Vladyslav Koptiev
Quarterly review – Q1 2021 To my copiers, Our gain in net worth during last quarter was 16.1% versus 6.2% in total return for $S&P 500 index. During the last quarter we observed a significant rebound of value stocks. iShares Russell 2000 Value ETF ($IWN) which measures the performance of the small-capitalization value sector of the U.S. equity market, delivered 23% gain. It should not come as surprise though – the economic recovery was strong and projected to be strong. Despite this, at the moment I am extreme averse to permanent loss of capital (that is, risk averse). Even value stocks prices look daunting for me. Speculation element in stocks valuation is at historical record, very similar to that observed in late 90s. That’s why I lowered our exposure to stocks during last quarter and at the moment we keep some bonds and cash, along with hedging instrument represented by VXX. I treat stocks as a share in business venture, not only a quote. As a follower of old school approach popularized by Benjamin Graham, daily, weekly or monthly movements are of no interest for me, unless they provide an opportunity to buy cheap and sell high. I made some additions and disposal during last quarter, mostly to fine tune our portfolio. As announced before, my intention is to reduce portfolio’s volatility as much as practicable, to maintain decent risk/return ration. I wrote a post about this in my annual letter 2020. I always feel happy when I deliver value to my copiers. I cannot promise any rate of return, but can guarantee that I will continue to treat you as business partners and manage your money with diligence. Some investment tips which can make your experience better: 1. As a rule of thumb, set your investment mixture according to your risk tolerance and re-balance in order to buy low and sell high. If you are copying me, you can ignore this point, since I already allocate assets based on very moderate risk level. If you have higher risk tolerance, consider overweighting shares in your portfolio, in particular small value stocks. 2. Never cut contributions to investment accounts during down markets. In the long run, you will benefit from buying new shares at lower prices and will achieve a lower net average purchase price. 3. If you're close to retirement, only the portion of your money that you won't need for another five to 10 years should be in stocks. Our portfolio at the moment has slightly in excess of 50% allocated to stocks. This process of allocating money according to when you'll need it is called time segmentation. You want a retirement plan that allows you to relax and not have to be concerned about the daily, monthly, or even yearly market gyrations. 𝙋𝙤𝙧𝙩𝙛𝙤𝙡𝙞𝙤 𝙘𝙤𝙣𝙨𝙩𝙞𝙩𝙪𝙩𝙞𝙤𝙣 Download your copy of portfolio overview by following the link: drive.google.com/file/d/1vVD2FSI5kPokd_ihkU82UYgJjWyPhRZd/view?usp=sharing Link to previous letters: Annual 2019: etoro.tw/2uneNhj Annual 2020: etoro.tw/38T3Wg7 January 2020 (an overview why monthly fluctuations have limited meaning): etoro.tw/2x0kS4u November 2019: etoro.tw/2QnfDD0 June 2020 (risk of “growth” stocks): etoro.tw/33Db9i9 Value investing vs growth investing: etoro.tw/34tX7Pi Cordially, Vlad.