2025 in Review - Leading a Purposeful life

2025 passed quickly for me. Tried to pay attention and be present to each day but because there is no big change in many aspects from previous few years, life just flows by. I realize that it’s in new situations and environments that time slows down. Makes sense as our minds tend to ignore status quo items. So when traveling, life is extended such that the 88 days spent traveling this year feels many times longer and  more memorable than the SG days.

In all, 2025 has been a mostly positive year on most dimensions. Readers can read my 2023 update and 2024 update to get more context. 

In 2025, I traveled about 88 days with the highlight being the family trips to Nepal, Jiuzhaigou, Japan and the couple trips to Alaska, Shanghai & Xiamen.

Children wise, 2 in university, one in IB and one in primary 5. All are doing fine school and health wise. Likewise Shao Ning and I are in good health and generally happy. The above 2 statements are short but are already huge blessings that are prerequisites for leading a good life.

AngelCentral continued its activities and as predicted mid year, the ecosystem is still at bottom with mostly down rounds and just a few green shoots of fund raising and secondary exits.

The one big down item is linked to above.  Many startups face big stress as they are still unable to turn profitable and/or raise more capital and/or get an exit. And we are very disappointed to see some founders make poor decisions or unethical decisions or self serving moves when facing large business challenge. It’s this disappointment in human nature that is the biggest source of unhappiness.

To recap, I centered myself on 3 purposes.

Purpose 1 - Be there and be good help for family. Extend to friends if i can.

Purpose 2 - Be healthy physically & mentally

Purpose 3 - Be a good custodian of wealth and sharer of experience. Help grow startup ecosystem via angel investing work.  Contribute to broader society as a volunteer.

Purpose 1: Be there for family. Share and guide kids more. Maintain friendships.

Overall rate this purpose an 8.5

Wife and I continue to spend time communicating about our relationship, about kids and our joint work. Dad wise, his overall mind is still sharp and we just brought him to Japan where he walked 6k-10k steps daily. Sister and mother in law came along too. Both are fine. 

Wife & I continue our date nights, couple trips and now integrate work even better. Our work is mainly about Angel investing, Angelcentral, own portfolio/family finances mgmt, & our various volunteer roles. 

The 4 boys and wife continue to be my biggest motivator in life right now.  Very proud of all 5 of them. For kids, we have started gently getting the older ones to invest and be accountable with quarterly reporting.

I have a continued shift in mindset this year where I have moved further to care less about winning in terms of finances or career. Part of it is realizing consumption has its utility limits, part of it is just growing older and knowing my situation and mindset won’t allow me to take risks needed to scale things faster. So might as well be content and happy with what I have.

Friends nothing much changed. Many of us turned 50 this year, so had 2-3 celebration dinners. Forum carry on as normal. 

Kody the dog is healthy but slowing down for sure. He now doesn’t bother to jog with us and likes to sleep much of the day away. Still walking twice a day. Very happy he came into our lives.

Purpose 2 : Be as healthy as I can mind and body

Rate this 8.5

I maintained at 63kg-64kg, body fat <20%. Weight actually fell to 61+kg but wife told me need more muscle. So I consciously ate more protein for 1 mth and reversed it. Quite happy with this new state as I have more energy and don't tire too easily.  I continue to eat salad for breakfast. Eat minimal degustation menus and heavy dinners. Continue exercise/move around a lot about 5-6 times a week. Exercise is usually 1 hr dog walk + 40min yoga or jog or swim. My motivation to be healthy is so that I can eat, enjoy sports and travel well into old age.

Supplements all continue as per normal. One thing different is taking a 30min nap in the afternoons if free. Works to prevent sinus acting up.

One fun activity I picked up is pickleball. Been playing it weekly with my cousins/ friends and also with hwachong alumni. It’s easy to pick up and gives a decent workout. A bit more social than just solitary exercise.

Mentally, the boredom as an early retiree still surfaces. This is no different from past years since retiring. Think the only way to cope is find new things to do and environments to immerse in.

The mental drain dealing with unethical or bad actor founders is still there. Not fun at all but have to plow thru it I guess. Part of the role I undertook. What helps is to focus on all the founders that are trying to do the right thing. And ignore the lousy ones.

