2016 Learnings/Reflections

It's that time of the year when some retrospection is in order. Let me first talk about the things that went well:

1. ULIP Investment - I am happy about making a long term investment commitment which I expect to reap good dividends 20-25 years from now, when I expect fatherly responsibilities to call for significant financial outlays. The last 2 quarters have not been great for Indian equities, but I am highly confident about the prospects over the next two decades. Assuming that I am in India at that time, my withdrawal will be totally tax free, which will be a nice bonus.
2. Employee Stock Purchase Plan - I finally began participating in my company's ESPP. This has  been my best profit earner this year. While I regret not having participated in the past four years, I guess its better to be late than never.
3. Options Trading - I did quite well with my Options trading in 2016. I made approx 20% profit on my options trades alone. With novice level knowledge and trading restrictions (due to the size of my account), this was pretty good.

What didn't go as well as I expected:

1. Stock Picking - The year began in a fantastic way. My portfolio was up 25% at the end of April. I remember reading a headline in CNBC in May which recollected an old market adage "Sell in May and go away", alluding to long term trends about how stock markets tend to underperform in the May-Dec period. I should've taken that advice. In the coming months, my portfolio had a pretty volatile ride - thanks to Brexit, Trump and Fitbit. I have lost all my gains from Q1 and look set to end the year with close to no gain/loss.
2. Two bad trades - All my gains were wiped out by two trades: Oil and Fitbit. In retrospect, I don't think the Oil loss could've been avoided. The market reaction to the collapse in OPEC talks was weird and hardly anticipated, so I don't blame myself for that. Fitbit gave a shocker of a forecast for Q4 and the stock tanked by 30% in one day. There is not much one could do in that situation. But in hindsight, I should've exited my options position much earlier, considering the higher risk/beta associated with the stock.

Lessons for 2017:

1. Focus on a few: Track no more than 20 stocks and hold no more than 7-8 at any time.
2. Improve on Options: Despite my limited knowledge in Options, I made money on most of my options trades. My objective in 2017 is to learn more and execute more consistent, lower risk trades.
3. Learn about the instrument before investing. I put money in some ETFs without fully understanding them and lost some money. Will not repeat the mistake in 2017.