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My FIRE Path: 2022 Mid Year Update – Getting Mauled by Bears (& JPOW)

Reading Time: 7 minutes

“OH GAWD, MAKE IT STAAAP!”

FIRE-Path Lion, 1H2022. Probably.

Welp, this has certainly been interesting times, to say the least! Who would have thought that after what we went through in 2020, that both 2021 and 2022 will be bringing us even MORE interesting and unprecedented times.

I think this is the very first time since I started investing in 2016 that I can say that we are really in a bear market and several readers have been interested in hearing an update from me – and of course my portfolio.

Given that we’re also now half way into 2022, this a great time for a status update!

What has happened since the last update?

This year has absolutely an “experience” to say the least. Let’s take stock of what has happened around the world since my last update in January, shall we?

Up until this point in time, in chronological order, here are important world events that has affected the market:

  1. 05-JAN: The Jerome Powell and U.S. Federal Reserve announced that they will begin raising interest rates and initiate Quantitative Tightening in an attempt to reign in run-away inflation. Gone are the days of the infinite money printer.
  2. 24-FEB: Russia invades Ukraine. Oil prices skyrocket. Fears about global food crisis starts.
  3. 16-MAR: U.S. Fed raises rates by 0.25%.
  4. 06-APR: U.S. Fed signals they will raise rates by 0.50% in May.
  5. 04-MAY: U.S. Fed raises rates by 0.50%.
  6. 09-MAY: Terra (UST) stable coin depegs and LUNA crashes to essentially 0. Market dives.
  7. 10-JUN: U.S. CPI data showed an increase of 8.6% vs 8.4% in the previous quarter, surprising the market which expected inflation to slow.
  8. 13-JUN: Celsius Network the largest crypto lending platform paused withdrawals.
  9. 15-JUN: U.S. Fed raises rates by 0.75%.
  10. 23-JUN: CoinFlex, another crypto exchange, pauses withdrawals.
  11. 30-JUN: Three Arrows Capital, one of the largest crypto hedge fund, enters liquidation.
  12. 01-JUL: Crypto broker Voyager Digital suspends all trading, deposits and withdrawals. At the same time, U.S. jobs numbers were relatively good.
  13. 06-JUL: Voyager files for chapter-11 bankruptcy.

And that’s just what I remember to write down!

I can already hear Jerome Powell in my dreams…

As you can see, things has not been going very well for the financial markets, especially not for crypto! If you frequent stock investing and crypto subs, you will be familiar with stories of people being down 70% or more just this year alone – not hard if the majority of your investments are in meme stocks, growth stocks, or crypto. Just know you’re not alone and given the market, hardly surprising.

This is the first time since the start of the bull run in 2009 that the market has been on a downward trend for 6 consecutive months, and it shows no sign of slowing. This is a brutal market for high-risk assets.

So what have I been doing during such uncertain times?

My investment activities over the last 6 months

Some reallocation

Before we get to the actual investment activities, at the start of this year I made a few moves to change the allocation of my portfolio for simpler management:

  • Sold all my STI ETF and EIMI in favor of VWRA

As I mentioned in the year end post, it’s becoming quite troublesome to manage the allocation between IWDA and EIMI, plus my broker stopped allowing easy purchases of EIMI – so I decided to just sell all my EIMI at the start of this year to switch over to VWRA.

Then as I mentioned in my previous post on STI ETF, I’ve done the same for the Straits Times Index and swapped over to VWRA for the portion outside of SRS and to Endowus for the portions within SRS.

Here’s the summary of the movements:

ActionTickerAmount
SELLSTI ETF~ SGD 11,500
BUYVWRA~ SGD 11,500
SELLEIMI~ SGD 50,000
BUYVWRA~ SGD 50,000
SELLSTI ETF~ SGD 50,000
BUYEndowus~ SGD 50,000

So all in all, I no longer hold a Singapore or Developing market ETF and have went with a global allocation instead.

I still do hold my IWDA as there’s no point incurring trading costs to get out of IWDA, plus I don’t mind being over weight in developed markets at the moment.

Investment activities

So now back to my investment activities.

Even when the market has been going through unprecedented turmoil, with a war actively being fought in Ukraine, and the highest rate of inflation since 1981 – I kept sticking to my consistent investing strategy.

Over the last 6 months, I’ve kept buying whenever I had liquid cash to put in – even when the market was dropping. Of course, when compared against the massive and sudden drops of the COVID crash of 2020, this was much less severe and much more drawn out.