Purpose 3 : Preserve & Grow Wealth - 10% annualized IRR on net worth. Quality angel work for startups+ build AngelCentral + good volunteer 

I would rate this 6.5 this year. 

Biggest reason is PE side was down 12% for the year! Mainly due to mark to market down rounds on two startups and asean VC funds writing down a lot this year. -12% is a very bad annual return for the risk and lack of liquidity we take in this asset class. For context, startup and vc investments are now at about 14.3% IRR since 2015 or 2.09 TVPI. So still up but no where near justifying the illiquidity and risk taken.

Only bright spots in this space are a handful of startups turning profitable, DPI improving significantly with a few PE/VC funds returning some capital and a good sized startup secondary sale. 

Rest of investing did fine with 

public portfolio of bonds, stocks and cash up another 10% in sgd terms on the back of strong performance by some stocks picks, astral fund, STI, SPY/QQQ and main drags are usd depreciation and a bad call on chagee.

It does look like the long term target of 10% IRR on net worth  is increasingly hard to achieve. I am at about 8% now since 2012. But will leave it there as the goal was to give myself a challenge. Still within reach if startups/VC  space delivers. Over 14 years, every other asset class has delivered as expected or better. 

AngelCentral and angel investing took up most of my work time this year and we saw our members funding stabilize at a similar quantum to last year. For our own portfolio, we invested into 3 more new startups and a bit more into 4 existing ones. Added one new USA AI fund too. Budget for investing a bit higher than 2024/23 but still halved from 2022 peak.

We have decided to drop the 100 angel investments goal. Not realistic since the exits are too slow in coming. I don’t want to be 70 years and still talking about startup liquidity. 

I will make a separate post on startup portfolio and angelcentral work for 2025.

Finally on volunteer work, I continued to do volunteer work at Hwa Chong, IPOS and NRF. Retired from my ITE role after 9 years. Felt a bit sad as I really liked the ITE mission and vision. Took on more responsibility with HC side so that kind of balances out.

So in summary, 2025 has been a good year for all 3 of the purposes. The write downs on VC side finally came but it’s the ugliness/weakness of human nature that is was subsequently exposed  that I would rather not have to experience and see.

Looking forward to 2026, i expect to continue life like in 2025 but with a bit more stress as number 3 has IB exams and number 4 has PSLE. Probably can’t travel that much due to that.

Also, i hope our tech ecosystem prospects will improve but i know there will likely be more closures and write downs coming even as the better companies start to pull ahead and shine thru. 

Mid year update on Startup portfolio + separation of wheat from chaff prediction

Finally starting to see significant write downs on many startups last few mths. Will do my proper year end mark to market but offhand both VC and startup side is at 2.08 TVPI, 0.3 DPI, 14-15% IRR. Big 13% drop on TVPI last 6 mths.

My prediction is next 12 mths is when asean Vc funded startups finally either raise new funds, turn cashflow positive or close down/distressed M&A. Those lucky ones that raise will mostly be on lower valuation unless their financials have improved dramatically and are clearly going to be or are very profitable.

And the VC funds that backed them will also finally correspondingly mark down the valuations of their portfolios. Already finally seeing some writedown of Vc value from the very unrealistic 2021/22 highs.

As mentioned before, it’s good for the ecosystem to clean things up, recycle talent and resources. But all this means less new money will be investing into Vc funds or startups until the later stage ones and their VCs prove they can make good money for investors. And the new money will be very demanding on valuation and quality. It’s actually great time to invest.

What can make things change? 4-5 ipo or giant exits of our late stage startups that make solid returns for investors and founders. And/or macro environment change with regards to IR and prospects. Then sentiment may improve.

For us personally? We are still patiently optimistic for certain winners in our portfolio and hope to still get a 2-3x on invested capital when we finally stop for good probably in a few years time. Already more than halved investing budget annually so that our cash inflow from PE exceeds outflow.

IRR of 14-15% is decent but below what we have been getting last 13 years on listed tech stock investing. Of course compared to STI it’s better but that’s not really any consolation. 

Rooting for the remaining founders to navigate this issue of lack of profits and exits and show the world we are a quality ecosystem.

Startup Portfolio Review 2024 - Bottoming out year but with no clear rebound in sight?

