What We’ve Learnt This COVID19 – Using US Stocks To Boost Overall Portfolio Gain

Recently I have been thinking a fair bit about our portfolio structure.

There are two types of portfolio: growth portfolio, and dividend portfolio.

As the name suggest, growth portfolio consists of high growth stocks but the downside is that, these stocks don’t pay out dividends. Dividend portfolio on the other hand, are made up of dividend paying stocks like REITs, which is great especially for Singapore investors looking for REITs as a source of passive income.

Over the past 1 – 2 years since we really started to chart our financial goals, we have been actively buying Singapore stocks which are paying out decent dividends. This is because we are aiming towards an eventual S$5000 monthly passive income in the future so that we can retire reasonably well.

When we look at our portfolio composition late last year to even today, our Singapore stock holdings almost double our US stock holdings.

While that is good news and all, when we look deeper into the returns of the Singapore stocks versus the US stocks, our Singapore stocks, inclusive of the dividends, are not giving even the near levels of returns we are seeing from our US stocks. Most of our returns made from the market since the onset of our investment, is actually from our US stocks holdings.

So we hypothesized that we should shift our mindset from holding Singapore dividend stocks to holding US growth stock instead. This will give us better returns in the long run.

To check on this, we took a look at the public portfolio shared by users from Stocks Cafe, and we found very interesting findings.

Here’s a look at the top performing portfolios (3 years timeframe) shared on Stocks Cafe, sorted by their % return.

Source: Stocks Cafe

To see what are the similarities of these top performing counters, we took a look at their individual portfolios to see how much of these investors invested in the US market and what are the overweight stocks that they are holding on.

When we dig deeper and look at their individual portfolios, here’s what we noticed.

  1. Of the 23 counters which made >30% returns in the past 3 years timeframe, 61% of them invested in US stocks.
  2. The top 2 performing investor jpf and zhengkang, and Cosmicpubes (lol), had over 85% of their stocks in US holdings.
  3. For the top 13 best performing investors, they either made money through US stocks, or if they had invested in AEM, an electronics manufacturer who counts companies like Intel as their largest client.

The common denominator seems to be that, one should have a combination of US stocks to boost the returns of his or her overall portfolio. JPF, the investor with the best performing portfolio, has a 52.47% YTD returns and a 570.06% all time returns, and 85% of his portfolio is made up of US stocks.

So to be in the top 10 on the list, you need to either invest in US stock market, or invest in AEM.

This is definitely easy for us to point out in hindsight, because over the past decade, the theme had been technology, internet, and computer chips. We think this theme is still going to be around for another 5 – 10 years.

Investing in US market also makes a lot of sense because big global companies have bigger addressable market and can continue to climb in value – thus one may end up holding multi-baggers.

I think that gave us some affirmation to the returns on our portfolio: if we have more US stocks in our portfolio, there is a high chance that our portfolio will outperform a portfolio without US stocks.

Hence moving forward, we will be looking at shifting our equity allocation to more US stocks so that our long term returns will be better than what we have now.

Our current allocation:

PortfolioSingapore HoldingUS Holding
Mr Budget$84,806.08 (60%)$57,855.33 (40%)
Mrs Budget$64,139.80 (76%)$20,025.90 (24%)

Ideally we should swap the percentage around to probably 60 – 70% US stocks and 30 – 40% Singapore dividend stocks.

For friends and family who have been asking us what to invest in, normally I would ask them to allocate some towards the US market too instead of just investing in the SG market.

This is because it is a bit unrealistic for us to think that we can beat the returns of the STI index or Singapore fund managers out there by just spending minimal amount of time choosing to invest in a few Singapore counters. We are better off just investing in robo / the STI index.

However, if we were to invest in the US market or have a US-SG hybrid portfolio, there is a very high chance (61%) to beat the Singapore index.

Happy investing!

Also Read: What We’ve Learnt This COVID19 – Price Levels, Selling And Coffee Can Portfolio

Looking to invest via Syfe? You can use our referral code: SRP6X8B8Y when you create an account.

