Thoughts on my Game Plan for year 2020

Not too long back, on 16 Jan 2020, I wrote about my game plan for the year 2020 (read here). Today at the end of February 2020, I would like to have a quick stocktake of my thoughts.

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As I progress through my investing journey, there is one constant lesson which I learnt over and over again. No matter how confident and right I think I am about the market or any particular stock or company, there is always the possibility that I will be wrong.

When people mention about the current Coronavirus outbreak and the market reaction to it, they often refer back to the Sars crisis in 2003 (see below chart from this article). They talked about how the market quickly rebounded after the crisis then and how it was a V shape recovery for the economy and the market.

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Personally, having read about the Dot.com crash, Sept11 attacks, invested through the Sars outbreak and Global Financial crisis and China-led global slowdown, there is always this question in my mind. Will it just end with the Coronavirus outbreak now?

In the case of the Hong Kong stock market, people might have thought that the Hong Kong protest was the black swan event for these few years. It started around mid 2019.

Without doubt, if I view it just from the Hong Kong market angle, in isolation…it is a huge event after a long time. It is a big deal from that angle.

Personally, I have never doubt that a bigger crisis could occur later. Yes, I do not know what it might be… but yes, in all possibility it might not happen. Even though many articles talk about the fire sale in HK property counters, tourism/retail sector counters, financial counters…I believed it could drop even more (more pain before we see any sort of recovery).

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The HK protests started sometime in June last year. By late Oct 2019, Hong Kong entered a recession. Its first recession after a decade. By Dec 2019, many analysts and bloggers were talking about the low valuation of HK stocks.

I started a Hong Kong dividend portfolio sometime in late 2019. I think I started nibbling in late Oct 2019 (Income Investing and Hong Kong, read here). By 1 Dec 2019, I have a small portfolio consisting of HK centric stocks (Hong Kong Dividend Portfolio, read here). In late Dec 2019, equities only occupy a small percentage of my net worth (15%) (Income Streams, read here).

I remember one of the readers of my blog (probably much older than me) commented that I was conservative for my age (given my low portfolio allocation to equities). How successful investors take big concentrated positions in just a few stocks. He just left it at that, as an observation.

Knowing myself, I don’t really trade a lot or enjoy selling losing counters (unless there is really something fundamentally wrong with the industry or company), I guess, in retrospect, it is for the better.

I actually thought I was late in investing in view of the development of the Hong Kong protests. Many Chinese investors were quick to take advantage of the big price drops in Aug 2019, and the market sort of rebounded after that.

However, as we all know now, the events affecting the HK stock market did not just centre around the social unrest. It was subsequently rocked by the Coronavirus outbreak.

The question now is: Will we ever going to be at the lowest point, even now when WHO has raised the coronavirus threat assessment to its highest level?

Nobody will ever know.

  • WHO raises coronavirus threat assessment to its highest level: ‘Wake up. Get ready. This virus may be on its way’ (read here)

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Currently, equities still only occupy a small percentage of my net worth (~15%) – despite me injecting cash in every month (probably due to the drop in stock prices). I reckon the capital depreciation in the stock prices is greater and faster than my cash injection. And I have not sold any stocks (only buying bits every month).

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So back to the ques: Will it just end with the Coronavirus outbreak now?

My own personal opinion is that it will not. (But again I could be wrong). If I am to relate back to history, I could simply swap the current Coronavirus outbreak with the year 2000 Dot.com crash… and subsequently, we might see 2 or 3 more crashes in the Singapore market before things actually start to rebound for the long term.

  • Dow falls 1,191 points — the most in history (CNN) (read here)

With the headlines screaming about the drops in the US markets, the market valuations are still technically above the mean & median values.


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In the case of the Singapore Stock market, the SPDR® Straits Times Index ETF (ES3) does, however, look cheap. However, the Singapore market has been underperforming the other major indices for ages. Note: The STI’s average PE ratio from 1973 to 2010 was 16.9. The current P/E of ES3 is now 10.93.

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So am I going to avoid stocks altogether? Nope.

Ok, I am going to be totally frank with you. It is not easy for me to be investing now. There are times I literally have to mentally force myself to press the buy button. But I will continue and slowly up my monthly purchase of stocks. Now with the wider array of stocks down trending, I will start to nibble on more Singapore listed stocks. And the losses have been piling up. I can buy the stock today and the next day it dropped by 4% to 5% (and that is not considering all the accumulated losses + new losses on my current holdings). The anticipated dividend has also been piling up but at a much lower rate, but I see it as a longer-lasting factor.

