Back where it begun

As 2018 wraps, it's time to take a look back on the year.

The chart says it all - I'm back to where I started the year. Q4 was basically a quarter of trauma, and I'm fortunate to have kept north of the S&P500, albeit slightly, in terms of my USD-denominated investments.

A couple of lessons -

Don't be greedy. Yeah, we all know that - in theory. I watched in glee as RLH climbed up far beyond my expectations, and before I knew it, it was back down at what could be considered fair/slightly discounted valuations. I am looking at a big patch of red.

Some things might not make sense - for the time being. Back on 21 May, I published a post about MU (Looking for value - case study on Micron). Guess what? That post was just about a week shy of MU's peak at $64.66. While I am lucky not to have entered at the peak, MU is now also another position that's deeply in the red. The recent weak forward guidance has not helped the cause, and makes me wonder whether the market knew beforehand that there would be weakness in NAND/DRAM demand and progressively began to price it in. As of today, the stock trades at a ridiculous TTM P/E of less than 3, but it's the future that's going to bring returns, not the past. I still like MU because of its strong cash position and the in-progress $10b buyback, but the forward guidance cannot be ignored. The company is not trimming $1.25b in capex frivolously, and must foresee market challenges ahead to be doing so. I believe there is long-term upside, but this will require patience and in the meantime I'll look for opportunities to bring down my cost basis.

Options aren't easy. I don't think I made positive returns on a single option trade this year, but this is a completely new beast for me. Options have their usefulness - buying $34 MU puts just before the earnings release would have cushioned the blow a fair bit, but I don't have enough experience to use them to my advantage yet.

With the recent volatility, it is tempting to exit one's positions and sit out the next couple of months (especially considering the Jan 2019 SSB issue will get you around 2% p.a. for the first year), but that may be an overreaction. While 2018 will fall shy of my desired returns, I take consolation in having stayed ahead of the S&P500, and will bring the lessons above into 2019.

In the meantime, I'm trying to keep a pulse on the M&A prospects, having narrowly missed on Panera Bread in 2017 and then Sodastream in 2018. Having not been able to plan a trip to the US this year (the first calendar year I've not stepped on US soil since I started university as a freshman!), my ability to get a pulse on things is severely diminished, so this is a lot more difficult than I would prefer.

On the home front, I continue to stare at lacklustre portfolio performance across all SGD-denominated holdings (seriously, I would be better off if I had put my money in SSBs) but will be focusing on finding good entry points for selected REITs in 2019. I've hitherto tried to apply my US stock thesis onto SGX stocks, to little success. In 2019, I'll shift towards a more dividend-driven approach for SGD-denominated holdings and hopefully be able to pare down on some of the big drags on my portfolio - I'm looking at you, S59.SI.

Till the next time, cheers and out.