Monthly Review - December 2010

December was a month of excellent financial progress. Equities and commodities appreciated and those gains were supplemented by favourable FX movements as the AUD/NZD appreciated against the USD. Cash flow on the properties was negative (although still a positive contribution to net worth) due to a combination of repair bills and a two vacancies (now filled). Savings were excellent.

Here are the details:

1. my Hong Kong equity portfolio appreciated. This was in spite of a sharp drop in China Gas (HK:384) ahead of the arrest of two executives. The stock is currently suspended and I have arbitrarily marked it down to HK$3.00 to provide against further falls once the suspension is lifted. This month I took up my rights entitlement in CCB (HK:939), my shares in Hua Han (HK:587) went ex-bonus and I purchased shares in Automative Holdings (ASX: AHE);

2. my ETFs were up with gains in Russia, Taiwan and India more than compensating for a decline in China. Hong Kong was flat. I purchased units in a Vietnam index tracker this month;

3. my commodities appreciated with silver making a significant jump and HOGS and NICK making much more modest gains;

4. two of my properties were vacant but the portfolio is still making a positive contribution to my net worth. There were a few repair bills to be paid and I had a small negative cash flow for the month. That said, as the biggest component of the monthly payments is principal on the mortgages, the properties remained profitable even with two vacancies for most of the month and the bills. The situation will be better in January with both vacant units now rented out, a net increase in rents and a drop in repair bills;

5. currency movements were favourable, as the AUD, NZD and RMB appreciated against the USD;

6. my position in bonds remains small. I purchased a token amount of RMB bonds this month;

7. a put option I had written against the NZD was exercised against me early in the month;

8. savings were strong with high income more than offsetting the additional end of year expenses (not including a holiday in Thailand over Christmas for which I had accrued a provision).

My cash position remains modest. HKD cash on hand and deposits now represent about 11 months' worth of expenses (up from ten months, in spite of new investments). This will jump significantly in January and February when I receive my end of year bonus.

For the month, my net worth increased 3.73%. The year to date increase is 29.55% (this is the full year end number). Needless to say I am very happy with this result.

My target retirement window remains sometime between early 2012 and early 2013. While the possibility of a one year extension exists, it will take some adverse market conditions or other unexpected event to require that. Every passing month brings me closer to my retirement goal.

A write up on the financial year as a whole will follow in a separate post.