(For context pls read 2023, 2022 & 2021 updates. Also this post is all about the startup side of things, I also post a review of life in 2024.  Can also read my outlook post made early in 2024. A lot still relevant except market really hasn’t turned around at all as many later stage financials still not clear are of high quality).

The title summarizes 2024. Funding and valuations stabilized at a low for most of the year with some small signs of rebound esp in earlier stages. However it’s still far from a strong recovery as later stage funding and IPO/exits are still very weak. Investors prefer to wait and see to see how their later stage portfolio companies navigate the new environment which cares about profits, operating cashflow and gross margins. 

The problem is that even by end 2024, it doesn't look like many of the later stage startups have convincingly improved their financial numbers like publicly listed SEA or Grab have. When I read the ACRA reports for FY2023 of a lot of the later stage startups, I can see there is effort to cut cost and lower cash burn. However, most are still very much loss making and consuming sizable amounts of cash. Of course most of these startups will claim that 2024 is even better in terms of cost control and cashflow. I certainly hope so! But this less than perfect financials coupled with still high cost of capital and weak public markets for loss making startups is why we are not seeing a big rebound.

On a personal portfolio front, Ning & I started the year with a reduced budget that is about 40-50% of the high invested back in 2021/22 or about the same as 2023 budget. This decision is partly a reflection of asset allocation choice as we are near the limit we want to invest in this asset class with little exits and is also a reflection that there are easier and quicker returns in the public markets. For context, 2024 listed stocks side we are up about 30% in sgd terms. In conjunction with tighter budget,  we also decided to be stricter and not invest if we can't find a good prospect.  

What unfolded in 2024 was that we made 5 added startup investments into existing portfolio rounds. We did find 4 new companies to invest in this year but 2 were found year end and still pending and two fell through as both founders found other investors that he preferred. Coincidentally both were gen AI startups. I guess this space still has some easy money from less demanding investors.

For context, we have invested in excess of S$8+M into ASEAN startups and VC funds and have seen a DPI of 0.27. That's very bad for a 9 year period and unfortunately it corroborates with industry study average of VC returns for 2015/16 vintage too. The TVPI of 2.4 and IRR 15-20% is ok esp since I feel this is the bottom already.

Observation 1 - DPI is still very weak for our startup ecosystem. Implication is little new money coming in.

Distributions are weak because there are little trade sales or big up rounds or IPOs. And these activities are very subdued as the valuation rerating caused by high IR has resulted in many startups being very over valued based on last private round. This prevents exits. Moreover these startups are not improving financials sufficiently well to attract big up rounds by new investors. 

Eg. Last round worth $100m on 10x revenue. Now norm is 3x revenue, so startup needs to 3.33x revenue with improving cash and profits just to stay at 100m valuation. 

This situation is similar in the USA but seems worse for ASEAN, I track cathie woods ARKK etf as a proxy for the growth loss making stories. ARKK fund recovered 22% in 2024 but is still 60-70% below its highs. 

My view is until the later stage startups generate liquidity via trade sales or IPOs and/or show vastly improved financials, new money will be very careful entering ASEAN startups. 

Observation 2 - Full cycle returns are still good for regional comparables but no longer great against other tech regions. Implication is that buying cheap matters and company selection matters.

Our 48 startup portfolio IRR is now at 20% with a TVPI of 2.45 since 2015.The VC portfolio side is 2.37 TVPI roughly with a slightly worse IRR. Absolute value wise, a small 3-4% annual paper gain in 2024 for startups/VC blended. Very bad compared to listed markets. It’s like property market returns.

The peak in IRR was over 38% back in end 2021. IRR has fallen steadily for 3 years. I would feel 20% IRR for something so illiquid and risky is probably ok if we compare with the STI etf total annualized returns of 6.1% for same period. 

But if we compare against India Nifty 50 index returns or China IT index returns or SPY returns, they both return about 9-13% annually. I suspect if we adjust these returns to account for cashflow, the IRR becomes closer to 15% which then to me is better than an illiquid startup portfolio. Needless to say global tech indexes like QQQ did much better.

In a way this makes sense, why should our smaller ASEAN markets naturally produce quality profits and companies that outperform big competitive markets. The implication of this is that as ASEAN angel investors, we must find a margin of safety via lower valuations and also via selecting excellent teams and models that beat the ecosystem index.