We would both get $10 to $100 depending on your first deposit amount, and you’d receive your bonus within 5 business days.

What We’ve Learnt This COVID19 – Price Levels, Selling And Coffee Can Portfolio

Hello everyone!

It’s been a while again since we last updated here! As usual, we want to write as much as we can, but haven’t really come out with much topics to update here.

So if you have any topics suggestions, or any questions – please drop us a comment below – we love reading them! 🙂

Today however, we thought we want to just quickly pen down some thoughts and nuggets of wisdom we have gathered from others here, both as a sharing and as a reminder to ourselves.

Obsession Towards Price Level

One of the key things that we’ve internalized recently is that, prices are just snapshots of offers from the market and that we should not be too obsessed by it. There was a recent saying we heard: “if you think the current price is too high, this is and will be the new low”.

A lot of times, there are a lot of counters which we are eyeing towards, and we often want to wait for the best time or a better price to buy. Eventually, what end up happening is that, we will miss the boat and the prices just keeps going up and up. And we will just not buy it.

This is true for companies with strong momentum and those that are 100 year old companies, such as amazon. Amazon for example, has been going up non stop – and at anytime you buy over the past 5 to 10 years, literally any day, you would still have made money today.

The lesson here is that, don’t be too obsessed about entry price – if it is a valuable company, just buy in and keep for the long term.

When To Sell

Which leads to my second learnings on when to sell.

Recently there was a few webinar which a few bloggers shared that during the COVID-19 downturn, they actually did not sell or adjust any of their portfolio. Of course, some of their losses might be recovered now. The more important thing though is that they did not trim any of their winners.

On when to sell – you should only sell when there are better opportunities to deploy your money. And it is actually quite hard to find better opportunities that the ones that you have invested in and are winning counters.

Case in point – during the last correction, Mr Budget sold off his winners Amazon, SEA, AXXN to lock in the profit and to buy more assuming the market crash more. However, the prices of these counters have since went back up at least 20-30%, and now his previous entry price is too far behind and quite unlikely that he will be able to get those price levels.

The lesson here is probably that you should never sell your winners and just ride with them. If there are any corrections, these corrections should actually give you opportunities to buy more of the winning counters.

Coffee Can Portfolio

In a recent webinar, the Coffee Can portfolio was introduced by Ser Jing from The Good Investor and I thought it really covers the 2 pointers above.

Coffee Can Portfolio is a concept based on the research done by Rob Kirby. In simple words, one selects a list of high quality growth stocks and invests in them, and then literally forgets about it.

The benefit of this is that, the costs are low in the long run because you don’t trade regularly (and save on fees), and also that you will not be obsessed with checking the prices everyday, and you wont time the market. You also wouldnt need to battle with your internal struggle of whether to sell to take profit.

Warren Buffet also had a similar saying:

“I could improve your ultimate financial welfare by giving you a ticket with only twenty slots in it so that you had twenty punches – representing all the investments that you got to make in a lifetime. And once you’d punched through the card, you couldn’t make any more investments at all. Under those rules, you’d really think carefully about what you did, and you’d be forced to load up on what you’d really thought about. So you’d do so much better.”

And I think this really inspired me to take a look at our current holdings and to start identifying some stocks as our coffee can portfolio.

Of course, it is definitely easy to start a coffee can portfolio, but to actually have the conviction to hold it for long term and not touch it requires a lot of resolve, as well as a lot of financial freedom to be able to leave the portfolio there on the side.

For Mr Budget, I am currently holding about 21 counters. For my own coffee can portfolio, it would mostly be my US holdings: NVIDIA and Alphabet and only CMT for my SG holdings now.

Moving forward, I will also be increasing my US equity exposure so that there are more global high growth counters in my coffee can portfolio.

Will do more updates on this, and add a new “Coffee Can Portfolio” update on our portfolio section.

What have you learnt this COVID19?

