"The stock market is a device for transferring money from the impatient to the patient " by Warren Buffet .
2nd Qtr 2021 : Portfolio & Dividend Update
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If you are an avid follower of stock market news, other than Crypto, I think the hottest news about investing nowadays is the " meme stocks " which can make you very rich overnight where the stocks price may increase 100-200% in a day. Just imagine, a "popcorn" promotion can drive the price of a company by more than 20%, yes, that's a true story and not imagination, I guess you know which company I am talking about.
Below quoted from an analyst from Bloomberg :
"Yeah. I have no notes, that’s perfect. “If you buy AMC stock it comes with popcorn” is the greatest capital-markets innovation of the century so far. I used to work in investment banking, building equity derivatives and equity-linked securities to help companies raise money and optimize their capital structures, and in hindsight we were idiots. “What if we used the contingent payment debt instrument regulations to increase the tax-deductibility of non-cash interest paid on a 30-year-non-call-5 convertible bond,” we thought, like fools, when the actual way to optimize equity capital raising is by throwing in a large popcorn.
As of 11 a.m. today, AMC’s stock was up 28% to $40.42, an all-time high. It is up about 300% since the start of May, and about 1,800% year-to-date. Popcorn!
"Whether you pronounce it ‘meem’, ‘mehm’ or, god forbid, ‘me-me’, as social media has grown in importance in modern life, the ubiquitousness of memes has grown with it. So much so, it has even pervaded the stock market. Meme stocks have become a buzzword in certain investing circles over recent years and the accompanying hype has resulted in significant shifts in valuations.
Just look at the power that Reddit and Twitter have had over the market in recent months.
A meme stock isn’t as easily defined as a growth or value stock, so to give it a definitive categorization would be inappropriate. Nor would actually categorizing it alongside growth and value stocks. They won’t be found in textbooks anytime soon, but to overlook their impact could potentially be an expensive oversight.
Some of the common characteristics meme stocks share are usually overpriced and experience spikes of rapid growth in short periods. Popular amongst millennials and Gen-Z, they are prone to high volatility with valuations based around potential rather than financials — or in GameStop’s case, not potential at all but simply taking advantage of the system. Usually, the sentiment around the stock is positioned around the future problem it solves, with talk of valuations very low down the list and usually only proposed by bears. FOMO is a big motivator to buy, while panic-selling at the slightest headwind is common, adding to the stock’s volatility. "
As I blogged about it in early 2021, stock markets had become a place to "gamble " like a casino with price fluctuation in certain stocks that are huge enough to make you a fortune in a short period.
I think it is quite natural that we as human being just like the " thrill " of gambling, everyone wanted to win big and that can be seen on the long Q when the prize of TOTO snowball to more than $5 Mil.
As I said before :
小赌怡情 大赌伤身 !…还会伤到身边最爱的家人 ！
If you really want to participate in this " meme stock" party, please make sure that this is the money you can, willing and prepared to lose and it just forms a small part of your total investment portfolio. Also, you really need to have a very "strong mind and heart " to ride through the volatility from time to time.
Enjoy the game !! as long as the market still flooded with so much liquidity, I think the party will go on, like the "musical chair".
Okie, back to my dividend and portfolio update for 2nd Qtr 2021.
Dividend & Interest Income Update :
As usual, the 2nd quarter is the best in receiving the dividend from my investment portfolio. Most of my HKG stocks are paying the dividend in this quarter as well as SG bank stocks.
2nd Qtr Interest & Dividend Income : $ 55,312.18
Total Interest & Dividend Income 1st HF 2021 : $ 77,727.49
52.4% of this quarter's dividend came from HKEX and you may notice that among the Top5, 4 are from the HKEX market with the only one OCBC is from SGX.
Sector-wise, same as my portfolio allocation, the top is from Financials (32%) where banks like OCBC/DBS/UOB/BOC HKG/BOC /Hang Seng Bank and Malayan Banking are paying the dividend in this quarter. Follow by Conglomerate ( CKH/ Jardine C&C and Keppel Corp).
Below will be closely monitored as to when MAS is going to announce the relaxation of the dividend cap policy implemented last year. Hopefully, in the 2nd HF of 2021, bank and REITs may restore back some of the dividend cut in 2020 to maybe 70-80% of the pre-Covid level. :D
MAS likely to ease stance on dividend cap imposed as Singapore banks have preserved enough capital
Expect higher dividends for FY21F on gradual relaxation of dividend caps; 2-stage relaxation likely
Banks may adjust high capital buffers through some special dividends from FY22F
Can see from below summary chart that the dividend received was exceptionally low in the last two quarters during Covid 19 pandemic.
