How not to think like myself

I had this realization over the weekend that I may need to step back from being me whenever I make decisions (in this case investments)

I was going through some articles on Seeking Alpha and ARK Investments and suddenly it dawned on me that during the entire steep decline in March 2020, my concern were capital protection, averaging down to get better positioning on existing stocks, yield seeking and downside protection. It sounds well and good and for a dividend investor with a (I dont wanna spend 6 hours a day analyzing stocks mindset) it made sense. But then I realized that I wasn't spending enough effort or resources into prospecting for 5-10 year developments, I wasn't allocating resources for areas that benefited from COVID-19 such as healthcare and IOT and stuff.

A brief look at what I SHOULD have done:

1. Rotation (Capital protection of underweight stocks and rotate to others)
2. Yield for future (done correctly)
3. Average down (overdid it)
4. Downside Protection (too conservative)
5. Identify Areas and Buy those with Potential in new normal (ZERO)

And this is a typical chart of what happened if i had just go ahead with any of the stocks in 5. or had went through with it (KDC, MLT, FLT for local stocks and QQQ, ARKK, ARKF for overseas tech) :

1. MLT - identified but did not buy. 

QQQ- identified but did not buy:


In general, I had the ideas roughly in my mind that logistics, tech related, infrastructure, utilities are gonna be ok to very good. But the thought process of "protect capital" & "as a salaried employee with bills to pay - must be conservative" , made me overly focused on existing problems and failed to have an better overview... Awful Awful,
I had a bad feeling during early May that I made the sub-par chessmove... and now its been proven.

I need to take a step back from thinking like myself in the market. Because Mr. Market does not care about individuals.

I need to develop a systemic way to identify stocks and trigger reminders to allocate capital.

Update on Covid-19 (May & June)

The covid-19 update. Since the lows of March the market has shot up all the way to June. Then on 11 June it came crashing down. Current STI is 2650+ while the recent high was 2800. Traders who are good with their TA should have made quite a tidy profit. 

Times like these I start to doubt my strategy, esp when friends around me shared on the great percentage gains they had on some holdings. However, without taking into account savings rate, capital injection, lifestyle sacrifices, risk tolerance level, and percentage of portfolio that particular stock weighs on their portfolio it serves little purpose other than a highlight. One could take a look or ignore it stick to own plans. 

I have decided that my current strategy would work well by covering both sides and is suited to my savings rates, income level as well as risk tolerance and time i am willing to commit to investment. I am not going to get a second job... that defeats the purpose. 

Portfolio A- dividend portfolio 

• This portfolio invests in mainly income producing assets. 
• It attempts to provide long term stable cash flows mainly via SREITS, but open to other opportunities
• Target >6% yield, or CPF+3.5% 

For yield, the low interest world wide caused by UQE will definite create asset inflation- its a matter of time once things stablised and peoples' incomes get back to normalcy. This is a once-in-a-lifetime opportunity like 2008 and I will slowly add quality yield counter into the mix, bearing in mind weightage risk, sector concentration risk and geographical risk. This portfolio forms the bed rock of my investment. 

Portfolio B- long term growth portfolio 

• This portfolio invests in a diversified holdings via ETFs
• Attempt to capture the growth of secular trend such as 5G and AI
• Aims for index + 5% or 12% annual 

So far I have taken the recent corrections to trim my holdings improve average costs and establish smallish positions in various counters. I have long term view of semicon and fintech and feel that these will give long term stable returns for next 5-7 years as demand grows. The holdings changes once i feel the potential growth has topped out or a new trend may take over. 

Current -3.6% despite a yoy drop of 20% on STI index and -5.5% on the VTI Vanguard Total Stock Market ETF, a benchmark for myself. 

How Covid-19 Affected me

I was supposed to go on a boys' trip with a few of my pals for a couple of weeks in April, then covid-19 struck and the world eventually went into shutdown (at least for tourism sector/ people movement). Within a short span of a month, my office went into full WFH mode, government did a lockdown (except that we can still get essentials) but all outdoor activities had to cease.

Within two weeks, I realized that I wasn't the geeky kid I used to be anymore. I cannot stand long hours of being at home, missed my twice a week basketball sessions, my noisy crowded gym, the local pubs and the feeling of dining out.

I am not too sure if it is due to the sudden and arbitrary shift from a certain office worker's routine to a stayhome worker. Or am I too used to my comfort zone and identity in my daily life. Certainly, being rung up for extra on site duties to keep users safely distanced irked me. Thoughts of "if I am able to retire right now, would it make me much happier knowing the certainty of tomorrow"?

I guess the uncertainty is the part which makes all decisions hard, I dare not begin a new game despite spending more hours at home as I wont know when I will be called up for duty. I dare not commit to a home gym as i wont know when this Covid-19 Situation ends. I prefer the gym I frequent, on saturdays it is not so crowded.

But with every crisis comes opportunities, the sacrifices I made over this period shall endure and become the foundation of my future success. For example, stocks are at multi-year lows, and new biz ideas are being generated constantly. Humans are a tough bunch, and i hope this time we prevail too.

I do hope i get to fly by this December. 

2nd Week of April - Investing in Covid19

I need to keep reminding myself to blog down whatever details I could during this period of investment as I am certain that these would eventually be good learning points for the next crisis. Human memories are short and I probably have only one more chance at accumulation during my productive years. 

Having bought and sold several counters - total cash deployed over this period is about $19,000. 

