Happy New Year 2022. I know it is kind of late, but still it is the first week of 2022. I am looking forward to this year that covid will no longer be potent, travelling can resume, with improve social gatherings and a more meaningful life for relationships and my work.
TECH & CRYPTO SELL OFF
The hopes of stock market uplift for the start of 2022 has been dampened, especially for Tech stocks, seeing a significant sell-off this week. Needless to say, the correction give rise to a major puncture in my portfolio that is Tech-centric. Refer to my portfolio mix here
Cathie Wood’s flagship fund Ark Innovation ETF fund (ARKK), has dropped 9% this week and is 45% from its peak in Feb 2021. This is the worst performance since inception in 2014. All 20 of ARKK are down 20% from recent highs except Tesla.
So if your portfolio is down badly, you can take comfort that even Cathie Wood is also not doing well for now. Worsening inflation and a sooner than expected rate hikes are the culprits of the rout.
Bitcoin and Ethereum’s fate are no difference. Bitcoin is at 41K USD as we speak, down 40% from all-time-high of 68K USD. Ether peaked at 4.8K USD is hovering around 3.1K USD now. Dogecoin suffers even worse from high of 74 cents to 15 cents now i.e. ~80% down.
KEEP THE FAITH
Cathie Wood still believe that as so long as the U.S. can avoid a recession, her ARKK fund is still able to return at least 30% annual return for the investors in the next 5 year horizon. In any case, the fund did return that feat since inception up to Sep last year.
I am aligned with her view and continue to keep the faith in my portfolio of tech stocks. None of the fundamentals of these company have twined, except for market sentiments of inflation, interest rates and perhaps also due to stock rotation and a loss of confidence temporarily. Yes, I agree that valuation had been lofty, and that is why 2022 may well be a good time to scoop some of the good tech stocks at reasonable valuation.
Undoubtedly, I am a strong believer that everyone should definitely look beyond 2022 or even 2023. With that faith, I added more of Sea limited and also re-invested into Coinbase to align my action to my faith this week. For both Sea and Coinbase, I am lucky to have sell it off at higher values last year and re-invested into it at lower value now again. I am also putting a lot of other good tech growth stock in my watchlist and looking to buy them at lower price. On and off, I will also do some trading to realise profits or cut losses.
Not all contrarian are stupid
In 2019 March, I wrote about how bitcoin is unloved and hence, I went through the trouble to open a crypto trading platform and started buying crypto. Refer following article.
Thanks to my good blogger friend “Unintelligent Nerd” I also learnt about other cryptos.
Back then, many of my friends advised me against doing so and seeing me as “dangerous” in my actions or even “stupid”. As bitcoin and ether rises, I did reap my fair share of profits though not as many baggers as wanted. Then when crypto fenzy hits the high last year, I did not invest and there are some who tell me that again I am “stupid” for not keeping or accumulating more cryptos.
Either way, “I am always stupid”! LOL. The fact is, I invested during “contrarian sentiments” and reaped my profits… not those who said that I am “stupid”.
The thing I learn vividly in my crypto lesson is : Contrarian is not always wrong, and more faith is just what we need for a longer period of time. To me, the NATO (no action and talk only) behaviour by those commentors is the “most stupid of all”! At least when you take action, even when you fail, you experience and learn. Many don’t even have the guts to take action and hence don’t learn at all.
Don’t be over-confident and arrogant, wait for the right time
When the market is super bullish, I believe there are many who saw their paper profits at all time high and naively start to think so highly about themselves as “investment guru” and talk about how stocks can give them exceptional returns and how they will be able to retire in no time. Worst of all, some may sound super arrogant and start to look at others as fools and themselves as king of kings. I remember those who predicted that bitcoin will easily hit 100K by end of 2021 with a strong stench of arrogance. Their mouths are all shut now.
FYI: It is not that I don’t believe in crypto’s future, but it is only back then, I don’t think it is the right time! 2022 may well be a good time for investment in crypto compared to 2021.
The lesson that everyone must learn is don’t be over-confident and over-arrogant even when you are doing well, especially when most of the time it is proven factually that it is only short term success that is not sustainable. Even when you are successful in dollars and cents, life is more than that! It is about relationships in family, friends, health, hobbies, helping others and continuous learning in a sustainable manner.
Accept facts and mistakes and improve
I remember writing about how property (at least for me) is “factually” a better return in my last decade of investing journey when the stock market is still very bullish in August last year. Oh dear… it received a lot of hoohaa and a lot of analytical comparison. *Duds*. The derisible thing, is that the analytical comparison only takes care of tangible part of stock investment when the intangibles such as emotions management and irrational behaviour is not accounted for. This evidently shows the immaturity in the big picture, but it is ok, as long as we accepted it and learn going forward.
Go ask around in Singapore. How many people earn easier money from property or in stocks? How many in Singapore invest in SG listed companies let alone US listed companies and hold all the way without wavering in 1 or 2 decades?
Facts is facts. That said, sharing of the facts in property investing, does not mean that I don’t believe in stocks and cryptos and only believe in one instrument of investment! I If I don’t believe in stocks, why would I even blog here since close to 8 years now.
The important point to note, is to accept facts and mistakes and to learn from it!
To my children:
Those who are often the loudest when stock market is at the peak, is also often the softest when market crashed.
Don’t listen to them.
Follow those who are more consistent and sustainably growing over a longer period of time and have a more holistic approach in life.
As with life, stock market has many ups and downs. When you are up, don’t be over arrogant and look down on others; on the contrary you should help those who are down. And when you are down, don’t be over depressed and please stay hopeful. Learn from it, and improves the next time.
Investing in high growth stocks or cryptos will have high risks. Often, the wild swings will keep your heart rate pumping for all the wrong reasons. For those who does not have “intangibles” skills, such as “emotional management”, “faith over a longer period of time”, and sufficient amount of cash to be used wisely, I am quite against you in investing heavily into these assets.
Being a “Contrarian” is not always wrong. In fact, majority of the people have been proven to be always wrong, with only a small percentage of people who is mostly right. Therefore show faith, hardwork and grit in what you believe in, but never deviate to doing bad things just to achieve your result. It will come back to haunt you badly.
There are many other rewards in learning investments and not just monetary wise.
Refer here for what I have written in 5 years ago.
Last but not least, stay humbly wise by having wider exposure and experience to learn from and to improve on the next time. Don’t ever let temporary noise affect your mental and physical health. Be kind and stay positive, hopeful, and keep the faith in your belief.