Cory Diary : Navigating Risks in a Volatile Market - Equity Portfolio

Banking Crisis

After a brief hiatus from my blog, I'm back to writing about my equity portfolio and recent market events. With the collapse of several banks, regulators are enforcing quick resolutions to avoid contingencies. The Federal Reserve has been clear about the risks involved, yet some banks like SVB continue to take risks, leading to poor risk management and the risk of losing Other People's Money (OPM) for the sake of performance.

The Middle Class

In the past, high-risk investments like those seen in Lehman Brothers in 2008 were a major concern. But today, even low-risk treasury investments can lead to failure if investors become complacent. The recent US rate path to fight inflation shows why the Fed is determined to bring down inflation rates, as basic necessities are becoming increasingly unaffordable for the poor. The middle class is also at risk, as a 9% annual inflation rate could result in a loss of $90k in purchasing power for someone with a net worth of $1 million, which could vaporize a lifetime of savings.

The next inflation report theoretically we could see another reduction. See above Inflation rate chart and we can understand why. The previous year on month has a spike. Again is all about meeting expectation.

Equity Portfolio

To balance my largely REIT-focused portfolio, I've had to increase my bank stake despite the rising rates and high PB ratios. I chose DBS Bank as a long-term performer in the STI Index, with sustainable and conservative returns. On the other hand, my experience with Prime REIT has been disappointing, with poor returns despite management's trying to paint a different picture. After learning my lesson with small-sized positions, I decided to clear off my tiny position in the REIT.

I've also been doing some trading with Mapletree Logistics REIT and have now completed my Mapletree collection with a slightly larger stake. While HK's future looks uncertain and US DCs and rates aren't favorable, I still have sizable positions in Mapletree Pan Asia Commercial Trust and Mapletree Industrial Trust, as they are better off than many others.

Overall, with the recent banking crisis and inflation risks, it's important to stay vigilant and invest wisely in a balanced portfolio to avoid losing hard-earned savings.

Cory

2023-03-25

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Cory Diary : iReit Review of Annual Report

One of our building's tenants vacated in December 2022, which caused a drop in vacancy. However, we are currently in advanced discussions with a potential new tenant, so the vacancy period is expected to last another two months.

Another factor affecting our DPU is the currency exchange rate. The Singapore dollar has been strong in recent years and appears to have bottomed out, barring any unforeseen events.

Our DPU has decreased by double digits in the latest quarterly comparison, primarily due to the factors mentioned above, as well as cash retention and management fees.

We have no loan renewal issues until 2026, and our effective loan rate is currently at an incredibly low 1.8%.

Overall, the current stock price already reflects most of these factors. However, with an annualized yield of 7.7% and the possibility of higher returns after the new tenant moves in, we may see another adjustment in the next quarter. Nonetheless, even with a worst-case scenario yield of 7%, the REIT remains an attractive investment option.

Cory

2023-02-25

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Cory Diary : Investment Questions to ChatGPT

Question 1 : Singapore

Question 2 : Ukraine

Question 3 : China - USA

Question 4 : REITs

In Summary, the answer is quite shocking and amazingly intelligent. The innovation of this Language Model can be use by Humanoid easily in the future. I think they have achieved a major breakthrough on the impossibility.

Cory

2023-02-15

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Cory Diary : Net Worth 2023 Feb

Net Worth

The year 2022 had a significant impact on my net worth, with a reduction for the first time in 15 years. This is not uncommon for salaried workers, as annual savings from salary may not be enough to compensate for market downturns that can affect the portfolio. However, I am pleased to report that within the first month of 2023, the stock market rebounded, pushing my net worth well into the positive for the year. This demonstrates the importance of investing in strong businesses and holding them through market fluctuations.

Year 2023 Strategy

Baseline Returns

My strategy for the year is to continue filling up T-Bills, SSBs, and fixed deposits with high rates. The aim is not to beat inflation for these emergency and war chest funds, but to ensure that I do not lose much in an inflationary environment. I will also continue to maintain the dividend achievements from 2022.

Rebalance

I plan to rebalance my portfolio by shifting investments from weaker businesses with high portfolio allocations to stronger ones with low portfolio allocations. I will prioritize non-REIT investments to achieve a more diversified balance.

Volatility Risk

To reduce volatility risk, I will impose more stringent allocation caps for stocks that have been performing well in business and stock price. This is a lesson I learned from the market conditions in 2022.

Foreign Income Risk

I will give more thought to expanding stocks that have a majority of their income in foreign currencies, as this can increase risk. I will take steps to reduce that risk by being more cautious.

Although the Fed is slowing down rate hikes, we are not out of the woods yet. I will remain cautious while staying invested in the market.

