What We’ve Learnt This COVID19 – Price Levels, Selling And Coffee Can Portfolio

Hello everyone!

It’s been a while again since we last updated here! As usual, we want to write as much as we can, but haven’t really come out with much topics to update here.

So if you have any topics suggestions, or any questions – please drop us a comment below – we love reading them! 🙂

Today however, we thought we want to just quickly pen down some thoughts and nuggets of wisdom we have gathered from others here, both as a sharing and as a reminder to ourselves.

Obsession Towards Price Level

One of the key things that we’ve internalized recently is that, prices are just snapshots of offers from the market and that we should not be too obsessed by it. There was a recent saying we heard: “if you think the current price is too high, this is and will be the new low”.

A lot of times, there are a lot of counters which we are eyeing towards, and we often want to wait for the best time or a better price to buy. Eventually, what end up happening is that, we will miss the boat and the prices just keeps going up and up. And we will just not buy it.

This is true for companies with strong momentum and those that are 100 year old companies, such as amazon. Amazon for example, has been going up non stop – and at anytime you buy over the past 5 to 10 years, literally any day, you would still have made money today.

The lesson here is that, don’t be too obsessed about entry price – if it is a valuable company, just buy in and keep for the long term.

When To Sell

Which leads to my second learnings on when to sell.

Recently there was a few webinar which a few bloggers shared that during the COVID-19 downturn, they actually did not sell or adjust any of their portfolio. Of course, some of their losses might be recovered now. The more important thing though is that they did not trim any of their winners.

On when to sell – you should only sell when there are better opportunities to deploy your money. And it is actually quite hard to find better opportunities that the ones that you have invested in and are winning counters.

Case in point – during the last correction, Mr Budget sold off his winners Amazon, SEA, AXXN to lock in the profit and to buy more assuming the market crash more. However, the prices of these counters have since went back up at least 20-30%, and now his previous entry price is too far behind and quite unlikely that he will be able to get those price levels.

The lesson here is probably that you should never sell your winners and just ride with them. If there are any corrections, these corrections should actually give you opportunities to buy more of the winning counters.

Coffee Can Portfolio

In a recent webinar, the Coffee Can portfolio was introduced by Ser Jing from The Good Investor and I thought it really covers the 2 pointers above.

Coffee Can Portfolio is a concept based on the research done by Rob Kirby. In simple words, one selects a list of high quality growth stocks and invests in them, and then literally forgets about it.

The benefit of this is that, the costs are low in the long run because you don’t trade regularly (and save on fees), and also that you will not be obsessed with checking the prices everyday, and you wont time the market. You also wouldnt need to battle with your internal struggle of whether to sell to take profit.

Warren Buffet also had a similar saying:

“I could improve your ultimate financial welfare by giving you a ticket with only twenty slots in it so that you had twenty punches – representing all the investments that you got to make in a lifetime. And once you’d punched through the card, you couldn’t make any more investments at all. Under those rules, you’d really think carefully about what you did, and you’d be forced to load up on what you’d really thought about. So you’d do so much better.”

And I think this really inspired me to take a look at our current holdings and to start identifying some stocks as our coffee can portfolio.

Of course, it is definitely easy to start a coffee can portfolio, but to actually have the conviction to hold it for long term and not touch it requires a lot of resolve, as well as a lot of financial freedom to be able to leave the portfolio there on the side.

For Mr Budget, I am currently holding about 21 counters. For my own coffee can portfolio, it would mostly be my US holdings: NVIDIA and Alphabet and only CMT for my SG holdings now.

Moving forward, I will also be increasing my US equity exposure so that there are more global high growth counters in my coffee can portfolio.

Will do more updates on this, and add a new “Coffee Can Portfolio” update on our portfolio section.

What have you learnt this COVID19?

Also Read: Our Thoughts On The Very Irrational Market Behaviour

Like our Facebook Page for more articles like this: Mr Mrs Budget

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