I have a habit of ‘low-balling’ the prices when I bid. I will typically put in a bid on the stock I have been eyeing for a while for the past week or weeks (a shopping list so to speak) in the morning. The price will often be below the trading price then, probably a few cents lower (lower than the lowest trading price for that day at that point in time). Very often, my orders don’t get carried through for the day.. and I am fine with that. However, these days, there are many “motivated” sellers (stock prices for many stocks are falling), and I don’t need to put in many orders … just one for the day and it will be filled by the end of the day. Of course the next day, I will find that the opening/closing price is often lower than my purchase price.

At one time, it used to be finance & property counters, retail/tourism counters & hospitality or retail REITs, hospitality counters, aviation & transport counters in the Hong Kong markets that are falling, then we have their Singapore and China counterparts falling.

Now even those seemingly not directly affected counters in the Singapore market are falling (eg. ST Engineering, SGX, CapitaLand Commercial Trust, Ascendas Reit, Parkway Life Reit etc). Although for some of these counters, percentage-wise, given the big run-up in prices, the fall isn’t that big relatively. Yeah, I still think they are not fair value or cheap yet. Sure these companies / REITs will be affected in some way or others if Singapore as a whole does not do well economically.

It is like people in a cinema rushing for the exit when there is a fire, and the exit is still that small.

Below is my current list of stocks in my portfolio as of today. For the month of Feb 2020, I have purchased shares of Sats, Ascott Residence Trust, BOC Hong Kong and Hongkong Land. From the earlier pie chart on my net worth, it seems like I did not do anything for the past few months… but I have been slowly nibbling into stocks. Just that the value of the stocks kept falling in recent times.

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For the coming month of March 2020, I am expecting dividends from Lam Soon, Sun Hung Kai Properties and Sunlight REIT.

Although I don’t think we are anywhere near the extreme low of the markets, I will still do some monthly purchase. I do not believe I can ever correctly time the bottom anyway.

Not too long ago on 20 Feb 2020, I did a post stating that I have reached the next milestone in my net worth (read here). I did not state the exact amount as I felt that this amount only materially matter to me only. Anyway, it is just a psychological thrill, and with the correction in the markets, and despite receiving my salary for this month, my net worth today has dropped below this milestone amount. Haha.. oh well.

Nevertheless, my focus is to build a steady stream of income and I think that this is more important long term.

About apenquotes

Born in 1976. Married with 2 kids (a boy and a girl). A typical Singaporean living in a 4 room HDB flat. Check out my Facebook Page: https://www.facebook.com/apenquotes.tte.9?ref=bookmarks
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5 Responses to Thoughts on my Game Plan for year 2020

  1. Pingback: Thoughts on my Game Plan for year 2020 | TheFinance.sg

  2. Bubbachuck says:

    Hi,

    What stocks are in your shopping list?

    Like

    • apenquotes says:

      Beyond what is already in my portfolio.
      Eg. Hong Kong centric stocks (Property, Commercial / retail REITs, Banks, Staple consumer, utility), Sg stocks affected by the virus outbreak (SATs, DBS, Ascotts Trust)…

      With the crash, I am now eyeing the ‘cream of the crops” —which dropped but not by a lot (Industrial REITs – Mapletree Industrial Trust, Ascendas Reit, SGX, ST Engineering, Parkwaylife., etc). Not cheap.. but help with the balancing in my portfolio.

      Like

      • Bubbachuck says:

        Hi,

        What do you think of vicom?

        Like

      • apenquotes says:

        I had a very good experience with Vicom. I owned Vicom before and sold it in Oct 2017, at around $5.75 and made a profit of more than 50% (including dividend).

        Yes I may be a bit bias given that I have seen lower price before, and looking at current P/E, P/B and dividend yield, it is not fair value yet.
        But it may never will… (common case for my good defensive stocks). Frankly, in all the years I held it, I don’t recall ever seeing it going to a undervalue stage.
        And yes, the recent Setsco issue with SCDF is over.

        However, ultimately, Vicom is not a big Cap company. It is a big fish in a small. It lacks catalysts for growth (beyond Singapore). It hoards cash, has a good balance sheet and has been willing to share with shareholders.

        Like I mentioned, I may purchase it for diversification. But not going crazy over it (buying massively into it).

        Like

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