I had written something similar on the last day of 2017 (see here). I felt from now on, it would be a good tradition for me to write an annual review, preview and of course, about our dear friend Bob. So here it goes for this round.
If 2018 was a roller coaster, it would be a hell of a ride as compared to 2017 which was just a normal uphill climb. The S&P 500 Index fluctuated heavily between 2350s and 2920s this year1. For the Straits Times Index, it went to as high as 3610s and as low as 2960s2. A lot of factors had attributed to the volatility of the markets, but the main ones most people point to were tariffs and the related trade wars, and the rise of interest rates.
A year ago I had mentioned that I would look into cybersecurity, payment solutions and alternative energy. Using three United States (U.S.) based ETFs; HACK for cybersecurity, IPAY for payment solutions and ICLN for alternative energy, the year-to-date returns as at 31 Dec 2018 were +6%3, -0.12%4and -9.39%5respectively. They are still relevant in my opinion, as I foresee they are long-term trends rather than short-term fads (see here for my article on trends and fads). Do your due diligence and analysis before committing.
If using the trade wars and interest rate hikes as basis, I would expect 2019 to be less volatile than 2018, provided that full resolution is achieved between the United States (U.S.) and China on trade issues, and the U.S. Federal Reserve adhere to its two-rate-hikes as announced6. Overall, 2019 will be a challenging year for the financial markets, local and overseas, therefore it is advisable to adopt a diversified portfolio stance and be prudent in your fundamental analysis.
In my humble opinion (and educated guesses), technology will continue to make inroads, especially on the disruption, artificial intelligence and blockchain areas. If you wish to venture further into them, do perform analysis on which sectors/industries will benefit from their development. You could use my associative investing method (see here) as a guide.
Compared to 2017 (+12.13% XIRR), Bob’s Bedokian Portfolio did not fare well for 2018 (-1.94% XIRR), though he had collected SGD 909.64 in dividends. Bob knows that his investment horizon is long term, so this “down” is just a kink in the journey. On 2 Jan 2019 he will inject another SGD 5,000 to the portfolio, so watch out for this space in the next few days.
That’s it for me. Wish you a happy 2019!
1 – Yahoo Finance. S&P 500 Index. https://finance.yahoo.com/quote/%5EGSPC?p=%5EGSPC. (accessed 1 Jan 2019)
2 – Yahoo Finance. STI Index. https://finance.yahoo.com/quote/%5Esti/ (accessed 31 Dec 2018)
3 – ETFDB.com. ETFMG Prime Cyber Security ETF. https://etfdb.com/etf/HACK/. (accessed 31 Dec 2018)
4 – ETFDB.com. ETFMG Prime Mobile Payments ETF. https://etfdb.com/etf/IPAY/. (accessed 31 Dec 2018)
5 – ETFDB.com. iShares Global Clean Energy ETF. https://etfdb.com/etf/ICLN/. (accessed 31 Dec 2018)
6 –Transcript of Chairman Powell’s Press Conference, p2. 19 Dec 2018. U.S. Federal Reserve. https://www.federalreserve.gov/mediacenter/files/FOMCpresconf20181219.pdf(accessed 31 Dec 2018)