This investment event was big enough for me to write a short post about it. Given the recent run-up in equity markets, we have decided to sell some of our stock holdings and take some profits. The last time we sold any shares was 1.5 years ago in Aug/Sep 2015. This is part of our overall strategy to focus on building up our ETF portfolio and simplifying our share portfolio. Over time, we should hold mostly ETFs in our investment portfolio with minimal stock holdings. It’s not that we need the cash since we are still employed in full-time jobs. Just a matter of rebalancing and reallocating our asset holdings.
Sell transactions for Mar 2017
Realised profit/(loss) excluding dividends collected: S$4,500 or 10%
Realised profit/(loss) including dividends collected: S$7,000 or 15%
If I compare these results to the current performance of our ETF portfolio,
ETF portfolio unrealised profit/(loss) excluding dividends collected: S$2,500 or 8%
ETF portfolio unrealised profit/(loss) including dividends collected: S$3,500 or 12%
It’s only marginally better and we are still holding on to a number of loss-making stock positions! Doesn’t seem like it’s worth spending the time monitoring and analysing the earnings releases and annual reports of the stocks. Besides, I’m losing interest in doing the necessary research and this dividend share investing strategy is not going to work without putting in the required effort & time.
Ever since our switch to ETF investing, we have more free time to do whatever we want. Be it travel, leisure, work etc. More importantly, we can switch off from monitoring the stock markets and not let them affect our personal lives. The monthly Dollar-Cost Averaging (DCA) of Singapore ETFs and market-timing Value-Cost Averaging (VCA) of Singapore and Global ETFs still require some manual transactions to be made. However, we have been increasing the level of automation and are waiting for the last piece of the puzzle (i.e. robo-advisor portfolio) to come into place.
I have been seeing some debate and criticisms of the passive index investing strategy. Stuff about the market becoming inefficient as more and more people become passive index investors and this strategy only offering market returns. I have to say it comes down to what works for you. There will always be active investors in the world. Institutions with client funding and high net worth/wealthy individuals that will pursue greater than market returns. My belief is that there will always be people who think they are smarter than everyone else (this includes me by the way since I’m one of the stupid ones) when it comes to investing. I actually agree with them. Why would I compete with investors who are willing to put in so much more work than me at stock picking?
Business life cycles are getting shorter and the pace of technological advancements is making it more difficult to predict which businesses can survive in the long run. I don’t have the ability, knowledge or funding to make the right calls and survive the wrong ones over the long term. But we do have the capability to be income earning. If we can continually earn and re-invest our active & passive income while earning market returns, I would be happy with that.