Observation 3 - Bottoming out is ongoing, more problems will emerge, no ecosystem catalyst for rebound. Implication is founders must create your own catalyst via solid revenue growth and profits. 

Of our 48 startups, 4 managed to have up-rounds as some money started flowing again. Valuations all higher than last round but lower or same valuation multiples. Also these are the earlier stage companies where they are raising $3-5M. For the later stage ones worth >100M, one had a big down round back to previous valuation while the other two didn't raise at all as they have sufficient cash in bank. We also wrote down 50-100% of value for 4 startups. Current count is 48 invested, 3 profitable exit, 17 closed down/bad return, 15 doing well/uprounds, rest too early to say.

I believe there will be more closures and negative disclosures. Most will be due to running of cash. Some will be founder burn out. And some really bad ones will be like efishery types of story. 

For us, we don’t mind losing money but we do mind backing undeserving unethical people.  When things turn tough, we really can see how founders are wired and their true natures. Wrote on this before.

Anyway, as they say, when the tide runs out, we will know who is swimming naked. And the tide has been out for 3 years already….

From a more macro standpoint, I don't see any big catalyst on the horizon. China is still bottoming out with a loss of faith from their own consumers/businesses + loss of western capital. USA markets are hot and  is sucking up a lot of global capital, broader ASEAN economy is doing fine but ASEAN tech ecosystem is grappling with scandals, lack of profits and dearth of good exits. USA IR is expected to cut at most 1% more this year, so capital is still expensive. Its telling that ARKK etf is still 65% below high. 

The implication of all the above is that founders should take a leaf from SEA and Grab who are driving growth and cashflow and profits so that they succeed as top dog businesses in spite of the weak ecosystem. Don't rely on ecosystem improving, improve your own business so that you are the exception! It can be done. 

Observation 4 : Founders have mostly got the memo on the importance of profit and cashflow

We sounded the alarm back in early 2022 to cut cost and aim for profit. Rely on your customers not your investors. And yet I know for a fact, many mgmt teams waited until end 2022, mid 2023 or even early 2024 to get the memo. The good news is that those who got it early are near breakeven now and have learned quality lessons on what lean looks like.  Some of those companies who started late on this journey may not make it. I guess that’s part and parcel of a capitalist system.

Observation 5 : Startup Creation intact. More angels in market.

One silver lining is that AngelCentral saw even more startups this year. 900+ companies registered with us and the quality of the startups are still high. In fact, there is data that shows startups formed during down periods tend to be big winners. Our club also stabilized in terms of funding made by our angels and we ended the year with record number of members. This corroborates with the view that the investing demand slump has bottomed out. Savvy investors are starting to look around for good stories at fair prices. And most important, many new founders are still daring to dream and taking risk to build their companies and make their mark on the world.

Hopefully next year when I review 2025, we will see a pronounced upturn in sentiment and funding numbers and exits. And better still that these are driven by solid startup financials rather than by macro factors alone. 

2024 in Review - Leading a Purposeful Life

2024 is the 10th year since Ning and I retired back in 2014 at 39. Looking back, the last 10 years certainly feels much longer and eventful compared to when running our business. Too busy back then to pay attention to life. But it’s not easy to retire and definitely society does not teach us how to retire well and still be useful and have fun. We took a good 4-5 years to find our footing. But no regrets for sure.

In all, 2024 has been a mostly positive year with a one area that causes some stress and unhappiness. Readers can read my 2023 update to get more context. But overall no major complaints and definitely a better year than 2022 for sure!

In 2024, I traveled about 83 days with the highlight being 2 trips to China and the couple trip to South Africa and Namibia. 

Second son finished NS and entered law school. So its a new phase of life for him. Work wise, I continue to define my role in society as an active angel investor and board volunteer for education and tech/startup related organizations. 

AngelCentral continued its activities and we can see that the startup ecosystem has bottomed out in terms of funding weakness. However, startups are still contining to adjust to the new funding environment with mixed success. In fact this is the source of some negative feelings for Ning & I. Will elaborate more below.

To recap, I centered myself on 3 purposes.

Purpose 1 - Be there and be good help for family. Extend to friends if i can.

