Cory Diary : Allocation Strategies and Performance YTD

This is quick interim gauge on portfolio performance so far with less than a month to go before the year ended. It looks like the Market may end better by year end. We will know when it arrives. The update today is on how my allocation doing in term of seeking performance and mitigation.

Basically, Reit losses managed to be well coverd by US market gains despite US allocation is much smaller in size. US allocation was around 10% whereas SG Reit about 40%.

Another thing to know is that SG Market Non-Reit performs much weaker than US Market too. The star performer is SG Banks which gain pushes the bulk of this year-to-date performance largely for the portfolio. Quite a number of Influencers got this wrong even for so called experts.

My logic is simple for a retailer me. The Bank business is good. Lowering rate is good for economy therefore mitigate losses in net interest income of banks. The yield is still good enough. Being so obvious, i have allocated sizeable portion to this year portfolio to mitigate Reits impacts which i said few times that it take a long time for the rental contract to measure up despite lowering rate. 

Quite a few retailers I know in telegram groups did similar intuitively on Banks as well and this works so well for all of us this year.  I still think there is still some tailwinds but we never sure. So always stay nimble. So what went wrong with the experts. I think they overthink too much whereas I do not need to understand too much at macro level.

As a constant reminder, investment is personal and this is how i manage my risk and personal situation with my limited knowledge and understanding. Please dyodd.

Cory Diary

2024-12-07

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Disclaimer: The articles presented in this blog reflect personal opinions and are intended for informational and sharing purposes only. Not responsible of errors. Readers are advised to seek professional guidance when making financial decisions and should take full responsibility for their choices.

Cory Diary : Year 2025 Strategy

With just three months left in the year, it's an exciting time to watch how our portfolio might perform as we approach the final stretch. It's also a good time to reflect and consider adjustments to our investments for the new year.

Earlier, I mentioned shifting part of our allocation towards the U.S. market. Increasing that exposure significantly will depend on higher returns from the U.S. market, which could provide the buffers we need after careful consideration. If those returns don’t materialize, this roughly 10% allocation may remains through 2025, as the plan is to rely mainly on internal growth.

Allocation of U.S. equities will be somewhat like a "peanut butter spread" across strong businesses, with varying weightings on a few. It's quite hard to predict which will perform best, but over time, the earning power of each should drive them forward. Minimum expectation is that these investments earning should outperform local banks. The risk lies in macroeconomic factors where the entire market could be driven down.

REITs and banks will continue to dominate the portfolio. Depending on market conditions, fresh funding may either stay invested or be redirected toward fixed-income instruments like T-bills. Another alternative could be reducing loan exposure.

For local portfolio adjustments, the focus will be on gradually weeding out underperforming companies, regardless of whether they are currently profitable. This will happen as opportunities arise. Releasing capital from these positions will allow reallocation to higher-yielding stocks, aiming to boost dividends, which are expected to remain flat for 2024 unless we take action. We have to be careful not to increase holdings just for the sake of it. Considerations include whether the price is running ahead of itself, yield returns, future expectations, and cash flow situations.

Here is a snapshot of current equity portfolio. The return of Microsoft (MSFT) to support the peanut butter strategy plan.

New Funding

Our goal remains to optimize and grow the dividend stream, even with a significant portion of funds tied up in T-bills, Singapore Savings Bonds (SSBs), and multiplier accounts that we try not to touch. The big catalyst is the boost of funding from retirement payments. There are a few options to consider, and the final plan may be a combination of these:

Pay Off Housing Loan: This can be reserved in case re-pricing does not work out. Ideally, we would continue to extend the loan so that we can use the money for investments with higher returns. For this reserve to work in the future, we probably need to park the funds in capital-protected instruments until utilized. The downside of this plan is potentially losing the key funds that can help generate significant income.

U.S. Equity Boost: U.S. market valuations seem relatively rich. There is reluctance to further increase exposure, as the "peanut butter strategy" has been completed. I would prefer to invest after a market correction for a margin of safety if we are to tap into these funds. Another concern is the lack of dividend play in this segment while we wait. The only situation where I would consider adding is if there is a rebalancing of the existing portfolio allocation towards weaker stocks.

Increase REITs Allocation: Earnings-wise, REITs are still not able to match the banks. While there is a lowering of Net Interest Margins (NIM) for the banks, there will be a lag in the implementation of lower loan costs for the REITs. Most of them won't see significant cost reductions, if any at all. The timing is not right for this yet, and there is a warchest of funding if needed.

