3rd Qtr 2020 : Portfolio and Dividend Update

 Time flies, we have seen a very volatile market while entering 4th Qtr of 2020, where the tech-heavy Nasdaq Composite dropped nearly 6.2% (from the highest point of 12,074 achieved on 2nd Sep 2020 ) its biggest percentage declined since June 11. But I think this pullback is quite normal with a market which already increased by almost +82% since low in March 202, as it reflects the “ reverting to mean “ to some extent.





                                            <Video Credit to:楊世光在金錢爆 >


Technology stocks have been among the leaders in the broad market rebound since March and it looks like the sky is the limit with such magnitude of increased in the past few months. We have seen the “decoupling “ of Wall-Street vs Main-Steet “since the pumping of trillions of easy money into the stocks and bond markets ( as well as commodities market like gold and silver, or even crypto). Overall, stocks have soared since March despite the worst economic slumps and highest “unemployment” figures reported by most of the countries. Within the stock market, there are also huge “divergence “ between “old economy “ stocks vs “ new digital /tech economy stocks.

 

3 Months Of Hell: U.S. Economy Drops 32.9% In Worst GDP Report Ever <source: npr.org>

 

S&P 500 and Nasdaq close at record highs to start September, Dow jumps more than 200 points <source: cnbc.com>

 

 

How About STI?


STI still lagging against other major indexes especially those with tech stocks or tech-related stocks ( like IC manufacturing company i.e TSMC for Taiwan Cap Weighted Index and Samsung for KOPSI ). Congratulations if have more tech stocks in your portfolio, I am sure you are sitting with double-digit return on investment.





< NASDAQ +24.5% , KOPSI +8.31% , TAIEX +5.53%, NIKKEI -2.25%, Dow Jones -2.29% , HSI -13.53% , STI -22.72% >

Korea and Taiwan market is doing much better because of booming in semiconductors related company due to the high demand for IC (Chips) in the last two years.

Although Hang Seng Index is still around -13.5% YTD, I am sure it will catch with others because of more and more tech-related companies to be listed there or moving back from the US market (with dual listing or delisting from the US stock exchange ).


How the new Nasdaq-like tech board in Hong Kong will benefit investors and tech giants <source: cnbc.com>

 

We have seen a few ETF tracking this tech-index being launched recently, e.g CSOP HS Tech Index ( 3033.HK), Hang Seng Tech Index ETF ( 3032.HK) and CAM HS Tech Index ETF (3088.HK). I am sure more come eventually.




STI still struggling at around -1SD level. As above mentioned, STI was among the worst index in Asia, I am not sure when we will see a rebound from the current level, as I mentioned before, even with the successful vaccine development, we may still see an uneven corporate revenue’s improvement in different sectors. The key is to have mind-set of investing for “  long term” and be patient while waiting for the market condition to improve.

We are almost 9 months into this “Covid-19 pandemic “ crisis but if you look at the chart, it took us more than a year for the market to start moving upwards in 2015-16’s bear market.

For time being, I think it is unwise or almost impossible to “time the market” by selling now and trying to buy back later in a short time. I would rather “stay the course “, be patient and be passive, waiting for any good news to come ( while collecting some dividend income ).

 

Why Mistiming The Market Can Be Disastrous <source:TheSimpleDollar.com)

What happens if you missed the best 5 market days?


<Image credit:
<Image credit: TheSimpleDollar.com>


Missing the five best days when you’re otherwise fully invested drops your overall return by 35%! And the results only get worse the more good market days you miss. Missing the best 10 days will more than halve your long-term returns.

The above chart tracks a 38-year period or roughly 10,000 days of stock trading. So, if you think you can time the market, you’re betting that you can get in and out without missing just five of those 10,000 days — which could happen at any time. To an average Joe like me, it seems far simpler to just stay invested rather than take on those odds.

