Welcome to CTHGPRO’s monthly or should I say annual update for 2022. 😃
What can I say but the last 12 months has been anything other than boring. I’ve been asked a couple of times why I stopped writing the updates last year and was it because I knew the market was going to hell? First and foremost the main reason I stopped writing was because my personal life got in the way, my daughter moved away from home for University and my son was absorbed in graduate interviews. I don’t remember how many mock interviews that were conducted in my home for both of my kids but I’m happy to say the hard work paid off with both achieving their desired outcomes. Just when that part of my life was in order I managed to fall down the side steps during one of Sydney’s many months of rain resulting in a busted lip and cracked ribs. Seriously you don’t know how good you have it until you try sleeping with fractured ribs. Anyway with that behind me I decided to enjoy life a little before getting back into writing updates. With the fall I also resolved to write a book on investing for my kids if they choose to use it in the future. Once I’m finished the book which I think is still years away (as I keep adding and subtracting ideas) I will consider releasing to the wider public.
The CTHGPRO Portfolio
Someone jokingly remarked every time I stop writing CTHGPRO updates the market falls apart. Last time I stopped in November 2019 and Covid hit in March 2020. Then I stopped writing in November 2021 and we all know what happened after that. 🙂
So I’m back to perform CPR on the market so to speak.
In regard to the CTHGPRO portfolio we’ve been mostly in cash since the start of 2022. This was not so much a great understanding of where the market was heading but more insufficient time to dedicate to my style of investing. As I indicated above, sometimes in life more important things get in the way of making money but the CTGHPRO portfolio never been far from my mind.
My real slice of luck began in November 2021 when my portfolio hit an all time high. So high I even asked my wife to view how well our portfolio was performing. For anyone that knows me those actions would in itself be the ultimate sign of a market top. My golden rule is when you believe you’re a hero in the market that is exactly when you will get belted by the market. Just a few hours after I had stupidly boasted to my wife, I realised my sheer stupidity and sold 30% of my portfolio.
“In the market we must stay humble or be prepared to be humbled” Alonzo Circa 1929
From there as I said I had little time to monitor the portfolio and decided to slowly wind back exposure over the next few months.
The most notable investments I have made for the portfolio over the last 6 months were in the lithium space and into one of my favourite companies Lovisa. I came into the Lithium trade quite early following on tails of early coal investors on Twitter. While the Ukraine war saw energy prices rise it also saw the rush of many countries towards energy independence and the ramp up of renewable power sources. I’m not sure if ideology drives many investors currently in the energy trade such as oil and coal but so many people continue to fail to understand renewable energy and a large share of false information is being spread in the market. While this is a negative for humanity, its a positive for any investor in this space and I’ve happily been taking advantage of these misconceptions.
Lovisa, I’ve written before how much I admire the way this company is run. Even though they reported exceptional guidance in early April it wasn’t until their full year report that the market actually believed how well they were doing. Again I was happy to take advantage of this disbelief by the market.
Other than that I’ve been basically concentrating on special situations such as companies going through a takeover process (UWL,RAP GNX) milking dividend ETFs and my most recent “special situation” was DBI where I was buying below $2 while awaiting a long foreshadowed client pricing update. (I’ve since wound back this position on recent news). In regard to ETF’s I’ve noticed that ETF dividends have reacted quite differently to companies in the current environment when that go ex dividend and I’ve been fortunate to make some bread and butter money while the market has struggled for direction.
Macro Environment
No matter how long I’m in this game I continue to be amazed at how even experienced investors place their faith in broker/media pundit forecasts. While I love discussing macro I rarely use it for investment decisions and I’m yet to meet anyone who actually knows how the macro environment will evolve.
Portfolio Returns
Since my November 2021 update the portfolio has risen 37%. Again while I would love to take credit for side stepping the crash of 2022 this one was definitely more by good luck than by any good management on my behalf. I’ve written and spoken on Twitter numerous times that I’ve never seen conditions like this before in my 20 odd years of investing so I applaud anyone who has remained in the market and done well.
Current Cash holding 65%
Ok I think that is enough ramblings for the first newsletter back.
Bear markets
(This note on bear markets was an edit done on the 16/10/2022)
Something I forgot to put in my original post was my thoughts on bear markets. Once you experienced a loss in a bear market the natural emotion is to try and win back the loss as soon as possible even though the market conditions are at their worst to try and do so. It’s important to keep in mind during bear markets the aim of the game is survival. They say in bear markets that he who loses least wins and that is absolutely the truth. It’s hard not to act especially after you’ve lost money but always remember bull markets last a lot long than bear markets so when the tide turns you need to have real capital and emotional capital to take the exceptional opportunities that appear when new bull markets are born.
Once again, I would like to remind all readers that nothing in this update is financial advice. Please do your own research and consult a financial advisor before investing or even when choosing the type of milk you take in your coffee.
As always, the team at CTHGPRO would like to take this opportunity to thank me for trusting yours truly with my money.
Regards
Alonzo
CTHGPRO Portfolio Connoisseur