Purpose 2 - Be as healthy physically & mentally

Purpose 3 - Be a good custodian of wealth and sharer of experience. Help grow startup ecosystem via angel investing & AngelCentral.  Contribute to broader society as a volunteer.

Purpose 1: Be there for family. Share and guide kids more. Maintain friendships.

Overall rate this purpose an 8.

I continue to evolve and try my best to be a good husband and good parent to the 4 boys aged 10 to 22. Wife and I spend lots of time communicating about kids, about our relationship and debate to come to joint decisions on key relationship strategic items and operational issues. Dad wise, he had a shoulder operation this year but happy to see that his overall mind is still sharp and in fact he just passed his fit for driving!

The most important relationship with wife has managed to improve slightly more now as we know each other even better and are more accepting of differences. We continue our weekly date nights, couple trips and it helps we have an added common interest in business and travel. I think the key thing attitude is a desire not to allow things to get dull or be taken for granted. I continue to be very proud of all the 4 boys and my dearest wife. Probably my biggest motivator in life right now. Definitely not about career or money.. 

Friends managed to keep in regular touch but some of them are more busy with young kids and career. This year also made a new set of friends via my volunteer work at HwaChong. It’s quite easy to get along as we have a common schooling background and lingo. My forum group also still manage to go strong after almost 15 years together! 

Kody the dog also has managed to insert himself well into my life. Have to walk him daily, brush his teeth, bathe him every month etc. And we had a scare on his tumor middle of the year but we decided leave it alone and so far so good. Not growing.

Purpose 2 : Be as healthy as I can mind and body

Rate this 8.5

I lost even more weight to an average 63kg, body fat <20%. Quite happy with this new state as I have more energy and don't tire too easily.  Also don't need to buy any new clothes. I continue to eat less processed food, aim never to overeat and also exercise/move around a lot about 5-6 times a week. Exercise is usually 1 hr dog walk + 40min yoga or jog or swim. My motivation to be healthy is so that I can eat and travel well into old age.

One thing I did different this year is that I ran a battery of medical tests and have been taking customized supplements. So far seems to work pretty well with a clear positive effect of removing my all my heartburn issues. Will see if there are any other effects.

The other fun activity was spending about 15hrs making a charcoal drawing. It’s the first time in my life I put in effort to do an art work. Art for me is mentally quite tiring but in a different well. Actually sleep very well after spending 2-3 hrs each time.

Mentally, feel quite happy and engaged though the boredom as an early retiree still surfaces sometimes. This is no different from past years since retiring. 

However, one major issue cropped up this year with some of the startup founders. The pressure from the funding crunch has created situations which make clear some founders ethical inclinations. So while I have always known humans can behave very differently when pushed into a corner, I am nevertheless somewhat bothered when our portfolio companies and other startup companies face problems and their founders start to pull stunts and display behavior that are at odds with quality ethical behavior. I am an optimist and always believe people are generally good so it’s disappointing when proven wrong. 

So what helps is just to focus on all the founders that are trying to do the right thing. And ignore the lousy ones.

Purpose 3 : Preserve & Grow Wealth - 10% annualized net IRR on networth+ Quality startup angel work for 100 startups+ build AngelCentral + good volunteer 

I would rate this 7.5 this year. Mainly due to startup side performance causing drag.

Failed to hit the 10% IRR and probably land at about 7.5-8% IRR for the year. Main positive is public portfolio of bonds, stocks and cash grew another >20+% on the back of very strong performance by SPY, QQQ, STI and SEA specifically. China continues to be a drag but at least this year it rebounded a bit from 2023 lows. Bonds did decently well too.

PE side, we are up about 4% on mark to market basis. Handful of complete writedowns offset by a few uprounds. This is a bad return for the risk we take in this asset class. In my modeling i am expecting PE to do 12-18% to offset property which grows 3-4% at best. Of course on cumulative basis PE side is still within that range as returns were very strong from 2016-2021.

Can read my 2024 startup portfolio review.

It does look like the long term target of 10% IRR is hard to achieve with a diversified portfolio. But I will leave it there as the goal was to give a challenge to myself.

AngelCentral and angel investing took up most of my work time this year and we saw funding stabilize at last year’s low of about $3.6m. Membership is growing which is good and our syndicates performance is still quite strong. For our own startups, we write off another 4 more startups. Budget for investing similar to 2023 which is halved from 2022. We won’t be able to hit 100 startups if the exits don’t come. End of the day our ecosystem deserves investment quantum that matches the returns it gives.

