2020 Investment Summary

2020 was my first year of stock investment, and my return was 56.5% (pre-tax).

This is a solid start, although it’s not as impressive as it sounds. First of all, anyone who bought stocks back in March would be loaded by now, no matter how much they understand what they are doing. Secondly, most of my returns come from a single stock, TSMC, and I’ve by no means foreseen how well it would go.

As I review my transactions this year, I am surprised by how many sales I carried out and how almost every one of them turned out to be a mistake. Had I never looked at my stocks after buying them, I would have made much more money. I’ve read over and over about the importance of long-term holding and thought “this won’t be hard for me,” but — surprise—it’s easier said than done. Hopefully I will get better next year.

Here’s a breakdown of all my transactions during the year and a few words about some of them:

Delta

03.25 +17 $31.41

06.09 -17 $33.72

06.10 +18 $27.1

06.21 -18 $26.8

Return: 6.3%

In late March, I thought there’s no way Delta stock was only worth $31, and that it would recover from the panic-selling sooner or later. This prediction was right, although I executed it in the worst possible timing: the stock went up to $37 soon after my purchase, but then went back down quite a bit. I panicked immediately and sold all my holdings, after which it went up again and eventually reached $40 by the end of the year. If I believed Delta’s intrinsic value was more than $40 (which I did, based on potential consolidations in the airline industry post-pandemic), I should have sat through all these fluctuations without blinking an eye.

NY Mellon Bank

03.25 + 31 $32.29

03.30 -21 $33.87

06.10 -10 $41.0

Return: 12.0%

TSMC

03.25 +19 $49.14

08.21 -4 $78.38

11.23 -3 $98.16

Ending balance: +12.1 $108.8

Return: 107.4%

In 2019 and most of 2020, TSMC was the only chip manufacturor capable of 7nm and 5nm processes. All major chip designers, from Qualcomm to Apple to Huawei to Samsung, had to rely on them to produce flagship chips. This was the reason I bought their stock, and it has indeed led to much higher revenue and margins in the last year. Unfortunately, the advantage seems to be eroding. In 2020, Samsung also succeeded in developing 5nm process, and is now manufacturing Qualcomm’s Snapdragon 888 (rumor has it that Samsung gave great price discounts to win this contract). This won’t have much immediate impact on TSMC, as their current orders go all the way to 2022, but if Samsung has really caught up, maybe they would be able to advance to 3nm, the next phase of chip technology, at the same time or even earlier than TSMC, and significantly weaken its moat.

Sysco

06.09 +9 $61.9

06.23 +7 $58.88

08.21 -3 $57.8

Ending balance: +13.2 $74.3

Return: 19.2%

As the leading food distributor in the US, Sysco was hit hard by the pandemic and the ensuing decline of dine-out. However, it doesn’t have as much fixed cost as, say, airline companies, and was able to break even in late Q3 while operating at 70% capacity. Moreover, it has significantly higher margin than main competitors, meaning that it’s able to run the same business business more efficiently. The financial health and the operating efficiency will allow Sysco to expand its business after the pandemic, when many smaller, regional food distributors would have failed after prolonged down time.

Berkshire Hathaway

06.13 +2 $184.4

08.21 -1 $207.25

Ending balance: +1 $232.00

return: 19.1%

Visa

07.28 +2 $197.85

Ending balance: +2 $219.44

return: 11.0%

Visa operates the most popular payment network in the world, and charges less than its main competitor, Mastercard. For some time, fintech companies have tried to challenge card operators’ positions, but Visa and Mastercard’s recent deal with PayPal shows that the networks are not going anywhere. Visa has been expanding their business rapidly in the last few years, and even this year, their earnings improved in every segment except cross-border payment, which will eventually rebound after the pandemic.

Qualcomm

08.21 +7 $111.25

09.11 -7 $113.55

Return: 2.7%

Biogen

11.02 +0.2 $253.64

Ending balance: +0.2 $244.58

Return: -3.46%

Catalyst Pharma

11.02 +17 $3.01

Ending balance: +17 $3.34

Return: 12.58%

Perdoceo Education

12.09 +8 $12.47

Ending balance: +8 $12.63

Return: 1.2%

Buckle

12.09 +3 $32.23

Ending balance: +3 $29.17

Return: -2.4%

Total Return: 56.5%

At this moment, the market seems pretty overvalued, and I wouldn’t be surprised if we end 2021 lower than 2020. If I can get 20% return next year, I would be very satisfied.