rebound eventually. I won’t be rushing in, but just DCA regularly. In general, I’ll be focusing on US and China growth/tech ETFs and US stocks.

Simplify. I feel that our Family Portfolio has too many individual stocks, and I’m struggling to keep up with every one of them. Current count is 11 stocks (excluding odd lots) and 2 REITs. For 2023, I plan to consolidate individual stocks/REITs to 8-10 counters. To do so, I’ll be concentrating on the winners and cutting the losers.

Automate. Currently, I’ve RSP set up for 4 counters – VT, QQQ, ARKK, and SGX:HST. Monthly investments are done automatically on FSMOne through a combination of scheduled transfers and RSP. Other counters are in our portfolio are not offered for RSP on FSMOne, so I’d have to find alternatives. The aim to make the investing process as passive as possible for these core ETF holdings.

Core principles

Risk management. The most important investing principle for me is managing risks. I do this especially for the Family Portfolio (for retirement) through diversification and asset allocation. The worst thing that can happen is the portfolio value dropping much more than we can tolerate, and causing us to sell at/close to the market bottom. I don’t want to be taking too much risk with family assets, and willing to accept lower returns in exchange for peace of mind.

Segregation of assets. Another important principle for me is to segregate family assets and personal assets, which have vastly different risk profiles. Thus, I can take a more passive and conservative approach for Family Portfolio, while also allowing myself to take a more active and aggressive approach for the Personal Portfolio. Since the Personal Portfolio is insulated and doesn’t affect family assets even if I lose everything these, I can also use it as a sandbox to experiment with different trading strategies to scratch that trading itch (admit it, we all have it).

Nice-to-haves

Passive and automated. Between my full-time job and 2 young kids, I don’t have much time to manage our portfolio. My aim is not to maximise returns but to optimise it. Thus, I’m looking to maximise return only for the little amount of time I’m willing to commit to maintaining the portfolio (ideally 4-5 hours a week). Increasing automation through regular scheduled transfers and RSP will help to take a lot of mental burden and free up my time to focus on more important things as well. Reducing the number of individual holdings and increasing index funds also helps by reducing the need to analyse individual companies’ fundamentals, earnings, charts, etc which takes a considerable amount of time. Not all tasks can be fully passive/automated though. I still need to review the portfolio allocations once/quarter to make sure weightings have not gone out of whack.

Optimise for cost and tax efficiency. Reducing costs has direct impact by letting me keep more of my returns. Once the big things are in place (mentioned above), I can focus more on the small things like optimising for cost and tax efficiencies. For dividends, I’ll look for tax efficiencies by holding Irish-domiciled UCITS ETFs instead of US-domiciled ETFs (which are subject to 30% withholding tax), and increase exposure to Singapore stocks/REITs (no tax). As for costs, I’m always continually looking for online brokerages (e.g. Tiger, moomoo, Webull, IBKR, Syfe Trade, etc) that offer lower commissions and fees to lower transaction costs.

Portfolio

Holdings. Currently, the Family Portfolio is 69% equities, 13% REITs, 13% cash, 3% crypto, and 2% bonds. My Personal Portfolio is 100% equities into 3 counters – Tesla (TSLA), Palantir (PLTR), SQQQ (hedge).

Portfolio breakdown by asset class

For the Family Portfolio, slightly more than half are in ETFs or with robo-advisors, and around 29% in individual stocks/REITs.

Portfolio breakdown by vehicle

Performance. After 5 years of investing, the Family Portfolio is still down -4.2% (-2.0% including dividends) and my Personal Portfolio is down -6.1%. Most if not all of the underperformance can be attributed to just a handful of big mistakes in individual stocks. Thus explains the big drive to index the bulk and focus in-depth on just a few individual stocks.

For more details on our portfolio, check out my Portfolio page.

I welcome your thoughts, feedback, and suggestions!

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Disclaimer: This is not financial advice. I am not professional financial advisor nor do I work in the finance industry. Anything I write here is purely my personal opinion. Please do your own research and due diligence before investing into anything. All investments come with associated risks. Best to consult a financial advisor if you’re still unsure.

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