Portfolio & Market Update :
The stock market seems moving in sideway recently after rebounded strongly from Oct 2020. Investors are concerned about rising inflation which may cause the FED to take action earlier than expected to do the tapering of QE or even rising interest rate. The market is quite volatile because of stronger economic and job data released recently.
Market sentiment also being affected because of increasing Covid-19 cases in some countries like Malaysia / Taiwan / Thailand / Singapore or even the latest news of lockdown in some cities of China Guangzhou.
Malaysia had implemented the total lockdown from 1st June while SGP and Taiwan had also tightened up their social distancing rules and carried out some kind of partial lockdown.
STE Portfolio YTD Return : +17.95% ( outperform STI by 6.3% )
With sector rotation from growth to value stocks, my portfolio is having slightly better returns this year as most of my stocks are dividend and value stocks. Oil&Gas/Commodity is the best sector with almost +17% returns and follows by Financial and property development with +12%. Well, as for REITs, my YTD returns is +5.8% as compared to the FTSE ST REITs index of almost flat at 0.41%. This is partly because half of the REITs in my portfolio are Industrials and Logistics REITs which is more resilient under the Covid-19 pandemic situation.
I am not adding much new capital into my portfolio since the end of last year and just switching some position by divesting some value stocks and moving into tech stocks. I have increased my tech stocks position to almost 7% in my portfolio and sitting with -8% of paper lost. As we all know that tech stocks have been beaten down in the last 2 quarters because of fears of rising interest rate which may affect their valuation base on future DCF.
Some of the HKG tech stocks like Alibaba/ Tencent / JD.com or Baidu were also down by almost 25-40% from the top. I still believe in tech stocks in the long run, especially for those big cap with healthy cash flow. You may notice that in recent tech correction, the mega cap like FAANG is not as bad as those smaller tech companies which have very high PS (revenue growth) and still in expanding stage (burning cash). Of course, some of this high growth company may turn out to be the next FAANG if correctly choose one, but on the other hand, you may also risk losing all your capital. Therefore, I would prefer to invest in those mega-cap tech stocks although with lesser expected returns in the long run.
With this, I have completed my own version of TECH ETF :D
As we all know that China's regulator just slapped a record fine on Alibaba recently and continue stepping up the anti-trust probe into other tech companies, we should expect to see more volatility from this sector and also the stock price may drop further. The short-term prospect for tech/growth stock will be very volatile because of the interest rate hike and if you are going to invest in tech, be ready to expect and see the price drop further, one must ready to keep it for the long term.
The reason for me to choose BATJ ( Baidu/Baba/Tencent/JD.com) is because, in total, they are controlling almost 70+% of E-commerce/ E Payment Services/ Cloud Biz / Online Video streaming/ Social Platform and maybe 50+% of Mobile Gaming market share from these 4 companies in total China market.
I have also added two small FinTech player in China which are listed on NYSE.
As mentioned earlier, I am not adding new capital into the market for the last two quarters and just shifting some of my funds from value to the tech sector.
So, where am I going to deploy my war-chest of cash received from dividend?
Yes, other than "buying the dip" in tech stocks should the opportunities arise, I am planning to do the VC to my CPF account (for both STE and Mrs ) and earning a 2.96% p.a of 4 years AAA Bond.
Of course, I do hope that the value stocks may perform well in coming years but with more tightening monetary policy expected in near future, the market will be very volatile and be ready to see more "bumpy " years ahead. Again we may see the " Taper Tantrum " of 10-20% correction when FED starts to curtain the QE even before rising the interest rate, like the one in 2013.
The phrase, taper tantrum, describes the 2013 surge in U.S. Treasury yields, resulting from the Federal Reserve's (Fed) announcement of future tapering of its policy of quantitative easing. The Fed announced that it would be reducing the pace of its purchases of Treasury bonds, to reduce the amount of money it was feeding into the economy. The ensuing rise in bond yields in reaction to the announcement was referred to as a taper tantrum in financial media.
No one will have the "crystal ball" to predict the future, just be prepared for all the possible scenarios and ready for the worst.
Hi Uncle CW8888, Yes, you are absolutely right , is hard to control our mind especially when we start to win some and become more and more greedy ! 还是不睹为妙 ！！ Cheers！！：D😊
Tien Eng, Congratulation to your timely stocks purchases last year and impressive dividend received YTD. Local banks makes up close to 25% of my equity portfolio, my wish too MAS will revise their dividend guideline before end of the year. I am fully with you on the potential of the Chinese e-commerce/e-payments/internet related companies, collectively they are the pillars and engines of growth of the future economy of any country, as indispensable as the banking industry has been since the start of the modern economy. These companies have established their economic moats. With Janet Yellen's recent statement (never mind she is no longer the Fed Reserve Chair), inflation/monetary tightening appears to be a foregone conclusion. Looks like the Chinese (and European) strategies of not following the US in increasing money supply (as you mentioned earlier) plays a part in bringing in inflation earlier than expected. The stock market in unchartered water again.