When news of the Covid19 broke out, I am skeptical of how bad it would be, however to be safe and to ensure that in the event that if there are significant drawdowns which I could trade around I sold some counters which i felt would be dragging my performance, as well as took minor profits. The main goal was not to lock in profits but more to ensure that I have significant warchest. I was at 85% invested in early February. 

Actions taken: 
1) Sold FPL, Ausgroup, Areit, Astera V - Booked total lost of $6.7k from FPL and Ausgroup. Broke even on Astera / Areit

2) Using the cash I quickly made sure to redeploy into counters which I am still holding with stronger convictions - KDC, CRCT, AReit I call this "change horse" tactic. Rider must continue journey but the horse is tired, need to change the ride. Based on their respective drawdowns and projected rebound (to normal situation) and dividend - I foresee that this step is the right choice (time will tell if I made the right decision) 

3) This is the tricky part, another portion of my deployment from existing cash will be used to average down. Gotten Aims Reit, UMS and LL Reit

4) Bought counters at significant discount or for recovery play - Starhill, Ascendas I-Reit

Summary of Week 2 April 

Current state of portfolio is very heavy reits, I am targeting Wilmar / SATS and SMH however these have yet to reach my buy TP. They have shown resilience after the initial dive during early March and gradually recovered to a more palatable pricing. 
I have missed chance to accumulate Wilmar and SATS below $3 due to indecisiveness.. honestly I had a TP but when the moment came so quickly and impactful drop, I reconsidered and held back for couple of days.. then opportunity gone. 

have a plan - STICK TO IT. 

Summary of March Madness: Investing during Covid-19

The situation has been bad and it looks like it will remain bad. Prices across all markets had recover during the last week of March. This seem to be the textbook situation of the rubber band effect where big drops are usually followed up by a sharp rebound.

we can all agree that there will be several potential scenarios playing out from here on:

1. Recover to V shape - highly unlikely as main cause of the crash (lowered economic activity) has not been resolved. 
2. Maintain at current prices/ bottomed already - Due to the Fed and QE5 measures they had drawn up, all the world leaders are now in this "end game" mode. Hopefully, this mitigate the measures somewhat and by then a cure / solution will be found. 
3. Further dips - I am more inclined to think that further dips will happen. At least 1 more big dip. Whether it will dip beyond 2200 is anyone's guess my I think good opportunities awaits.

Actions

1. Take short term trading profits.
2. Trade around core position to keep lowering average prices for counters I hold
3. Buy when value emerge - Identify future proof companies (Semicon / Datacentre / Logistics / China Mid-class growth) 
4. Buy when extreme craziness appears, good yield on staples industry (Utilities / Basic consumers)
5. Put aside cigar butt investing for now (too risky) 

To be reviewed again in April.

My First Black Swan / Market Crash

What a week it has been for the stock markets worldwide. I feel like dedicating a post so future me will be able to judge how I have handled this event. 

It was known by Jan 2020 that the Covid-19 and the global economy wasnt good. I had plans to divest my holdings to a more diversified base with global etfs , thematic plays and more non-reits (take profit) but as usual the lack of TA and focus + hesitation made me act slow. Resulting in a -15% on portfolio not unlike the time in 2015 where I acted slow and news of rate increase by Fed had me seeing most of my holdings drop by a notch. 

One thing i did correctly was to amass a sizable (compared to my holdings) warchest that makes up 25% of the target this year by Dec 2019.

Actions taken / Out of Control Factors 

1. I took action decisively  once I realised that I needed sufficient ammo to average down/ ride the upswing for outsized returns and high yield on cost in near future. I sold Astera V bonds/ some of Ascendas Reits (still in green) and cut Ausgroup (speculative) for cash. 
2. As mentioned earlier- prepared warchest
3. Set aside - Performance Bonus for 2019. Honestly, was expecting zero PB this year but i guess in accounting terms its from the 2019 budget. However do expect no bonus for rest of this year. 
4. Promoted - well.. silver lining for 2020 is that I had gotten a promotion as well as 10% increment (very little lol). Unless the markets tank THAT badly (ie: ppty prices fall significantly), chances are my AUM will see an increase for 2020 from the sheer fact of 3) & 4) 

What's Next / Action to take 

I feel that this should be a classic "Black Swan" if you strip away all the emotions and hype. Market had been distorted from real ground sentiments since 2018 IIRC, so nobody should be really surprised.  My own greed has caused me to take unnecessary  losses from speculative positions (as always I find it hard to invest in bull market, should really just sit still, this is same for my basketball style)

Having amass almost 50% warchest I am in good position to deploy and ride the wave up. 

1) Buy high Alpha stocks - all stock will recover eventually, but blue chip and big names have the financial resources and ability to bounce back swifter. Buy those first as usually they arent cheap to buy. 

2) It is a good time to buy into super long term ETF such as Vwrd. 

3) Hold the losers, when rebounds come - sell them. 

4) Short list a few targets so that I can purchase a meaningful amount for each. 

5) prepare for rights issues / cash call. Dun be caught like many in 2015 !!!! Best chance to get Cheap Reits!!! 

6) Cut expenses - direct more to warchest 

Summary 

My 2020 networth goal might be affected pending the recover speed/timeframe. However short term goals stays the same. 

To the future me in 2 years time, good job, you have done well, and I have told you so right?

KEEP CALM AND CARRY (INVEST) ON!

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.