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My portfolio returns 17% in January (so far)


I don't usually do portfolio updates so often.


The last one I did was just on New Year Day when I recapped the performance (or rather dismal performance) of my minimally managed portfolio in 2022. I have highlighted then that I will most likely only be posting quarterly updates of my portfolio moving forward. More details on the constituents of my portfolio here.


The reason why I did an update now (less than a month since the previous update) was to remember this January as a phenomenal month for my portfolio. Of course, I also do know that there are still 2 trading days to go so this is done in the spirit that not too much will change early next week.


I did a backtesting of my portfolio on Portfolio Visualizer (you should try it if you haven't) to see the monthly returns of my portfolio since Jan 2015. Jan 2015 is used as there isn't any earlier data for ARKK prior to that. A monthly return of 17% has been the best monthly result since Jan 2021. However, it's still far from being the month of highest return. There are about 4 or 5 other months since Jan 2015 when the return is higher than 17%. The best month was Nov 2017 when the monthly return was nearly 40%. Unfortunately, I hadn't started investing in this portfolio then.

Being a portfolio with higher beta than the index, it's natural to have high volatilities along the way. Volatility cuts both ways. During the past year when the index returns a negative 18% annual return, my portfolio got worse with a negative 27% annual return. In this month of January thus far, the index has given a return of ~6% so far while my portfolio has given a return of ~17%.


I look through the individual constituents of my portfolio to understand the reason for the huge return in January. Not surprisingly, the severely underperforming assets have pretty good returns in January. For example, ARKK has a YTD return of ~32% and MCHI has a return of ~14%. The one which tops the table is Bitcoin with a YTD return of ~36%. The geopolitical policies in China and the inflationary environment in the U.S. have been some of the main reasons behind the dismal performances of these constituents in 2022. Admittedly, it has been painful to see the big drops last year.


The encouraging signs we saw this year so far with China reopening and reports indicating inflation is better in control have been great boosters to the market so far. Though we are far from winning the war against inflation, many are starting to see the light at the end of the tunnel and even predicting interest rate coming down sooner than expected. If the inflationary environment gets under control, I am confident that my portfolio might outperform the index this year.


However, all is still too early right now so let me just enjoy this current moment of my portfolio beating the index by 10% this month.


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