Mar 18, 2022

Cory Diary : Asset Allocation Update 2022-0318

The buzzword this month is STAGFLATION. Per Google, persistent high inflation combined with high unemployment and stagnant demand in a country's economy. Interesting there aren't high unemployment yet mixed with Great Resignation Wave which is kind of a pull event. Interestingly inflation is up due to supply issue of Covid with added dimension due to Ukraine War on Oil & Gas. Raising rate quickly will not be going to help much instead cost more to service the debts.

What's this implied is they are two separate problem and when it is conflicting, is there alternative or to focus on one first. Inflation hits all whereas unemployment hits on unemployed. Since there aren't significant unemployment the focus will likely be inflation and this could mean persistent rate rise in gradual manner such that we do not wake up the unemployed monster. Well, the Fed could still increase the pace if they have confidence that we are far from it. However it seems inflation is unavoidable just mitigate. From yesterday Fed decision on 25 bps hike this implied is better to have higher inflation than recession which kind of make sense. The market rally. This is a critical milestone and I feel is the right decision to support incremental changes.

Few key changes reflected into the Pie Chart. Firstly exercised some of company share awards. This has been valued zero in net worth. Have been doing this exercising routine so that in the event of unexpected this sizeable amount will not be in limbo. The increased cash expanded the Fixed Deposit allocation.

Secondly, the investment Account reduced some by actions to max out Multiplier allocation this month for 3% target. This stream of additional income gained traction hitting 2% for last month. Not a lot but this help to build up low risk segment of the portfolio and allows me to sleep well.

On Equity side portfolio year to date is down 2.8% (updated end of market US time). Decided to sell remaining baba shares just a day before it gallops down again therefore zero investment in china now. The Chinese Tech stocks have  huge rally this 2 days but I won't be entering back due to lack of conviction. This will fill some war chest as some funds have been used to raise bank allocation to 6.7% for a more balance portfolio. Is clear that we cannot ignore to have some stake in the bank despite digital banking risk.

On the property investment side there is increment increase in the $psf transaction but as the volume is low decided not to reflect into the net worth. Rental market do see sizeable increase in rent which seems to indicate genuine demand for housing after the last curb on property. So any further increase in ABSD or TDSR seems punishing people who really needs them. 

CPF has grown some after doing another round of top-up to max out CPF allocation. This 2 years are important for my age because SA allocation is at it's highest through VC3AC process. The only top up possible now VCMA or Child CPFs. I think there is no hurry considering there can be good opportunity in the market which has been lows for some periods.

Lastly, with the significant increase in FD/Multiplier segment, I should start to plan to reduce my saving cash. We will see if the investment cash runs out.



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