Also Read: Our Thoughts On The Very Irrational Market Behaviour

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Funding Societies’ Rising Default Rate Paints Worrying State Of SG Businesses

Few nights ago, Mrs Budget shared something which we thought we should pen our thoughts down.

So over the past few months, Mrs Budget has been cashing out the money payments received from the loans she backed through funding society, a peer to peer loan financing company.

If you are unfamiliar with funding society, basically you can go onto the platform, look at profiles of companies who are asking for loans, and decide if you want to loan and help the companies out.

As these companies are usually rejected by bank loans due to higher risk, the interest on these loans can go up to between 10 – 20%.

Both Mr and Mrs Budget has been putting a small amount of money backing SMEs in Singapore, probably about S$5,000 total each.

For Mrs Budget, she shared that during the past few weeks, she has seen a lot of loan defaults on Funding Society, and that her capital is now mostly turning into a loss position, with only small chance of recovery.

What it means is that, Mrs Budget will most likely lose up to S$3,000 from funding society due to a non recoverable loan default!

For Mr Budget, he is still quite fortunate as his loans are quite diversified across many companies,. With his loan exposure per company set at S$200 max per company, the default rate is still quite manageable.

However, since February, Mr Budget has already disabled the auto-invest function under Funding Society and is now only collecting all the disbursed loans.

What he also noticed is that, the defaulting companies are skyrocketing since he last checked! Hopefully there will be lesser defaulting and non recoverable loans.

We also saw similar reviews on Seedly where a lot of retail investors have been saying that they are now sitting on capital losses although they have been investing for a while now.

Most of the investors on Funding Societies shared the same situation: investing over 2 to 3 years, from net gain to now net loss.

And all of this started in the past few months.

“Well, I would like to share my experience with this platform & anyone who is investing in P2P lending. In the span of the last 2.5 years, I invested around 100000 SGD on which I made around 4K SGD as profit after all the fees after 2.5 years. I thought I was making some real profits, however soon my dreams got shattered when almost 5-6 of my loans got default & resulting in loss of around 9k SG. There you go my 4k profit changes into 5k loss from my own pocket. Now forget about interest or profit I couldn’t able to protect my principle.”

To be fair, I don’t think its entirely Funding Societies’ problem. When times are good and when people earned up to 10% a year in the early days, no one complains. And now when companies start to belly up, then people complain.

Returns on investment for loans are also decreasing year on year

Increasingly, I think more of these businesses are going to face more problems with cash flow, which will lead to loan defaults, and closure of businesses. Closure of businesses will then lead to unemployment, and then leading to individual cash flow problems.

This gives an early indication of the state of businesses in Singapore, and I think we are going to hear more from mainstream news soon.

Funding Societies or P2P loans are secondary market which provides liquidity for businesses – and with default rates ballooning up, this is yet another clear sign and indication that things will get worse.

For investors thinking of investing in high risk investment vehicles, this is definitely not a good time right now. For the amount of risk for platforms like Funding Societies, they will probably need to return 20-40%, as compared to a 3.35% – 23.87% return on investment based on 2019 figures.

Also Read: Our Thoughts On The Very Irrational Market Behaviour

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Our Thoughts On The Very Irrational Market Behaviour

It’s been more than a week since Mr and Mrs Budget wrote something here.

To be honest, we want to write more but have been running out of topic to write. So if there is anything you’d like us to share more about, please feel free to drop them in the comments below. We love hearing from our readers.

So today we wanted to share an observation that we made over the past few days.

It seems as though market has reentered the bull market again, where it has gained 20% since the low just 3 weeks ago. Every other day market seems to be rallying. Stock prices continued to charge upwards as if nothing happens.

This has definitely triggered a lot of FOMO feeling amongst investors, Mr and Mrs Budget included.

To overcome the FOMO in us, we have to resort to discussing and reassuring to each other than this cannot be a V share recovery. And it seems as though this is more of a very irrational investing behavior as opposed to keeping up with what is happening on the grounds.

COVID-19 No Signs Of Slow Down Yet

First of all, there is still no signs of a successful development of a vaccine towards the covid 19 virus.

