Over the past few weeks, Mr Budget’s US equity portfolio has swelled from S$80,000 end of last month to now over S$100,000, hence hitting a new milestone in his investment journey!
Most of the gains are due to gains from his existing counters, which are continuing to hit their all time high.
We only made a S$4,000 purchase of Fastly earlier this week, as well as a S$4,000 fresh fund injection into the portfolio. Hence the portfolio registered a capital gain of +S$12,000 this month so far.
|Counters||July 30 Price||21 Aug Price||mom Change|
While we are delighted by the news, it is actually quite scary to know that the valuation of these companies are priced to perfection and if there are any external events happening, any news will send the price crashing down.
With the performance of the US stocks on our portfolio, we took stock of the portfolio allocation and made a few mental notes in terms of how we are optimising our portfolio moving forward.
While our US holdings had registered strong momentum and continued month on month growth for us, our Singapore portfolio remained muted and lacking in momentum. Historically too, US stocks have provided way better return for us.
There is also a comparison somewhere that Singapore is actually one of the worst performing stock market around the world. And since COVID, we have allocated more funds purchasing local REITs and SG stocks than US stocks.
As such, moving forward, Mr and Mrs Budget will be moving our funds towards purchasing global US stocks more, all with a holding period of at least 2 years.
However, we are also mindful about selection and confirmation bias, and hence we will still be staying invested in Singapore stocks which in theory should provide a steady stream of dividend income for us.
Though that may not be the case anymore since a lot of Singapore stocks are cutting their dividend payouts, hence making Singapore stocks way less attractive to us as compared to US stocks.
For Singapore stocks, we will only purchase them if the counters are very attractive and if they are recovery play.
For context, Mr Budget’s Singapore’s portfolio is only still at a breakeven point after investing for 3 years, while his US portfolio returns are at over 70% now.
This is mainly due to strong capital gain from the US counters. Singapore counters on the other hand, are held back by the limited market size as well as the uncertain economic outlook.
In terms of actionables, what that means is that we will aim to shift our portfolio allocation towards a 60% US stocks and 40% SG stocks allocation over the next 6 – 12 months for Mr Budget, and at least 40% US Stocks for Mrs Budget. Currently, these are our allocation breakdown:
|Mr Budget||Mrs Budget|
Back in June, Mr Budget’s SG equity portfolio allocation was at 62% (S$106k). Fast forward to today, that has changed to 49% (S$98k) due to portfolio value depreciation, no buy or sell, and there were no capital injection.
For US equity on the other hand, in June it was 38% (S$64k) and now it is at 51% (S$106k), with just a capital injection of S$14k over 2 months, registering a S$28k (50%) in capital gain.
If you are reading this and actively looking around for opportunities, Mr Budget would urge you to look at US stocks to compliment your portfolio.
As we have previously shared, if you can’t fight them, join them. US tech stocks continue to hit all time highs and if you are having a long term view, most likely you will benefit from holding some US tech stocks.
Another question we all have is that, US tech stocks are all overvalued now, can we still go in?
To be fair, your guess is as good as ours.
But as long as the counters that you are interested in are future proof (industries that will be around 5 to 10 years later), clear leaders in their vertical, and you have a long term holding period, it is quite certain that you will be able to reap the rewards in the future.
Counters on our watch list:
1. Ascendas REIT
2. Keppel DC REIT
3. IREIT Global
Happy hunting and happy investing!