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.
Speaking of drawdowns, I've dealt with two crypto drawdowns since I got into investing, so I think that qualifies as 5 drawdowns in the stock market haha!!
Two crypto drawdowns may well count as five, but I am not very experienced with digital assets.
For me, conviction is what makes holding power possible. My income structure prevents me from being a forced seller; conviction stops me wanting to be one. I’m less sure how neatly that maps onto crypto.
Interesting angle. I like how you approach companies from broader context and moat to the financials that eventually confirm or reject the stock.
However, I am in doubt about China, not because I try to avoid the country or because I want investors to stick to US stocks. I am concerned about a few things and would love to hear your view as someone with a lot of real life experience in China.
- Independent auditors and transparent accounting: (can we trust the reporting system?)
- Free flow of capital (the government is a majority shareholder and steers investment decisions, the Chinese population cannot move capital outside the country)
- Limited news transparency (in the US or Europe we have no Idea what is going on in China and whether or not it is good or bad for a certain stock)
@The Inside Analyst — fair points, and I'd separate them rather than treat them as one China risk.
Audit quality likely varies, but for US-listed Chinese companies the PCAOB has had full access to inspect mainland and Hong Kong audit firms since 2022. Capital controls are real. The state is also not a majority shareholder across Chinese companies, and HK Stock Connect carries substantial capital in both directions.
The information gap is the harder one. If most of the input comes through English-language coverage, China can look much less knowable than it is. Exchange filings, Chinese-language industry sources, procurement data and time on the ground give a rather different picture. I cross into Mainland China 1-3 times per week from Hong Kong.
None of the above removes the risks. I treat them as part of the underwriting. If I cannot get comfortable with the accounts, movement of capital or the state's role, I do not invest in the company.
Thanks for the deep explanation, will follow your posts closely and see if I feel comfortable with a higher China exposure for my Financial X-Ray portfolio.
What determines whether or not the state is a majority shareholder of a Chinese company?
@The Inside Analyst, the short answer is to trace the company’s shareholding to its ultimate controlling owner.
Most Chinese state-owned enterprises were established with capital from the central or a local government, often to operate in strategically important sectors such as banking, telecommunications, energy or utilities.
Many large state-owned enterprises are also listed. Public investors can buy shares in them, but the state usually retains control through a government body, a state-owned parent company or another state entity.
A privately established company remains privately owned unless its ownership subsequently changes through an investment, acquisition or restructuring. Government regulation, policy support or influence over an industry does not by itself make the government a shareholder.
So, while a company’s origins often explain why it is state-owned, the practical test is its current ownership structure and ultimate controlling shareholder.
Thanks for sharing your expertise and insights here. Yet the government can exercise control over ANY business once it becomes powerful, can’t it? This is the main concern in a world where capital and investments should flow independently.
Thanks to your insights I’ll give it a closer look though but some doubts remains.
You've hit on the core of macro underwriting. You are right that at a certain scale, no business operates completely independently of state power, regardless of geography.
We have seen examples of this both in the East and the West. Sovereign intervention, whether through export controls, tax policy, antitrust laws, or tariff threats, is a global reality. Governments everywhere retain the power to alter the rules when national or economic interests are at stake.
In that sense, the risk of state intervention is always on the table globally. For me, the real work in constructing my portfolio isn't finding a market completely free of state intervention, but trying to underwrite the predictability, scale, and specific direction of that risk.
Glad the discussion helped provide some nuance, and looking forward to hearing your thoughts as you dig deeper!
The two-bucket structure with a fair value compass is essentially a formalized version of what most disciplined investors do intuitively but rarely articulate. The hard part is always the behavioral layer: buying when everyone else is selling requires a pre-committed framework precisely because in the moment the narrative always makes the selloff feel justified. I write about similar portfolio construction dynamics through a macro and quantitative lens.
Thank you, Alessandra. I like the way you have framed the behavioural layer as pre-commitment. If there is one piece where you develop the portfolio-construction angle, would you send it my way? I would be interested to read it.
I'm still digesting all the great details & knowledge in this article... however Philip, can you share more about which Fair Value estimation approach / tool you use and why so ? Thanks in advance 🙂
Fair pushback, but I do not publish actual performance as it's meaningless in isolation. I run a global portfolio built to meet my income and growth criteria over a medium-term period. Everyone has individual investment goals; mine is to fully support my living, which requires a more conservative approach than, for example, someone in their 30s with a salary who can take maximum risk. Because of these distinct goals, raw returns alone don't tell the whole story. I hope this clarifies it a bit.
So much value in this piece!
Speaking of drawdowns, I've dealt with two crypto drawdowns since I got into investing, so I think that qualifies as 5 drawdowns in the stock market haha!!
Thank you. Glad you liked the piece.
