Paskalis Investment Annual Letter 2020

Throughout the year 2020, Paskalis Investment has gained 39.91% Year-to-Date considering a decrease of 5.09% of IHSG. This also meant gaining over 8 times of bank time deposit’s rate which was quite extraordinary and unusual. This achievement of sorts might not seem to reoccur in the next 10 years, especially when the fund is – hopefully – getting bigger. Luck and fund size play a big part towards the result but sadly those two factors often unreliable. 

My personal goal is reaching 15% long term rate of return. Putting higher rate may push me to the realm of unreasonable expectations. Lowering the goal’s rate, however, makes my devoted energy and time not worth. I might as well investing in other assets

some changes

There was a change in PI’s NAV and monthly performance calculation starting May 2021 from only public equity to overall PI’s investments performance. Therefore, the new performance metric includes Public Equity, Private Investments, Fintech and other assets that I am currently holding. All the accumulated money and assets are solely for investment purposes, which exclude my personal & household expenses. The calculation is based on Mutual Fund’s formula, where if withdrawals and deposits were conducted, the percentage would not changed.

Regarding the calculation change in May, I admit that the timing of the shift was terrible. From outsiders’ point of view, it might seem like I was hiding the poor public equity loss which was almost -50% in April compared to -25% of IHSG. However, at that time, my exposure of public equity was around 5%. I was still starting to learn about public equity investments and did not want to dip my feet into water at once. Hence, those awful numbers are not representative of all my asset allocation decisions. That loss may or may not triggered the shift, nevertheless that was not the reason.

Questions may be asked, then, why did I not include other investments on PI’s performance review before May 2020? It is because the initial purpose I made this website was to display my thoughts and decision-making process regarding my Public Equity investments since those investments information are readily available for everyone. Thus, everyone may judge them using valid data provided. That was the reasons why articles posted in this website were strictly only about Public Equity and I think PI’s performance should only includes that asset too.

As time went by, I felt that this website has became my sort of investment diary and I would very much like to be able to reflect on past decisions made. Of course, my reflection will not be completed if I just take a look on a small part of investments that I made. Why do I even bother showing the performance of PI since it is not a public mutual fund anyway? Well, it is my own method of forcing accountability to myself. I believe displaying publicly my decisions and results will prevent me for making bogus statements and claims. It also works as a reminder for me to think twice before creating and publishing any articles since it is never my intention to lead readers with false information.

In Hindsight, I was stupid

Unfortunately, making my decisions public does not halt me to do stupid mistakes. Hindsight is always 20/20, it is always been easy and clear now to see the things that should have been done comparing a year ago where it was all blurry. Back in March 2020, I stated that I was late to withdraw my stocks despite the fact that I had foreseen the crash a couple months before. Then, I did not buy any stocks because I was afraid if there would be a second crash due to the impending doom of recession which all these led me in making another stupid mistake; buying securities based on dividend yield and market expectation in April that I repeated again in September.

I was wrong all those times. In my conscious mind, I was prepared for the market crash. All other investments that I kept was quite liquid and readily available to be transferred to my brokerage account. But, I did not move those money because, turns out, I was not prepared at. all. The greed that led to market timing overwhelmed my mind and clouded my judgement. All decisions were made based on “What if the market crashed again?”. My fear was not having unrealized loss, but I surely did not want to lose any chance to buy them at cheaper price when the market went down. I never once thought the reverse outcome and the implication.

As we all know, the reverse happened. The big crash happened once and the recession did not even made a dent in IHSG. Market rapidly went up, albeit not as quickly as USA market, powered by hope that “the worst is over” and influx of new retail investors. We called them “Angkatan Corona” whom sees nothing but bull market since their first deposit.

During those months, I gradually increased my exposure to IDX reaching around 30% by the end of the year. It is still obvious that the greed/fear was still lingering on my mind, most of my assets have missed the opportunity. Fortunately, I found some big winners that could increase the total value of the fund. It is not worth the time and mental health to discuss those big winners (since I will beat myself for not buying more). If you follow the discussions in Telegram, you will know those stocks.

It was a very humbling event that made me realize how inexperienced I was, and still am. Though I was grateful the crash happened within this time of my investment career since the fund that I hold was still relatively small compared to the next 10 years. I learned a lot. I might not react perfectly in the next bear market, but at least I should not do worse.

Moving Forward

I made some changes in my daily habits regarding my investments plan. I am currently focusing my time to learn and study accounting and companies. I realized it is not an easy task to learn company listed in the equity market, therefore I forced myself to read at least 5-10 years of annual reports of any companies including their competitors before investing in them. I have also reduced my other investments that take most of my time, especially the one with invaluable returns.

Investment principles, especially in value investing, do not seem to change a lot in the last 50 years. Once we understand the theory, it is just a matter of practice. I have also limited my exploration in “Investment Gurus” now that I know that everyone that follows this style of investing are saying the same thing with different accents. If you see PI’s Instagram, it is more interesting and useful to follow what companies do in their social media rather than follow what other people think they do.

I will not do monthly performance review again, since it does not align with my long term investment view but I might do it quarterly though.

I have not posted any new articles other than PI Meet this year because I have allocated my time for a better use. Despite the decrease in quantity, with all the learning that I have done and experienced, I hope the upcoming articles are increasing in quality.

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