1st Quarter 2020 : Dividend and Portfolio Update



OK, my “little bear” finally wake up after many years of hiding / hibernating in the jungle. Ah! You still can’t really see him “roaming or running “ around as he was just “peeping “ out from the woods once awhile.

The market suddenly realize the “danger” and the impact of COVID-19 to our economy as a whole and some industries specifically. Demand for certain industries like hospitality, aviation, retail, transportation and oil will be severely impacted due to lockdown and quarantine measures taken to contain the virus.

It was a terrible week for the US stock market ( and Asia Stocks markets to some extent). The three major stock indexes posted their worst weekly percentage drops since the financial crisis, as coronavirus fears mount. Dow drops more than -1000 points in few consecutive days.




Everyone seems excited about the market correction and prepare to use their war-chest to buy on dips or bottom phishing as some of the stocks in their watch list are hitting their so-called “target price”.


Are stock really cheap now?

By judging from long term trend line, even after almost -15% correction from recent peak, US stocks market don’t really look “cheap as it is still way above mean level after having a strong bull run in the past 11 years after GFC. My own opinion is that the US market may still have much room to drop if COVID-19 the situation in the US is getting worse since the market has exceptional strong BULL run for many years with an increase more than +300% after GFC. 





How about Singapore (STI) or other Asian Market?




STI doesn’t really have high valuation even before COVID-19 crisis, with this -7% from the recent peak, STI is now moving close to -0.5SD. Although STI is not in dirt” cheap territory like -1SD or -2SD, but is at level close to 2016 where we have “oil and emerging market” crisis at that time, especially affecting the bank and Oil&Gas sectors.


I don’t have a crystal ball to predict the movement of the stock market or if the market will continue to plunge in the coming weeks. Is really hard to buy right at the bottom, if we are still waiting to buy at -20% or -30%, we may continue waiting and by the time market hit -20% or -30%, with full or negative news on earning from news headline all over the world, we may think that is better to wait till -40% or -50%. Again, by the time market is in crisis level, one may think that is too risky to invest and better to place our money in FD or SSB. You got to start from some point, especially if you are still young and time is in your side ( with the magic of compounding effect ).

Below, my blog post appeared in AK’s blog in 2016 as “guest blogger” as I yet to start my own blog at that time.

STE says to see crises as opportunities and accumulate.



This time around, STI still holding quite well because of Banks and REITs, of course, some sectors are badly hit by this COVID-19 crisis like aviation (SIA/SATS), transportation ( Comfort Delgro), retail ( CRCT/ MNAC ) and hospitality ( CDL-HT ).

If you believe that this crisis may pass and over eventually, some of these stocks look attractive with more margin of safety now. But one will need to understand that this will be a “long battle” as measures to contain the virus seems not so effective and WHO may declare it as Global Pandemic when it spread more in the US and Europe. We need to take note that COVID-19 seems to have high R0 than SARs / MERs and is a matter of time that more and more countries will be affected by this due to its' difficulties to track and identify.

Please ensure that you have a plan and strategy to deploy your war chest. Position sizing and buy-in stage are important as we don’t know when will be the bottom of the market trend and it may get worse from here, before hitting bottom.

<Some stocks / blue chips affected by this Covid-19 crisis >









How about S-REIT?




Well, in-line with overall market sentiment, S-REIT also plummeted by almost -6% from the peak. Even though with this correction, FTSE REIT Index is still above mean level with the recent strong rally in some of so-called “blue chip” REITs. The dividend yield for some of these REITs been compressed to very low due to the ultra low-interest-rate environment. Again, if you believe that this crisis may over same like others previously, you may start to look at some of these REITs with little bit more MOS (margin of safety ) now.

Hospitality and Retail REITs are among those badly hit by this crisis :







1st Quarter 2020: Dividend and Portfolio Update




Total Dividend to be collected in 1st Qtr 2020: $50,626.43






My portfolio was down by -6.79% as of 28th Feb 2020 vs STI of -6.58%, which is quite in-line with the market. Compare to Singapore (STI), Hong Kong (HSI: -11.2%) and UK (FTSE100: -16.6% ) market both were down much more than STI. Similarly, my venturing into these two markets seems not doing well YTD and may need to see how they perform in the long run. Time being, I will just stay calm and collect dividend on stocks invested in these two markets, with a dividend yield at cost of more than 7+%.