Increase Banks Allocation: Currently, the portfolio has significant exposure to banks already. The appetite to further increase this segment may not be good as interest rates have started lowering. There is a limit to how much we can increase, and it may not work for the fund. If there is a major correction, it may be helpful to tap some of the funds, but this also means existing profitability will be impacted.

Fixed Returns: Current fixed returns are coming down; however, they are still relatively high. This option can also be considered an expanded warchest—a safer option with sufficient income. It's a good reserve to support major emergencies, such as paying down the home loan if forced to. There is a time factor in this for the housing loan. It appears that a large segment will probably be allocated here for opportunities or needs.

No Chinese stocks yet. Sleep well.

Cory Diary

2024-10-10

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Disclaimer: The articles presented in this blog reflect personal opinions and are intended for informational and sharing purposes only. Not responsible of errors. Readers are advised to seek professional guidance when making financial decisions and should take full responsibility for their choices.

Cory Diary : Strategy for 2025

My hope is to have US Portfolio build up with some profit buffers before year ended and as synergy with my local income stocks. There is no targeted size for the US segment just that the stocks needed to be deployed and then allocation build or adjust in Year 2025. There is a dependency on how the macro market affects my available funds and stability of local portfolio to allow me to grow US Market fruitfully. Recent Yen Carry Trade Crisis nearly de-rail the plan this few weeks. However, the fast recovery put the invested fund into life time new investment high today. On a side note, USD weakened a few percentage points for the period which mean fund exchanged is down even before we trade in SGD term.

STI P/L YTD excludes dividend

With 4 months to go before the year ended, an impending rate cut, chances are we may see another ride up. This will put the portfolio in good footing in Year 2025 starts. Few things to watch is the over-exposure in local banks which i decided to reduce some of my trading positions for cash. Roughly 10% reduced. Is still quite sizeable and there is a small hit on final year record dividend hope as we are getting 5.8% ~ 6% yield from banks currently. There are no strong Reits of that range that i could deploy to mitigate the hit that I am willing to allocate increase size.

Currently, RMB is trading at low against Sing Dollar. There are stocks over there in HK that I can get greater than 7% yield with the on-going housing crisis and tension with US. One of such stock is Ping-An Insurance which just announced good result. This will be classic play opportunity. After second thought, decided not to proceed for now due to lack of familiarity. So my initials to enter Chinese market ends before it starts. With my last counter MLT has sufficient Chinese exposure ending badly which I cut quickly, most other counters have small exposure if any. China is becoming uninvestible.

Larger Cash buffer is not a bad option as market may flip with whim like what we see with recent Yen Crisis. This also tell me the shakiness or fragility of the financial system or economy which requires Fed to stabilise with cutting rate. Maybe a toppish sympton ? Maybe unchartered terriory ? whatever the case, emotionally we need to be ready. And the best way is to ensure our portoflio are.

In Summary,

Current

1. Complete build a portfolio of US Stocks

2. Risk-Adjust Income Portfolio

3. Strengthen Investment Cash Availability ( Not Warchest )

4. Maintain Dividend achieved in 2023 or more

Year 2025

1. Adjust US Portfolio allocation in measured pace

2. Continue Risk-Adjust Income Portfolio

3. Maintain Dividend achieved in 2024 or more

Simple Goals

Cory Diary

2024-0824

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Disclaimer: The articles presented in this blog reflect personal opinions and are intended for informational and sharing purposes only. Not responsible of errors. Readers are advised to seek professional guidance when making financial decisions and should take full responsibility for their choices.

Cory Diary : Yen Carry Trade Crisis P2

Here's the Cory Equity Performance Chart on mainly still invested during the Yen Carry Trade crisis. This chart is for fun and educational purposes only.

Market is spooky and volatile. As Fed will likely do a first cut soon, the market will survive this year. However, unlike past cuts, they aren't in a situation to save the economy. So successive cut in short time may not be one. This time can be different but cutting consistently long term still rhyme.

Banks could well benefitted significantly and Reits will take longer to recover due to high rate cost staying high. Things may turn differently. Able to manage emotion has never been important as before.

Cory Diary

2024-0817

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Disclaimer: The articles presented in this blog reflect personal opinions and are intended for informational and sharing purposes only. Not responsible of errors. Readers are advised to seek professional guidance when making financial decisions and should take full responsibility for their choices.

Cory Diary : Emotional Management

Managing emotions in the stock market, especially during periods of market highs or when a particular stock like DBS is at an all-time high (ATH), requires a disciplined approach. Here are some considerations and strategies I can think about using this portoflio below as an example :

P/L YTD

1. Assessing DBS Investment

Current Portfolio Allocation: Evaluate how much of my portfolio is currently allocated to DBS. If it's a significant portion, consider whether this aligns with my risk tolerance and investment goals.

