Portfolio Updates

Portfolio Update February 2022 – More Pain and War Stoking Inflation Fears

Calvin Lo

More stock market pain, misery and even despair in February as war breaks out as Russia invades Ukraine towards the end of the month. That has caused even more supply disruptions especially for oil, metals and agricultural commodities of which both Russia and Ukraine are significant suppliers of.

Inflation is thus expected to continue to accelerate. Prices of commodities are surging, especially oil. Tech stocks continue to sell off. Seems like only stocks related to oil, commodities, and defence are going higher. Other safe havens like bonds, gold, and healthcare stocks seem to also be doing pretty well relative to the market, which is expected in times of uncertainty.

Closer to home, fuel prices are now super high and still increasing. My fuel pump bill has definitely increased significantly. Fortunately, I’m still working from home so I save fuel burn commuting to the office for now.

The stock market is still in a bearish downtrend, with the S&P 500 and Nasdaq 100 are both down 10% YTD and 15% YTD respectively. I’ve deployed a substantial amount of cash since the start of the year, so I’m hanging back a little before dumping in more.

The good news is that March is bonus payout season, so we will get a nice infusion in cash for investing after setting aside funds for insurance premiums, kid’s enrichment classes, and CPF (either housing refund or cash top-up).

Hopefully we get an amicable resolution to the Russia-Ukraine conflict, inflation moderates, and economies continue to show strength sooner rather than later. However, I’m not holding my breath. Even if it is otherwise and we get more FUD, that could also mean lower stock prices and better entry points on the bright side.

See my portfolio holdings and strategy on my Portfolio page. I’ve included portfolio pie charts that update in real-time.

Family Portfolio

  • February performance: -11.2% vs SPX -6.2% vs NDX -7.5%
  • YTD performance: -18.4% vs SPX -10.2% vs NDX -15.1%
  • All-time performance (since Aug 2016): -1.5% (+0.7% including dividends)
  • February dividends: S$37 (-80% yoy)
  • Bought: VT, QQQ, SQQQ, SARK
  • Sold: JPM, SGX:A17U

Unfortunately after 2 months of steep declines, our portfolio has fallen into the red despite investing for more than 5 years. VT, QQQ, Big Tech stocks are still up but growth stocks and ARKK has been a huge drag on performance, not to mention a few bad bets which I was late to cut losses.

After war broke out, I took steps to hedge the portfolio to try to dampen any further downside. Towards the end of 2020, I started experimenting with protective put options as a hedging strategy against further declines in the stock market. However, the strategy didn’t really work especially when the market recovered a bit towards the end of January and trended somewhat flattish in the first half of February.

Also, trading options was costing me an inordinate amount of time to find the right balance between strike price, expiry, and delta. With 2 young kids and a full-time job, I just didn’t have the time stay on top of my options as much as I’d like.

However, I still felt the need to find some kind of hedge. I considered stocks related to oil, commodities, gold but decided against more stocks. I’m also not comfortable shorting stocks directly yet, due to the unlimited downside although that can be mitigated using stop losses. So, I decided to try inverse ETFs. These are also short-term hedging instruments, but appears to me at least not to require as much monitoring. Maybe I’ll share more thoughts on this in another post next time.

Specifically, the inverse ETFs I picked are the ProShares UltraPro Short QQQ ETF (SQQQ) and Tuttle Capital Short Innovation ETF (SARK). Essentially, SQQQ provides daily 3x inverse of QQQ, and SARK provides daily inverse of ARKK. I also sized the positions to hedge around 10-20% of related holdings in the portfolio. I don’t plan to hold these inverse ETFs for long, probably a few weeks at most.

Besides those inverse ETFs, I’ve only picked up the usual VT and QQQ as part of DCA.

Sold off 2 positions this month, JP Morgan (JPM) and Ascendas REIT (SGX:A17U). Both counters have not been doing well.

I was expecting JPM to be doing pretty well in anticipation of them benefitting from the effect of higher interest rates on net interest margins. However, JPM stock price has been declining especially after reporting earnings on 14 Jan 2022. Since we have a pretty substantial position in Singapore bank DBS anyway which is performing much better, I didn’t see much point in also holding onto JPM any longer.

Similarly for Ascendas REIT which has been performing poorly the past year. I’ve decided to lower our portfolio exposure to individual REITs, in favour of REIT ETFs like VNQ. I’m also looking out for a Singapore-based REIT ETF. Syfe REIT+ also looks interesting, but I’ve yet to dive deeper into the product. By selling off Ascendas, I’m left with only 2 REITs – Frasers Logistics & Commercial Trust (SGX:BUOU) and Ascott Residence Trust (SGX:HMN).

Personal Portfolio

  • February performance: -6.9%
  • YTD performance: -16.1%
  • All-time performance (since July 2020): +25.8%
  • Bought: TSLA, PLTR
  • Sold: None

I continued to average into Tesla (TSLA) and Palantir (PLTR) since both stocks have continued to drop. I’ve no qualms buying more of either stock but more so with Tesla after they reported blockbuster earnings. Palantir is not doing too badly either, although their last earnings report was somewhat mixed.

I’m taking a somewhat cautious approach in adding though, still sitting on ~40% cash until things settle down a little bit more. If I have any cash leftover from bonus this month for personal use, I might deploy a bit more cash if prices continue to stay low.

Social Portfolio

Not too shabby this month for the trading account, which actually made some profits though meagre.

My short-term trades in Archer-Daniel-Midlands (ADM) and XLE paid off, but was offset slightly by Tencent (0700.HK) which ended up in losses.

My copy trades with jaynemesis and KoraTrades still in the red, not much improvement this month. The only other open positions are XLP, XLU, and XLV.

I’m around 50% in cash now after closing ADM and XLE so I’m looking for new short-term trades.

If you’re interested in opening an eToro account, you can through my referral link here.

How did your portfolio perform in February?

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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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