Everyday there are more new cases globally and the graph is still an upward sloping graph. While the daily new cases globally seems to be tapering off, but I think there are still under reported cases globally.

Daily new cases seemed to be plateauing

If consumer confidence are not restored, how can share price increase to pre covid 19 pricing?

Weak Business Fundamentals Not Announced Yet

COVID outbreak and the lack of vaccine aside, business fundamentals are still giving out waves and waves of bad news. AGMs of companies are pushed back, and companies like Lendlease are announcing revisions to their projected dividend.

Other than that, what we have heard from F&B owners is that traffic and business has plunged by more 80% during this circuit breaker period where everyone is required to stay at home. Streets are all quiet and people are not spending any money at all.

Empty Orchard Road

With companies increasingly going out of business, this means unemployment will increase as a result of that.

All the signs on the ground are pointing to negative signs – how can this be a V shape recovery? PM Lee also mentioned that this will not be a V or U shape recovery.

“It is going to last quite a long time: it is not a V-shaped down dip, it is not a U-shaped dip.” – Lee Hsien Loong

Bad Economic Projection Globally

If you have been following the news, there are certain big headlines recently that should warrant some worries from the financial market, but yet the market is rallying every other day.

According to International Monetary Fund chief Kristalina Georgieva, the outlook for global growth was negative and the IMF now expected “a recession at least as bad as during the global financial crisis or worse.” This was back 3 weeks ago.

Let’s take a look at the chart above – if you look at the past 2 major financial crisis – the Financial Crisis in 2008 as well as the dot com bubble in 2000, the peak to bottom is more spread out and takes longer.

Comparing that to COVID 19 where the impact should theoretically be a lot worse than the previous crisis, the chart clearly shows that we are still at the beginning of the crisis.

Even during the 2009 financial crisis or the SARS crisis, people are surely still spending, unlike now where the whole of Singapore is under a “lockdown”.

The latest world economic outlook published by IMF also paints a similarly bad picture where global economies is set witness one of the worse economic contraction in history.

So we need to reassure ourselves again and again that after looking at the recent bull run up, the worse is yet to come. How can this be a V shape recovery and how long more can we expect the prices to go up?

For those who are almost 100% vested – surely it doesn’t make any logical sense for prices to recover back to 3 months ago with all that has happened?

How can the market price behave as though nothing is happening outside in the real world, and that we can just “discount” the impact of the COVID 19?

This reminded me of the feeling when bitcoin prices are hitting its all time high every single day about 2 years back. Everyday the prices are just going higher and higher, until everything starts falling apart.

Giving Into FOMO

Of course, while it is easy for us to rationalize all of this, but we are all but weak humans filled with greed.

To avoid missing out in case we are wrong, and caving into our FOMO-ness, we made 2 more counter purchases over the last few days:

  1. SPH REIT – Trading at below NAV and may go into the student accomodation business, with a 45% upside.
  2. Centurion – Trading at below NAV (0.54). Been holding onto Centurion, exited it few weeks ago, and reentered again at a lower price, with a 47% upside.

What we have been buying is into companies which fulfill these requirements:

  1. Below their NAV – great businesses which are undervalued now
  2. Has a good sponsor – wont close down
  3. At least 40% upside to previous high

If the prices plunge further, we are more than happy to average down on the counters we picked up over the past 2 weeks.

With the two new entries onto our portfolio, here’s an update to our war chest:

Mr Budget War ChestS$70,000
Mrs Budget War ChestS$30,000
Mr Budget Home Loan War ChestS$50,000
Mrs Budget Home Loan War ChestS$150,000

Our home equity loan has still not come in yet so hopefully that will be in soon for us to do our cash allocation strategy.

Through it all, we need to constantly remind ourselves that, this is most probably not a V shape recovery, and it is very irrational to expect prices to keep going up.

So if you are feeling FOMO – it’s a normal feeling and you are not alone, but please dont let irrationality takes over.