Risk Mitigation: DBS is sized to mitigate high-rate scenarios. Assess if increasing your DBS allocation further fits within your risk management strategy.

2. Criteria for Decision Making

When deciding whether to sell, hold, or buy more DBS shares, consider the following criteria:

Fundamentals: Evaluate DBS's financial health, growth prospects, and market position. If fundamentals are strong and justify a higher allocation, holding or buying more might be prudent.

Valuation: Assess whether DBS is overvalued or undervalued relative to its historical metrics or industry peers. High valuation might warrant caution. For this case sustainability of the dividend.

Portfolio Diversification: Ensure overall portfolio remains diversified across sectors and asset classes to mitigate risk. Limited alternative.

3. Taking Profit

Profit-Taking Strategy: If DBS has generated significant profits for the portfolio, consider taking partial profits to lock in gains and rebalance your portfolio. This can help manage risk and reduce exposure to a single stock.

Reinvestment: Reinvesting profits into other assets or sectors can help maintain diversification and potentially reduce emotional attachment to a single stock.

4. Managing Emotional Threshold

Establish Rules: Define clear rules or thresholds for when to buy, sell, or hold based on investment strategy and risk tolerance.

Stick to Strategy: Avoid making emotional decisions based on short-term market movements. Stick to  predetermined investment strategy and criteria.

5. Long-Term Perspective

Quality Investments: Focus on investing in fundamentally strong businesses with good long-term prospects. Quality investments can provide stability during market fluctuations.

Patience: Markets fluctuate, and stocks go through cycles. Having a long-term perspective can help reduce the impact of short-term emotional decisions.

Conclusion

In summary, managing emotions in the stock market, especially with a stock like DBS at ATH, involves assessing portfolio allocation, using objective criteria for decision-making, considering profit-taking to rebalance, and maintaining a disciplined approach aligned with your investment strategy. By focusing on quality investments and diversification, you can better navigate market volatility and emotional biases.

Currently, doing nothing. The logic is simple. Bank is to hedge Reit. So sell at this time seem bad idea as it may or not get worst for Reits. Adding more DBS is no too as it may exceed my mental treshold should DBS got hit.

Cory Diary

2024-06-15

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Cory Diary : Cory's Investment Insights

Emergency Fund

Personalized Emergency Fund Calculation:

Individual Circumstances: Emergency fund needs vary based on personal circumstances such as age, job stability, housing loan, and other financial obligations.

Expense Coverage: While experts recommend 3 to 6 months of expenses, this may not be adequate for everyone, especially those closer to retirement age or with significant financial commitments like housing loans.

Long-Term Considerations: The emergency fund should be sufficient to cover expenses until the investment cashflow can reliably support your needs. For example, if it will take 6 years before your investments can cover your expenses, a 6-year emergency fund may be more appropriate. 

Housing Loans Impact:

Significant Financial Obligation: Housing loans can greatly impact the size of the emergency fund needed. A $1M home with a $5k monthly payment requires careful consideration.

Depleting Emergency Funds: Paying off a housing loan with emergency funds can leave you vulnerable. It's important to balance loan repayment with maintaining a robust emergency fund.

Income Streams:

Dependence on Income: If your financial plan relies on rental or dividend income, these should not be counted as emergency funds since they are intended for future needs.

Economic Stability: In regions with generally stable economic conditions, like Singapore, the likelihood of finding work is higher, but still, one must be prepared for the worst-case scenario.

Investment Risk

Young Investors and Risk:

Risk Tolerance: Young investors are often advised to take higher risks because they have time to recover from losses. However, this advice must be tailored to individual financial situations.

Critical Funds: For young couples, a significant sum like $100k might be needed for major life events (wedding, home, children). Losing this in high-risk investments could be devastating.

Weighing Risk vs. Needs:

Early Financial Milestones: Before risking essential savings, consider the importance of the funds in question. High risk can be suitable for surplus funds, not those needed for immediate, crucial expenditures.

Risk as a Percentage of Net Worth: As your net worth grows, the proportion of your portfolio you can afford to risk might increase. However, early on, preserving capital can be more crucial than seeking high returns.

Starting Small

Slow and Steady Growth:

Initial Capital: Starting with a small capital doesn't mean you should take excessive risks to grow it quickly. Consistent, smaller returns can be more beneficial in the long run.

Compound Growth: Over time, regular savings and moderate returns can compound significantly, leading to substantial portfolio growth without taking undue risks.