Here are the purchases I’ve made in the past 6 months – I’ve added all the trades for each ticker up for simplicity:

ActionTickerAmount
BUYETH~ SGD 14,000
BUYIWDA~ SGD 16,000
BUYVWRA~ SGD 48,000

Total Purchases: ~ SGD 78,000

Overall looks great right? I’ve managed to add quite a significant amount of funds to the portfolio when the market was going down. Well… let’s take a look at the overall portfolio performance till date shall we?

Portfolio Performance Year to Date

I guess this is the fun stuff, pretty pictures 😆 – let’s see how we’re doing:

Graph of portfolio value over time

So even though I’ve added almost SGD 80,000 in capital to the portfolio in the last 6 months, my portfolio value dropped from around SGD 1 million to roughly around SGD 850,000 now. Ouch.

This means the market actually dropped by around SGD 230,000 in total. At the lowest point, I was hovering at SGD 800,000 – or a market drop of SGD 280,000. Super ouch.

Here’s what the percentage returns look like:

Chart of percentage gain and XIRR over time.

I went from about 50% gain (against the money I put in) at the start of the year to just about 10% up today. In terms of XIRR, we started the year near 20% return p.a. to about just 6.50% p.a. now – a pretty significant drop.

So what does that mean from a dollar amount, in terms of gains? Let’s see:

Chart of total gains over time.

I’m basically back at where I was in 2020 before the COVID crash. At the lowest point so far, I was back to around the end of 2019! This is after adding more and more to my investments. Pretty crazy!

How is my house thing going?

Given that it’s also been 6 months since my last update on my cashout refinancing of my condo, I might as well give a brief update on that here as well.

It’s not going as fantastically as it was at the start of the year for sure, but it also hasn’t gone incredibly badly.

I’m pretty much back at around breakeven / slightly positive. It did go below breakeven for a brief period before rebounding back up now, but is alright overall. I still believe it was the right move overall 😀 and will update you guys again on how it’s going at the end of the year!

Here’s the value chart for that:

Chart of the cash-out refinancing value over time.

Where do we go from here?

At the moment it does look like the market will like continue to go down in the short term – however I have no clue by how much. The market will likely continue to go down as long as the U.S. Fed continues to indicate that they will continue to raise interest rates… And they will continue to raise interest rates until they see a clear signal that inflation is dealt with.

So does that change my investment plan going forward?

Nope. It doesn’t.

I will continue investing whenever I have the funds to do so. Why?

Mainly because:

  1. There’s no way to know when inflation could improve – it could be quite soon (given U.S. Fed is being quite aggressive) or it could still take several months to years if other macro economic factors continue to be unfavorable. So trying to time when the rebound will happen isn’t going to do me much good.
  2. There’s no way to know how much lower the market will go down. We know that it should continue to go down, but not really by how much. It could be significant if the Fed needs to raise interest rates a huge amount before inflation is reigned in, or it could be quite small if things turn around soon. So the returns on trying to guess exactly where the bottom is may not yield that great of a return compared to just buying today.
  3. The market is already “on sale” compared to 6 months ago. Given the current downturn, many stocks and indices are already at a lower point today than they were 6 months ago. Some are down to their prices a year ago, and some growth stocks are down much further than that even. So unless my conviction about the underlying fundamentals of the company or index changed – I am now able to pick up shares at lower prices than 6 months ago. Trying the bottom when we don’t know when that would be and how much lower it would be (especially since we’re already down 20%) isn’t going to make a huge difference.
  4. This will also allow me to spend more time on other things, rather than obsess over market news. That is much more valuable to me, with much clearer returns on investment.

If you are just starting out, this recession (and I think a recession is pretty much a certainty at this point – market likely has already priced that in) is a great time to start investing. If you are a seasoned investor, this is a great time to add to your position when you can.

However, most importantly, whatever you do, do not be tempted to panic sell.

Remember, people make money in bull markets, but wealth is created during recessions – if we don’t panic.

As long as you have your emergency funds saved up and you have money you don’t need in the short term (as in next 3 to 5 to 10 years depending on how conservative you want to be), this is a great time to build up your investment stock pile when everything is on sale. Good luck and stay the course!

Until next time!
FPL

3 thoughts on “My FIRE Path: 2022 Mid Year Update – Getting Mauled by Bears (& JPOW)”

  1. Hmm, I didn’t receive the email notification for this post. The last one I received was the previous post about STI.
    Do you know if there’s a problem with the mailing list service you are using?
    Thanks!

    Reply

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