Cory

2023-02-05

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Note: The articles on this blog are my personal opinion and are shared for informational purposes only. Readers should seek professional help when making financial decisions and be responsible for their own choices.

Cory Diary : Mapletree Industrial Reit Info

This Reit is one of key holding in the portfolio. It has years of long term record performance. Recent quarters we have seen some tough market condition especially higher interest rate cost. The Reit just announced their result and this post will be on my read up and highlights due to my vested interests. I may provide some personal view however this is from fast read up and understanding so please dyodd. For those who read the report directly, you may want to skip my post.

DPU and DRP

Mapletree Industrial Trust Announces Distribution per Unit of 3.39 Cents for 3QFY22/23. Annualized yield of 5.5% from this week price.

There will be DRP however with 1% discount I do no plan to consider at all. However with rising market, this maybe attractive for some.

Result

Comparison with 2Q, there appears to be some cost cutting measures as expenses are reduced with reducing revenue however dpu is up slightly due to capital gain and release of some cash withheld earlier.

Completion

Completion of the first block of the new high-tech industrial redevelopment project at Kallang Way in November 2022

Summary

Can see the management working to continue alignment with shareholders. Despite rising rate, the rising cost is contained. The coming Fed report expects to see another round of rate increase though smaller. This Reit is 3rd largest allocation in my portfolio. Not going to see much surprises and upside is limited in result performance perspective.

Decided to only reduce my allocation from the recent increase back to previous size to reserve more cash for other opportunity as the Reit stock price rebounded this week. May reduce further just a little more if the Reit continues to run up. Continue to be on the high side of the portfolio allocation forming a stable base for some core dividend. The main down side is possible macro environment.

Cory

2023-0128

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Cory Diary : Life Style Creep Part 2

This is continuation of earlier post on Life Style creeps expenses running out of control. ( link ). With the year ended for 2022. 2nd Half data collected for analysis for comparison to 1st Half data.

There are some costs taken out for relative comparison. For example Home Loan and Insurance as they kind of covered from corresponding returns from it. If we  include them the expenses will be way above the data listed in the table.

The expenses reduction for 2H 2022 is about $11,614 which kind of much more than the saving planned from 1H 2022. One for the key reason is structural saving from Nanny expenses when my elder go nursery. Credit cards expenses came down which has most of my daily expense in it. Have not run through the details but I suspect medical cost, some food and transport.

In a nutshell, expenses came down 11% comparing 2H'22 to 1H'22. However YoY, is still up 12.7%.  There maybe some accounted due to inflation however quite certain there are family lifestyle developed which we can't go back easily.

Cory

2023-0123

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Cory Diary : Year 2022 Performance

The Year 2022 is one of the bad year in stock market. There were tons of bad news one after another. Black Swan comes in a Swam. While STI is in green, the index in my view is not a strong reflection of the actual environment most investors are seeing unless ones are just mainly into Singapore banks.

Equity

As I remember during GFC, Portfolio were down more than 50%. However, for the year 2022 Cory  XIRR is down -12.8%. This is the 2nd worst after Year 2008 GFC. In absolute, today portfolio size is far greater than the one during 2008. It has been 15 years.

More than 50% drawdown is mainly due to Singapore stocks which are mainly in Reits. This are generally neutral mentally as from investment and cash flow perspective, we are getting more shares cheaper as their fundamental is good despite rising rate environment. This form bulk of cash flow dividend play strategy. To mitigate rights issue at this bad time, any new cash injection will be on Reits that is less likely not to give heavy discount if it does any. Theoretically it does not make sense as spiking rate environment is not conducive to shareholder returns to do rights issue as the loan will be expensive.

The other losses are mainly due to Tesla and some aspect Msft in the US Market. This are growth stocks which I embarked for long term. So far I am still quite bullish on them despite dramatic price falls of Tesla.

As in any investment, profit and losses are part and parcel of the investing game. Is how we size them such that we can sleep well. As we can see from this experience, even with less than 10% exposure in US market, we can see them taking sizeable loss onto the portfolio. A humbling experience even though the amount invested in this segment is sized with Year 2021 profits.

Net Worth

This year bonus is smaller than last. When totaled up, -1.6% reduction in asset. This is the first time we see reduction due in large part to Equity, and Personal Expenses which I plan to blog later.

There is another plus that mitigate the fall which is property value has gone up slightly in Year 2022.

Assets Allocation

Another view of the asset. There is some focus on fixed returns due to strong interest rates. They act as reserve for emergency and opportunity. Decided not to do CPF top up for now to allow more flexibility and higher rate income.

Cory

2023-01-16

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