The Hedgehog Portfolio Hits S$1.1M!

Hey Kelvestor readers!

We’ve entered the New Year – the Year of the Ox! Every year represents great opportunities for us as growth investors who are focusing on Superstocks.

In this New Year, all of us should strive to be not just an investor, but a good one. Too many people have told me that they had regretted not investing earlier.

As an investor, you are being paid to learn more about the world, using your observations to create wealth for yourself.

Investing is also a mental sport that will get easier over time because your mind starts to recognize patterns quicker. It’s the highest ROI financial activity in your life.

Start today.

Coming back, I once read this quote that goes like this:

“A master is once a disciple but a true master is always a disciple.”

This is something I truly believe in, and the biggest reason why I work hard to learn how I can become a better investor every single day.

Over the course of the past few months, I’ve been busy calling up various investors globally to learn as much as I can from each of them. This knowledge exchange process helps me to become a better coach to my GIM community members.

You see, it’s important that we are not satisfied with our status quo and we should seek to discover ways on how we can improve our portfolio returns through:

1. A smarter stock discovery process
2. Allocation adjustments
3. Options, and
4. Better analysis

That is why, in the coming days, there will be a new analyst joining the GIM team which also allows us to add even more value to our GIM community members.

Anyway, I want not just my GIM community, but all of you to become better and make more money every year.

That is why besides managing my main portfolio in ThinkOrSwim, I re-started a portfolio called The “Hedgehog” Portfolio in August 2019.

I chose this name because a hedgehog represents sturdiness and curiosity. An investor needs to have this sort of doggedness and constant curiosity as well to succeed.

Let me update all of you about how it’s doing.

Portfolio Returns since Inception

When I first started this portfolio, my purpose was very clear.

It was to demonstrate to all of you that even a small portfolio could grow very well when one is focused on choosing the best Superstocks and worrying less about the macroeconomic environment.

After running this portfolio for 1 year and 5 months (August 2019 to February 2021), this portfolio is currently at $1.1M.

TWR (Time-Weighted Rate of Return) Portfolio Returns:
– 837% since Inception
– 50.13% since the Year 2021

This was achieved by having a portfolio filled with 85% stocks and 15% call options.

Capital Injection History

Previously, the fund was at $500,000 in October 2020.

Did I put in additional capital since then?

The answer is yes.

I’ve also transferred some of my positions from my main brokerage to my Hedgehog portfolio.

As you can see, since October 2020, I’ve withdrawn $4,000 and placed in nearly $56,010.

My total net capital injection was $269,159.80 since the portfolio’s inception. The bulk of it was deposited in latter parts of 2020. My simple goal is to grow this to $1.8M by end of this year.

My Mindset for Investing Success

While there could be an element of luck behind my results, it is a constant improvement on my part to reflect on what went right and how I could improve myself.

My goal is to keep doing what goes right and discard the rest.

We have the power to keep molding ourselves until we see perfection. I encourage all of you to think big and achieve hall-of-fame returns. (E.g. portfolio returns of above 50% yearly)

To become a good investor, you have to first observe your investing mindset.

Our mindset is often being distorted by all the kinds of financial news we consume every day.

There are thousands of lies being told to you by people who call themselves “experts”, and these lies stop you from becoming an excellent investor.

But the truth is, we never once verified their claims but instead live in their words rather than create our own worlds the way we want them.⁣

While most of us have different views, I would like to offer a different perspective from my experiences. Feel free to embrace or reject these thoughts.

These thoughts have helped me gain tremendous returns on my portfolio, and I hope they will help you gain these returns too.

Myth #1 – You Can’t Beat the Market⁣

This is false. You CAN beat the market as long as you’re using a thoughtful investment framework + you’re patient enough to see great things happen when you invest in Superstocks.

Myth #2 – Buy Low and Sell High⁣

It’s really difficult to talk about buying low and selling high. What’s low and what’s high? It’s too subjective. ⁣
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The key is to understand the valuations and growth trajectory of your companies, not just looking at mere share prices. Using share price to make decisions without understanding the company is a recipe for disaster. ⁣

Myth #3 – Take Your Money Out, The Recession is Coming⁣

Here’s the thing. Many experts have been predicting a recession every single year.

