(edited with typos)
The recent volatility and drastic fall in equity prices had left me speechless.
On some days, I was shocked into inaction while on others, I took irrational decisions. I guessed I was frightened. I knew I should be more “steady” than that but I just couldn’t.
Sleep got affected and that was it for me! Its the last straw = I have to take some actions to jolt myself out of this.
I thought I would share some of those actions with you. You will have to judge if they are relevant to you. Everyone has our own investment objectives and because of this, there is no one size solution that fits all.
Refresh and Remind Myself of my Investment Target
Mine was a simple one – I want to create a portfolio that can provide me with passive income that secures a large proportion of the current quality of life and lifestyle for my family when I am retired, either normally or prematurely.
Hence, for me, capital preservation and investing in companies that can distribute dividend in a sustainable way are important.
My annual target is 5% yield.
I hope to achieve it from both dividend yield and capital appreciation. Dividend yield is what I work towards while capital appreciation is “icing on the cake”.
Those actions that I took were:
(1) I avoid selling where I can and have holding power – I have not sold the shares of the 3 big local banks and high quality Reits (The Capitalands, The Ascendas and the MapleTrees)
(2) I cut losses on those vulnerable companies which might not survive this downturn – Eg it was extremely painful to cut losses on Eagle Hospitality Trust but I was glad that I managed to do a huge bulk of my holding before they suspended the shares. Even then, my loss is massive and substantial. To help me get over it, I asked myself to look in front and not to look behind – but it was difficult, very difficuly (sob sob)
(3) With the money I got from (#2), I invested in companies that should be able to withstand this challenge and can afford to still pay dividend. I hope to hold them to wait out this crisis. So, I keep the money in the market and hopefully when the share price of these companies bounce back, it would help me to recoup some of those losses.
(4) From my warchest, I withdrew some cash out and invested periodically in index ETFs. I cannot say for sure which company will definitely survive, hence, I prefer to invest via index ETFs.
I had read articles and advisory from others not to invest in index now as it contains a basket of strong and not so strong companies. But in my view, I are already quite well vested in individual companies that I feel are strong. I don’t need to add more – and I am also afraid of putting all my eggs in one basket.
Index ETF is a convenient way for me to diversify the risk. Not the best but I think it would work for me (Again maybe it is because my target is simple – 5% dividend yield and capital preservation – I am not aiming for a “killing”).
(5) I accelerated my diversification from individual SG companies focused to index ETFs. The percentage of my index portfolio over my total holding went up from 21% to 36% from 1/1/2020 to last Friday.
It is partially due to me investing greater proportion of my current capital injections into Index ETF (#4 above) and the resilience shown by my bonds and gold index investments which is about 40% of my total index portfolio. Bonds and Golds are holding up better than equities. This once again shows me the importance of diversification in other asset classes beyond equities.
(6) Furthermore, I accelerated my geographical diversification to more US and Hong Kong. The percentage of US and Hong Kong equities holding is now 30% of my total equities holding. It was only 16% on 1/1/2020.
Fueling this was because I believe that US stocks offer better long term value now. The recent sharp declines provided a good opportunity for me to accumulate. The other is that Hong Kong stocks seem to be more resilient in this crisis compared to SG. This may be because it has a big hinterland, China, behind while SG is totally exposed to the international trade environment as the domestic market is very small.
With the above, I felt I could sleep better.
The most important thing and lesson to many people (some of whom I know) from this crisis is that please don’t borrow excessive amount of money to invest.
Moderate leverage is still ok in my opinion as long as we have the ability to cover the loan when things turn sour quickly. If you can accept simple return, then do NOT borrow to invest is the best.
Hope things will stabilize soon.
I don’t need the market to bounce back but I hope at least it will stabilize and be less volatile, then I can have time to review and re-work my investment plan.
Do have a safe week and hopefully a stable market for all of us.
Regards,
Warriortan
Invest For Yourself 
Totally agree with your comment. “The most important thing and lesson to many people (some of whom I know) from this crisis is that please don’t borrow excessive amount of money to invest.“
Holding power is the only weapon small investors like us have against the market. Of cos with the assumption of choosing the right stocks. If not possible, then buy the index ETFs
At lest I would dare say that 50% of the listed companies will survive this downturn. The gut wrenching worry is that only 20-30% of the SMEs will survive this downturn.
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So, Treasury Secretary Steven Mnuchin claimed that the U.S. unemployment rate could reach 20% may be true … so many people will be jobless.
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Yo bro, at least you managed to exit eht with some money. I still trap with massive losses too. Prepared to write it off already. Hang in there and fight back together. Cheers!
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We are in it together. #SGUnited
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Hi, is me again, been a long time. It is very normal to feel like you. For me, I would just continue as per my plan to continue accumulate SREITs in quarterly basis. I have share this in my blog recently for what I will do during this outbreak. I believe if we invest within out mean with holding power and without leverage, should be able to hold through this tide.
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Also made investments into Eagle. Now kenna stuck… might have to write-off the investment in full. Can I ask what was the trigger point to make you decide to cut-loss?
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I’m curious to know how you went about deciding which companies in your portfolio are likely to make it out of this crisis. I look at my client base and within the same industry, the outlook can be very different. For example I have architecture firms that I’m pretty sure will have a rough go of it, as well as one that has already pivoted and is working with potential clients to redesign their spaces for the post COVID-19 reality. What are the criteria you look at to decide what companies you’re going to keep vs what you’re getting rid of?
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