No Pain to Begin With: How I Invest My Own Capital

I explain the operating system behind my own portfolio — two core buckets, a fair value compass, and the discipline to buy when everyone else is selling.

Jin Mao Tower rooftop, Shanghai. January 2019.

In April 2025, my portfolio was down six figures in a week and I felt nothing worth acting on. Not because I’ve transcended fear — I haven’t — but because I’d built the portfolio so that a 40% drawdown changes my mood, not my decisions. That distinction is an operational design principle, and it’s the foundation of everything I do with my own capital.

I spent most of my career in and around financial markets — most recently as CFO of a global family office. Every crisis I’ve sat through — and there have been several — looked terrifying in the moment and obvious in retrospect.

The trick is that it’s only obvious if you’ve done the homework beforehand and if your portfolio structure doesn’t force you to sell.

In 2024, I quit that world to become what I call the CIO of my own life — betting my livelihood on the ideas I write about on Cohong Lane. What follows is the operating system I use to allocate capital.

Why does structure matter?

Holding power is the one structural advantage an independent investor has over professional money managers. I don’t have clients calling to redeem. I don’t have a Sharpe ratio mandate forcing me to reduce volatility. I don’t have a career at risk if I’m down 30% for two quarters.

Professionals cannot buy during maximum fear because their clients won’t let them. I can. That’s the edge. But it only works if I’ve structured my portfolio so that drawdowns are an opportunity, not a crisis — and if I’ve trained myself to feel no pain when the red numbers pile up.

None of this comes naturally. I’m still learning. A mentor told me it takes about five major drawdowns before your subconscious mind stops reacting. The first one is torture. By the fifth, it barely registers. The work is in internalising, truly internalising, that price does not hurt. Only value does. If I own a company generating reliable cash flows at a price I know is cheap, a 30% paper loss doesn’t change anything about that company. It just means I get to buy more at an even better price.

How is the portfolio structured?

My portfolio is built around two core buckets — Income and Growth — with a small, emerging allocation to Venture bets. The assets span multiple geographies — Europe, the US, Singapore, Greater China — but this newsletter focuses on where I do the majority of my own research: China and the companies shaped by its industrial policy. The separation is about cognitive clarity and eliminating forced selling.

Income exists for one reason: to generate enough cash flow that I never have to sell anything I don’t want to sell. If my dividend and coupon income covers daily baseline expenses, every other decision becomes optional. I can hold Growth positions through multi-year drawdowns without being a forced seller. That changes everything.

The threshold is simple: minimum 5% net of withholding tax. If an income asset doesn’t clear that bar after tax drag, it doesn’t earn its place. Beyond that, yield must be real and sustainable, tiered by risk — from European and US corporate bonds to Singapore REITs and dividend-paying Chinese state-owned enterprises. When high-quality income assets sell off alongside lower-quality names during dislocations, I rotate up the quality ladder. Once this bucket is set up, I spend maybe 20% of my investment time here. The real intellectual work happens elsewhere.

Growth is where I concentrate on my highest-conviction opportunities — businesses I understand deeply, where I believe the market is materially mispricing the long-term trajectory. I hold growth positions across Asia and the US, but my concentrated bets are in Greater China. Concentration, not diversification. Every Growth position is underwritten for a minimum five-year horizon. If the thesis doesn’t hold over that timeframe, the position doesn’t belong here. I don’t want to own 50 growth stocks. I want a small number of companies I understand well enough to hold when the price is moving against me — because the edge isn’t information, it’s the ability to sit through the discomfort.

Valuation still matters here. Growth investing isn’t about paying any price for a good story. I model fair value ranges and size positions based on the gap between current price and my estimate. Even the best business is a bad investment at the wrong price. And if my thesis is about where a company will be in five years, I need to be prepared to hold for five years — including through substantial drawdowns along the way.

There’s also a third bucket: Venture. These are small bets on things that could be worth a lot or nothing — new technologies, new competitive dynamics, situations where the range of outcomes is very wide. I size every one for total loss. That’s the price of entry — and it means the only positions worth taking are ones where I can see a credible path to 5–10x over the investment horizon. If the asymmetry isn’t there, the bet doesn’t belong here. It’s deliberately small, deliberately early.

What does fair value actually mean?

Every investment decision I make ends with the same question: what is this asset worth?

