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Is there hope for Chinese tech? 100% invested!

Sunday, October 30, 2022

Reader says to AK:

My investment portfolio is almost 100% in Chinese and U.S. tech stocks and it has been very depressing to see a growing 6 figure loss for almost 2 years.

I am still holding on but I don't know if there is light at the end of the tunnel.

The saving grace is I am not using borrowed money.

It has gotten so bad that I think my relationship with my family is being affected. 

My work is beginning to suffer too.

I confided in a close friend that I thought of selling everything and never look at stocks again. 

He suggested a few things and one is reading your blog and I saw that you bought into Chinese tech ETF. 

Do you think there is hope? 

Should I hold on?

(The above has been edited to leave out very personal information.)

AK says to reader: 

Not to rub salt into your wound but I only started buying into Chinese tech after Alibaba crashed dramatically in price. 

That was when I thought the valuations of tech stocks were more reasonable.

My first purchase was sometime in April this year. 

I am also not buying and holding but trading for some pocket money because the ETF just like Alibaba does not pay a dividend. 

So, I don't have the baggage that you have.

Not in the same shoes but I can understand how you feel.

It sounds to me that you are overly concentrated in tech stocks, whether in China or the U.S.A. 

I will say that there is probably light at the end of the tunnel but we just don't know how long is that tunnel.

This is especially the case with Chinese tech because of policy risks.

So, to make the wait more bearable, you might want to think about reducing exposure to tech and diversifying your portfolio.

Since you have read my blogs, you would also know that my exposure to Chinese tech is very small at lower than 1% of my portfolio.

I am not suggesting that you should reduce your exposure to tech stocks drastically but a 100% exposure is obviously affecting your mental health badly.

Conviction is a good thing but being stubborn isn't. 

Our investment portfolio should have more than one leg to stand on. 

Standing on one leg isn't very stable.

It isn't something we would do in real life normally.

So, why would we do it as investors?

I cannot say that my investment portfolio is a good model to follow but it gives me peace of mind because it is sufficiently diversified by my standards.

I have a mix of investment grade bonds (i.e. CPF, SSBs and Treasury Bills), real estate exposure through selected REITs and also equities, with large caps in the finance sector having the lion's share.

The idea is that our investment portfolios should be standing on more than one leg.

How many legs should your portfolio have?

I am sorry that I cannot tell you specifically what to do but I hope you get the idea. 

I know you are going through a very rough patch now but never let a good lesson go to waste. 

We will make mistakes as investors.

Even Warren Buffett and Charlie Munger make mistakes.

The important thing is to learn from these mistakes and try to do better in future.

The stock market will always be there and as long as we don't give up, we will have our revenge one day!

I sincerely hope you will find the strength within you to bite the bullet and soldier on.


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ts said...

Hi AK,

Any thoughts on OUE Com Reit? It is trading at more than 40% discount to book value.

AK71 said...

Hi Unkown,

I looked at them (i.e. OUE Hospitality Trust and OUE C-REIT) many years ago and didn't like what I saw.

I haven't looked at them much since.

Hard for leopards to change their spots but I could be wrong.

OK, I admit I am too lazy to look at it now. ;p

Daniel Yip said...

This China Tech thing reminded me on the dot com bubble, same-same but different?

Still vested anyway, hope to reach the end of the tunnel soonest possible lol

AK71 said...

Hi Daniel,

Hope it is same same but different and not exactly like the dot com bubble.

If it is exactly the same, the tunnel might end up to be about 10 years long. ;p

Rellangis said...

Hi AK,

I dipped into HS Tech at around 0.72 merely as a speculative play and form less than 3% of my portfolio. So, no regrets, and will hold until it goes above $1 one day. Hahaha

AK71 said...

Hi Rellangis,

3% sounds like an OK size to me for something we might consider speculative.

At 3%, definitely won't sink a portfolio if it goes kaput and I would be very surprised if Chinese tech goes kaput.

My plan is to trade the ETF for some pocket money and I already did one round not too long ago.

However, I could hold a portion of what I have for the longer term.

My guess is $1 per unit could be too conservative a figure for buy and hold.

Shh. ;p

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