Portfolio Management is a most important part of investing.

My Portfolio

My portfolio is diversified across 30 holdings: Malaysia (25 stocks), the UK (1 stock), Hong Kong (3 stocks), and the US (1 stock).   

The portfolio has a significant allocation to Malaysian blue-chip and consumer stocks, supplemented with major global technology, retail, and healthcare companies.  

The foreign portfolio allocation represents ~15% of the total portfolio (in MYR), making it a meaningful but not overwhelming international exposure.  This foreign portfolio is focused, high-conviction, and strategically split between Chinese growth and global defensive plays, with a clear emphasis on large-cap leaders.  The portfolio is exposed to HKD, USD, and GBP, adding a layer of currency risk alongside equity risk.

My Malaysian Portfolio

Extreme Top-Heaviness:

Top 3 Holdings = 52.93% of the entire portfolio.

Top 5 Holdings = 71.85% of the portfolio. (19.8%, 18.7%, 14.5%, 10.0% and 8.9%).

Bottom 15 Holdings combined = less than 10% of the portfolio.

The portfolio's fate is inextricably linked to three sectors via its top holdings:

Financial Services

Energy/Oil & Gas

Consumer Staples 

"Long Tail" of Small Positions:

Holds many very small positions.   This can indicate:

Experimentation with new ideas.😀

Legacy positions from past trades.😀

Portfolio clutter that may not be worth the management effort.  😀

This is a portfolio built not on broad diversification, but on high conviction in a few key ideas. The investor is effectively saying:

"I believe strongly in X, Y, and Z as my foundational winners."

"I have a major speculative/value bet on S (4th largest counter)."

"Everything else is a supporting or side bet."

This approach can lead to significant outperformance if the top picks are correct, but it also carries substantial single-stock and sector risk. The large size of S position (despite its high-risk tier) shows the investor has a strong appetite for contrarian, deep-value opportunities alongside blue-chip stability.

Risk Profile (Based on Tier Classification)

The portfolio is a mix of defensive core holdings and high-risk speculative positions.

 Investment Strategy Inferences

The portfolio suggests an investor who employs a core-satellite strategy:

1. Core (Income & Stability): Heavy allocation to dividend-paying blue chips (Banks, Consumer Staples, Utilities) for predictable returns and principal preservation.

2. Satellite (Growth & Speculation): Active bets on:

• Recovery Plays

• Value/Deep Value

• Growth/Tech

Strengths

• Strong Blue-Chip Foundation: Excellent holdings in market leaders 

• Sector Diversification: Spread across Finance, Consumer, Energy, Tech, Gaming, and Industrial.

• Good Collateral Quality: Low overall haircut facilitates strong borrowing power.

Weaknesses & Concerns

• Extreme Concentration: Top 3 holdings make up 53% of the portfolio. A downturn in banking or energy would significantly impact total value.

• High Conviction in High-Risk Assets: Large allocation to Tier 3 stocks could lead to permanent capital impairment.

• Low Liquidity in Satellites: Many satellite holdings are low-volume stocks, making entry/exit difficult.

Portfolio Summary

The portfolio is a bifurcated portfolio that combines a conservative, income-generating core with a high-conviction, speculative satellite sleeve.

• Profile: A moderately sophisticated retail or high-net-worth investor comfortable with taking calculated risks on undervalued or distressed assets, while anchoring the portfolio with Malaysia's largest and safest companies.

• Primary Objective: Likely capital growth with income support, seeking to outperform through selective bets on recovery and value situations.

• Key Risk: Concentration Risk. Performance is heavily tied to a few stocks and the success of the speculative bets in S and others.

• Collateral Strength: Strong. The portfolio's collateral value is close to its market value, providing excellent liquidity for margin or loan facilities.

Recommendation for Review:

1. Review Concentration: Consider whether the size of the top positions aligns with current outlooks for the banking and energy sectors.

2. Assess Satellite Rationale: Regularly re-evaluate the thesis behind each Tier 2/Tier 3 holding. Are the reasons for investment still valid?

3. Rebalance for Diversification: If new capital is added, consider diversifying into sectors not represented (e.g., Healthcare, REITs, Telecommunications) to reduce reliance on the top 3 holdings.

Overall, this is a thoughtfully constructed but bold portfolio that reflects a clear investment philosophy blending prudence with opportunism. Its success will hinge on the performance of its few large blue-chip holdings and the investor's ability to correctly identify turnaround stories among the speculative picks.

Warren Buffett: If I Could Only Buy 5 Stocks for My Grandchildren

 

Introduction to Long-Term Investing

• The speaker, Warren Buffett, a 94-year-old investor with over 80 years of experience, discusses the importance of selecting stocks for long-term generational wealth, specifically for his grandchildren.
• He emphasizes the need for businesses that can endure economic, technological, and political changes over the next 50 years.
• The speaker notes that most companies do not survive long-term due to various challenges, but a select few possess characteristics that make them nearly immortal.
• He plans to share five specific stocks that he believes will compound wealth effectively over the decades.