Incremental Growth: As your career progresses, your ability to save and invest larger amounts will increase, accelerating your portfolio's growth.

Personal Journey:

From Small Beginnings: Many successful investors start with modest amounts and focus on steady, incremental growth rather than seeking quick, high-risk returns.

Consistency: Regular contributions and disciplined investing practices build a strong financial foundation over time.

Conclusion

Investment strategies should be personalized, taking into account individual circumstances, risk tolerance, and financial goals. Emergency funds should be sufficient to cover unexpected situations without compromising long-term financial security. Young investors should balance risk with the need to preserve critical funds for life milestones. Starting small with a focus on consistent growth can lead to substantial long-term success.

Cory Diary

2024-05-28

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Disclaimer

The articles presented in this blog reflect personal opinions and are intended for informational and sharing purposes only. Readers are advised to seek professional guidance when making financial decisions and should take full responsibility for their choices.

Cory Diary : Sell in May and go away logic

As a dividend investor, this principle has never crossed my mind. It seems more aligned with a timer or short-term investment rationale. Coincidentally, many REIT and BANK stocks go ex-dividend in May. As you may be aware, stock prices typically drop upon going ex-dividend. This might give the impression that the local SGX market is down, especially for counters that offer substantial dividends in this region.

What makes this time particularly noteworthy is the market's response amidst an environment of inflation and high rate, where banks are performing well, while REITs have already rebounded from lows. This trend holds, with the exception of US REITs, which are experiencing a serious downturn.

The portfolio is invested in several markets, which can be categorized as follows [positioned at the bottom right].

With REITs and banks combined comprising more than 76% (after selling off UOB before ex-dividend to raise cash), the portfolio was expected to experience drawdown symptoms as they went ex-dividend. However, the portfolio returns achieved another all-time high. Perhaps this is simply a positive market pump, but I foresee further potential in the banks as they report record profits this quarter.

Note : Top Left, Year 2022 drawdown but not as deep as Year 2020 Covid year which aren't reflected in the chart due to it occurs in the mid of the year which then closed up before the year ended.

Nevertheless, it's a good time to capture a snapshot of today for future review.

Cory Diary

2024-05-012

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Disclaimer: The articles presented in this blog reflect personal opinions and are intended for informational and sharing purposes only. Not responsible of errors. Readers are advised to seek professional guidance when making financial decisions and should take full responsibility for their choices.

Cory Diary : Cash Flow against Assets Investment

A quick show on investment returns supporting cash flow compare to asset invested. Each set of matching colour between the 2 charts for comparison. Left is Asset allocated. Right is the corresponding cash flow returns from it.

Rental Income is the net after interests portion of the monthly loan and maintenance fee. Further 20% cut on rent to be conservative. It is an expansionist for my cash flow though not much as Equity. View it as much lower risk even though on leverage and potential capital gain.

Retirement and Insurance segment includes CPF. Keep in me this is paper exercise as I won't be withdrawing my CPF OA/SA after 55. And the monthly amount in RA will only happens after 65.

Dividends are basically from Equity. Do note some stock don't give dividends therefore reflect weaker cash flow. Itself tells a story on how we want to plan it between growth and dividend.

Saving Cash is high due to bonus and de-risk of the portfolio before Year 2024 started. Looks like a key priority to have it reduced.

Ending with Equity and Property are the two key pillars that go beyond their asset allocations when come to supporting cash flows. The worst is to leave cash in saving account. Need to make them to work obviously.

Keep in mind not to lose capital on whatever we do.

Cory Diary

2024-01-23

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Disclaimer: The articles presented in this blog reflect personal opinions and are intended for informational and sharing purposes only. Not responsible of errors. Readers are advised to seek professional guidance when making financial decisions and should take full responsibility for their choices.

Cory Diary : Investment Ratios

Today played around Ratios with newly updated Asset numbers. We start with Asset Allocation. See below.

And then we do some interesting Ratios among them.

The first ratio is how much liquidity on current assets that i can move easily. This give me an idea if I am to ramp up my equity portfolio to support war chest.

The second ratio is how much resource into property. 61% of Equity size. This tell me how diversified is my income stream considering both are considerable income sources.

The third ratio is how much idle cash against equity which is 16% on opportunity cost. On the net worth allocation wise, cash is just 5.4% only. This surprising facts tell me there is more work to do to manage cash better after year end bonuses and stock option sales.

The final ratio is how much Fixed income allocated. They come from FD, SSB, T-Bills etc. In this ratio is whopping 53% of Equity. Am I really conservative ? On Net Worth allocation wise the fixed income ratio is only 18.5%.

