Portfolio Review - Selling during US Election and subsequent new set up

Previously I had come to the format of having +-50% in income stocks and growth etfs (US based for better upside) and was pleased with it. But I discovered that I probably wasnt able to reach my financial goals by at this rate. While fretting on what else do do I came upon some discussion on telegram about selling off bulk of portfolio to avoid the election-induced possible selling down. I sold about 80% of my holdings with the mindset to avoid losses (which didnt happen) on hindsight although I should do my own dilligence this "fomo" action gave me an excellent opportunity to reposition myself and "force" myself to cut deadweight like Straits Trading. 

Two objectives: To position myself for eventual recovery to normal economic situation, and to try achieve at least 20% ROI to make it. New Portfolio allocation: Income - 40% Growth aggro - 25% Growth stalwarts - 30% Speculative - 5% I was actually considering doing a SG / US ETF splits since late 2019. The plans were in traction but covid struck and hasten the drop of vulnerable industries and sectors. 

I was stuck with turnaround value play like Straits Trading, retail reits like Lendlease Reit. These are pretty good stocks with their own merits I felt and is why I had been holding on to them, but the change in mindset cause huge downside. 

Why dont I buy and hold? Well for starters the rate of compounded growth for buy and hold only works for companies that had real long term growth trend. This buy and hold theory was started in the US where they really had some great companies like McDonald's, Starbucks, Microsoft and Facebook. Secondly, I dont have much capital, I would DCA into a stock, which means buying up. If the returns arent higher double figures my eventual cost is much higher than the historical performance of the stock due to buying up. This means eventual growth is just single digits. 

Switched to Reits for SG market and Growth for US market as these markets are repectively good at income and explosive growth Currently my plans is to keep a sizable portion in thematic ETFs (>10% in SMH, ARKK, MOAT) while holding around a third in proven income producing stocks like local reits or UMS (that is the strong point of SGX) I will also have 5% for speculative or positions which I do not quite understand yet - park under here. 

I am considering juicing up portfolio by having 15% in "moonshot" stocks.. I understand the risks involved but I feel that without such "moonshot" stocks investments I would not likely be hitting my dreams as the age presently. Of cos I would only invest in what I can afford to lose completely in this 15% and still be able to maintain current lifestyle as my limit.

Mid August review of my portfolio, records of my recent actions and justifications.

 

First off, some rambling...

Between having a stable, meaningful dividend portfolio I also felt like I had to make up for lost time due to the relatively late start to savings and investment game. Starting from 2019, I have allocated a portion of my resources to start a position for growth. For now I am satisfied with the weightage, with my dividend: growth at 2:1 for the near term. (current ratio is at 4:1), progress is better than expected and I should be able to hit my near term portfolio aum goal earlier than planned.

Buy & Sell

I added some AIT due to the positive results, in hindsight I could have done a quick trade before adding again if I wished to once the excitement die down (locals are a forgetful bunch) but nonetheless I was too impatient and bought it at market price on opening. Mid-long term wise it is still a good purchase and I am looking forward to receiving meaningful income and expect its dpu growth.

Sold AEM after deliberating for a couple of days at 30% profit.  I didn’t get it cheap and although I may miss out on its potential splits / issues the recycling allows me to replenish some cash and this is key especially in frothy market conditions this year.

At the same time, I resisted selling UMS for its yield still falls within my acceptable range of >5%. Being a good year for semicon industry it should be able to provide great income for the upcoming year too. 

Opted for cash this time for CRCT due to the weightage in my portfolio plus I am having Lendlease reit too. Both are affected negatively by COVID-19 and I would expect the price to weaken, again replenish cash for deployment.

Initiated a small position in Brookfield Renewable Energy (BEP), it checks a few boxes of stable income, dpu growth, sustainable payout, and more importantly it is a hedge for the future trends which I identified as potential challenges for old world business (veganism/sustainability/animal cruelty/feminism/racism/sexuality orientation) Going forward, I would continue to identify business or themes which provides a natural hedge towards consumer and social trends changes for the foreseeable 20 years to future proof my portfolio. Sustainable energy is the first one which I felt is reasonably addressable from a business point of view, we shall see.

Portfolio review

Yield of portfolio has improved but still far from my target of 6.5% now that most stocks / reits have ran up due to the QEI I would either have to take more risk by entering subpar reits or buy beaten down industries and hope they survive (neither is a good idea) I am looking at some HYBs and if they provide at least 6% it may be a reasonable entry. Also this will serve to prevent such a big drawdown during the next blackswan (my portfolio got a -35% during the march period). I have also learnt the beauty of sustainable dividends vs purely high year to date dividends.

