Clean slate


It’s been a while! School’s kept me busy and unfortunately unable to update my portfolio blog, so I thought I would do all that in this post. Having ended last August with my portfolio deep in the red, I managed to singlehandedly erase the NFLX crash that essentially halved my position by riding the AAPL train. The 25% total return from AAPL was supplemented by the 17% total return from NCT plus about $400 in dividends accrued over a year. This purely opportunistic portfolio has returned me to my starting stack. After a year of monitoring my portfolio, I can truly appreciate how turbulent last summer’s equity markets were: the 5% up/down swings of the Dow on a daily basis were seldom replicated, and the major indices have made healthy gains since then.

I have changed as an investor as well. While my buy decisions used to be justified by predominantly fundamental indicators, I have begun to appreciate the power of technical indicators after reading more about them online. While I agree that past prices have limited ability to predict future price movement, I am also convinced that there are definite recurrent patterns of price movement which can be used to predict momentum in price changes. I did some back-testing of many of the technical analysis strategies with NFLX, and found that even simple indicators such as moving average lines should have sent out serious warning signals weeks before the tumble. While I still plan to use fundamentals to evaluate potential buys, I will definitely be using technical indicators to help me decide entry/exit points and for me to better interpret price movement with respect to market news.

There will again be no lack of interesting market news this summer as François Hollande’s ascendancy to the French presidency will again shake up the Eurozone, and it will be interesting to observe how Hollande’s stress on growth inducing measures is received by Merkel’s austerity-driven approach. Their collaboration will be crucial to how the Eurozone crisis will evolve over the summer and beyond. The upcoming Facebook IPO on May 18th will also be a hot-button issue as investors scramble to determine a legitimate valuation for a giant social network that has exciting potential and complex problems in its balance sheet and financial statements. I will again be looking to diversify my portfolio: AAPL prices have been stagnating and won’t be making a major move in the near future, and I’ll be looking to cash in my AAPL returns and initiate new positions in some high-dividend REITs and the like. I hope that my performance will be much better this time around.

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