Hi retiree5559, Thanks for the comments and congratulations for the 25% of banking stocks in your portfolio! :D Yes , hope MAS will relax the dividend cap soon so that we can enjoy highre dividend income again. Yes ,inflation will be the key and main issues in coming quarters , I think Janet Yellen is testing (or hinting ) the market from government or FED's perspective. As you said , we are in the "unchartered water" again although with so much liquidity floating around , but the flow may turn against the market with so much "liquidity " to speculate, we may see a "short term" pull-back or knee jerk reaction from time to time. Just need to tighten our seat-belt to ride through this "bumpy " journey. Yup, the Chinese internet giant has become the " indispensable" things / services for the whole economy, although with current "anti-monopoly" probe , I think the government will not try to "killed" them but to strengthen some of the rules and game plan, which I think is good for the industry and economy as a whole in the long run... Cheers !! :D
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Higher For Longer The Federal Reserve held interest rates steady in the recent FOMC meeting, while also indicating it still expects one more hike before the end of the year and fewer cuts than previously indicated next year. In addition to holding rates at relatively high levels, the Fed is continuing to reduce its bond holdings through the so-called QT , a process that has cut the central bank balance sheet by some $815 billion since June 2022 . The Fed is allowing up to $95 billion in proceeds from maturing bonds to roll off each month, rather than reinvesting them. The “ dot plot ” chart from the latest FOMC meeting showed a much higher and longer rate till 2026 and this has “spooked” the market, causing some reactions and pulling down of market indexes last week. “Chair Powell and the Fed sent an unambiguously hawkish higher-for-longer message at today’s FOMC meeting,” wrote Citigroup economist Andrew Hollenhorst. “The Fed is projecting inflation to steadily co...
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image credit Izquotes.com Is time to calculate our dividend income for 1 st Qtr 2018 as the financial result for most of the company should have been announced by this time. The market has gone through like a “ roller coaster “ ride in 1 st Qtr 2008 where it was down by almost 10% at one point and rebounded subsequently. As I mentioned in my early blog post ( here ), even with correction of 10-20% from the current high in the US market, I would consider it still as “ expensive or rich in valuation “ and normal correction in any market cycles.
Quote : 小赌怡情 大赌伤身 !…还会伤到身边最爱的家人 ！
ReplyDeleteI also once have this problem when I was on winning mode and so shiok! Then it finally became 小赌怡情 ---> 大赌伤身 !
小赌怡情 only works when we can control our greed on winning mode and don't feel so shiok and lost our head!
Hi Uncle CW8888,
DeleteYes, you are absolutely right , is hard to control our mind especially when we start to win some and become more and more greedy !
还是不睹为妙 ！！
Cheers！！：D😊
Tien Eng,
ReplyDeleteCongratulation to your timely stocks purchases last year and impressive dividend received YTD. Local banks makes up close to 25% of my equity portfolio, my wish too MAS will revise their dividend guideline before end of the year. I am fully with you on the potential of the Chinese e-commerce/e-payments/internet related companies, collectively they are the pillars and engines of growth of the future economy of any country, as indispensable as the banking industry has been since the start of the modern economy. These companies have established their economic moats. With Janet Yellen's recent statement (never mind she is no longer the Fed Reserve Chair), inflation/monetary tightening appears to be a foregone conclusion. Looks like the Chinese (and European) strategies of not following the US in increasing money supply (as you mentioned earlier) plays a part in bringing in inflation earlier than expected. The stock market in unchartered water again.
Hi retiree5559,
DeleteThanks for the comments and congratulations for the 25% of banking stocks in your portfolio! :D Yes , hope MAS will relax the dividend cap soon so that we can enjoy highre dividend income again.
Yes ,inflation will be the key and main issues in coming quarters , I think Janet Yellen is testing (or hinting ) the market from government or FED's perspective. As you said , we are in the "unchartered water" again although with so much liquidity floating around , but the flow may turn against the market with so much "liquidity " to speculate, we may see a "short term" pull-back or knee jerk reaction from time to time.
Just need to tighten our seat-belt to ride through this "bumpy " journey.
Yup, the Chinese internet giant has become the " indispensable" things / services for the whole economy, although with current "anti-monopoly" probe , I think the government will not try to "killed" them but to strengthen some of the rules and game plan, which I think is good for the industry and economy as a whole in the long run...
Cheers !! :D