My Year in: Investing

The year of 2016 was the second full year I spent invested in securities. Rather than imitate the pros by starting to write publicly about my performance only when I got good, I decided to start right away and here’s the second edition.

Since these are personal figures, instead of revealing actual currencies I chose a more important measurement of the worth of money to me (and I suppose to most non-rich people): months of life in current regular living conditions.

Performance in securities was +30.02% for the year.

Overall savings change was +131.96% for the year.

Expressed in months of living expenses, my total savings at the end of 2015 are at about 2 to 3 months. That’s roughly -25% compared to last year. I have a two-year-old daughter and we have to pay for school among other things, so our cost of living grew immensely this year. Here’s hoping it stays at the current level next year.

It’s almost impossible to look at a savings addition of over one hundred percent and not think you did something really right. If you want to show great percentage improvements, I do recommend having close to nothing to begin with.

An investing gain of 30 percent is also in the range of the most brilliant minds in the history of investing. But the Ibovespa rose 39% this year, so my active engagement cost me 9 percentage points compared to just buying an index fund.

The year was full of activity in the portfolio, with 14 transactions total. Last year I did 3. I end this year holding none of the 4 companies I owned when it began. At the moment I own long positions in 3 companies.

I expect to hold the current companies for at the very least 3 years from purchase dates, which ranged from May to December.

One company in particular took me in a new path, and since it is now sold, I feel at ease to discuss it. Whirlpool Latin America owns 3 highly respected brands in household appliances: Brastemp, Consul and Kitchenaid. In early June I had analyzed the company and found a comfortable debt situation, even though looking back the liabilities were a bit high. Still, the company was selling at a PE10 of 5.2, and excluding the less profitable year of 2015, a market cap of about 3 times earnings for recent years. I bought in at R$2.35 per share. One day I woke up to see the price at over R$3.00. Whirlpool had issued a public offer to buy back all its shares for R$3.31. I sold out at R$3.25, a 38% return in 5 months. I believe Whirlpool’s management appraised the company at too low a valuation, the company easily being worth between R$4 and 5 per share. Later I learned that not enough shareholders agreed with the price, and management failed to take the company private.

More than any numeric result for this year, which is truly a consequence of the effort put in over previous years, the most fortunate development was that I was able to dedicate a lot more time to investment studies, perhaps 20 times as much as I did in any previous year. With the exception of banks and financial companies, which I am not able to analyze at the moment, I studied every Brazilian public company, a number approaching 300. I started a YouTube channel where I analyze companies’ financial statements, which I strongly encourage you to subscribe to, and now counts 55 episodes, all with (spoiler alert) investment ideas that end up being rejected. This dedication should bear fruit in the future.

My goal as we entered 2016 was to beat inflation. That was accomplished. From 2017 on, my benchmarks will be the Bovespa index and the major global indexes.