I don’t calculate before I understand. First comes the industry analysis, the competitive position, the technology edge, the operational reality. Only then do I have enough context to estimate fair value. The number is the final checkpoint, not the starting gate.

For income assets, that means estimating a fair yield given the risk. For growth assets, it means building cash flow models with explicit assumptions I can stress-test. The output is always a range, not a single number — because I’m not that precise and neither is reality.

The point of doing this work is not the number itself. It’s having a pre-built shopping list ready before the crash arrives. When prices collapse and everyone is panicking, I don’t want to be making emotional decisions. I want to be executing against fair value estimates I’ve already pressure-tested in calm weather. The time to decide what to buy in a crisis is not during the crisis.

One discipline worth highlighting because it trips up nearly everyone: my P&L on a position has zero relevance to what I should do next. If I’m sitting on a 50% loss, that’s irrelevant. The only question is whether, at the current price and my current fair value estimate, I should buy more, hold, or sell. The past is sunk. Acting on it is the single most common mistake I see investors make — and it applies equally to gains. If a position has doubled and is now at or above fair value, the fact that I’m “up 100%” doesn’t mean I should hold. It means I should evaluate it as if I were buying fresh today.

The obvious counterargument is that holding power without external accountability is just stubbornness with better branding. Professional managers have risk committees for a reason — someone to tell them their thesis is wrong before the P&L does. I don’t have that. What I have instead is the fair value framework and the discipline to update it. If the business fundamentals deteriorate — not the price, the fundamentals — that shows up in the model and changes the decision. The check on stubbornness isn’t a committee. It’s the homework.

Why does this matter for China?

China’s market is shaped by forces that most investment frameworks don’t account for — and that’s exactly why I’m writing from Hong Kong instead of London. I’ve been investing my own capital in Chinese equities since 2018, and the longer I do it, the more I’m convinced that industrial policy isn’t background noise here. It’s a primary driver of capital allocation at massive scale. When Beijing sets binding targets for factory automation or EV adoption, that creates something I think of as captive demand: procurement that happens regardless of market sentiment. The money gets spent because a provincial official’s career depends on hitting the KPI — and that policy commitment creates demand visibility that market-driven economies simply can’t match. Understanding the transmission mechanism from a Five-Year Plan target to a company’s order book is where much of my Growth research begins. When the 15th Five-Year Plan set binding factory automation targets, the procurement pipeline for companies in that chain was effectively locked in for years — regardless of what the macro headlines said. Tracing those mandates to specific order books is the work I publish on this site.

Then there’s the information problem. Western mainstream media defaults to “China is in structural decline.” Local media defaults to “China’s rise is inevitable.” The possibility that reality might be somewhere in between — messy, sector-specific, and actually quite interesting if you look at the numbers — that’s somehow never on the menu. Sell-side research is conflicted by design — banks won’t publish contrarian China views when IPO mandates are at stake. So you end up with a dangerous context gap: investors have data but lack the nuance to distinguish structural risk from cyclical opportunity.

That’s why I’m here. Not because walking into a XPeng showroom in Shenzhen gives me statistically significant data — it doesn’t. My sample of one showroom visit is not going to hold up in a peer review. But it gives me calibration. When I read a bearish report claiming Chinese consumers have stopped spending, I can check that against what I see in Shenzhen malls on a Saturday. It’s not proof. It’s a filter for obvious nonsense — and in China coverage, there is a lot of obvious nonsense to filter.

The combination of holding power, fair value discipline, and physical presence in the Greater Bay Area is the operating system. The homework I share on Cohong Lane — the policy analysis, the valuation work, the ground-truth checks — is how I keep that system honest.

But the homework only works if the structure underneath it never forces me to sell. Income buys the freedom. Fair value is the compass. And the goal — the one I keep coming back to — is not to manage the pain of a drawdown, but to have built something where the pain doesn't arrive in the first place. That's the operating system. The positions are just what it produces — and that's what I'll be writing about next. How the income bucket is constructed to clear 5% net. Which growth positions I'm holding through a five-year lens and why. And the live question I can't yet answer: whether this structure holds when the drawdown is not 40% but 60%. That's the test I haven't sat through yet.

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Cohong Lane is a periodical publication made generally available to the public. Nothing here is a recommendation to buy, sell, or hold any securities. Full disclaimer · About Philip.