Thematic ETF play has been the new weapon of choice for me this year. It has absolutely outperformed the rest of my portfolio and my local market of cos I would underperform the Nasdaq and stock pickers for tech sector but being far from markets and without reliable network, I think thematic ETF play style is the most risk adjusted way to get alpha for myself. I just need to identify the trends, basic long term potential , all of which are more qualitative analysis and quantitative. I reduced the need for technical analysis to a bare minimum.

2020 - Year of the Rat and a sad day for all basketball fans

Its the new year of the Rat and right from the beginning we have the situation of the coronavirus that started in the city of Wuhan, few days later news broke that NBA HOFer Kobe Bryant has died in a helicopter crash. Till now it is still very unreal and overall it feels like a bad way to start the lunar year altogether, told my wife that we should look out a little bit more. Just yesterday while crossing the road, I was almost ran over by a taxi who didnt check the blind spot. 

These are signs of a bad year, and although I am not one who makes decision based on myths and superstitions, it would be a wise move to be extra careful of things. 

I am officially 35 last November and I feel the need to set "hard" KPIs in order for myself to achieve certain financial goals. Did some rough planning and noted that i would require doubling my current income in order to achieve my ideal state of FAT FIRE. Assuming the other 100% income comes from investment returns, then at least I will have the option to replace my employment income fully while maintaining current standard of living. 

Goals:
1) achieve 200k income portfolio 
2) set aside 1 year emergency funds (done)
3) research and start on growth portfolio (in progress)
4) kick start business, prototyping of our first products and sale by June 2020!

A reminder to myself to manage the risks as the markets have been on a bull run for such a extended period of time, dry powder will definitely be needed once the correction comes and looking at the macros (trade war, oil game, WH-virus) there is likely situations to get in. 

Am considering divesting CRCT due to its 100% exposure in China and since it has ran up significantly. An alternative strategy would be to amass cash to average down once it happens. 

Good luck to me, today I was reminded to live life to the fullest yet again.

Perhaps we should take a short term view

A thought came to me over the weekend (which I would highly attribute to the books and conversations I had recently):  Most financial advice that is doled out involved careful planning and execution over a long period of time. The period of time is usually over 20 years or more. I start to question if that is even viable, as the rate of change is accelerating at a higher rate than ever.

Think of this: IIRC it took us far shorter time to build the first aircraft than to invent the first light bulb. It took only 10 years for internet to be flooded with all these new social media and big data hype. (some of which I am still struggling to make sense of) In the last couple of years, it seems to be fashionable to sell products that is basically dreams.

Viability

What I am trying to pen down is: Would these financial solutions be viable some 20 years later. If not, why are we working on something that might be doomed to fail? To be clear this is not just accounting for inflation or personal lifestyle situation changes, but more of mega changes that is unthinkable presently and vast technological advancement and change of mindset. All these would ultimately affect how one plans.

Speed

I am starting to believe that anything beyond 15 years is in need of massive review. Unlike companies and institutions which plans for “long term” and “perpetual” you only really live once. You can only do certain activities when you are young (like come on, I can’t hoop that much if I am 50 year old , it is not about training. Same goes for alcohol. Same goes for your fast twitch muscles required for online gaming# ) In short I want to have the resources in the near term, when I can physically enjoy the good my money could buy me.

Planning for old age is fine, but people get so tied up in this that they practically missed out their 30s and 40s. I feel that there is a portion of the folks out there who got the formula but it isn't that easy. To put it simply, to enjoy life while you are still (relatively) young, you need to work super hard to get that high income / high business profit. 7-10% CAGR a year is great until you realize that without a significant base capital and high capital injection each year. The total amount at the end of your journey is a million at most which isn't a lot in most developed cities.

Seed Money

The ultimate solution is still getting that first pot of seed money – which for most people without a silver spoon in their mouths since birth would be a great income or a side gig.  It is important to get that seed and even at modest growth it would lead to great compounding wealth. The difference is, the speed you get the seed.

I have no solutions yet; it is another yet random thought I had over the weekend. I am currently pursuing what could be a boost to my main income and hopefully that works out.

#I am getting my ass kicked by kiddos in CSGO cause’ my fingers can’t seem to react as fast as my eyes anymore.. no more split second scope flicks or headshots.