I will make separate post on startup portfolio and angelcentral work to review 2024.

Finally on volunteer work, I continued to do volunteer work at Hwa Chong, ITE, IPOS and NRF. Retired from my PEP role after almost 7-8 years. One activity that stood out as especially meaningful this year is my contribution to help a non profit craft its strategic plan and values/vision. 

So in summary, 2024 has been a good year for all 3 purposes. But when I drill down, the startup side of work does create some unhappiness and mild stress. And these are all due to interactions that expose the ugliness of human nature.

Looking forward to 2025, expect the main focus to stay on family relationships. Hope to travel as much or more. When last kid gets independent, I hope to ramp up to 120-150 days a year and stay longer in each place.

Work wise will continue to work with and hopefully help founders, startups and the various non profits. Do my bit for society. Portfolio strategy no need to make any change but I will surprised if listed side can continue the fantastic performance…I am hopeful that startup side will start to improve in terms of exits and ipo. 

Volunteering with SG civil service

Time really passes in a flash. Have been volunteering with the Pro enterprise panel for 6+ years now and just stepped down.  I volunteer across 5-6 organizations related to business or education. It’s a good way to give back to society and make use of the learnings I have.

A few takeaways. 

1) Our civil service is very serious about doing its job well. Not only do they provide services and regulate society and industry, they go the extra step to constantly benchmark against world standards and push forward sg development across multiple facets.

2) The PEP focuses on helping the civil service be pro enterprise in its activities as regulator and service provider. The fact that chairman is head civil service shows how seriously this is taken. Over the years I have seen suggestions from industry get taken up seriously and changes made whenever it makes sense. And even if it does not make sense, proper answers are given to the suggesting firm. You can read more below.

https://www.mti.gov.sg/PEP/About-the-PEP

3) There is good clarity of thought on the role of the regulator when it comes to significant innovation. Industry naturally leads on many new services like ride hailing, ev ecosystem or even crypto exchanges etc. Many will push the boundaries of our laws. The approach is never a sledgehammer but a case by case, let the market show the nuances approach. Open sandboxes, engage industry and the answer frequently will reveal itself in terms of what regulators need to do.

4) The civil service is huge. So naturally it is not nimble and there is always a good reason for status quo. And many issues cut across multiple ministries and agencies so it’s easy to get bogged down. 

Hence it’s necessary to have encourage cross pollination of ideas and have cross agency task forces to look at things. Again, this is done in many cases. Quite heartening to see an entity so large try to be nimble and responsive to stakeholder feedback.

5) Finally, many of the civil servants we meet whether senior or not are engaged with their work. Maybe not at the startup team standard but they clearly have strong domain expertise and there is good  thoughtfulness of many replies. Hardly any lip service kind of talk.

6) If there is anything I feel can improve it’s that the sensing of what’s happening on the business ground and in future tech and business trends can be made even stronger not just at the top mgmt level but at the directors and officers who deal with industry. 

More mechanisms for regulators to interact with the businesses they regulate and learn and see what’s done in overseas jurisdictions. Maybe even more roles for secondment to private sector etc

Learnings from Portfolio Gains last 13 years.

The last post i wrote in July 2023 analyzing and summarizing lessons from key losses was well received with close to 5000 views and a good number of people contacting me to ask follow up questions. So here’s the other side of the coin -  sharing our portfolio learning when it comes to the wins and things we did right. I am using the same data set of all the trades over 13 years and the focus is on what we learned.

To set the context, our investing experience has been good but not great (own yardstick) over the last 13 years to end Apr 2024. 

1) Equity returns better than ACWI ETF 8+% total annual returns.

2) Fixed Income returns better than JNK ETF 3.5% total annual returns.  

3) PE investments (which are majority VC and startups) at  20+% IRR which is strong but a lot of unrealized gains and is still undergoing the effects of the funding winter and growth stock rerating. I won't be including this segment in the analysis below as I share about startup investing a lot already.

Why 13 years? Because that's from when we first sold the business and started serious investing.  

