My investment year 2016

Time for the yearly look-back ritual.

Results were great. +47% during 2016. Now CAGR of 45% year since 2012-01.

+ Focus and positive mindset throughout the year. I like doing this, it hardly feels like work. At least when things go well. Now is the time to prepare mentally for worse times and staying process oriented.

+ Continued learning. I took a Swedsec license. Good volume of reading. And some experimentation with new instruments and markets in a small way.

+ I did some proper valuations and write-ups and posted them online, which I set as a goal previous new years.

+ I went to a board meeting for the first time. Small company, I happened to be the biggest shareholder in attendance outside of management. Good learning experience. I’d like to try and make more time for this type of thing even in my current full-time job + small kids situation.

+/- Quite a bit of money was made trading news with a small part of the monies. A thousand here and there adds up if it can be repeated a hundred times a year. It’s not hard to see how some day-traders produce their stellar graphs. If I ever tried to be a day trader my first strategy would be to sit watching the news ticker with a filter for swedish stocks with market caps under a few hundred million USD or so. Even if the returns were okay doing this, I’m not sure it’s a total positive on my situation given that it’s quite distracting for the brain even if doing this just one hour in the morning and takes away both from analysis of long-term holdings.

– Feel like the portfolio is deteriorating. The gap between my belief of instrinsic value and portfolio value of holdings is less. If this feeling continues to rise it might be time to get less than 100% invested. Currently own 93% stocks and 7% debt.

– I was guilty of diworsification, holding too much of low-conviction holdings. This was mostly due to the feeling above which made me reluctant to add to existing positions, and instead added some in big companies where I was less likely to make a big mistake. But also much less likely to earn +50%/year. Examples of this was holding Sampo, Starbucks, Apple.

– Got an account-addiction habit, mindlessly checking the balance without purpose. Will try to counter this again by writing down more of my thoughts in journal + occasional blog/twitter posts.


Going forward

Go to two board meeting this year. Results target is to beat index with 15%/year over time. When this feels hard it seems I can spend my time better elsewhere (unless my account has become so large that 15% is much more meaningful).

Investment method:

– Try to incorporate a framework of self-reinforcing / self-defeating processes into my thinking (ala The Alchemy of Finance) and actively look for such situations. See fundamentals as less static and more like a dynamic process. I.e. be willing to deviate in assumptions (discount rates, growth prospects) in valuations if there is a prevailing bias, or likelihood of one developing.

– Do one writeup and/or valuation per month with a bit more depth