It’s been 4 months since I’ve written new content but when you read through this post, you will understand everything. 2018 was one hell of a ride for investors, and also for me personally. Let’s kick this off by letting you know the reason I went public after anonymously blogging for more than two years. Then we’ll go over the investment returns, portfolio transactions, and how I plan to achieve similar or better returns in the future.
The reason I went public was that I wanted to create stronger connections to the people I often communicate with. It also feels better as I’m not just one voice out of the thousands of anonymous investment bloggers. Having a face attached to the tips gives me more credibility and authenticity.
This time, even more than before, I have to write in an understandable manner while being able to prove why I act the way I do. As I have said before, writing publicly why you sell or buy an asset is one of the strongest benefits by blogging.
It’s very embarrassing telling people that you sold a firm just because you got a bit scared or excited about some news. Rather, you stay more frosty and calm, which is exactly what drives good investment returns.
So this is me. Arne Magnus, turning 27 soon and eager to learn more about investing, and how to balance wealth and happiness. I’ve learned a great deal by being active on investment forums; it has made it possible for me to show a thorough understanding of finance at school.
We learn so much about the world, firms, and how businesses actually operate by analyzing and talking about dividends, growth potential, and so on. See my recommendation from the Dean of Finance from Tokyo.
“Most notably, his interest in current topics in finance as well as his knowledge of international business affairs and finance were exceptional.
This was even more remarkable given the fact that the class at Keio University was attended by talented students not only from Keio but by students from Keio’s various partner universities.
Arne performed outstandingly in all areas and I am confident that he will continue to develop his skills and knowledge in the future”
XXXXXX, Dean of Finance
None of the true knowledge I’ve gained is from academia. Most of the practical information I learned, I got from reading investment books and from talking with you guys. Keep asking questions and seeking knowledge! Feel free to interact or connect with me on LinkedIn.
Life Changes and Investment Performance –
Summary of 2018
To make you understand why I acted the way I did, You need to understand my situation. While I was living in Tokyo I met a girl and we are now semi-engaged (I have no clue what that really means, but that is what she tells her friend so I just follow along).
Pro tip: Buying a Promise Ring is romantic but very confusing. A ring is a ring is a ring. When you have a ring on your finger, you feel either engaged or married. I have no clue what I am, but I have a ring and it kind of feels okay. Anyhow, having a long distance relationship between Japan and Norway is really expensive, but totally doable if you just accept the cost.
Berkeley and Silicon Valley
A few weeks ago I received news I was accepted in an Entrepreneur program at Berkeley and from 07.06.2019 until 19.08.2019 will work for a FinTech firm at Silicon Valley*
*I’m working for free. I suspect that this experience will compound into something really cool, but the short-term cost is naturally high. Hence, building the stock machine has been neglected for a while.
I realize that my capital would decrease rather fast. So I made the heartbreaking decision last November of selling a few of my favorite firms in order to secure the financial future. Once I was done I had 150,000 NOK or $17,350 in my account
*blue means buy, read means sold; click on the images to see a larger version
While all of the firms were sold at a profit of around 10,000 NOK or $1,300, I was naturally quite sad. Selling equities that you plan to hold for a long time is never fun, but then again, I needed to be sure that I could A) afford to keep my relationship with my girlfriend in Japan, and B) afford to stay in SF and pay tuition to Berkeley.
The Market Crash and Performance
What happened a month later made everything so much more complex. Hence, I wrote this on another investment forum:
As the market is falling and your account is getting smaller, I’d like to remind you of something: In the military academy, each student is taught to not make impulsive, long-lasting decisions while they feel low/uncertain/bad/tired.
Far too many candidates quit because they make decisions in the moment, when they feel like shit and can’t see any positive outcomes.
Same goes for investing (and almost every aspect of life), make choices when your brain has cooled and you are calm.
If you want to sell, then that’s okay, but make sure your decisions are based on rational arguments, not feelings (btw, you could save a few relationships by following the same rules).
Little did I know how hard the market would fall. Within 3 weeks, Nasdaq fell 16.46% and dragged the market down. Suddenly, I saw cheap high-quality stocks everywhere so I sat down and wrote a list of the possible results of my actions if I started buying equities again (after my November selling).
My portfolio did not take such a beating because I was not heavy in tech, but it was time to add to tech after the crash
First, many of my equities were up during the market crash due to people moving capital to safer assets. Second, I could probably, by working hard, get close to that capital before flying to SF and I would not buy very risky assets. So I went ahead and started shopping for cheap stocks.
I bought 7 shares of Apple at $156, 20 shares of Altria at $49, 15 shares of Philip Morris at $69, 1060 shares of Elkem at 2,373 NOK (still hadn’t recovered), 42 shares of Kopparbergs at 149 SEK, and again at 77 shares at 164 SEK, and 60 shares of Nolato at 408 SEK. I also did an arbitrage trade between Investor AB B to Investor AB A and got 500 NOK from that.
Furthermore, I also moved some capital to crowdfunding platforms and invested in 5 loans with a yield ranging from 7.9% to 11.5% and the capital is locked from 12 months to 60 months.
The loans are very safe with a grade rating at B and A, and I expect to move more fixed income capital to such platforms. As of now, I’ve invested 70,000 NOK and will earn about $800 from those investments.
Right now, it seems like this was it and I am once again beating the very concentrated Nasdaq Index. My risk-adjusted return is good and my sharp ratio is 1.22
The Conclusion From The Market Crash
The conclusion from the market crash is I did, as intended, have a portfolio which was suitable for bear markets, and this time it performed well. I can admit though, that I want a bit more volatility in my portfolio; I’ve added a heavy position of Apple to the portfolio with a cost basis at $189. If one ignores the down-trending news from Asia right now, I think Apple will be a very rewarding holding for a long time.
The total dividend income for 2018 landed in 21,550 NOK or $2,504. All months grew from 2016 and I hope to see the same trend in 2019. I finally passed the accumulated $4,000 dividend income mark which means I have received $4,000 in income from stocks.
The yield in the portfolio is around 4%, but what’s impressive is that the CAGR is 9.6%. That means a lot because I’m a dividend GROWTH investor looking for firms with GROWING dividends. While this table is not 100% accurate, it doesn’t include my Nordic firms and starts at $1,700, it surely gives you an idea of the power behind compounding.
Concluding The Summary Of 2018
The goal for 2018 was to get $2,500 in income and I managed to beat that goal. For 2019, I’m not going to make any goal because it is possible that I will sell equities should it turn out that San Francisco is more expensive than what I thought.
Even more, having a girlfriend on the opposite side of the world is more expensive than what I have experienced so far. These factors are too uncertain right now, so I guess I’ll just say what happens happens. I think I will find capital to deploy in either the stock market or to life anyhow.
When looking forward, I see that I will continue with the Dividend Growth Strategy but 2019 might not be my best year in terms of getting richer (in money that is). For the smaller portfolio, which is my index portfolio, I will stay cold and I’ve added a small Africa ETF after reading the book Factfullness because it truly seems like Africa is a place to invest when thinking long-term.
I will also let the emerging market position be the largest in my portfolio, simply because I believe that’s where the greatest returns are in the future (morningstar also agrees here).
For me, 2019 will be challenging and rewarding in many ways. I will get experience in Silicon Valley, will be apart from my girlfriend for more than 5 months and will need to stay true to the strategy that I’ve chosen. Despite this, even though it is especially hard when life gives you so many other things to think about, I hope to stay calm and reasonable.
That’s all for now. Take care and expect volatility in 2019.
Feel free to connect with me here.