Another good reason to stay invested is that the majority of the best stock market days throughout history have come in the midst of significant market downturns. Of the top 10 biggest gaining days, six occurred during the chaos of the early 2000s tech bust or the 2008 Great Recession. Even though it can be hard, it’s crucial to avoid panic selling when the market struggles. “






**FTSE ST REIT rebounded nicely to around mean level.

 

 

3rd Quarter 2020: Dividend and Portfolio Update

 

My portfolio still struggle and underperformed the STI index by -1.5% ( YTD return = -24.2%)

This is mainly due to 98.6% of my holding is still in “old economy “ stocks like banks/ property (including REITs), oil majors, utilities etc. I have added some HKG Tech ETF into my portfolio recently, but still very minimal of less than 2%. As I mentioned before, I am trying to understand more about tech-related industries like 5G/AI / Clouds Computing/ IC Chips / SaaS /E-commerce & Payment and of course the future digital bank/currency technology. I am still a newbie on all of these. I am choosing HKG over US Tech ETF as I believe China/HKG will have more potential than the US (in term of growth) in the next 10-20 years. The diversification into the Tech ETF (instead of individual tech stocks ) is because I have no confidence in my stock analysis and selection for most of the tech company, which looks complicated for me, hahaha. Also, the % of tech ETF in my portfolio will only grow slowly over a long period of time, as I am still a “hardcore” dividend investor.  :D

 

 

Growth vs Dividend Investing :

There is no right or wrong about strategies of investing be it growth or dividend approach.

As the old proverb says, “All Road Lead To Rome”, any strategy that can lead us towards achieving financial independence ultimately is a good strategy.

 

FIVE FACTS ABOUT BELIEFS AND PORTFOLIOS <source: Harvard University>


Base on the above research paper from Harvard University, we tend to have “biased” in constructing our portfolio”.  Our beliefs, peers, parents, upbringing or even working environment, all influence in our portfolio construction and composition. Of course, the risk tolerance and age will also determine what we have in our portfolio ( e.g % of Equity vs Bond ).

I am sure if you are a young and tech-savvy investor, you will most probably have more tech and growth stocks in your portfolio ( of course with some exception).

 As you may notice, I was influenced by articles or books on “value and dividend “ investing since young (school time).

 

Good Financial Journalist That Could Shape Your View in Investing

October 05, 2016 <link>

 





Total Dividend & Interest ( 3rd Qtr 2020  ) = $52,085.36

YTD 2020 Dividend & Interest : $142,609.16




Total dividend collected from HKG market was higher than the SGP market in 2nd Qtr and this 3rd Qtr this year as most of the HKG companies are paying their dividend in 2nd and 3rd Qtr (e.g CKH/CKI/CK-Asset/Road King/QingLing Motor etc) and some China banks are paying their dividend once a year ( like BOC/CCB/Minsheng Bank).





** I have added few Malaysia stocks during the last quarter ( Malayan Banking BHD/ Public Bank BHD/ LPI Capital / Panasonic Malaysia and Heineken M BHD).

** For HKG, I have also added Sinopec Kantons/ Henderson Land / Sino Land.

** As for HKG TECH ETF, I have added KWEB ( CHINA TECH ETF) from AMEX, I bought the ETF  before HK launch it’s own Tech Index and subsequently, few ETFs have also been launched by different fund managers.

 

 

 

 

                                                Top 30 Holdings :






I have reduced my REITs holding quite a lot since the beginning of 2020, from 48.4% in Dec 2019 to now about 21.4%. At the same time, I have increased my holding in Banks +18%, Consumer Discretionary +4% , Property Development&Management +2.9% , Conglomerate +1.6% ,Utilities +1.3%.

 


Final Thought

 

As I have written in the previous blog post A Waiting Game, I don’t think anyone will have “crystal ball” to tell you when the market will rebound or even collapse and we shouldn't try to time the market by hopping to sell now and buying back at a lower price later.

Yes, there will still be a possibility that the market may drop further and test the March low, but as long term investors, that will give us another chance to accumulate more good and fundamentally strong companies.