If you have to take some action, like us, please only buy in small batches and only on counters which will not crash too badly if there’s another upcoming crash. Don’t go 100% vested now. Currently, counting our incoming home equity loan, we are probably only using 20% of our available war chest.

Stay safe folks! 🙂

Also do let us know what topics you’d like us to cover or if you have any questions to ask us.

Also Read: What Have We Done This Month Towards Our Financial Goals – March 2020

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The Most Important Thing Right Now Is Job Preservation

Quarter 1 of 2020 is now over.

It is probably an understatement to say that 2020 has been a bad start for everyone around the world. Probably more so for investors who have been investing over the past 5 to 10 years preparing for retirement.

Since the start of the year, market has plunged, wiping out 10 – 30% of retirement portfolios around the world.

While many other financial bloggers and us here have shared our take on investing during this period, we wanted to pen down our thoughts on another equally important matter – job preservation.

To us, the most important thing right now is job preservation, and this topic is probably quite understated in Singapore. This is especially important because companies are now cutting cost and freezing hiring during this period of uncertainties.

Decide If You Are The Cost Or Profit Center

Specifically, job preservation means that you have to decide if you are the cost or profit center of the company.

If you are the profit center of the company, you are less likely to take a pay cut or be laid off. Example of profit center is the sales department.

However, if you are the cost center, you are more likely to be affected if there are any cost savings measures in the company. Example of cost centers include customer service, maintenance, accounting, IT, HR and more.

Another thing everyone should do is to make sure that you are irreplaceable, or that it cost more to fire you than to hire your replacement in the long term.

What this means is that you have to demonstrate value to your boss, and be more proactive during this period to see if there is anything you can do more to help your company survive during this period.

Job preservation and mass unemployment is a very real problem, and because it is a lagging indicator, we will only hear about these numbers 2 or 3 months later when the government announce the quarterly unemployment rate.

However, we can use US unemployment data to give us a glimpse of what is to be expected.

Earlier last month, US announced that the number of people claiming for unemployment insurance claim reaches 3.3 million, 400% more than the highest ever recorded in the history of US. There are also no signs that this is slowing down.

Here in Singapore, companies are also earmarked to be closing down, and laying off their staffs to save on costs. The government has also stepped in and government agencies are actively creating temp jobs to ensure that Singaporeans continue to have employment income.

Preserving Cash inflow and Controlling Cash Outflow

Other than job preservation, which takes care of your monthly inflow, one should also look at his or her monthly outflows.

During this difficult period, cash is definitely king – and what we are actively doing is to make sure that we keep our expenses low. Because we are working from home now, we are cooking in more, which translate to slightly more savings.

All of our entertainment, travel and shopping budget are now shifted to zero as we try as much as possible to stay in and tide through this critical period.

Just as companies are taking this time to optimize for their finances, individuals should also take time to optimize their finances too.

For Mrs Budget and myself, we are also expecting dividend cuts from the counters we are holding on. SPH REIT had already announced a 78% reduction in their dividend, and we know that this will probably not be the only REIT to do so.

In similar vein, we also expected banks to cut the interest rates of high yield account, which all the 3 local banks have announced the past 2 days.

With the reduction of interest rates and dividend, that will reduce our monthly inflow, which means our outflow will have to be reduced too.

PM Lee and Minister Lawrence Wong has also shared in two different occasions that this will be a long drawn out battle, and will last at least another 6 months.

Times are bad folks. Please save up for rainy days.

Here at Mr and Mrs Budget, we will continue to update you on:

  1. What we are doing financially to cope with the slowdown in economy
  2. Updates on our portfolio and what we are buying and selling
  3. Important things to take note of during this COVID 19 situation

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Why The STI 5.8% Rebound Today Is Probably A Dead Cat Bounce

It seems like the mood everywhere is very sombre now. 

The vibe we are getting is that, everyone is bunkered up and staying at home. Social activities are limited to friends meeting at home. For out of home activities, it is mostly limited to supply runs as opposed to leisure activities.

