Stock Garden Crosses S$1M Again…But for How Long?

Selling your winners and holding your losers is like cutting the flowers and watering the weeds.
– Peter Lynch

This famous line from legendary investor Peter Lynch offers a powerful framework for managing an investment portfolio.

But like all great analogies, it can provide further insights when you probe further:

What happens when flowers start to wilt? Are weeds really bad?

No matter how beautiful the flowers, they will eventually wilt. But a well-tended plant will continue to produce even more blooms. Similarly, while a quality company’s share price may fall in the short term, its strong fundamentals will cause it to rise again in the long term.

And just like weeds can help to prevent soil erosion, having some stable, slow-growing businesses in your portfolio can reduce its volatility.

As you can see, it’s not just about the individual flowers and weeds but about cultivating the entire garden with care and attention. Likewise, managing a portfolio requires the same effort to produce the desired results.

The recent earnings season has been a busy time for any investor “tending their garden.” With markets reacting accordingly to the results, here’s a look at how my own garden is faring.

Stock Garden Crosses S$1M Again

Thanks to the recent rally, portfolio value crosses the S$1 million again!

The last time I hit that milestone was during the market euphoria of mid-2021. The success was short-lived, however, as my portfolio was battered by the bear market in 2022.

Moreover, in preparation for my new adventure from 2023, I was increasing my cash pile. Consequently, portfolio value dropped by almost S$300,000 by the end of 2022.

Similarly, I don’t expect this to last long.

In fact, given the markets’ volatility, I wouldn’t be surprised if the value falls below the seven-figure mark by the time you read this. Even if it doesn’t, I may withdraw the amount I’ve set aside for future expenses by the end of the year.

The growth of my portfolio has certainly slowed since I resigned three years ago, but that doesn’t disappoint me; it was a trade-off I accepted.

On the contrary, I’m pleased that it has turned out better than expected, increasing in value even after I’ve withdrawn some funds.

Watering the Flowers, Cutting the Weeds

Peter Lynch’s investment adage has served me well, but I’ve learned that it’s a practice, not a foolproof recipe.

At times, I’ve still accidentally cut the flowers, mistaking them for weeds. At other times, I’ve naively hoped my water could miraculously turn the weeds into flowers.

One of the biggest misses was selling Food Empire Holdings (SGX:F03) at around S$0.60 in 2020. My mistake wasn’t just in the initial sale but also in not buying it back when the company’s business proved to be more resilient than expected.

That’s a 400% lesson!

The more recent mistakes are selling Singapore Exchange (SGX: S68) at S$9.52 in 2023 and Sheng Siong (SGX:OV8) at S$1.52 in 2024, which are trading at S$16.57 and S$2.03 respectively now.

What a foolish gardener I am.

The saving grace is that I got some things right, and I’m pleased that 25 out of 28 stocks in my portfolio are now blossoming.

Stock Allocation: Same Same But Different

In terms of allocation, there isn’t much change.

You’ll see the same names that occupied the top half of my portfolio since the beginning, providing evidence that the “water the flowers” strategy is working.

However, a closer look reveals a few notable shifts since my June’s update.

After their latest earnings reports, Arista Networks (NYSE: ANET), Venture Corporation (SGX: V03), and Shopify (NASDAQ: SHOP) have all moved up a few positions.

Arista is now in the pole position and could soon become my first 10-bagger, while Shopify has finally emerged from its doldrums to make it into the top ten!

I’ve also deployed cash, decreasing my position from over 6% to the current 3.5%, with three new stocks added to the portfolio: ComfortDelGro Corporation (SGX: C52), Vicom Ltd (SGX: WJP), and Novo Nordisk A/S (NYSE: NVO).

For the rest of the year, I don’t anticipate any major changes. I’ll continue to monitor the garden’s development and health, while enjoying the beautiful view.

As with any garden, this growth and beauty requires consistent effort and time. It can be tiring, but the outcome is definitely worth it.