Hard Carrying

“Hard carry” is a terminology used by gamers that refers to a player or game character dominating an entire game or a game mission, resulting in the player’s/character’s team victory, even though the rest of the teammates are either performing poorly and/or did not do anything much. Putting it in a general context, a person is seen hard carrying a group when he/she was the one pulling everyone through with his/her skills and/or knowledge.

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On the investment front, there could be a few securities or counters doing the hard carrying of gains, such as those that provided the most capital gains, or those that gave the most dividends, or a fair mix of both.

It would be an interesting exercise to see what counters are the “hard carries” in one’s own portfolio, and although it may be comforting to see which were the resulting counters, an analytical and objective view must also be adopted on what to do with them.

Sustainability

Sustainability is often one of the key considerations of investors when conducting a portfolio review. Questions such as whether a counter would continue to give the same growth rate and/or provide the same yield throughout. Even if it cannot sustain the required increment, does it able to maintain within the desired threshold, or perhaps it could still provide some alpha over market returns or inflation rate? These two questions could only be guesstimated by fundamental analysis, i.e., reading up on the company’s forward trajectories and plans, and foreseeing how things unfold in the markets or anything that has a direct or strong indirect effect on the company/sector/industry concerned. 

Sizing

Hard carries in the growth category may run into the risk of being too dominating in terms of sizing in the portfolio. Unless one’s conviction and confidence on a company is strong, it pays to be diversified to avoid a wipeout should anything happen. Different people have different sizing guidelines, which for our Bedokian Portfolio the limit is 12% (for individual company counters).

Selling

On a related note to manage sizing, selling part of the hard carrying holdings is one way, which on a wider scale it is called rebalancing. As part of diversification, rebalancing allows the investor to move the capital from one oversized asset class or counter to an undersized asset class or counter, thus avoiding the potential larger loss should the abovementioned wipeout occurs. A big challenge in carrying out rebalancing is the mental hurdle of not letting a winning position go, thinking that it still has the potential to go higher (and earning more). For this it may be necessary to sacrifice a little bit of the hard carriers for the sake of the portfolio, for I had mentioned before, no security/counter is bigger than the portfolio itself.

CPF’s New Investment Scheme

During Budget 2026, there was an announcement of CPF to introduce a new investment scheme in the first half of 2028, offering simplified, low-cost and diversified commercial investment products.

 

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According to the CPF website, the key features include:

Automatic age-based rebalancing of investment portfolio mix, with phased liquidation

Investors’ portfolio mix will automatically rebalance along a glidepath from higher-risk assets, such as equities, to lower-risk assets, such as bonds, as they age, before being liquidated in phases by the target date. For example, if the target date is the Payout Eligibility Age (PEA) of 65, the investor's portfolio could be liquidated in phases a few years before PEA.

This calibrates the amount of investment risk to which investors are exposed to at different stages of life and mitigates the risk of a market downturn during exit.

Upon phased liquidation, the investment sale proceeds will be transferred to the investor’s Retirement Account (RA), up to the Full Retirement Sum (FRS). Any remaining proceeds will be transferred to the Ordinary Account (OA). The funds in the RA can then be used to join CPF LIFE when the member decides to start his monthly payouts anytime from age 65, and help boost his monthly payouts.

Simplified choice

 

To simplify decision-making for investors, we are looking to select two to three reputable product providers to offer a small number of options.

Low fees

 

All-in fees will be capped to minimise costs and allow investors to retain and benefit from more of their investment returns.

The Bedokian’s Take

To summarise, this new CPF investment scheme is designed for people who want to take on more risk in beating the prevailing CPF interest rates, yet have a hands-free approach to investing via the automatic rebalancing and liquidation attributes. In other words, I would define it as a “robo-investing plus”, with the plus part being providing the service of divestment.

While I would wait for further details on the new investment scheme, such as the make-up and duration of the portfolios available, at first look it is a pretty good idea for CPF to implement this. However, due to the potential long-term nature of the portfolios, it may be more suitable for individuals who still have a long runway (at least 20 years according to the CPF’s example) than those whose retirement age is coming soon.

References

https://www.cpf.gov.sg/member/infohub/news/news-releases/cpfb-to-introduce-new-investment-scheme-in-2028

 

Disclaimer

“How To Generate $XX Per Month From Your Portfolio”

Occasionally there will be blogposts and social media videos teaching how to generate an amount of income per month (or year) from one’s portfolio, which I find it a good thing as they give expectations on the approximate sizing of portfolio and yield required.

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While it is a relatively simple theoretical exercise involving percentage mathematics, it works when everything else is static, i.e., on a ceteris paribus basis (assume all other things are equal). However, executing it would be slightly difficult as market conditions do not really listen to what the theory was supposed to espouse. For instance, the yield or yields from the various asset classes and securities do not remain at that fixed number throughout, and so does the portfolio size that the yield(s) is based on.

