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January Portfolio Update (2022)

Updated: Jan 1, 2023

Here's an update on the portfolio's performance. If you have missed my portfolio review for 2021, please check it out here.

2022 Performance YTD

My Portfolio: -4.93%

Vanguard 500 Index: -5.19%

Performance since inception (Jan 2021)

My Portfolio: -4.09%

Vanguard 500 Index: 21.85%

The US market has had one of the worst starts in recent years. To be exact, a drop of ~5 percent in January make it the worst monthly performance of the S&P 500 since March 2020. A hawkish Fed with the looming rate hikes send the market into a rather despaired mood. Growth stocks are the worst affected. Towards the end of the month, around 46% of the members in NASDAQ have at least 50% drawdown from 52 weeks high. That makes it one of the stealthiest bear markets I have seen. If not for the rallies on the final few days of January, I'm sure the results in January will look a lot worse.

Is the market overreacting? Well, I will say volatility is part of the game. Just don't dwell too much on the market performance in the short term.

How did the respective constituents in my portfolio fare in the past month?

ARK ETFs are the worst performing constituents in my portfolio in January. The degree of the drop is rather appalling. ARKK has a drop of -23% in the whole of 2021. In just the first month of this year, it dropped a whopping 20%. There's an article going around showing Warren Buffett's Berkshire Hathaway shares closing in Cathie Wood's ARKK based on performances since Q1 2020- a story of hare vs tortoise. However, it's important to know that the results look rather different when viewed with a 5 year time horizon as the ARK ETFs still outperform Berkshire Hathaway in that time horizon.

ARK ETFs are rather uncorrelated with Berkshire Hathaway and this is also why I have both in my portfolio.

I'm also aware of the risks ARK ETFs bring to my portfolio and hence I reduced the allocation from a combined 20% (constituting ARKK and ARKG) to a combined 12%. I am not writing them off yet and I'm still optimistic that they will outpace the market in the next few years. I'm just not comfortable with the volatilities though and hence I'm trimming the stakes. With Bitcoin taking a rather significant part of my portfolio (20%), I will not want the rest of my portfolio to have too much volatilities.

Bitcoin also has a dismal month with a drop of -16% in its price. I'm pleased that my portfolio has a more modest drop of -4.9% (in fact it's even lesser than Vanguard 500 index). The portfolio is constructed in a manner so that Bitcoin could provide the tailwinds I need for my portfolio to grow and outpace the index in the next few years with a level of volatility and max drawdown that I'm comfortable with.

A bright spot for this month will be Shell shares which rose almost 18% in the month of January. That comes after a year of +34% growth in 2021.

That's all for January update.

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