Investing Lessons & Reflections of 2023

2023 has been a great year overall for investing in equities.

The S&P 500 is up by a whopping 24.8%. For 2022, we were down around 17%. But 2023 came with its own sets of challenges and losses.

Just when we thought the world couldn’t be more fragmented from the Russian-Ukraine war, Hamas and Israel broke into a major war again.

We also lost the investing legend Charlie Munger as well.

2023 was a challenging year for me, as I am crossing over to be nearer to my 40s than being in my 30s.

Here are some of my reflections and lessons as I age, hopefully, wiser as an investor that I want to be.

Always emerge as a better investor every year

We don’t score great lifetime achievements every single year. In some years, our challenges and hardships overshadow our small achievements.

In a rat-race world, it seems natural to always overachieve your peers. But some achievements are a multi-year game plan. Not all good initiatives bear fruits in just 1 year.

We used to track our social media stats ever since we started Kaya Plus. But after 1 year of tracking our social media stats, at least I stopped doing it.

Yes, an entity with a website and social media presence is often judged by its audiences. The default way of being “better” is having more views, more likes, and getting more sponsors.

This is IF, we are Key Opinion Leaders and Influencers.

I stand firmly by the notion that Kaya Plus is not.

We don’t do flashy stuff. We don’t operate as a media outlet for major advertising opportunities.

Maybe we should brush up on this aspect.

But what I am certain, is that ever since Kaya Plus started 3 years ago, I certainly became a better investor.

I write and analyze better. And I hope Kaya Plus readers grow as we did.

And yes, I am proud that my investment returns outstrip Kaya Plus’ revenue. I am an investor after all by returns, not an influencer.

The more I know, the more I think I don’t know

I am deep in the rabbit hole of investing, that it has become philosophical rather than just pure gains and profits.

The yearning to be right, to be spot on, outweighs the monetary returns from the daily fluctuations of each ticker and counter.

Just like whether there is a silver bullet ratio with a 90% success rate of picking a great investment, to looking at a sector and trying to figure out how each battle between each company will pen out. It has been a very mentally stimulating yet satisfactory process.

But as we all know, we live in a world that is constantly and rapidly evolving.

Back then Netflix Inc (NASDAQ: NFLX) was one of the darlings under FAANG. Today, it does not make it into the Magnificent Seven.

Looking beyond to 2024, the world is abuzz on how dovish the Feds have become, and are looking forward to the pivot.

But with all of this known by almost everyone, what is it that we still don’t know yet, that could throw a wrench to the next bull cycle?

And just to bring you back 1 year ago to December 2022 – almost every investment bank analyst and economist painted a picture of recession for 2023.

You can never be too old to learn new investing skills

Although 2023 has been tough for me from other aspects of life, I am thankful to have picked up a new way to invest.

Back then, I never had the time to look into options and derivatives. But due to work and career, this opportunity has seemingly landed on my lap. It took a bit of practice to at least grasp some basics for me to operate a trading regime that compliments my overall portfolio.

This by no means is foolproof. I have my fair share of losing trades. But at least for 2023, the returns have been surprisingly satisfactory.

Perhaps when a certain level of mastery and blueprint is crystalized, I might share more on this.

You don’t need to go running after the next shiny toy as an investment idea

Again due to FOMO or whatever reasons, there seems to be a new investing theme every single year.

It has been Tesla Inc (NASDAQ: TSLA) for quite some time. And then cryptomania, where coins and jpegs of Apes took center stage. Then there was also the loss-making hypergrowth.

But putting aside some of these single-year wonders, followed by years of winter, the stocks that grew year in and year out, were your typical Microsoft Corp (NASDAQ: MSFT), Amazon.com Inc (NASDAQ: AMZN).

Crypto and Tesla cults will point out the outperformance of BTC and TSLA over the last 5 years. I’d say fair point, but take a step back and ask can the same returns be replicated for the next 5 years.

When everything is fast growing, it’s easy to say buy growth and forget about prudence and profits.

It’s easy to cherry-pick a single time frame where a stock or asset outperforms and justifies its relevance and expected returns for the next 10 years.

But when looking at things from the other side of the coin, those who bought BTC and TSLA at the peak, are still in heavy loss-making situations as of today even after the rally.

Returns are the results of risks undertaken. Too often in this era, returns shout more loudly than the silent cries of getting the rug pulled.

p.s. This is by no means a piece of investment advice to stay away from crypto and other stocks. Just stay away from toxic friends or individuals who have been blindly lucky or ignorant about investing.

The more willing you are to admit wrong and take losses, the more you will grow

2023 was quite a painful year for returns if not for the newfound skill of running an options trading schedule.

I realized plenty of losses on Hong Kong tech. These were the onslaught and seeds sowed during the low-interest rate era, and a China economic recovery that is still missing.

How things are being run in China, is just not the same as the West. Not that there aren’t great companies to invest in Hong Kong or China, but it is not as straightforward as buying Alibaba Group Holding Limited (HKEX: 9988) as Amazon.

From a business point of view, both companies share so many similarities. But from a performance point of view, the difference could not have been more stark.

Crystalizing the losses helps enforce the lessons that will be imprinted in my memory.

Some lessons and principles need to be applied across all

I still remember how I never bit the bullet to invest in any EV companies.

Yes, I might have missed out on Tesla. But behind every successful Tesla, there are more losing bets on NIO Inc., XPeng Inc., Rivian, Lucid, and many more.

These companies are just the products and toys of multiple venture capitals.

And it’s easy to see how badly EV investors got burnt when companies could not grow and eke out profits.

But the same mind frame did not sound alarms when it came to Sea Ltd. A company that showed so much vigor and interest to grow globally, suddenly went weak when interest rate hikes came in.

And in the end, companies like Pinduoduo with Temu and SHEIN, are the ones that manage to crack the code by having growth and a strong presence in both Asia and the West.

It is great that I did not end up investing in EV companies. But it would have been better if I minimized the losses I had with Sea.

Never too old or smart to revisit the basics

It has been quite some time since I last read books. I have been reading, but the vast of it has always been reports, and results of listed companies.

I have forsaken how to think and sometimes overlooked the basics. This book recommendation came just at the right time. It helped me revisit some common sense and principles that I might have forsaken.

It also helps remind me that as humans, we are always prone to errors. And in a world where quality companies are less available, it’s much more important to minimize buying every company that you think a potential but is not, and end up losing money.

It is okay to miss out on Tesla and other stocks that can grow exponentially in 5 years but a question mark for the next 10 years. The compounded returns of a company that is highly likely to do so, will give you more assurance and ease, and might even outperform in the longer run.

It’s better to know why you made the right move, or why you made the wrong move, rather than think you are right because of purely just luck and timing.

No one knows the future, but one can always prepare for any circumstances

Will stocks continue the bull run, or will a recession happen?

Honestly, I don’t know, and I don’t assume I know. But I do know irrespective of what happens next year, will only be part of history in the next 10-20 years.

And stocks will still outperform across all assets in the next 10-20 years.

I am fully vested, and not selling any of the quality companies that I have accrued. I will be ruthless in spring-cleaning the underperformers in my portfolio. Sadly that means reducing most of my Malaysia positions. And taking losses on other hypergrowths.

But I am blessed that the option trades can help cushion and net off the losses. And by staying true to the tenets of investing, things can only be better.

If there is a crash next year, happy to deploy capital and take advantage of it. If no crash, then-current holdings will continue to perform and grow.

I am more prepared for 2024 than I am compared to previous years. And I hope each year that enthusiasm and confidence grow.

To a better 2024, to a better me, and to a better world.