[Net asset review] 2H2018

Thoughts

Q2 of 2018 onward was challenging, market started trading sideways, many of my trade ideas didn't turn out well (lose money).  In fact my big profit was slowly etched away by the numerous small losses. nonetheless it still proves the point that trend trading principles prevented me from holding on big losses.

Overview

After realising a stagnant net asset in my last review (here), I acted on  the insights by: i) reducing cost opportunity of liquidity; and ii) reducing risks of trading. This has resulted in a slight increase of net asset.

Observations

1. The rate of gain for my assets was suppose to be higher each year. This is due to higher wages each year (annual increment & payrise due to switching job), but it may have also be because of me missing 1.5months worth of salary due to prorated AWS (lose 0.5months) and forfeiting of 1month declared bonus. need to review expenses to prevent creep

2. Large % in cash is an opportunity cost. aside from optimising with saving accounts, will need to spread out the cash into Singapore Savings Bonds (I actually bought about 0.75 year of expense worth of it but didn't document). Transfer some cash into SSB to double interest.

3. Deploying liquidity beyond trend trading. If we look at the long-term basis of STI, period of sideway trading and down trading occupy from 40% to 75% of a boom-bust cycle. A good trend trader may have a net 15% return (annualised) on a uptick, but if you average it out throughout the entire cycle, it maybe 9% for a cycle (decent high but not incredible) or as low as 3.75% (not that high). hence to learn beyond trend trading.

Key action

I will review my expenses for 2018, and make adjustments to avoid further escalation.

Transfer the funds i use for trend trading into SSB, instead of leaving in savings account.

Restart income investing; alternate between income investing and trend trading for boom-bust cycles.