The structure of this annual review will be as follows:
- Introductory ramblings
- Reading and listening in 2022
- Targets for 2023
Any sane investor can quickly realize the pointlessness of calendar year returns, yet here we are, tied to the calendar. Buffett uses sliding five year periods when comparing his returns to the market returns, and has frequently told us that the meaningful thing to look at is the returns over a full business cycle.
Unfortunately I haven’t got perfect data from where I started investing, in 2014, but in the grander scheme of things that’s quite irrelevant for two reasons. First, the sums of money I invested then are completely insignificant compared to the total size of my portfolio now (the sums got significant around 2016). Secondly, because I think I didn’t find “my strategy” until closer to 2019. Before ‘19 I was more focused on keeping up with the index, and building some sort of dividend income portfolio. During ‘19 I shifted my focus to more aggressive returns, and shifting away from the income and dividend focus.
Looking at the results (numbers later) I am happy that I kept pace with the market during the insanity that was 2020-2021, and during 2019. I’m even happier that I outperformed the market during 2022. This might be an incorrect takeaway, but I hope this is due to me not “confusing brains with a bull-market” and staying cautious during ‘22.
The biggest change during 2022 compared to the previous years, especially 2020-2021, was the massive change in the market environment. The short-term right thing to do in 20-21 was to own high beta stocks, remain fully invested, and give in to FOMO. In ‘22 this has been massively punished. High flying stocks with insane valuation has returned everything between -50% to -90% in some cases. The big change is that in ‘20-’21 mistakes still could give you +20% or something like that. In ‘22 mistakes have cost you a lot of money. Some of the “wretched excess” has been cleaned out, but I think there are still a lot of things with significant downsides.
My personal inclination to prefer cheaper stocks over more expensive ones is something that I think has been beneficial this year. This is important to me, because I think that avoiding losses and outperforming in a down-year is more important than outperforming in a strong up-year for the market.
Finally, this year has been very different for me compared to any other earlier year. This is mainly because during the first half of the year I had the pleasure of living in Stockholm. This came with the benefit of being able to meet a lot of people I have interacted with on Twitter. Every year I look back, it feels like my wealth of knowledge (still only a tiny amount) has doubled every year. Same definitely goes for 2022. Moving on to the main event, returns.
Disregarding the introductory statements about the pointlessness of short time-frame returns: my 2022 calendar year returns landed at -1.79%, beating the index (S&P500 -19%, Nasdaq COMP -33%, and OMX Stockholm PI -25%). This leaves me both satisfied and dissatisfied, of course I am very pleased to have outperformed the index in my first year where the index is down, but I’m also not happy with having negative returns.
Since 2017 my estimated total return is 159%, or 17% compounded annually,(first investment made in 2014 but completely insignificant in terms of size until 2016, but I don’t have return figures for 2016 adjusted for deposits). 2019 is where I think I switched gears, from dividends and very long term index like returns, to more actively trying to compound my capital. From 2019 my total return is 161%, or 27% compounded annually.
Here are the returns for each year I have data with S&P 500 returns in parentheses:
2022: -1.8% (-19%)
2021: 45.2% (26.7%)
2020: 43.2% (16.2%)
2019: 27.9% (28.8%)
2018: -4.5% (-6.2%)
2017: 4% (19.4%)
In short, beating the index gives me some sense that I have some process that is solid, but the negative returns clearly show that there are improvements to be made.
Reading and listening in 2022
According to Goodreads, I’ve read (or listened to) 18 new books during 2022. I’ve also re-read 6 of my favorite books. On top of that I have read a bunch of Buffetts letters, and in early 2023 I will have read all of his letters.
The noteworthy new (to me) books are, in order of how much I liked them: Skin in the Game, Debt: The First 5,000 Years, A Little History of Economics, University of Berkshire Hathaway, Titan, The House of Morgan, King Icahn, Shoe Dog, The Einstein of Money, Tronstriden: Maktkampen i Industrivärden.
Note that I liked all of the books above, but the only one that made it into my list of favorites is the Taleb book. Titan and House of Morgan are very interesting but also incredibly long, and the rest did not feel very important or interesting enough to be worthy of re-reading. They are all good and I’m glad to have read the ones mentioned. I did also unfortunately read some utter garbage, three books to be exact. These were so bad that I didn’t make it far before deciding to not finishing it.
The books I re-read during 2022 are:
- The Most Important Thing – Howard Marks
- Common Stocks and Uncommon Profits – Philip Fisher
- 100-Baggers – Christopher Mayer
- You Can Be a Stock Market Genius – Joel Greenblatt
- There’s Always Something to Do – Thomas Russo-Gill
These are some of my favorite books, and they are part of a pile of my all time favorites. My plan is to continuously re-read this stack of books, hoping to take away something new on each read.
I did put way more time on listening to podcasts than i did on reading, no clue about the returns of this time allocation, but that’s what it is. My most listened podcasts this year was, in order with time spent listening in parentheses:
- Focused Compounding (11 days) ← way understated since I frequently also listen/watch the episodes on youtube as well. I have watched or listened to some of the episodes more than tree times…
- Acquired (9 days)
- Berkshire Hathaway Annual Meetings (3 days)
- Kvalitetsaktiepodden (2 days)
- Value After Hours (1,5 days) ← this is way understated, since I usually listen to most episodes of this podcast twice, once on youtube and later in my podcast app.
- Börspodden, Fill or Kill, and Market Makers (1,5 days each)
- Ekonomiekot Extra (1 day)
Two “one-off“ episodes that stand out are the Ted Weschler interview in the I am Home Podcast, and 89Olle’s interview in the Swedish podcast Aktiesnack.
Targets for 2023
What to do more of
In late ‘22 I started using Journalytic, as they opened up the platform for everyone. So far I really like having a “private” place to put notes and such regarding different stocks. It helps with feeling “done” after doing some research on a company, as I summarize it into a Journalytic note. I plan to keep using the platform during ‘23, but I have no clear targets or goals in terms of number of notes or anything like that. If you are looking for someplace to keep notes etc related to investing, try it out!
The second thing I want to do more of is doing more deep research on companies. This includes reading more reports, both Q’s and K’s, and updating more spreadsheets. Ideally this also leads to more write-ups posted in ‘23 than in ‘22, but this might be way too ambitious given that I will have a higher workload in my main occupation.
Finally, I’m going to put more time to discussion with other investors. This is something that I think will be very beneficial given where I am at right now in my development as an investor.
What to do less of
The first thing that I plan to do less of, is screening for stocks using a screener. I find that very little of the cases that have contributed positively have been found via screening. Instead I plan on leaning more on other sources for stock ideas, such as Twitter, other good investors, competitor analysis, etc.
Secondly, as some might have noticed, is that I am going to put less time into “low-effort” writing. This should lead to less random writing on Twitter, and hopefully help lead to more write-ups instead.
Finally, I plan to put less time into playing video-games in ‘23. Way too many hours were spent on gaming in ‘22, and although I really enjoyed playing a lot of the games I played last year, I have to get better at limiting the amount of raw hours put into playing games. This should help me achieve the goals under “what to do more of” during ‘23.
Okay, that’s it! 2022 was a very eventful year, both on and off the markets, and both for me personally and with regards to my investments. I expect ‘23 to be very interesting as well.
Here’s what the portfolio looked like on 2022/01/01,
and here is what it looks like today, as of 2023/01/12.
In order not to make this post way too long, I’ll leave it here. I hope this yearly review will be of some value to someone, or at least to myself in the future. Thanks for reading!