I could rationalize that my Equity allocation has reach bottom so no more sales unless market really really tempt me. Cheers

Something to think about this month ! 

Cory Diary

2024-01-09

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Disclaimer: The articles presented in this blog reflect personal opinions and are intended for informational and sharing purposes only. Not responsible of errors. Readers are advised to seek professional guidance when making financial decisions and should take full responsibility for their choices.

Cory Diary : Year 2023 Equity Learning Part 2

This is an update on the 2nd part of Equity Performance in Year 2023. The first part is the result. Link here. The Year 2023 XIRR return is 14.6%. For a portfolio that has 50% Reits (fluctuates between 40% to 70%) allocation, the dynamism is quite high (See below chart) . The key learning is how to manage drawdown, and profit from it.

Manage Risk

Reits are investor instrument for cashflow and have sturdy business that protects our investments. Therefore thoughts I have is that we need to minimize and careful when we select Reits denominated in foreign currency or majority returns in foreign rental income. In situation we cannot avoid, we hope to see careful hedging of foreign income and their loan by the Reits if is not natural hedge. 

Hedging for loan rates are a must with size varying to their business situation. Finally, investment sizing or allocation will be key to reduce the risk. With this I will probably add another lens to my current portfolio an adjust accordingly.

How to Profit

Assumingly, we have strong business in the stocks we hold, we could invest each time in bit size when there is draw down, and come out of top later. See picture above on the volatility. Is easy to say but normally hard to execute. To do that, I need to ensure we have warchest, strong reits, not to huge allocation on any single reit to allow upsize and hopefully strong sponsor in such counter. Make sense ?

Cory Diary

2023-01-04

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Disclaimer: The articles presented in this blog reflect personal opinions and are intended for informational and sharing purposes only. Not responsible of errors. Readers are advised to seek professional guidance when making financial decisions and should take full responsibility for their choices.

Cory Diary : Investment Plan for 2024, Navigating Through High Inflation

As I embark on my annual ritual of crafting an investment plan, the theme for 2024 becomes apparent: the persistent impact of high inflation. In contrast to the pre-COVID era's 1%-3%, we anticipate a sustained period of elevated inflation rates.

Acknowledging the inevitability of economic cycles, we must navigate through the highs and lows while thriving amidst higher inflation. The rate hikes are yet to be fully felt by Real Estate Investment Trusts (REITs), leading to a continued compression of distribution per unit (DPU). Eventually, as these adjustments take effect, tenants will grapple with increased rental costs during contract renewals. This, however, is a gradual process, allowing time to assess the economic landscape before making significant adjustments.

The looming possibility of a recession adds another layer of complexity. As rates potentially decrease to mitigate the impact, there is a crucial time lag in each step of the process. Therefore, strategic planning is imperative to safeguard our portfolios.

Personally, my top choice for this environment is banks. Their adaptability allows them to thrive in both high and low-rate scenarios. While recessions may impact banks, history shows they weather such storms better than many other industries. As long as banks are not directly hit, as seen in past crises like the Asian Financial Crisis (AFC), Global Financial Crisis (GFC), or specific industry collapses like oil, they tend to provide stability and robust dividends, currently at a manageable 50% payout ratio.

REITs, on the other hand, assume a secondary role due to the ongoing DPU risks and direct impacts. Despite a 90% payout ratio, they may offer capital gains potential when the bottom is reached and recession seems remote.

Another intriguing class of dividend stocks includes ventures like Sheng Siong and NetLink NBN Trust. These stocks present opportunities for good dividends based on their unique attributes. Sheng Siong, in particular, boasts a track record of both dividend and capital growth, making it a potential performer in a high-rate environment.

The strategy for the coming year involves allocating resources to protect capital, secure base dividends, and allow room for growth. This includes trimming specific REITs that have yielded substantial capital gains, rebalancing towards banks and non-REIT dividend stocks. Caution is advised when expanding positions in specific REITs or growth stocks. Finally, excess investment cash could be secured in a war chest, which can be parked in interest-bearing instruments such as Singapore Savings Bonds (SSB), Treasury Bills, or other similar instruments in the absence of compelling opportunities.

With that, the current portfolio did some re-balancing. Is not done yet and there are still some funds to deploy as the dividend has been lowered.

Cory

2023-1212

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Disclaimer: The articles presented in this blog reflect personal opinions and are intended for informational and sharing purposes only. Not responsible of errors. Readers are advised to seek professional guidance when making financial decisions and should take full responsibility for their choices.

