We all should experience a crisis in confidence at some point if we invest for a long time.

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In recent news local fund manager Asia Genesis wrote a concise letter to their shareholders to explain the recent performance of their Asia Macro fund. What happened and their decisions to close the fund:

The fund was established in 2020. The website of Asia Genesis provides the following information.

The fund’s goal is to seek capital preservation and positive annual compounding. This message is intended to appeal to a large number of us, as this is what we all want:

  1. Don’t lose money
  2. Don’t lose out to inflation.

Most strategies that perform well in both areas will not work together.

Chua Soon Hock (CIO) is a trader. It is not a lie that they have a magic formula, but if you invest in them you will benefit from their trading sophistication.

The fund’s performance has been positive, even in years like 2022 when most strategic buy-and hold portfolios have been negatively impacted. Since inception, the fund’s 31% cumulative net returns is half of the 62% return of IWDA (which tracks the MSCI World), but similar to the performance of EIMI, the MSCI Emerging Markets IMI ETF. The fund keeps up with the index they measure against.

Soon Hock, unlike many others (including us), did not bury the issue, lamenting the poor performance of the selection and the unexpected outcome. In normal circumstances, this would never happen.

In his post, he admits that the operating environment I described is in fact what he said.

Expect both unexpected and expected results from different aspects of investments.

Soon, Hock’s post also gives us a glimpse into something different regarding trading and buy-and-hold investing. In a buy and hold strategy, you can expect a 20% drop in the value of your investment portfolio but also a 35% to 60% increase over a period of months.

This can be very different within a trading strategy.

I’ve read more about volatility drag and I think traders are trying to avoid it. In this case, Soon Hock has admitted that they made a mistake.

The Macro Fund would need a 20% return in order to recover. If you look at the recent monthly trading results, the highest monthly return is 4.8%. That’s far from this amount.

The easy conclusion is trading doesn’t work or this fund sucks.

The average wealth creator is not that different from a trader with a portfolio mentality. They are just less sophisticated.

We all decide whether to invest the capital we receive from our jobs in Treasury bills, an account for savings, this investment or that property.

Trading and making investment decisions are not that different. Just because our timeframe and nature of investment are different.

I am a wealthy builder and have tried to allocate my own money. I was also a personal stock investor who had a portfolio of individual stocks. In both roles, I have also experienced a crisis of confidence.

I’m sure that some of you have also experienced this crisis of confidence.

An index buy-and-hold strategy may look simple, but it’s greatest flaw is that it requires you to hold through some great volatility periods. Those periods will generate enough episodes of “Crisis of confidence” or the “do I know what I am doing (really!)” moment.

All strategies, whether low volatile or high volatility, will have these moments.

If we want to be successful, we will all go through this crisis of confidence. It is not clear how we will overcome it.

I wonder how many of us can write such a “I know I fxxked up” letter out to the world.

I invested in a portfolio of exchange-traded fund (ETF) and listed stocks in the US, Hong Kong, and London.

My preferred broker for trading and custodianship of my investments is Interactive Brokers. Interactive Brokers lets you trade in the US and UK, Europe, Singapore, Hong Kong, among other markets. Options are also available. There are no minimum charges for the month, very low forex exchange fees and very low commissions.

Find out more Visit Interactive Brokers Today.

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