End of the 2012 marked five full years I have been managing my portfolio. Five year is perhaps the earliest milestone in the long investing journey ahead. It is also a good time to look back and introspect. The annualized performance record is shown as follows.
Ironically, five years is a complete career for professionals-- going from scratch to stardom and bust before the end of the fifth year.
Is it beginner's luck? It is certainly a possibility, but I hope that there is some genuine skill involved. Only time will tell. I certainly do not expect the 30+% yearly returns to repeat very often as time goes on.
Asset allocation
As of Dec 31, 2012, the portfolio had 27.2% in cash and equivalents, which continues to earn a pittance. It continues to be a drag on the portfolio's performance-- a risk that I am willing to accept. The large allocation to US listed equities is largely due to the healthy rise of some of the US equities in the portfolio, specifically Bank of America (BAC) and Cisco (CSCO). I continue to hold these equities..png)
Winners
The biggest winner in the portfolio would have to be Bank of America. I started buying a significant position in BofA in mid 2011, as it was trading near 1/3 or tangible book value. During 2012, BofA rose close to 100%. I continue to view this giant bank as significantly undervalued in the market. It continues to sell at a mild discount to tangible book. I believe the market will slowly but surely realize the continuing improvement of BofA's earning power.Other winners included Canam Group, Cisco and Markel.
