In late 2015 I turned my attention to learning how to invest in equity markets. The first two full years went well but the markets generally went up so it wasn’t difficult. This year, 2018, was a different story.
Today is an exciting day for me and I want to share my excitement publicly. I am proud to say the the equity investments I manage for Kaspi Creative outperformed Berkshire Hathaway’s by about 6.5% in 2018. (Unfortunately the net value of my account is lower than Berkshire’s) That means we beat the S&P 500 by around 15.5% and the S&P TSX by about 18.5%. My personal accounts still beat the indexes by a good margin but didn’t perform quite as well as the company money I manage.
This summer with the high evaluations and long ride on the bull I wanted to reduce the risk exposure and volatility of my portfolios by dramatically increasing my cash position. I had just signed up for a global executive MBA at the University of Toronto. With its six figure tuition plus travel expenses I didn’t want to also to see a drop in my investments. Mostly because of market evaluations (I consider myself a growth at a reasonable price – GARP – investor) I took the safer route. At the time I had no idea if a drop in the markets was two months away or two years away. I just knew there had to be one coming.
I’ll admit that there was a whole lot of luck involved with the timing because five months later evaluations declined enough for me to start buying again, which is also exciting for me. I’ll be honest, I have to fight the temptation to buy as prices go down.
I want to be long-term focused and I generally buy with the intention of holding for many years. But when the markets were as high as they were it was tough to stay fully invested. And now that they’ve dropped dramatically its tough to hold on to such a large cash position. In August I was about 70% invested and slowed down contributions. This month I went on a shopping spree and now I’m closer to 90% invested and still contributing heavily.
I don’t know what will happen in 2019 and I’m not trying to predict it. I do believe strongly that the investments in my portfolio will grow significantly sometime in the next 10 years. Because of that I am confident with my current position and looking forward to the new year.