BIG PICTURE LEARNINGS

1) EVERYTHING MUST BE DELIBERATE & OWNED

Every buy or sell or allocation decision must be thought through and deliberate. Our best trades are based on small positions, build up to full size and held thru for multi years. Similarly, asset allocation must be deliberately planned and thoughtfully executed. We track all trades and returns monthly and have a sit down session to run through key happenings and decisions to make in the month ahead.

Finally, we own all decisions. We can listen to experts, read books etc, but if we make a buy or sell or investing decision, we own the outcome. This sense of ultimate responsibility is very important in ensuring good decision making.

2) ASSET ALLOCATION IS KEY

This is the key factor that drives returns for us. We made a decision back in 2011 to run our own version of balanced portfolio for 10 years. For us, that means to always have about 55% in equities, 35% in bonds and 10% in cash. I cannot stress enough how being fully vested all the time into equities makes a huge difference to returns. The reason why it works is that it allows us to capture the up days which a lot of data has shown before that if you miss the top days, your returns will be middling. 

And after the 10 years, we relooked at our data and experience and since 2022 decided to go an even more aggressive portfolio with 80% equity, 20% FI/Cash. Strangely we don’t feel any less safe allocating into so much equity.

And within the equity, we learn that bite sizes have to significant for single picks to drive returns. Otherwise might as well all in into index.  So now it’s about max of 5% as a cap per single stock.

3) GETTING THE MACRO THINKING & ASSET SELECTION RIGHT

First thing we got right is that business ownership or equity is the right place to be in. Equity risk is best option as businesses are dynamic and can adjust to almost all economic climates so long as environment is capitalistic and mgmt good.  Hence we allocated the 55% initially and the 80% now. It helps that we made first pot off our business sale and so have a visceral confidence that businesses always are best risk reward if one knows how to pick. 

That leads to the next question of what equities to pick. We made the usual mistakes of picking wrong businesses and markets. What worked well was to focus on growth/tech companies for single stock picks and broad indexes to just track world growth. For latter we ended up picking world index ACWI and later S&P 500 and QQQ. The latter 2 has now become the core holdings because we realized :

- The strongest economy in the world esp at private sector side is the american one. It has been like this since the 80s and it’s driven by their MNCs.

- the global tech revolution shows no sign of abating and american firms still dominate.

We do overlay tactically to China, SG banks/reits but these have been drags and we would have been better off just doing SPY/QQQ. But we never know. Last 3 weeks China / China tech has finally rebounded.

4) STICK TO WHAT WE KNOW

Our best moves revolve around sticking to what we know. So picking and tracking listed tech stocks, ASEAN tech stocks, these are our area of strength. More recently, getting the inflation impact on markets right and broader sense of where world economy is going. Getting macro trends largely right enabled us to get the property timing right and also catch some of the tech AI boom.

5) BENCHMARKING & TRACKING

We benchmark the funds we invest and our own picks against relevant benchmarks. I keep life simple, our benchmark is AGG/JNK blend for FI and now midpoint of ACWI/SPY for equities. And we adjust for usdsgd as we think in SGD terms as base currency. We find benchmarking and tracking portfolio returns across multi years, YTD and MTD helps us understand how we are truly performing and gives us the impetus to make changes if things are not working. No fooling ourselves that things are fine.

6) JUDICIOUS USE OF LEVERAGE/ NO HEDGING

We use leverage to juice returns but leverage is a doubled edged sword. We don't view leverage  against a particular asset but view leverage across entire invested portfolio.  Logic is money is fungible.

At current loan IR of 5-6+%, leverage is now zero. When it was just 0.7%, we lever up to 30% of portfolio. 

And because we decided not to hedge against usd, we have actually made sizable currency gains when mark to sgd. if we had hedged, returns would have fallen by 1% per annum which is very significant. But this does mean we need to pay attention to usdsgd pair. Taking our cue from GIC and other usd denominated giants is helpful here. The worry here is loss of usd status as reserve currency.

7) LETTING WINNERS RUN & HAVE AN IDEA OF FAIR VALUE 

This is self explanatory but it took me years to build the mental discipline to allow winners to run for many quarters and years. This is for single stocks only. Then when the stock exceeds fair value, it’s time to sell. Can sell in tranches no hurry. For growth stocks over valued status can last a long time. I remember back in 2018/19, people ask me how high can sea go, I told them 80 in a few years. Looks like I am not far off but I never expected it to hit 350 before coming back all the way down to current 65!