Investment Philosophy for Grandchildren

• The speaker distinguishes between investing for himself and for his grandchildren, highlighting a longer time horizon for the latter.
• He prioritizes minimizing the risk of permanent capital loss while achieving solid returns, rather than maximizing short-term gains.
• The importance of tax advantages when passing on investments to grandchildren is discussed, particularly the step-up in cost basis for inherited stocks.
• The strategy he advocates is a buy-and-hold approach, focusing on stocks that can compound over decades without needing frequent trading.

First Stock: Visa

• Visa is highlighted as the first stock to buy, emphasizing that it operates as a payment network rather than a credit card issuer, thus avoiding credit risk.
• The company generates revenue through transaction fees, making money regardless of whether consumers pay their credit card bills.
• Visa's business model has minimal capital requirements, leading to high operating margins, and it benefits from strong network effects.
• The long-term growth potential is significant as the world shifts from cash to digital payments, especially in emerging markets.
• Despite regulatory risks, Visa is well-positioned to remain a leader in the payment processing industry for decades.

Second Stock: Costco

• Costco is described as a unique retailer that generates most of its profit from membership fees rather than product sales, creating a strong incentive to keep prices low.
• The company maintains high membership renewal rates by providing excellent value, leading to predictable revenue streams.
• Costco’s operational efficiency is enhanced by its bulk purchasing and limited product selection, allowing for better pricing from suppliers.
• The company’s culture of treating employees well contributes to high customer satisfaction and loyalty, further solidifying its competitive advantage.
• Costco’s growth potential is substantial, particularly in international markets where it has room to expand its warehouse locations.

Third Stock: Berkshire Hathaway

• Berkshire Hathaway is presented as a diversified conglomerate with a collection of wholly-owned businesses and significant public equity investments.
• The company has a strong culture of capital allocation, focusing on long-term value creation rather than short-term gains.
• Berkshire's diverse business portfolio provides stability, as different sectors can perform well at various times, mitigating risk.
• The management structure encourages autonomy among its subsidiaries, which fosters accountability and operational excellence.
• The speaker expresses confidence in Berkshire’s ability to thrive for generations due to its strong balance sheet and disciplined approach to investments.

Fourth Stock: Moody's

• Moody's is characterized as a leading credit rating agency with a strong market position, benefiting from regulatory barriers that limit competition.
• The company's business model is high-margin, generating recurring revenue from bond ratings and ongoing surveillance fees.
• Moody's has a vast database and historical knowledge that enhances its credit rating accuracy, creating a positive feedback loop for its services.
• The long-term growth potential is driven by the increasing demand for debt issuance as global economies expand.
• Despite regulatory scrutiny, Moody's is expected to remain a dominant player in the credit rating industry for decades.

Fifth Stock: S&P 500 Index Fund (VO)

• The speaker advocates for investing in an S&P 500 index fund, specifically Vanguard's VO, as a means of diversifying and reducing company-specific risk.
• This fund provides exposure to the largest companies in America, ensuring participation in the overall growth of the economy.
• The S&P 500 has historically returned about 10% annually over the long term, making it a reliable investment for generational wealth.
• The index fund is tax-efficient, with minimal trading activity leading to low capital gains distributions.
• Investing in VO serves as a safety net for the portfolio, ensuring that even if individual stocks underperform, the grandchildren will still benefit from market growth.

Portfolio Allocation Strategy

• The speaker outlines a specific allocation strategy for a hypothetical $100,000 investment, emphasizing risk, return potential, and diversification.
• He suggests allocating 35% to the S&P 500 index fund (VO), providing a stable foundation for the portfolio.
• 25% is recommended for Visa, as it has the highest growth potential among individual stocks.
• 20% should be invested in Berkshire Hathaway for stability and family legacy connection.
• 15% is allocated to Costco for its consumer defensive qualities, and 5% to Moody's for its durability and steady compounding.

Guidance for Managing the Portfolio

• The speaker advises his grandchildren to adopt a long-term perspective, holding the stocks for decades without frequent monitoring.
• They should reinvest all dividends to accelerate compounding, contributing to the portfolio's growth.
• The importance of maintaining discipline during market fluctuations is emphasized, particularly during downturns.
• Grandchildren should avoid chasing performance or reacting to market noise, focusing instead on their long-term investment strategy.
• Regular reviews of the fundamentals of each stock are encouraged, but major changes should be rare and based on significant shifts in the business environment.