Two crypto drawdowns may well count as five, but I am not very experienced with digital assets.
For me, conviction is what makes holding power possible. My income structure prevents me from being a forced seller; conviction stops me wanting to be one. I’m less sure how neatly that maps onto crypto.
Interesting angle. I like how you approach companies from broader context and moat to the financials that eventually confirm or reject the stock.
However, I am in doubt about China, not because I try to avoid the country or because I want investors to stick to US stocks. I am concerned about a few things and would love to hear your view as someone with a lot of real life experience in China.
- Independent auditors and transparent accounting: (can we trust the reporting system?)
- Free flow of capital (the government is a majority shareholder and steers investment decisions, the Chinese population cannot move capital outside the country)
- Limited news transparency (in the US or Europe we have no Idea what is going on in China and whether or not it is good or bad for a certain stock)
@The Inside Analyst — fair points, and I'd separate them rather than treat them as one China risk.
Audit quality likely varies, but for US-listed Chinese companies the PCAOB has had full access to inspect mainland and Hong Kong audit firms since 2022. Capital controls are real. The state is also not a majority shareholder across Chinese companies, and HK Stock Connect carries substantial capital in both directions.
The information gap is the harder one. If most of the input comes through English-language coverage, China can look much less knowable than it is. Exchange filings, Chinese-language industry sources, procurement data and time on the ground give a rather different picture. I cross into Mainland China 1-3 times per week from Hong Kong.
None of the above removes the risks. I treat them as part of the underwriting. If I cannot get comfortable with the accounts, movement of capital or the state's role, I do not invest in the company.
I wrote more on how I translate China’s latest Five-Year Plan targets into actual portfolio decisions here: https://www.cohonglane.com/p/china-15th-five-year-plan
Thanks for the deep explanation, will follow your posts closely and see if I feel comfortable with a higher China exposure for my Financial X-Ray portfolio.
What determines whether or not the state is a majority shareholder of a Chinese company?
@The Inside Analyst, the short answer is to trace the company’s shareholding to its ultimate controlling owner.
Most Chinese state-owned enterprises were established with capital from the central or a local government, often to operate in strategically important sectors such as banking, telecommunications, energy or utilities.
Many large state-owned enterprises are also listed. Public investors can buy shares in them, but the state usually retains control through a government body, a state-owned parent company or another state entity.
A privately established company remains privately owned unless its ownership subsequently changes through an investment, acquisition or restructuring. Government regulation, policy support or influence over an industry does not by itself make the government a shareholder.
So, while a company’s origins often explain why it is state-owned, the practical test is its current ownership structure and ultimate controlling shareholder.
Thanks for sharing your expertise and insights here. Yet the government can exercise control over ANY business once it becomes powerful, can’t it? This is the main concern in a world where capital and investments should flow independently.
Thanks to your insights I’ll give it a closer look though but some doubts remains.
You've hit on the core of macro underwriting. You are right that at a certain scale, no business operates completely independently of state power, regardless of geography.
We have seen examples of this both in the East and the West. Sovereign intervention, whether through export controls, tax policy, antitrust laws, or tariff threats, is a global reality. Governments everywhere retain the power to alter the rules when national or economic interests are at stake.
In that sense, the risk of state intervention is always on the table globally. For me, the real work in constructing my portfolio isn't finding a market completely free of state intervention, but trying to underwrite the predictability, scale, and specific direction of that risk.
Glad the discussion helped provide some nuance, and looking forward to hearing your thoughts as you dig deeper!
Thanks so much!
Income and growth, love it.
Thank you. Glad the income and growth structure resonated.
The two-bucket structure with a fair value compass is essentially a formalized version of what most disciplined investors do intuitively but rarely articulate. The hard part is always the behavioral layer: buying when everyone else is selling requires a pre-committed framework precisely because in the moment the narrative always makes the selloff feel justified. I write about similar portfolio construction dynamics through a macro and quantitative lens.
Thank you, Alessandra. I like the way you have framed the behavioural layer as pre-commitment. If there is one piece where you develop the portfolio-construction angle, would you send it my way? I would be interested to read it.
I'm still digesting all the great details & knowledge in this article... however Philip, can you share more about which Fair Value estimation approach / tool you use and why so ? Thanks in advance 🙂
What was the return for 2025?
I do not disclose the portfolio’s actual return. What I can say is that both the income and growth sleeves met the benchmarks I set for them in 2025.
That answers nothing
Fair pushback, but I do not publish actual performance as it's meaningless in isolation. I run a global portfolio built to meet my income and growth criteria over a medium-term period. Everyone has individual investment goals; mine is to fully support my living, which requires a more conservative approach than, for example, someone in their 30s with a salary who can take maximum risk. Because of these distinct goals, raw returns alone don't tell the whole story. I hope this clarifies it a bit.