For indexes like SPY, the reallocation happens automatically. So for indexes, there is no need to ever sell everything unless we stop believing in american MNC top dog position and in capitalism.

SOME SPECIFICS

1) Making gains via single stocks. 

We have about 5 stocks over the 10 years that made more than $200k realized gains each. One made a solid 7 digits. Amount invested range from 80k to 200+k. They are SEA, SHINVEST, FB, GOOG, BABA. They add up to about 35% of all time net equity gains. We also have another larger group that made between 50k to 200k. Examples include BIDU, Foundation Medicine, IFast, LULU, GLP, DBS, air Asia etc

What they have in common is consumer familiarity, lots of research and later conviction as I track them, meet founders sometimes etc. So it’s a multi mth to even 1 year accumulation process. All are growth stocks and almost all solidly profitable companies. Holding period is 1 year to 5 years. Of these, only airasia crashed and burned badly but I got out way before Covid. Another 3 of winners got bought out. The rest are still doing very well as listed growth companies. 

Then the key thing is to let winners run for years if we can. Until growth finally slows. We bought SEA at avg price of 18, sold last tranche at 340+ and average out at 150 ish. Likewise for Shinvest which was a proxy for Espressif. We first entered early at 0.7 and held it until market discovered Espressif and its IPO. Got taken out during the private buyout, likewise Foundation Medicine/GLP. I would argue I sold out of Fb and Goog early but I told myself owning lots of QQQ and SPY also counts. And we do prefer not to duplicate big index components unless super bullish.

Single picks for us has the best return as capital used is much smaller than core and we also trade options on these. Do note the winners do follow the 80:20 rule where 20% of single stocks picks account for almost all our gains. That’s why we now focus on just 4-6 single stocks. Forces us to only hold the best choices and we don’t waste mental energy on no conviction stories. 

2) CORE - SPY & QQQ as proxy for best run companies + long term technification of the world.

SPY & QQQ are our core holdings and we don't sell them and are always vested. Logic is there is no better place to park since we believe in business ownership and these are the best run companies worldwide. The only time we sold out completely was to buy our home in 2021 and through that lucky move, missed out on part of the crash. And once we could, we bought back our SPY and QQQ positions in 2022/2023. A bit early but it’s always hard to time the market.

We do sell some call options on SPY/QQQ that out of money and if they get triggered we buy back in almost immediately. Having SPY/QQQ as core holdings account for another large chunk of gains.

3) FIXED INCOME 

We don't really like debt but have a little FI always that is slow and steady in generating some cash returns. Over the 13 years, in aggregate the return is significant like owning an investment prop over the same period but it’s still a drag on portfolio return and that's why we reduced it to just 20% with cash now.

4) SPECULATIVE ITEM - LONG CALLS & SHORT PUTS

Sometimes, the 10-15 compainies I track really get so beaten down due to macro. Eg. tech companies during the Oct 2022 crash. And we have maxed out cash to buy. Then we have been fortunate that we gain quite a fair bit buying calls at lows. Quite a few calls on tech names made us 50-100k profit by the time we closed them out in early 2023.

We also sell PUTs to collect premiums while trying to enter a stock at slightly better price. Please note the stocks are the same stocks we have conviction on above.  

5) One good fund manager - ASTRAL ASSET MGMT

Our experience with private bank discretionary products,mutual/hedge fund managers and many non broad based ETFs are not so great. Make some money but they usually fall short of ACWI/SPY and need good timing. More specifically,  Asian funds or stocks ones need good timing like single stocks. 

We subscribe to the view that in inefficient markets Asia, stock picking can generate alpha. Hence we invested in an old friend whom we know is very sharp. So far beating his benchmark by a distance and we have a decent profit at 6-7% annualized. However, it’s still way below SPY - again highlighting how important the big picture decision on asset allocation is.

Hope the above sharing is useful to fellow investors who are navigating this tricky road too. Remember it’s important to find a formula that works for you and to  find the framework that can adjust to multiple scenarios well into the future. And what I share is relevant for anyone with 6 figure or more portfolio. For the equity side, we don’t use any esoteric instruments and everything can be bought from IBKR, POEMS or iFast.