But let’s not kid ourselves – we do not have mystical powers.

Instead of timing the market, why not hold great companies and ride through the volatility?

At least we are putting our money at work every single day by owning a piece of great businesses. Let compounding take its course.

Myth #4 – You Don’t Go Broke Taking a Profit⁣

While this is true, it is extremely painful taking profits on companies with SUPER long runways. The biggest pain is sometimes thinking you’ve sold at the high only to see it going MUCH higher… like 10x or more.⁣
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But you don’t have to take my word for it. Ask that to the early investors of Amazon, Walmart or Apple.⁣

You’re doing yourself a huge disservice if you are selling your stocks early.
⁣
This is why I don’t have a profit target to sell. I don’t sell when I hit 50%, 60% or 80% gain. I sell only when I see a weak future for my companies.⁣ Period.

As growth investors, we’re investing in exceptional companies with tremendous growth possibilities.

Some companies could be exceed its target price temporarily, but we do not sell. There are possibilities of value creation such as growing a new business segment or earnings exceeding expectations.

What is overvalued could be deemed as fair value very quickly.

We should not be fixated on the “target price”, but we should always focus on the quality of companies and if they could continue growing at very high growth rates.

In my humble opinion, as long as they are executing well, there is no target price to sell.

In some cases, companies could be overvalued by 20% because the market is placing a premium on the superior execution abilities of the management.

Understand your companies and don’t just think about taking about profits.

Leaving your profits to compound could be EXACTLY the right moves to have phenomenal portfolio returns. ⁣

Myth #5 – You Need to Watch Financial News Every Day

When I started out as a new investor, I was hooked on the latest news from CNBC or alerts being pushed by various investment gurus. Truth be told, a lot of their content did not help me achieve the results that I want. Instead of providing clarity, it created more confusion. 

You need to be able to sieve out whether you are paying more attention to noise or signals.

What are the noise? Donald Trump pushing a bigger stimulus package. Rocket attack on U.S. Embassy in Iraq. S&P 500 hits all-time high. The market is overvalued!

What are the signals? Corporate developments, corporate expansions and strategic hires. We tend to overestimate the impact of macroeconomic factors on our own individual companies in our portfolio. 

The truth is… what matters in the long run is a company’s earnings growth, not those macroeconomic events. 

I do not have a view on where the market’s going, but all I know is I need to have a view on whether my companies are going to earn more money.

I have a “Signal or Noise” framework for you, ask yourself:
• How does this news affect the earnings of my company?
• How useful is this news to my entire investment strategy?

Most of the time, I will zone out on all the market noise and develop a laser focus on my companies instead.

This is why I believe in providing fundamental research over a discussion on macroeconomics. I encourage you to do the same to start to see a different result for yourself.

Closing

To conclude, I will say that some of the best things in life is to help each other succeed. It’s a joy writing articles like this – I hope that it inspires you to think bigger and want more for both your life and portfolio.

By changing the way you think, it opens up new possibilities for you to enjoy higher returns on your portfolio.

I truly hope that you will consider investing as your “part-time job” on top of your full-time job because I know it will change your life. It changed mine.

I want all of you to succeed in investing.

Don’t be fooled by what the financial world tells you. Sometimes, the financial world does not know itself too.

Be someone original and challenge yourself to become better every day.

Choose good people with good values who are doing good work.

Appreciate them and show love.

You deserve a good life and you can turn your dreams into reality.

The compounding that happens in your wealth and relationships will change your life.

* 🐂 P.S. Here’s a CNY special for our Kelvestor readers! 🐂 *

As we want to start out this New Year on a high note, we decided to do something cool for all of you.

After reading my article, share what YOU will do in 2021 to improve your investing results!

1) Leave your answer on my Facebook post here!

2) Share this article with your friends – if you found this helpful, why not gift them an Angpao of knowledge too?

The person who sends in the best answer will be invited out to an “Ox-picious” (belated) CNY dinner with me – and you can ask me anything in this session! 😆

Send in your answer today!