Cory Diary : Expensive Ventures

When embarking on our investment journey, we often experience moments of elation, whether from impressive returns on investments, a bolstered savings rate, or an unexpected inheritance. It's during these times that we may be tempted to dive into new ventures that could potentially be wasteful. In this article, we'll explore a few common pitfalls to avoid as you navigate your investment path.

1. Overseas Property Investments

Investing in overseas property can be an enticing prospect. However, before taking the plunge, it's crucial to consider the opportunity cost. Suppose you inject a substantial $300,000 into an overseas property investment. This could yield an annual income of, let's say, $15,000. Now, imagine if you had instead invested that $300,000 in a dividend stock, which could potentially generate a 5% yield. In this scenario, you would have earned $15,000 annually without the additional complexities of property management.

Moreover, if you remain committed to this venture for a decade, you would have missed out on $150,000 in potential dividend income. This calculation doesn't even account for the compounding impact, forex risk, or potential capital loss associated with property investments. So, it's essential to weigh the pros and cons carefully when considering overseas property ventures.

2. Premature Retirement

Retirement is a significant life milestone that many aspire to achieve after years of diligent work. While it's natural to dream of an early retirement, it's crucial to ensure you are financially prepared. Premature retirement, when not adequately funded, can have adverse consequences.

Consider an annual savings income of $30,000. Over the course of a decade, this amounts to $300,000 in total savings. However, if you had continued working and investing during this period, your net worth could have grown even further. Assuming stable income and returns from your investments, this $300,000 could potentially grow to $400,000 or more in missed net worth after a decade.

Retirement should be a well-planned and financially secure phase of life, where health and well-being take precedence. Rushing into retirement without adequate funds could lead to financial stress down the road.

3. High-Risk Dividend Investments

In the realm of dividend investments, stability and peace of mind are paramount. However, some investors are tempted by high-risk opportunities, such as foreign REITs or ventures in unfamiliar territories. While there's potential for higher returns, these investments come with added risks.

Foreign investments, especially in areas with different economic conditions and currency fluctuations, can be unpredictable. If these ventures don't align with your overall investment strategy, they can set you back significantly when things take an unexpected turn. The hit on your capital assets can be substantial, impacting your income for years to come.

In conclusion, while there may be other pitfalls in the world of investments, these are three key areas to watch out for. Investing wisely and staying true to your financial goals can help you achieve long-term success. Remember, it's essential to seek professional guidance when making financial decisions and to take full responsibility for your choices.

Cory

2023-0926

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Disclaimer: The articles presented in this blog reflect personal opinions and are intended for informational and sharing purposes only. Not responsible of errors. Readers are advised to seek professional guidance when making financial decisions and should take full responsibility for their choices.

Cory Diary : Net Worth Tracking 2023-08

The longest 16 months. Net Worth has stayed flattest ever in Current High Inflation Environment. However, the losses in Equity market of last year is likely behind us, so far. Touchwood ! In this article I documented what I do so far that affects my Net Worth trend currently.

T-Bills

What I did is to continue be vested in market while expanding allocation in T-Bills and SSB during this flatten period. By now, it looks to me it could be time to unwind T-Bills in alternate staggered month fashion. What I mean is not to renew in first batch expiry but on the next in alternate step. This will spread out with lower allocation over time while allocating more cash move into Equity Market.

Banks

After thinking through, we still do not have any idea how long the high rate environment will last even though is near it's peak. Who know this could last much longer. This could lengthen Reits recovery and more benefits the bank longer. And when rates finally lowered, the bank will enjoy it too. In that perspective, bank segment seems to be a better play in-addition to 6% yield we could be getting from local banks. This is on the back of 50% earning retention without needs to face rights issue constantly in current environment.

So have we found ourselves the holy grail in our investment pick ? Let's no hoodwinked to think there is no downside. With China seems to be imploding economically their property segment has never been worst. We could see recession spreading to our shore. This may have some impact on the stock market and if worsen could spiral down. If this happen, neither Bank nor Reits will do well.

Therefore, in local equity market scene, Banks are likely the better bet than most with sustainable income and dividend. So the Portfolio continues to expand and right now hold more than 25% in bank allocation. This could grow to 33% as they don't look expensive at all. Nevertheless, sizing for balance mental state is still important to sleep well as market is in constant change.

Managing Volatility

The larger the volatility the smaller the allocation using commonsense. Which is what I did when Tesla ran up significantly. In hindsight, we could have sold more but that could mean the counter impact to the portfolio would be so small it wouldn't be worth our while. With the cash raised, we probably could do a forex gain to SGD with recent USD moves, and then buy local. Is quite rare that I have good luck in forex being local.