We wanted to share a bit more thoughts about the current situation of the economy.

Our thoughts are a bit all over the place now and hopefully documenting it down will help us focus our thoughts, and subsequently give us more resolve in either deploying our cash now or holding on a bit longer.

Has The Market Sufficiently Price In The Demand Shock?

Speaking to some of our friends who have been investing too, the overall consensus is that the current market correction rewrote how we should be investing. 

Without knowing what the “new normal” is, it is hard to “price” equities now.

Source: Zero Hedge

The situation that we are dealing with is a demand shock, where people are no longer spending money. The image above illustrates this perfectly – everyone is adopting a “wait and see” behaviour.

Has the demand shock been priced in? Exactly how do we price this and how much of a discount should we apply to the current stock price level? 

Finding A New Normal

While we have a shopping list of REITs that we are eyeing, but the truth is that, our entry prices are all over the place, the entry prices have been triggered a few times. 

Even if there is a clear entry price strategy with sufficient margin of safety, taking into account the discount towards the NAV, we still don’t feel confident to enter into any trades.

We let emotions get to the better part of us, because we are trying to navigate uncharted grounds and a new normal here.

We also think that working class and small business owners will suffer the most in this current situation.

We are already hearing Facebook posts sharing from small F&B owners where their 2020 plans are all thrown out of the window – a sharp contrast from a hopeful start to 2020 to now a devastating state of struggling for survival every single day.

A Lot Needs To Go Right For Economy To Rebound

In order for the economy to rebound and things to go back to normal, a lot of things need to go right:

  1. Virus needs to be contained, and this means that a vaccine should be successfully tested and developed.
  2. The economy should not have taken too much a hit before the virus is contained
  3. Consumer needs to feel safe and ready to go about their previous consumption pattern
  4. Consumer should not have taken too much a hit before resuming their consumption pattern
  5. Global trade and travel demand needs to be restored

There is a lot of “if and only if” situation for the economy to go back on track.

Instead, the economic signs that we are seeing now:

  1. More job cutting measures
  2. Airlines shut down (SIA)
  3. More countries on lockdown (India, UK, Australia, Thailand, Malaysia)
  4. Global travel demand is zero
  5. Businesses are encourage to work remotely

What we expect to happen next:

  1. Credit card defaults
  2. Mortgage defaults
  3. Companies needing loans for operating cost

Earlier today, the STI Index rebounded a 5.76%, a much needed good news for all investors.

However, is that the mark of a rebound?

While some level of FOMO might be toying with us, when we sit down and look at the signs around us as mentioned above, I think we’ve decided to let this play out just a bit more. 

For some more context, in 2008, STI dropped more than 50%. So far, the STI has only dropped 30%. A lot of people shared that this crisis felt different and worse than the one in 2008 – so to think that the rebound today is a recovery is really quite a stretch.

While the US government (and soon the Singapore government) had announced more quantitative easing and economic stimulus package, I really think that it may do more harm than good if it is overdone (like in the case of US). 

The problem right now is, even if the government is giving free money for everyone to spend, this might not necessarily lead to the desired spending.

Instead, it might lead to more unspent money in the “system”, and when the money equilibrium is achieved, will lead to hyperinflation and cash will become worthless.

There is a very real possibility that this will happen in the US, and the effect of that will trickle down to Singapore’s economy. 

Knowing this, we really need to rethink about our financial goals and to see how we can safeguard ourselves and minimise any potential impact of that.

The truth is, there is no right answer to this, and we are just about as clueless on this as we are on the near future of the economy.

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The Market Crash – The Economic Signs We Are Looking For And When We Will Deploy Our Cash

One of the biggest dilemma that we are facing now is, when should be deploy our capital back into the market. 

The sensible response to that is, keep DCA-ing now because one can never successfully time the market. That’s especially true because who are we if professionals themselves can’t time the market correctly.

Our cash in hand is limited because we have been constantly investing throughout the past one year. Our equity portfolio is now at -20% and we expect the position to drop slightly further when companies announce their earnings in the next two quarters.