Tax Considerations for Generational Wealth

• The speaker explains the tax advantages of holding stocks until death, allowing for a step-up in cost basis for his grandchildren.
• He highlights the potential to gift stocks during his lifetime without triggering gift taxes, facilitating wealth transfer to his grandchildren.
• The option of placing stocks in a trust is discussed, providing controlled access to dividends while preserving the principal for long-term growth.
• The trust can protect against poor decision-making by younger grandchildren until they reach maturity.
• These strategies are aimed at maximizing the potential for wealth to compound across generations.

Long-Term Value of the Portfolio

• The speaker estimates potential future values of the portfolio based on historical compounding rates, projecting significant growth over 50 years.
• He emphasizes that with consistent contributions and reinvested dividends, the total portfolio could reach substantial amounts, providing financial security for his grandchildren.
• The focus is on building generational wealth that allows future generations to pursue their passions without financial stress.
• He stresses the importance of understanding that wealth is not just about money but also about the principles and values instilled through wise investing.
• The ultimate goal is to empower his grandchildren to make responsible financial decisions and contribute positively to society.

Conclusion and Life Lessons

• The speaker concludes with key life lessons he hopes to impart through his investment philosophy, emphasizing patience and discipline.
• He encourages a focus on long-term goals rather than short-term gains, reinforcing the idea that wealth-building is a marathon, not a sprint.
• The importance of simplicity in investing is highlighted, advocating for a straightforward approach rather than complex strategies.
• He reminds his grandchildren to control their behavior and ignore market noise, focusing solely on their investment plan.
• Ultimately, the speaker aims to provide not just financial security but also the knowledge and values that will allow his grandchildren to thrive in all aspects of life.

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AI market: Is it an investment "bubble" or "bust"?

The AI market has experienced a significant boom in recent years, driving massive stock gains for key companies, but analysts are divided on whether it is an investment "bubble" similar to the 1990s dot-com era. The current run is characterized by substantial profits from leading AI companies, a key difference from the largely unprofitable companies of the dot-com bubble, but also by extreme capital concentration and high valuations. 

Growth of the AI Market in Recent Years

Since approximately 2022, the AI sector has seen exponential growth fueled by advancements in generative AI and the critical need for advanced computing infrastructure, particularly high-powered chips. This has led to massive investment in key technology companies, especially the "Magnificent Seven" stocks.

• Nvidia (NVDA): As the primary supplier of AI chips (GPUs), Nvidia's stock has seen a massive surge, with a price change of over 970% from December 2022 to December 2025. Its market capitalization briefly surpassed $4 trillion in mid-2025, making it one of the world's most valuable companies.
• Microsoft (MSFT) and Alphabet (GOOG): These giants have also integrated AI deeply into their services and made substantial investments, reflected in significant stock performance. Microsoft's stock price has increased by over 96% and Alphabet's by over 246% in the past three years.
• Startup Funding & Revenue: Private AI companies have also seen explosive growth. For instance, OpenAI's annualized revenue surged to $13 billion by August 2025, up from $200 million in early 2023. 

Discussion: Bubble or Boom?

Financial analysts and experts have mixed opinions on whether the current AI boom constitutes a "bubble". 

Arguments for a "Bubble":

• Extreme Capital Inflows: Over half of all global venture capital funding went to AI startups in Q1 2025, an extraordinarily skewed allocation of capital.
• High Valuations: While not as extreme as the dot-com era's P/E ratios, current valuations are high by historical standards, and some AI startups command "surreal" valuations per employee, sometimes exceeding $1 billion.
• Circular Investments: Some investments are circular, with major AI companies investing in startups that then become their customers for computing power, raising concerns about the sustainability of revenue models. 

Arguments against a "Bubble" (for a "Boom"):

• Profitability and Fundamentals: Unlike the dot-com era, where many companies were unprofitable, today's leading AI firms (Nvidia, Microsoft, Alphabet) are highly profitable with strong, established business models.
• Real-World Utility and Demand: AI technology is already integrated into many industries and delivering tangible productivity gains, with massive, quantifiable demand for computing infrastructure currently outpacing supply.
• Physical Infrastructure: The current investment is heavily directed towards tangible capital assets like data centers and hardware, rather than just marketing and abstract ideas. 

Comment on the Phenomenon

The current AI market is less a speculative mania built on promises (like the dot-com bubble) and more a rapid "boom" or "supercycle" underpinned by significant technological advancements and real-world demand. The core difference lies in the profitability and existing market position of the major players driving the boom.

However, risks persist, particularly for smaller, less-established AI startups with unproven business models, many of which may fail if the market consolidates or interest rates rise. Investors face the challenge of balancing optimism about AI's transformative potential with caution regarding specific company valuations and the potential for increased market volatility. The ultimate outcome will depend on whether continued innovation and adoption can justify the extraordinary capital investment and meet sky-high earnings expectations. 