Finance

What do I think by end of the year. One thing likely will be smaller bonus and not much salary adjustment. Later part is probably what I wanted, to last longer if you understand what I mean ! The pandemic has implanted many of us the seed of laziness at home. Question is when will this be reflected in the broader economy. I mean something has to give, right ? hmmm

Probably those that could not adapt or manage their staffs will see upheaval change in their respective industry where companies get replaced by passionate start-up which are running much more efficiently and effectively. How can we tap on this ? Difficult to execute for most people I guess. One thing for sure my Net Worth aren't growing fast enough. Maybe is a good thing to have when after decades of investment, monthly salary saved slipping out finding it harder to push for the net worth growth as it gets larger.

Investment

Fortunately, the base of the pyramid namely CPF, T-Bills, SSB ... or even rental income etc which are positioned way earlier fulfilled the basic living needs. See link Pyramid. This doesn't end there as we still need to constantly review the absolute amount is still meaningful after each year. If we execute properly over decades, the ever increasing basic amount over time will become larger while in percentage term be smaller as the portfolio grows, if it does grow.

What this mean is every cent earned after expense can be plough into Equity theoretically or psychologically keeps the investment size intact in down market through buying lows. Solidifying future growth of the portfolio. Sounds easy huh. Till you try to buy in ever lowing market and tearing your hair out. A believer of biting multiple small chunks to survive psychologically one has to be.

Snake Oil

Before ending out. Be aware of half smart thoughts. Not just me ok ! Commonsense tells use that 100 years of S&P500 performance may tell us the future performance. I am sorry to say this is the most dangerous statement because 100 years ago performance can have outsize influence when you annualised S&P500 returns. Is not like that you can have a time machine to go back 100 years to put a dime into your investment account. You can't, and therefore it does not translate to future returns.

Cory

2023-0828

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Disclaimer: The articles presented in this blog reflect personal opinions and are intended for informational and sharing purposes only. Not responsible of errors. Readers are advised to seek professional guidance when making financial decisions and should take full responsibility for their choices.

Cory Diary : Reflections on the US Market and Singapore Investments

US Market ( Nasdaq )

In recent times, the US market, specifically Nasdaq, seems to have completed a significant run-up. Despite Tesla showing decent growth results, it experienced a correction on the second day. This reminds us that the market will always find a reason to sell. Microsoft also followed suit with lower volatility. Looking at the three-year performance of just these two US stocks, it appears that I am almost breakeven, with only a modest 15k gain if I were to consider all US shares held during the past three years. This experience has taught me that growing out of dividend plays in the SGX market is not as easy as it seems. Timing plays a crucial role in the US market, and its wild volatility can lead to valuation fluctuations with each reporting or news release. Consequently, it is wise to avoid chasing stocks, especially when there are no or little dividend gains for holding them long-term.

Singapore Market

On the other hand, Singapore banks have experienced some revival due to recent Fed hawkishness, balancing out the hits on Reits. I have observed that the recent rights issue on iReit and Aims Apac Reit have been profitable, but the discounts are not as substantial as in previous years, resulting in less impressive gains. My current allocation is as shown above, with some USD cash remaining from earlier sales. Given the current lower US rate, I am undecided on whether to hold it until the next bottom cycle and park it in a high-interest rate account or convert it back to S$.

As I review my equity portfolio, it is becoming harder to rotate stocks, particularly since Fed rate hikes may have already peaked. The sell-off in Reits, however, presents a promising opportunity for investors as we could see significant capital gains alongside regular dividends in the future. I plan to maintain a cash reserve for the last one or two rate hikes or potential recession sell-offs, if any. This strategy could lead to another record-level annual dividend, and the opportunity is quite apparent.

Passive Income Reporting

Additionally, I've noticed a new trend in my financial planning that better suits me. I have shifted away from reporting Net Worth Pie Chart segment allocations to focus on Passive Returns ( Non-Salary based returns or other returns). This change comes from the realization that using asset methodology doesn't directly help me with my expenses. However tracking Passive Income gives me a gauge on income once I retire. Currently reporting excludes my partner.

Using the listed amount in the table, I have a good idea how they fit into my expenses. And how much I need to grow or control.

In the past three months, I have invested more into T-Bills, primarily adding an additional $2,350. There was also a slight increase in my CPF investments, though I am cautious about doing so since I am nearing 55 to fit my personal plan. I've learned to avoid this unless there is a significant boost in cash levels from an euphoric market. Please note that CPF is not tracked in this table and is currently treated as a bonus retirement amount at 65.

While there have been upticks in equity dividends from rights issues, I've sacrificed a significant amount of cash for safer investment allocations in the past three months. Currently, I am monitoring my cash levels carefully to ensure my T-Bills are adequately spread out to support property loans or meet any cash needs comfortably.

