There is always something new to learn in every crisis. Covid-19 overlapped with Oil price war. Yes, we can also include Trade War as well. The sell-off is so hard ( steeper than GFC 2008) within 2 weeks that Cory feels a bit cheated of his Year 2019 profits.
Maybe there are 2 general ways to handle Covid-19. Easy and hard ways. The hard way will be like Taiwan and Singapore chasing down every soul and leads. Curbing travels and blocking entrys. The easy way is to let the Virus spread through the population killing all the weaks and olds. It will be over in months. Those who survive will have immunity. Obviously if people try the later path, the damage is going to be very hard to accept. This is inhumane but that's Nature way of selections. Some leaders think they could till they find they can't. The medical facilities will be so overwhelmed that no sane leaders can afford.
When the virus first started, the market continues to beat new high. Is a China problem basically. Is only when Europe exploded and invading America shores that everyone woke up to reality. The fall is so steep that not many can react in time. This comes at a time locally when dividend Investing could probably be awarded the holy grail of investing. However on hindsight the writings were in the wall. The ever diminishing yield, all time high reits prices, relatively small or average volume, double digits portfolio growth in Year 2019, .... waiting to be challenged. Many are new investor believers. Quite a few use banking facilities to borrow on margins. They thought market won't be that insane but they do. There is also huge funds sellout that precipitate the falls though to many it does't make sense for the price such as CMT for 6.5% yield ?
What will Cory portfolio plans be is what's the end state goal he likes to have. The first obviously or not for some gurus will be to cut down all hospitality or travel related stocks. So Cory will also avoid transportation stocks despite lower oil prices. The next is all oil related stocks which have been suffering for years. Chances are they aren't coming back near term as quick. Some may not survive. So the risk tag is much higher than others. Cory has SIA Bonds so this is cut due to high risk and cash release for yield. As previously blogged, no more acendas-h tr or Ascott Residence Tr. thanks goodness.
As for banks, Cory has some exposure but will not expand further as digital licenses could do some damage to banking margins. Bad luck on this one as if there is no banks stake Cory would have have get some at good price today. For now, is better to reserve precious warchest in current market for something more definite to rebound strongly and portfolio risk managed.
During this crashes, Reits with high yields tend to crash a lot more like 30%-40% range even though fundamentally they are alright just not as cool as the blues. Yes, Warchest is so important in current conditions. So many fruits are ripe for picking. While cheap can get cheaper, seeing strong reit stocks giving 6.5% seems no brainer to buy. What we have to do now is to grab those with good yields that can survive the downfalls yet fundamentally earning will recover. This may mean more counter expansion which means a plan to reduce counter with low % exposure and build it back later after crisis.
So the question is are we bottoming. Last check, DJIA drop another 900 points just as we thought market is stabilizing. So the earlier plan to conduct multiple purchases across weeks and months continue to make sense. It could be a lifetime opportunity for people who want to invest for yield. But if we is to throw in all bullets, chances are it won't be last bad news. Seriously we don't really know how deep or shallow it can be. People with limited bullets probably wait for upturns.
Cory
2020-0321
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