The overall portfolio still skews towards REITs and income stocks like banks & utilities. I have also increased my exposure to Oil/Energy & Commodity to 9.3% where I picked up more oil majors recently. (I will explain later)


Currency Risk: <source : Investopedia.com>


You may notice that more and more foreign asset REITs been listed in SGX for the last two years and being quoted in the respective country ( economy block) currency like USD/ EUR and GBP.


After venturing into HKG/CHN and UK markets, my exposure to currency risk increase to 63.72% although I have 63.55% of my portfolio value invested in SGX.






From now onwards, I may need to pay more attention to currency movement other than the stock index. At least as of now, the weaker SGD will give me more dollar in term of dividend collected from USD or other currency-denominated REITs ( at this for time being per weaker currency policy from MAS ).







Portfolio Update :






As I mentioned before, I am considering SGX as income market to generate dividend for me to buy more stocks from HKH/CHN or even LSE now. Also, as highlighted before, I have further reduced my stocks from SGX to 22 and venturing more into HKG/CHN and LSE stocks.

Overall stocks value from SGX drops to 63.5% as compared to 83.7% previously update in Dec 2019 as I deem HKG and UK market is giving more value, but of course with much more volatility.
I have added some REITs and Oil Majors recently, but with STI at around -0.5SD, I may consider adding some blue chips if it continues to drop towards -1SD.


Final thought

I am sure we all faced with limited war-chest and as quoted from famous economist John Maynard Keynes  “..market can remain irrational longer then you can remain solvent. We need to plan for the worst and stage our war-chest carefully by not using up our “bullets “ too soon and too fast, buying in phases before the market really crashes into a “crisis “ level.

-           Have a plan on how to deploy your war-chest
-           Buy fundamentally strong stocks and not speculative one
-           Don’t expect the share price to rebound soon as the crisis  may last longer than the previous crisis and going to be a long battle

-           Prepare for the worst
-           Stay healthy and sleep well

So, what is your plan during this “mini-crash” ( at least not at a full crisis level now) cause by COVID-19?


Cheers!!




STE


Quote Of The Day :



“The stock market is the story of cycles and of the human behaviour that is responsible for overreactions in both directions.” By Seth Klarman








Please be reminded that this is not a call to buy or sell of any stocks mentioned above, as disclaimer please DYODD before acting on the information is given and all the counters and numbers given are just for illustration purposes.



Appendix:
Regression chart for FTSE100 and some of the component stocks.











Comments

  1. Once again thanks very much for an inspiring and useful post. The art of judiciously using your war chest will come only with time and experience, both of which you have in plenty!
    I have been portion sizing my buys at HK, UK, US and SG markets accordingly as my war chest is pretty limited.
    Looking forward to hearing more from you once the dust settles, however long it takes , it will eventually

    ReplyDelete
    Replies
    1. Hi garudadri,
      Thanks for the comments, yah, we need to plan how to deploy our war chest carefully...as market still not really at " crisis" level. But as you said, it will pass eventually... let's hope not many ppl will be affected by this covid 19 epidemic n pray for speedy recovery for those been affected.
      I'm sure after many years later, when we look at the long term chart, this event may just appears as "small dip" along the trend chart.
      Cheers

      Delete
  2. hiow many % are u in cash now?

    ReplyDelete
    Replies
    1. Hi , around 16+% now after firing my first round of "bullet " recently , use to be 22+% before this....need to keep some "war-chest" in case market drops further to -1sd or -2sd , nobody knows .... :D
      Cheers

      Delete
    2. How much is your net worth?

      Delete
    3. Hi Henry, is quite subjective on how to calculate the net worth...some add CPF and some include their house value ... hahaha.
      For my equity and bond portion , is quite easy to do a " reverse calculation " by using current yield of 7.3% and total dividend of approx. 195K.
      Cheers ... :D

      Delete
    4. Your portfolio yield is 7%
      ?!?

      Delete
    5. Yes , used to be ... but now , with so much uncertainty and expected economy activities to be severely affected , mots company will either cut or defer the dividend pay out. I don't thin the amount of dividend will be same as last year.
      Cheers !

      Delete
  3. Wow that is very impressive. If add in the 16% cash, then its more than 3M.

    ReplyDelete
  4. Can share how you amass so much wealth at your age?

    ReplyDelete
    Replies
    1. Hi Henry,
      You may read “About Me” to get more detail... but in short , is about “saving n invest for Long term”, live within your mean , understand the market cycles n take advantage during stock market crisis ...it took 25 years for us to accumulate amount of this portfolio...believe in “ compounding effect”...hv patient to wait ....for crisis...for price recovery (mean reversion).
      Cheers. :D

      Delete

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