What a roller-coaster ride of a month in my investment journey!

A lot of stress but I think it’s a good experience and I’m learning through it.

Reminder of being okay to be wrong

So the BOJ actually hiked rate despite many, including myself, think that it’s not time to do so yet.

Anyways, I made long-term bets already on a bullish USDJPY, and of course there are losses there.

But I also did a bit dip-buying based on observation that the market is pricing in a rate hike too much and the yen should at least hold ground at 155.

So in total I lost around HKD5k based on this wrong judgment. It could’ve been a $5-10k gain if I was right.

Based on the results, it’s easy to think I made a mistake. I think looking at it closely though I didn’t.

It just so happen the outcome turned out to not be what I expected – and many were caught by surprised too.

In any case I had baked this scenario into the calculation, so a HKD5k loss is not a big deal.

Of course there’s also the ~HKD25k decrease in value going from 160 to 150 – but that’s simply the cost of holding long-term.

In conclusion I need to remind myself to not beat myself up or get too upset from the total HKD25-30k loss.

The fundamentals of USD and JPY haven’t changed and it will go back up, unless my long-term thesis was wrong somehow.

But then no matter short-term or long-term, we have to make bets that we are convinced about. Any investment is a bet so let’s see a few years from now how many of my long-term bets pay off.

(update Aug 5th – the realized + unrealized loss has ballooned to HK$40k. I had to cut more to minimize future loss as unlike stock it’s kind of an endless hole)

Current Portfolio:

HKD/USD cash: 20.4% (19.3%)

USD ST bonds: 44.0% (40.4%)

USD stocks: 14.6% (18.1%)

USD LT bonds: 6.2% (6.3%)

Gold (USD): 14.8% (16.0%)

Bitcoin (USD): 3% (0%)

YEN cash: 6.0% (6.7%)

JPY stocks: 16.6% (16.9%)

YEN shorts: -25.6% (-23.8%)

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So the main change is getting more risk-off especially on the US side, as the mega-cap US sell off began, and moved some to bonds.

Maybe I should get a little risk-off with JP equity as well but it’s a little harder to move. Plus I’m a more bullish on JP equity in the medium term so I don’t want to miss out on the next surge being too risk-off.

Bitcoin wasn’t actually 0% previous but I just added it as an asset class moving forward. It’ll probably take up 5% of the portfolio from here on so it’s significant enough I want to keep track of it.

US Equity

Some sell off mixed with some huge rebounds.

Anyways it seems like in August it’ll continue to be flat – with uncertainty on election and war and rate cuts.

I’m a bit risk-off at the moment with 15% portfolio there.

JP Equity

Some crazy volatility here as well.

Made some stupid moves in July and realized some losses.

Anyways same as US equity seems like it’s going flat again in the near future – especially with the surprised rate hike which probably spooked some people.

Of course still absolutely bullish on the medium term (1-2 years) though so keeping it floating between 15-18%.

USD.JPY

So now a lot of unrealized losses here, and some losses on dip-buying as well.

In fact the short position hasn’t really increased that much from previously though, so mainly just losses from existing positions.

In the medium (1-2 years) to long (3-5 years) term still absolutely bullish.

155 is my base case for 1 year from now and 170 is still in sight I think.

If it holds around 150 I’m not going to complain though, and I just don’t see it at 145 or 140 unless the fed start cutting furiously in the next several months. It’s possible if some surprisingly bad unemployment figures come out – and honestly if that happens it’s recession fear time.

(update Aug5 – bad unemployment figures came out. The market IS expecting furious rate cuts from the fed in the next several months now. Unlikely turn of events that happened, o well what can I do.)

By the way I just realized I need to remind myself – the yen dropping sharply and really strong inflation will lead to crazy home prices in Tokyo, which is kind of my ultimate goal and the USDJPY longs is a hedge against that as well. So if USDJPY goes bottoms up, maybe BOJ hikes way more than expected – at least that means the inflation and home prices are probably in check.

(Update Aug5 – after some careful consideration, USDJPY isn’t necessarily a good hedge, as the risk can balloon very quickly as I have seen in this past couple weeks from 162->142 … and who knows if it’ll go to 130, or even 120. Fundamentals won’t drive it there but sentiments might, and it can take a long time to recover which meanwhile it’s adding a burden to my risk tolerance that isn’t yielding great reward)

Aug2 update

seems like recession fears is really on the table. If the employment statistics comes out bad tonight, this time it’s really “bad news is bad news”. US market will drop, JP market will drop, and USDJPY will probably drop.

Not too worried though as this point since except USDJPY, both US and JP equity I’m in a risk-off distribution for the most part.

With 20% in short-term bonds, I could always attack and increase the positions, buying into weakness – and my wallet is deep enough to wait out until the next round up.

I really need to backtest this “buy into weakness, sell into strength” investing style though, and see how I might fine-tune it to make it profitable for my long-term investments.

Crypto

So I’ve never taken bitcoin seriously probably until this year.

I’ve always dismissed it as some niched technology that might eventually all crash to zero someday – that’s the mindset I had when I invested hkd10k into it in 2018.

Anyways in the past year, it has officially been approved to get packaged into ETFs, and Donald Trump is even speaking about buying bitcoins as a national reserve.

I think from now on I’ll keep around 5% of portfolio as bitcoin, and also a little bit in MSTR just in case it goes crazy.

Due to the volatile nature I think I don’t have the stomach to keep too much more than 5%. I’m always looking at a 20% drop in a month easily, and maybe 50% drop in several months would not be surprising.

I’ll trim as it gets too much above 5% and buy when it gets too much below. I think for now maybe 3-7% range make sense.