Revisiting the Dot-Com bubble of the 2000

The dot-com bubble was a period of intense speculation in internet-based companies during the late 1990s, which led to a massive stock market crash starting in March 2000. 

The Few Years Before the Bubble Burst (c. 1995-2000) 

Rapid Internet Adoption: The widespread public adoption of the World Wide Web from the mid-1990s created immense excitement about the potential for new business models and services.

• Influx of Capital: Fueled by low interest rates and a "fear of missing out" (FOMO) among investors, venture capital poured into nearly any company with a ".com" in its name, regardless of a viable path to profitability.
• Speculative Investing: A belief emerged that traditional valuation metrics (like earnings and cash flow) were obsolete in the "new economy". Companies were often valued based on unconventional metrics like "eyeballs" (website traffic) and projected future growth.
• Soaring Valuations: The result was a stock market frenzy, with the tech-heavy NASDAQ Composite index rising from under 1,000 in 1995 to a peak of 5,048 on March 10, 2000. Many startups went public via Initial Public Offerings (IPOs) and saw their stock prices triple or quadruple on the first day of trading.
• High Spending: Many dot-com companies spent lavishly on advertising and marketing to build brand awareness quickly, burning through cash reserves without generating revenue.

When the Bubble Burst (March 2000 - c. 2001)

• Peak and Initial Decline: The bubble peaked on March 10, 2000, and began to deflate as investors started to question the sustainability and profitability of these new companies.
• Interest Rate Hikes: The U.S. Federal Reserve began raising interest rates to combat potential inflation, making it more expensive for companies to borrow money and dampening investment sentiment.
• Panic Selling: As high-profile companies began to miss earnings expectations or go bankrupt (e.g., Pets.com in November 2000), a wave of panic selling ensued.
• Market Collapse: The NASDAQ index fell by 9% in a single day on April 14, 2000, and the decline accelerated throughout 2001.

The Post-Bubble Burst Period (c. 2001-2002+)

• Massive Losses: By its trough in October 2002, the NASDAQ Composite had fallen nearly 77% from its peak, wiping out trillions of dollars in market capitalization. Even established tech companies like Cisco and Intel lost substantial portions of their value.
• Bankruptcies and Layoffs: A majority of the publicly traded dot-com companies folded after running out of capital, leading to mass layoffs in the tech sector.
• Shift in Investor Behavior: Investors became significantly more cautious, shifting funds to more established companies with proven, profitable business models and demanding greater financial discipline and transparency.
• Survival and Consolidation: Companies with sound business plans that survived the crash, such as Amazon and eBay, eventually emerged stronger and became dominant players in the internet economy.
• Regulatory Changes: The crash, combined with subsequent accounting scandals (like Enron and WorldCom), led to increased regulatory scrutiny and stricter reporting requirements to protect investors. 

During the dot-com bubble, Warren Buffett avoided internet stocks entirely, sticking to his value investing principles and accumulating large cash reserves. He warned that most of the new internet startups would fail. 

Buffett's Actions Before and During the Bubble

• Adherence to Value Investing: Buffett's core philosophy is to invest in businesses he can easily understand and which have durable competitive advantages, or "economic moats". He believed most tech companies lacked these characteristics due to their fast-changing nature and unproven business models, making their future performance difficult to project reliably.
• Public Warnings: In a 1999 Fortune article and in his letters to shareholders, Buffett explicitly warned against the "irrational exuberance" of the market, stating that expectations for future returns were unrealistic. He famously used the example that while the automobile industry revolutionized society, most car manufacturers eventually went bankrupt, predicting the same fate for the majority of internet startups.
• Underperformance and Criticism: As the tech-heavy NASDAQ index soared in 1999 (up nearly 86%), Berkshire Hathaway significantly underperformed the broader market, with its stock price falling nearly 50% from its June 1998 peak of $84,000 to a low of $41,000 in early 2000. For this, Buffett was widely criticized by analysts and the media as being "passe".
• Hoarding Cash: Rather than chasing the fad, Buffett built up significant cash reserves, which positioned him to buy assets at attractive prices when the market eventually corrected.
• Focus on 'Old Economy' Stocks: He continued to invest in proven, cash-generating businesses with stable operating margins, such as Coca-Cola and American Express.

The Outcome

• Vindication: When the bubble burst in March 2000, Buffett's strategy was vindicated. As the NASDAQ crashed by nearly 77% over the next two years, Berkshire Hathaway's stock rebounded, and its net profits rose 113% to $3.3 billion in 2000.
• Opportunistic Buying: He was able to make opportunistic purchases of corporate debt and private companies in the post-crash period when others were paralyzed by fear and lack of capital.