Admittedly we do come out with such calculations for retirement/step-down planning for our portfolios, but we would also take in variables that may boost or hinder this model of determining monthly income. Of course, the first thing to do would be to derive the overall annual yield across the asset classes using the asset class allocations and their average yields, which goes something like this as an example (Figure 1):

 

Asset Class	Allocation (%)	Average Annual Yield (%)	Weighted Yield (Allocation x Average Yield)  (%)
Equities	35	5	1.75
Real Estate Investment Trusts	35	6.5	2.275
Bonds	20	2.5	0.5
Commodities	5	0	0
Cash	5	1	0.05
Overall Annual Yield			4.575

 

Fig.1: Overall annual yield of the balanced Bedokian Portfolio using assumed average yield per asset class.

The average yield could be obtained from a few sources, like from one’s own portfolio numbers, figures from finance sites showing the current yield, etc. Do note that the term "average" is used; yield figures have been sourced from multiple references and consolidated to present a mean value. The advantages of using the average are two-fold: the result gives a benchmark value if the actual portfolio is below it, or a buffer if the actual portfolio is above it.

If one is still not comfortable with the average number, a margin of safety can be introduced, corresponding to an imagined portfolio value drop; if one is prepared for a 30% drop of capital, he/she could adjust the expected yield number by 30% to 3.2%, and then plan the spend on the reduced income amount. This conservative approach would have the psychological effect of viewing amounts above the yield to be “windfall” and thus using them as savings and/or further capital to invest (and grow more yield).

AI Eats Software’s Lunch (Or Is It?)

It was coming; the feared disruption of artificial intelligence (AI) into the domain of software, which was already hanging around like the Sword of Damocles, came crashing down onto the markets the past week, accelerated by the introduction of Anthropic’s Claude large language model (LLM) legal tool. 

 

 Picture generated by Meta AI

 

Share prices of software companies such as Microsoft and Salesforce took a beating, down by 9% and 11% respectively the past 5 trading days. On the sector front using the iShares Expanded Tech-Software Sector ETF (IGV), it dropped close to 14% during the same timeframe.

 

Delving deeper on the situation, the number of inroads, potential or real, that AI made has been tremendous, and we are seeing a lot of these in the past few years. Though most leisure users utilise AI for generating pictures and summarizing homework, it is getting real with job-replacing tasks and applications being introduced for business purposes (e.g. Databricks, Base44, etc.). A serious threat to software, indeed.

 

However, if an investor steps back and relook at the whole picture, he/she may notice that there is another narrative being bandied about just recently, and that is about the threat of an AI bubble bursting. Logically the investor would be asking, “if AI eats software’s lunch, then how is it that AI is having this bubble?”. This paradox is a legitimate question.

 

However, amidst the bloodbath happening in the markets, a rational investor would see this as a good buying opportunity. With lowered share prices across the software and technology sector (the latter was a result of a spillover effect from the former), the next thing would be to look for companies that have strong moats and the strategic and financial ability of coming back (think Alphabet).

 

Think not of panicking but view it as a (probable) sale worth waiting for is now on.

 

Disclosure

The Bedokian is vested in Alphabet, Microsoft and Salesforce.

 

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Disclaimer

Possibilities And Probabilities

Although these two words may be similar to each other, both are different in meanings. Possibilities are occurrences that can happen, whereas probabilities are the likelihood of the occurrences happening. Using a lottery as an example, it is possible to win the top million-dollar prize, but the probability would be very small given the odds of winning it (literally at least a one-in-a-million chance).

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The reason that I brought up these two things was from my encounters with other investors over the years, particularly on the issue of risk. While I had met some who totally disregard risks (so-called the “boom or bust” or “all-in and hope for the best” investors and traders), there were many others who did consider the different aspects of risks in their investments, to whom I give my praises to. Among the latter group, however, were some individuals who treated all possibilities with equal concerns; in other words, all potential risk happenings were given the same probable treatment by the person(s).

This is akin to an investor viewing the possibility of a company’s share price going down to zero and that of a brokerage firm absconding with his/her securities with the same probability lens. Hence, a typical interaction with this group would be peppered with many “what ifs”, like “if I buy overseas securities, what if the custodian ran away with my money?” or “what if A invaded B, resulting in the share price of the company located in B going down to zero?”, and so on.

For investors with this line of thought, a little bit of self-critique is necessary to slightly wean off from the equal-probability bias. After acknowledging a risk possibility, the first question to ask oneself would be how often it happened. If it was many times, assign a higher probability to it; if not, treat it as an event that one may not see again in his/her lifetime, and then go on and assess the next risk happening. After going through the possible risks, a probability scale of sorts is formed. Though in strict sense, probabilities are quantifiable and calculations are required to give them a number (e.g. percentage or odds), but having a simple probability scale should suffice for one to have a clear picture.

In an ironic twist that even myself adhere to, it is good to have a contingency plan for even the lowest probability risk event, and most are surprisingly easy to implement. Afraid of a custodian brokerage running away? Open an account on another one (what are the chances of two custodian brokerages going rogue at the same time? Very remote). Scared of a company’s share price going to zilch? Diversify one’s holdings. Most of these can be mitigated, but there are several events where one (or almost everyone) cannot prevent, like a total global market collapse, or an asteroid 10 kilometres in size hurtling towards Earth at 60,000 kilometres per hour. For this, should it really happens, it has been nice knowing everyone.