Portfolio Update

This will be just a quick update on my portfolio. Basically, it has been rather uneventful.

I am still in a net cash holding position in relation to my stock holdings. For this month, I did not divest any of my stock holdings. Personally, I am pretty comfortable with my holdings.

• Robert Shiller: With stock valuations high, it’s time to reduce your holdings (read here)

The above table appeared in the 14 June 2017 Business Times. No matter what way I see it, the markets seem over-valued.

I have been doing some internal adjustment to my holdings:

1. I topped up my SRS account.
2. Transferred money from my CPF OA account to the CPF Special account.
3. Bought Insurance: An Enhanced Incomeshield policy (Hospitalisation) and a Whole Life policy for my daughter. (A present from mom & dad, to her on Father’s Day)

I reckon the Whole Life policy is a ‘good to have’ insurance (kids don’t have term policies from what I have gathered). Whole Life policy is really not a necessity.

Stock Portfolio

Somehow, the high valuations in the stock market seem to like this invisible ‘force field’ that make me reluctant to invest. Yes, I am sure there are bargains out there – but I always felt that the biggest bargains can be found when markets correct or crash.

In retrospect, some of the stocks which I previously studied have gone on to reach higher highs – Cheniere Energy, Chipotle Mexican Grill, Mastercard, Paypal, Straco Corporation Ltd, Heineken Malaysia Berhad, Sheng Siong…..and much more.

And I am sure a lot of investors (who did not invest) would be bemoaning about the missed chance in investing in AEM and Best World. These would give any portfolio an outsize gain, given their outstanding share performance in recent times.

No point looking backward, opportunities would come again.

My stock portfolio is basically status quo.

So now it is down to 7 stock holdings. Back in March 2016, I had 14 stock holdings (read here). Quite a number of these stocks have been delisted.

The above percentage gain/loss did not take into consideration the dividends received.

Overall Proportion

However, as stated in my earlier posts: I have been on a mission to try to increase my war-chest. Namely the cash proportion in my portfolio. Note: I do not consider the value of my HDB flat in my net worth calculation. And my wife and I hold separate accounts (so basically it is only my personal net worth).

One thing about having a blog or a diary is that it kind of instil within me a sort of discipline. Yes, I don’t recall all that I have written. However, for those thoughts which I remembered, I do try to follow. It has been pretty consistent.

Yes, there are times when my fingers are itching to pull the trigger to purchase stocks – especially those growth momentum type of stocks – always in the news, and seems to be reaching new high every other day. It is sooooo… easy to just buy stocks. However, I will always remember the posts I did about the high valuations of the stock markets, short term irrational volatility of stock prices and the need to increase my war-chest.

Also, there are many great companies out there whose stocks have been overvalued for a long time. Frankly, my war-chest is just not big enough if there was a ‘sale’.

Back in Nov 2015, the cash proportion in my portfolio is a pathetic 7%. Perhaps the 2 charts below can illustrate how much the cash proportion has increased from then till now.

Cash proportion has increased from a mere 7% to 33%. This could be attributed to the divestment of some of the fundamentally weaker stocks, delisting of some stocks and divestment from the P2P loans and Invoice financing.

To me, the cash and stock proportions are the 2 main variables in my net worth pie chart. The rest (namely CPF, Insurance cash value and P2P loans, Invoice financing, unit trusts) either don’t fluctuate much or don’t have much weightage.

I don’t invest the money in my CPF account. I reckon the interest received from CPF holdings are safe and good enough for me. However, I do occasionally use the cash in the SRS account to invest in stocks.

Actually looking at the above chart is a bit misleading, as the overall value of my net worth has increased (since 2015) – in absolute terms.

My current war-chest amount is reaching close to 3 times my initial target for it (in absolute terms), or approximately 6.5 times the value of the war-chest in Nov 2015.

Not only did the proportion of my Cash/SRS increased, the overall net worth also increased. And oh yeah, in general, the stock portfolio performed well from Nov 2015 through 2016 to now, and of course, there is incremental cash infusion from my full-time job salary. So the reduction in stock value proportionally is lesser than the increase in war-chest.

By the way, I do not intend to divest/liquidate all my stock holdings. I intend to hold on to most of these stocks even in the event of a market crash (probably add on if prices drop to my target prices). Yup, I am always invested.

My passive income has decreased in comparison to the amount received in 2016, due to the reduction in my holdings in stocks and P2P loans / Invoice financing.

Nevertheless, the Passive Income amount has increased in relation to the amount received in 2015.

That’s it for now. 🙂