Our holding was up 41.3% verses S&P 500, which was up 18.4% in the Calendar year 2020.
Albeit, there is no reason to celebrate because we are still trailing market in the long term. See below for the detail. We do not want you to come to an early conclusion by this yearly, short-term performance.
| S&P 500 | AoP | |
| 2010 | 15.1% | 22.3% |
| 2011 | 2.1% | -46.5% |
| 2012 | 16.0% | 38.9% |
| 2013 | 32.4% | -1.4% |
| 2014 | 13.7% | 25.9% |
| 2015 | 1.4% | 11.6% |
| 2016 | 12.0% | 5.3% |
| 2017 | 21.8% | 38.3% |
| 2018 | -4.4% | 3.5% |
| 2019 | 31.5% | 40.6% |
| 2020 | 18.4% | 41.3% |
| CAGR | 14.0% | 10.8% |
| Total | 322.5% | 279.8% |
This year, most of the gains has come from our major holdings as usual with an exception of one.
Our second most biggest holding, where we have backed our truck a while ago, went side-way.
What Propelled Our Gain in 2020?
In March, during the outset of covid-19 pandemic in United States, the stock market crashed. In another word, there were better opportunities in the market.
However, we had no dry powder. Additionally, our entire equity holding piggy-backed the stock market towards recession. We fortunately, with sheer luck, had no margin debt.
When the great American business were tossed like empty water bottle, we couldn’t sit idle. We were prompt in purchasing great many businesses in Margin loan.
The practice of purchasing stocks in margin loan is well unwelcomed and unloved practice within value oriented investors, for many good reasons. We, however, thought quite opposite for that given situation.
For example, the cost of margin debt that was offered to us was 2.87% per annum. A historic low figure. Although, we do not anticipate that rate to continue forever. At the same time, the bone solid business like Berkshire Hathaway was offered for less than $400 Billion dollar, where its investment portfolio itself is around $300 Billion and they had $125 Billion in cash. In a way, you are paying just $75 Billion for all the fully owned subsidiary of Berkshire Hathaway like GEICO, BNSF, Sees Candy, Berkshire Energy and the brain power of Charlie and Buffett.
That seemed like no-brainer, although, it surely wasn’t an easy decision. Neither in mind nor in stomach. After all, we are humans and we have human emotions.
Would the stock market tumbled further 40% from that point, you would be reading a thriller instead of romantic note.
All in all, 2020 has been a fantastic year for us financially. It was our the best year so far. Although, 2020 was not kind to us in many other factors.
We hope 2021 has even greater surprises for us, perhaps positive. Happy New Year.
