2021 investment summary

Here I would like to preserve my thoughts on 2021 from an investment point of view and the results of my trades.

Events that moved the markets

There were several topics that moved markets:

  • The worst wave of Covid-19 (for most countries) yet at the beginning of the year.
  • Covid-19 vaccination started.
  • Some pandemic restrictions remained, some vere eased.
  • Post-covid economic recovery was not at strong as expected.
  • Highest inflation in 30 years (in US, but other countries had similar issue).
  • Supply chain disruption.
  • China property sector crisis and Evergrande risk of default.
  • China crackdown on tech and educational sectors.
  • Prices of oil, gas and energy skyrocketed.
  • Europe gas crisis – some energy suppliers went bankrupt.
  • Russia gathered forces by Ukraine border near Donbas.
  • Green Deal, UN Climate Change conference.
  • Meme stocks and Reddit “Wall Street Bets”.
  • Record year for new IPOs.

As you can see, negative news prevailed but the S&P500 gained more than 28% (dividends included). However great results were not everywhere. Stay-at-home and many other golden growth stocks from 2020 were hit hard.

What happened to top growth stocks of 2020

As the vaccination started, the popularity of stocks that helped us survive lockdowns cooled off. A great example is ZM (Zoom Video Communications) which lost 59% since its 2021 high at $451. Also, Chinese stocks were in trouble as the Communist party crackdown on the tech sector and delisting fears moved the markets. Alibaba was literally cut in half and many Chinese real estate developers even more as the government tighten borrowing and debt rules called Three Red Lines.

Another factor was rising inflation. FED statements about inflation moved from “it’s transitionary” to “it is more persistent than we thought”. I wrote two interesting posts about that during the year:

Why inflation and the possibility of rising interest rates could harm growth stocks?

Inflation vs deflation – history and how to hedge.

To see the real impact, look at the table below that compares the stock price at the end of the year 2021 with its highest value during that year:

As you can see, investors that didn’t move from overpriced growth stocks or open positions at the “top”, suffered huge losses during the year. Now let’s have a look at stocks and other assets that did well during 2021.

2021 winners

First of all, oil surged 50% as pandemic restrictions eased and demand for oil rose. This helped the whole energy sector XLE (Energy Select Sector SPDR® ETF) which rose 53% and Gazprom (GAZ.DE) that profited from the natural gas crisis, rose 70%. Inflation was also reflected in other materials with Alcoa (ticker AA) rising almost 157%.

Unsurprisingly, companies that did well were vaccine makers with Pfizer (PFE) rose 54%, Moderna (MRNA) 140% and BioNTech (BNTX) 202%.

The PE ratio of the S&P500 was 36 and the Buffet indicator was at an all-time high at the beginning of the year which was a sign of overvaluation. However, observant value investors had several opportunities among the stocks that were beaten down by the pandemic and were forgotten by the investors in 2020 like The Goodyear Tire & Rubber Company (GT) gained 96%.

Among the others, the financial sector profited from record IPOs listing and gained 35%, some cryptocurrencies had good profits with Ethereum rose 400%.

My results

Since not all of the historical statistics cannot be seen on the eToro web here RadimGoth Stats – eToro, I would like to share it here.

I ended up with 11% profit which is not horrible but it underperformed the S&P500 which gained 26.89%. I got rid of some overpriced growth stocks during the year so I was able to protect profits from the previous year but still suffered some losses.

However, since I moved to eToro in April 2020, I’ve had a 155% gain which is two times more than S&P500.

Risk

I hold some cash and rotate into safe assets (gold, ETFs, low PE stocks) in the second half of a year which lowered the risk to 3. After holding for several months, I started buying again growth companies that had fallen under their intrinsic value.

Dividends

The following chart shows an average dividend per position. As you can see, the biggest dividends were received from property developer China Resources Land (1108.HK) – one of a few China’s real estate companies with an ok balance sheet.

Almost two-thirds of dividends were from stocks, the rest was from ETFs.

Short selling

I made 42 short sells with a total profit of 1.4% (fees included) counted from the end portfolio value. The result is simple – it didn’t worth the effort. Therefore, I will reduce short selling in future.

Buy positions

Here are all buy positions that were closed in 2021. The biggest profits were from Pfizer, DataDog, NVidia, ZScaler, Beazley and CrowdStrike.

Posts that got the attention

Record year for IPOs – Rivian

Connection with Europe debt crisis

Connection with internet bubble of 2000

Oatly is overpriced

Real estate development accounts for more than 25% of China’s GDP

Assets under management

At the end of the year, I had 232 copiers, $370K AUM and 2300 followers.


Join me and copy my trades at eToro.


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