Keep investing even if you lose money

Each individual has a different personality, investment style preferences, current and future capital needs, etc. All of these factors affect each individual's risk and expected return on investment. As investments are viewed as a whole portfolio, different portfolios including but not limited to securities, bonds, funds, commodities and derivatives are used to seek higher returns with lower risk (generally speaking, margin trading is a separate issue). The risk factor is more important than the return factor, because capital preservation is the most important factor, and the mentality is more balanced and less likely to make irrational choices.

I have no major foreseeable capital needs at the moment, and I can invest for a period of more than three to five years, and I have a stable income at the moment. My current ideal equity to debt ratio is about 7 to 3 to 8 to 2, which is similar to the results of the bank investment questionnaire. If there are no major problems with the company, I can get a 4-5% annual return if I hold it for a long time, mainly from dividends, but there is a risk of dividend loss, but even so, I should be able to return my capital after holding it for many years. My current bonds are mostly government bonds, with a return of about 2% per year, and basically no risk of dividend loss, so I just treat them as fixed deposits. In addition to the above, I also have about half of my money in bank deposits, money funds or liquidity for daily needs or to wait for a big downturn before entering the market.

Because a certain safety zone has been established, it is possible to invest in higher risk investments and reap rich returns from investing in promising industries, including areas I do not know much about, such as technology, environmental protection, and consumerism. These areas can be left to the experts. Currently, I am invested in ChinaAMC Greater China Technology Fund, BlackRock World Technology Fund and Invesco Global Consumer Trend Fund.

I invest in Greater China Technology Fund because I believe that the next technological advancement will happen in Greater China, and I also believe in domestic product substitution due to geopolitical and commercial issues, including new energy, internet, pharmaceuticals, electric cars, etc. However, since July last year, the fund has been affected by the central government's policy, and the fund's performance is still in the red because the fund is in the middle of a storm. The fund is still in the red, but still holds a fixed investment, out of the smile curve. The fund's performance is expected to fluctuate between the Hang Seng Technology Index and the Growth Enterprise Market Index because of its exposure to the A-share index. The manager has another fund under management that has performed better, but is more A-share focused, which is why the manager has added the A-share STI to the Greater China Technology Fund.

I invested in BlackRock World Technology Fund because it invests in technology companies around the world, but has a smaller proportion in Greater China, which can make up for the shortfall of the first fund. It was still in the red until December last year, but is now in the red after the crash. Although I wanted to stop the profit at that time, I couldn't do it because I haven't invested enough issues, only 10% to 20%, so there is still room for a smile curve. The fund is still under the influence of interest rate hike and watch reduction, so it is difficult to improve its performance in the short term, but the advantage is that it can reduce the cost of holding.

Invesco Global Consumer Trend Fund was started in 2021 when the epidemic was not yet subsided, because one of the main drivers of the economy was consumption, and the consumer market was expected to recover at that time, and the fund was also officially recommended, so it was started. However, the net value of the fund has been moving sideways for some time and then it has been falling, and the fund has not been able to outperform the relative reference index after the investment started. Currently, this fund is my least favorable sector fund among the 3 funds, because in the long run, it will only outperform the reference index for a short period of time, and the related companies are also affected by high inflation and high wages, which affect their profits, and therefore need to raise prices to shift costs. Consumers are also reducing their purchases due to higher commodity prices and reduced income from the epidemic, further reducing the profitability of the underlying companies, especially for non-essential consumer goods, as consumers are prioritizing less purchases of these products. Although there is still room for improvement in the performance of this fund, there is still no relevant ETF alternative in the Hong Kong stock market, and there is no relevant Hong Kong dollar fund alternative for cattle, so if you still want to invest in the consumer sector, this fund is still the only choice.

As the market is still volatile, we will mainly invest in fixed income and wait for the market storm to leave. I am also considering adding another fund or stock to my portfolio, but most likely I will not do so for the time being, as the market is not expected to be good in the future, but I will hedge to reduce losses. Sometimes not switching is the best decision.