Let’s dive right in.
FULL YEAR 2022:
SINCE INCEPTION (FEB 2020), ANNUALIZED:
Note: Returns are MWRs, all figures in USD
TTF’s NAV: USD 2,110,819.49
Deposits/Withdrawals: USD 1,643,091.06
Nett capital gains since inception: USD 467,728.43
For reference, the last fund report: https://thumbtackinvestor.wordpress.com/2022/11/27/thumbtack-fund-report-12-no-longer-a-teenager/
Since TTF was incorporated in Feb 2020, this means that TTF has enjoyed a nett gain of USD 467,728.43 over a period of 34 months of investment activity, which works out to be USD 13,756.72 every month, or approximately SGD 18.4k per month from Feb 2020 to date.
Cumulative ROI (Feb 2020 to Dec 2022):
2022 has been the best year, financially, quantum wise, that I’ve had. Ever.
Business hit new all time highs, I use revenue and revenue growth as the main key metrics, amongst others. By Nov 2022, the revenue has already exceeded 2021’s by a significant margin.
Investment holding wise, out of 3 funds, 2 have done exceedingly well, both have returned positive double digit %s, generating alpha way in excess of what I would’ve expected at the start of 2022. The 3rd fund is still heavily in the red, but that’s just a small 10k USD started fund set up for my son to have some experience. He bought only 2 stocks: Tesla and Apple, both of which are obviously quite red. But that’s ok, the whole objective isn’t for investment gains anyway. I mentally wrote it off the sec it was incorporated.
I have just written out some thoughts in the last post a mere month ago (https://thumbtackinvestor.wordpress.com/2022/11/27/thumbtack-fund-report-12-no-longer-a-teenager/), so nothing much to add to it currently. The outlook for 2023 remains extremely cautious business wise: I think we are all in for some tumultuous times ahead, but comparatively, SG businesses will still be relatively insulated. Our property market continues rising, albeit at a slower pace, whereas literally all the other major economies’ property markets are dropping like a stone: esp in the US and in China.
Personally, my guess (and this is just a wild guess) is that the authorities are deliberately allowing prices to rise to uncomfortable levels, in anticipation of a downturn, so that we come off from an elevated base and are still ok, whereas the other major countries will experience a wealth destruction shock, which would in turn, lead to repercussions in other related property related industries.
In business, I’m seeing the classic signs of caution when business owners start to get cold feet, and have a negative bent to their outlook for the year ahead: businesses are delaying capex requirements, trying to keep relatively high levels of capital, bunkering down, and even delaying or scrapping expansion plans. We have already seen the retrenchments in the big tech companies who have mostly gone on a crazy hiring spree when times were good and investors were throwing capital at these companies. I personally already know of a buddy who scrapped such expansion plans and adopted a “wait and see” approach instead. I’d say that my view is similar in this regard.
Now, business is different from investing though. For TTF, I’m going to adopt a more aggressive approach in 2023. What has worked well for TTF was a series of short volatility bets in instances of high volatility. There are very specific pockets of mispricing that I can find, and these opportunities are relatively transient, and the markets misprice them largely because of emotions of exuberance or fear. In these instances, the markets are still efficient, but efficient with a lag. And that’s a great thing for me cos it means I don’t have to wait very long to see gains when the markets correct this mispricing. Although small in quantum, the relatively short time frame it takes to correct this mispricing means on an annualized basis, the returns are massive.
The only downside to such a strategy is that it requires one to search intensely for such opportunities. They are not super uncommon, but they are not out there blatantly in the open. Also, they exist in unknown names: companies with specific situations that are not described in the media, nobody’s really digging into these companies, and most of the large players do not even bother to follow or understand the situation.
IMO, this period of time is the best time for such short volatility strategies. It’d have potentially been disastrous to do so in 2021 when liquidity was high, money was swooshing around, because crazy volatility can get even more crazy. And more crazy. And yet more crazy.
But now, with reduced and still reducing liquidity, the tables have turned, and whenever there’s strong emotion driving prices in either direction, I sit up, pause the background music, pick up my calculator and start crunching some numbers.
Spikes in volatility have to come down in rapid succession each time they appear imo, because the “adrenaline” that feeds such volatility is gone.
The 2 targets in 2023 for TTF are:
- Generate an annualized return above the current annualized 3yr average of +19.27%. That’d further increase my long term CAGR.
- Increase AUM for TTF to USD 3mil.
While a ROI target of > +19.27% seems like a pie in the sky in the current climate, IMO, it’s very do-able because most of my strategy isn’t dependent on how well the markets do in general: in fact, TTF’s long term 3yr correlation to S&P index is currently in the negative. (0 = perfect correlation, 0 to 1 = positively correlated and -1 to 0 = negatively correlated)
Also, whilst an AUM target of 3M is an almost 50% growth from current AUM, I think it’s still reasonably achievable. Not easily of course, but that’s what targets are meant to be for. Not easy, but not impossible either. I wouldn’t want it to be easy anyway.
That’s all I have for this short fund report.
I read something that someone wise wrote before that I like: While we can’t all be rich, we can all certainly try not to be poor.
So to all readers, buddies and fellow investor warriors: Godspeed for 2023 and good luck!