Overall, my experiences in the US market and the shifts in my investment approach have provided valuable lessons, which I hope will continue to guide my financial decisions moving forward

Cory

2023-0724

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Disclaimer: The articles presented in this blog reflect personal opinions and are intended for informational and sharing purposes only. Readers are advised to seek professional guidance when making financial decisions and should take full responsibility for their choices.

Cory Diary : Managing Volatility Emotion

Managing Emotion

Emotions can have a detrimental effect on average investors who have worked hard to build up their portfolios over a lifetime. These investors typically have a monthly income ranging from $4,000 to $6,000. Through frugality, investments, and perhaps even inheritance, they may have accumulated a million-dollar portfolio after 30 years of employment.

However, when the global financial market experiences a downturn, these investors can face significant drawdowns, sometimes as much as 50%. This means that they could see half of their lifetime of effort evaporate, or $500,000 vanish into thin air. When portfolios experience such losses, it can be financially devastating if investors are unable to maintain their composure. Assuming the fundamentals of the portfolio remain intact, realizing these losses can be detrimental to one's financial well-being.

To manage these challenges, diversification becomes crucial. I personally employ a diversified portfolio consisting of property, stocks from SGX/US markets ( 15 - 20 stocks ), pensions, SSB/T-Bills/FD, as well as funds in my Multiplier and investment accounts. Throughout my investment journey, I make adjustments to the allocation of these assets to effectively manage my emotions and, hopefully, improve my ability to overcome them.

Successfully managing emotions allows me to adopt an investment mindset even when the market is experiencing a drawdown. This mindset enables me to seize investment opportunities. It is important to be mentally prepared for such scenarios and be willing to make necessary adjustments.

Conversely, during bullish market conditions, it may be prudent for me to accumulate cash reserves, known as a "warchest," if the need arises.

In conclusion, I wanted to share these insights to encourage thoughtful reflection. Cheers to overcoming the Monday blues!

Cory

2023-0717

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Disclaimer: The articles presented in this blog reflect personal opinions and are intended for informational and sharing purposes only. Readers are advised to seek professional guidance when making financial decisions and should take full responsibility for their choices.

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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Articles in this Blog is personal take and sharing purposes only. Reader should seek their own professional help when making financial decision and be responsible for their decision.

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 : 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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Articles in this Blog is personal take and sharing purposes only. Reader should seek their own professional help when making financial decision and be responsible for their decision.

Cory Diary : Financial Investment Updates

Have not been posting lately so thought is good to document down current Market situation and actions I did. First in recent days, Tesla has faced significant down hill in stock price. As I mentioned before in  previous article, growth stocks that do not provide dividend basically means there is no cushion or support to stock price when market in down turn or bad news.  It's market valuation basically determine by market forces which can be macro or engineered through different investment instrument.

I suspect the deep sell down in Tesla likely is due to popularity if investors selling put options for income that suffered the recent meltdown. Despite reduction in Tesla investment, and lower allocation down to single digit percentage, the capital loss is still quite sizeable. So on hindsight I should have reduced further my allocation to minimize the extreme volatility. The reason why the portfolio is mainly dividend based investments.

The Base Line Investment Support

In-addition to Equity, continued to do SSB renewals to higher rates. This is quite welcome as the bulk of the investment is for housing loan emergency needs and managed to lock strong rates for next 10 years. Will continue to renew various batches as opportunity arises.

Short term Cash in Saving is further reduced by taking up 6 months T-Bills. Managed to get recent 4%+ batches. This is carefully timed to need of cash flow.

Another good news is DBS Multiplier has adjusted the interest rates to 4.1% for those that meet all the conditions which I did. Keep in mind that the rate can also be easily adjusted down when macro force changes.

Also did some Fixed Deposits at 3.8% rate. Not that great but enough to park it for 5 months such that I can only use it 5 months later from my itchy hands.

Saving Cash

Continue to review and adjust this segment of Cash constantly to make sure every bullet tapped from it is efficiently utilized to support dividend income. There is huge temptation to average down into Tesla however I am past my Prime and Risk Tolerance. Nevertheless will constantly review my thoughts and maybe do micro injections if there is good buffer. The basic idea for me is Tesla is selling a dream of generational wealth so the investment is long term. Longer than Reits therefore the allocation is more absolute rather than in percentage to portfolio.

Cory

2022-12-29

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Articles in this Blog is personal take and sharing purposes only. Reader should seek their own professional help when making financial decision and be responsible for their decision.