As mentioned before, I am with the more “positive and optimistic “ side that this is not the end of the world and Covid-19 pandemic may pass eventually, sooner or later, we don’t know and try not to make any prediction on this. Life goes on as usual, together with Mrs STE, we went for morning walk, slow breakfast, doing some marketing preparing for our lunch or dinner, reading, watching movies & youtube, more exercise or playing badminton with kids in the evening etc…that's our routine. No overseas holidays or staycation in Malaysia this year but I think we can spend more time and money in SG ( to support the local economy ) with more promotions from local attractions. :D

 

Free entry for 2 to Jewel's Canopy Park with any spend until Sep. 30, 2020

 

OFFERS & PROMOTIONS : SPECIAL DEALS AND PRIVILEGES AT GARDENS BY THE BAY

 

We’re all about Sentosa’s free entry and fun deals this September!



Plan your September School Holidays now !! 

 

Cheers!

 

STE

 

 

Quote Of The Day :

“The stock market is a device for transferring money from the impatient to the patient” Warren Buffett



Comments

  1. Hello STE!

    Love to read your writing as always.

    I am also venturing into tech company investing however I also take a cautious approach as it is something that is very new to me. Trying to figure out valuations. Which is, difficult in the current climate as prices are very volatile and my intuition tells me most class A listings are overbought.

    It is an opportunity to learn nevertheless.

    I am old fashioned. :D I still believe that 'old economy' companies are still needed in this 'new economy' and will remain relevant in some form. I am also adopting a 'waiting game' and avoid panic movies. At -1SD STI values, there is value is the market.

    Having followed your blog for a while, I have learnt the 'power' of reversion to mean. I guess we should just all be patient. Thank you for always updating the graphs!

    ReplyDelete
    Replies
    1. Hi The Passive Investor,
      Thanks for the comments , yes , tech-related stocks is very volatile a we can see from these few days movement on Nasdaq. Yah, have to be careful in picking up these stocks as it's hard to do valuation for tech stocks , is more on "Art than Science "... :D
      Yup.. for old economy stocks , guess no choice , would have to wait and be patient....hope capital or fund rotation may happen soon from tech stocks to old economy ...
      Cheers !! :D
      Stay safe n stay healthy..

      Delete
  2. Hi STE, thanks for another great write-up. Have been a silent reader of your blog, very inspired by your investment journey and aspire to 'save and invest' toward a portfolio that can fund my retirement lifestyle (both needs and wants).

    Would you mind sharing what is the current yield (on present value) of your portfolio? How has the yield of your portfolio been affected by Covid?

    ReplyDelete
    Replies
    1. hi Sintek,
      Thanks for your comments and reading my blog.
      As for the "current yield " , this is a "moving target" as it affects by "current price and latest dividend pay" ,see whichever is up or down more. At this moment , my yield is around 6%, of course dividend been cut ( from SG/MY banks and S-REITs , also oil majors) but the dividend from HKG stocks seems quite stable ( although hv some reduction). Same time , price also drops for all stocks, hence the "current yield " looks almost the same as pre-covid level. Yield remain as both move in-tandem , it might be different if either one move in different direction.
      Of course the yield is much better than keeping in bank FD or bonds , but with greater RISK for sure.
      Hope this explain...
      Cheers ! :D

      Delete
  3. Hi, Thanks for your quarterly update.. I am also planning to increase my investment in HKEX after increasing my stake in some LSE stocks.. The 2 stock exchanges have some world class companies that are still not overvalued with good yield. Best of all, their dividends do not have any withholding tax.

    ReplyDelete
  4. Hi GlobalPassiveIncome,
    Thanks for the comments , yes , I think we still can find some (hidden gem )good dividend and fundamental stocks from HKEX and LSE.
    One of my HKG stock ( Oriental Watch) just announced privatization at HKD 3 , this is one of a good dividend and almost nil debt company (with almost HKG 1 bil cash in hand ).
    I will miss this good dividend stock , but I am ok with almost 90% returns in less than a year of purchased. :D
    All the best in searching for good stocks from HKEX and LSE.
    Cheers !

    ReplyDelete

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