In reality, all of us are part gamblers and it is challenging to continue to DCA downwards, especially when we are now presented with a once in a lifetime opportunity to accumulate stocks at great value. 

So instead of buying down and accumulate stocks this few months, we will be looking out at these signs before we start deploying our cash.

Recovery of global travel demand

The global and local economy is powered by production and productivity. Both of these is in turned catalysed by the workforce.

If human interaction is still low, productivity and production will decrease, leading to decline in economy and eventually leading to recession.

So the question then is how do we get a barometer to the “recovery of human interaction”. The answer to that – the global travel demand. 

Empty planes now

If global travel demand is restored, people will start to travel for trade meetings, conferences, or even travelling for leisure which will boost local economy.

All these will increase local spending, which are all great news for companies globally. 

The slight good news is that, China has announced that shopping malls are starting to buzz again.

Unemployment rate will go up, housing mortgage default rate will increase

Another ripple effect of the virus is that, companies have freezed hiring.

I think companies which are faced with big cash flow problem will start to cut their manpower cost at part of cost cutting measures. This will lead to an increase in unemployment rate. 

Unemployment rate is bad news – this means that housing mortgage default rate might increase.

Once we see the recovery of the default rate, I think we may potentially be looking at the recovery of the local economy. 

Of course, this is one of the last lagging indicator for the recovering economy, so we will be looking to deploy our cash when the housing mortgage default rate starts to hit the news. 

Constant Battle Between Buying Now And Waiting

For now, Mrs Budget and myself are prepping up our war chest by seeing exactly how much we can invest, where can we get more cash, and we have drawn up a shopping list once we see some signs of recovery. 

We may deploy 10-20% of our war chest soon because some prices of REITs are just unbelievably attractive, and warrants strong margin of safety. 

However, we are also mindful that any bounce back now is just a dead cat bounce because we really haven’t seen the worst from the virus globally. Countries have not seen the tapering off of the virus yet, and it is really too early to access the impact of the virus to their business. 

To give a better context, the stock market crash only started less than a month ago!

Companies will still have to announce their actual earnings, and we have not hear anything from the government in terms of the second economy stimulus package.

Also what if Singapore implement a full shut down since everyday cases are going up? Then the price all local retail and commercial REITs will take another dive.

Hence we are constantly battling between: “Wa damn cheap now! Buy buy!” versus all the reasons we laid out earlier in this article – that the ripple effect is not fully internalised yet.

Our logic is that, if it’s a clear sign that in the next few months it will be a downward slope, why do we DCA now?

On theory and paper it is easy to follow through with DCA-ing, but in reality, we find it a bit challenging – at least for the next 1 – 2 months.

Adding this here for memory sake – on 16 March, only 2 counters were green.

Because of the sudden market crash, we will be viewing our existing portfolio which is in the red now (as with everyone’s portfolio who have been investing in the past 5 years) as a cold storage. Wont be cutting loss and we will just wait for the recovery of the portfolio.

For the existing portfolio, we manage to sell about 20-30% before the mega plunge to take profit, but overall we are probably down by 20-30% in terms of portfolio value. We expect a further 10% drawdown from that.

This market crash is also a good time for us to reset and relook into our portfolio strategy – because our current portfolio are a bit of a rojak now due to a combination of various reasons. 

Our first few stocks were bought as far as 2 years ago, and it’s based on the “attractiveness” and value of the counter at that point. We then added new counters along the way as new “attractive” counters came by, and hence, it’s rojak now. 

With the market crash, this presents a good time to reset our portfolio mix, and sort them according to fair allocation to different sectors.

Hence our priority shopping list during this great REIT Singapore sale will be based on adding exposure to sectors and countries we were previously underexposed, for example:

  1. Data Centre – Keppel DC REIT
  2. India – Ascendas India Trust
  3. Transport – Comfort Delgro

Will probably be sharing our shopping list soon along with updating our portfolio and net worth impact from the market crash.

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