Back to black - in a big way

On March 21st, 2020 near the bottom of the COVID19-induced market crash, I wrote a blog post stating essentially that

• I don't believe in timing the market. 
• This included pledge of not jumping out of market when it starts to look bad (exception being a clear bubble)
• As result of sticking with this I lost all gains from previous 3 years
• As my next steps, I told that I was going to continue to ignore daily swings of the market and focus on the quality and financial condition of the corporations we continue to be invested in.

Well, you know what happened. A very rapid correction upwards and then some.

Both our pre-crash and post-crash portfolios were riskier than the portfolio than the Dow Jones Global Index (W1DOW) shown in the figure above (yellow line). The post-crash portfolio being more risky than the pre-crash one because I deliberately shifted balance to the most risky assets in portfolio.

And when I say risky, I mean high beta. Not some low quality hacks, but high quality corporations that just happen to amplify whatever the general market direction is.

Because of that, I emphasized that I make these investments with 10-30 years time horizon. Because it could have gone the other way too. In which case I would have been ready to sit on that portfolio for the said time.

After significantly beating the index, I have rotated back to companies that are low beta and hence the portfolio is likely going to behave close to market.

Let's be clear: Getting above average return was not due to some skill I possess in picking overperforming stocks. It is largely because I took more risk (than the index contained) and was compensated for taking that risk because the market moved the right way and the high beta stocks amplified the market move.

Where the stock picking comes in is to have a portfolio that you do not have to follow every day. Not even every week to get a good night sleep.