The last few days have been good in terms of stock market performance. Quite a no. of my counters have now turned green (with unrealised profits). This will be just a short post for myself to gather my thoughts, for my plans for the month of May 2020.
Typically the month of May is the dividend month. Looking at the projected dividend payout, typically most companies in my portfolio pay out their dividend in May. So yes despite the dividend cuts and suspension, I will be getting dividends from Hongkong Land, Dairy Farm, Mapletree Commercial Trust, Parkwaylife Reit and Mapletree Logistic Trust (so far announced – if I look at the list in my Stockscafe portfolio). And that will help provide some cash for further reinvestment.
My war chest is now running low. 10% left. Most of it in SRS, some in cash. However, I shall still carry out my regular DCA for the month of May.
The percentage of stock in my portfolio has increased significantly and with it, I must learn to deal with the volatility (comes in bigger absolute amounts). I try not to be too fixated on the prices, the unrealised losses or profits. Not easy when the first thing I see every time I log in to my brokerage account, is the unrealised losses/profits (rather than the projected or due dividend payout or companies’ earnings). Sub-consciously, I believe that is a major flaw in the system.
I have read a lot about the concept of barbell investing (with different versions). Some divide the portfolio into two baskets, one consisting of bonds and the other of stocks. While others group them into a basket of bonds/dividend stocks vs a basket of growth stocks.
For me, given the market crash which happened only recently – I would probably opt for the more aggressive version – bonds/dividend stocks vs a basket of growth stocks. To take more calculated risks now. Typically, I am quite extreme. In good times, my portfolio would be heavily skewed towards bond funds and money market funds (while I indulge in ‘thumb sucking’ aka doing nothing).
Currently, the portfolio is heavily skewed towards dividend stocks (95% dividend stocks vs 5% growth stocks). Basically I only consider Mastercard & Alphabet stocks in my portfolio as growth stocks.
Growth stocks typically are more volatile in terms of stock prices. For my portfolio, the mini-rally in stock prices have largely benefitted Alphabet Inc Class A (increase by approx. 9% in a single day). There are a handful of dividend stocks in my portfolio which has also have relatively large price increases (eg. Mapletree Commercial Trust, Parkwaylife Ret, ST Engineering & CK Asset).
Personally knowing myself, I do suffer from loss aversion. It comes in many forms. Like most people, I feel the urge to sell when the unrealised losses become too much eg. more than 50%. I don’t like to sell those stocks which are deep in the red. In a more subtle way, I also feel hesitant to add on to counters which have already a significant run-up in prices even if the future forecast and fundamentals remain good (or getting better). eg. I fear to lose what I have already ‘gained’, and perhaps lowering the % ‘unrealised profit’.
Currently – my plan for the month of May is to add on to the growth basket of my unbalanced barbell portfolio (eg. Master Card or Alphabet) using the cash in my war-chest, and adding still more dividend stocks (ST Engineering or Mapletree Logistic Trust) using the SRS fund in my war-chest, going forward. It is psychologically harder to add on to the growth pie given that their stock prices been on a rise in recent days… either I bite the bullet now or wait for a drastic drop in prices (no idea).