Cory Diary : Portfolio Updates

One of my key goal is to keep increasing my dividend income to cover expenses while hope to manage some growth through US Market. Therefore, the final holding in US market will be settling towards growth direction. For dividend income side, mainly SG local market specifically focus on Banks and Reits. 

US Treasury Bills ETF

Recently, I have tested out US Treasury 20Y and 10Y ETFs. The dividend distribution is monthly. Unfortunately, there are 30% withholding. As I understood, there maybe tax refund later by brokerage counterparty. This to me is not a sure thing so i will continue to monitor. At the same time, I decided to sell away 10Y treasury bill stock. I realised is not needed for my situation. I am not sure what to do with the USD cash yet.

Currently, 20Y T-Bill gives 4.7%. In good times it can been as a market buffer during recession period. The only down side is the USD Currency and because it is ETF, there is no date limit where capital will be returned to me in full if I wait long enough. To work this strategy well, my allocation may need to be larger. At the same time to boost my total dividend income.

Banks

Decided to push for more allocation with fresh fund availability. I just surrendered my GE Policy (Endownment) and could allocate some to it. The Banks yield are tempting. I will need to further study the implication and robustness of my decision. To add a special note, I plan to add Critical illness so is not going without insurance.

There are some concerns by an influencer on recent DBS result. One of the key point is that Q4 result is weaker than Q3. If we look at previous year Q3/Q4 comparison, there is also similar pattern. So it doesn't look like a concern to me. Probably some banking cycle going on or fluctuation between quarters. However, the Q4 result is much lower than Q3. About 13%. I look for pattern swing in prior quarters and this does happen. So is not conclusive. Based on the 6 cent increase and the quarterly 15 cents capital return, this seem to indicate to me the management is not worried.

There is also another concern raised on rising cost/income hiting 40% if we look at each quarter trend. However, YOY comparison seems ok. Q4 is likely a period the bank give rewards to employees and the size likely much bigger than typical years due to the strong banking returns. So again is not conclusive. I will probably investigate further before adding more into banking stocks. Is something I am eager to do as this will address my dividend income shortfall and portfolio growth over time.

SG T-Bills

Increasing my allocation sizing laddar continuously. This is to further increase my buffer in case there is significant draw down at the bank side in which I plan to hold long term. I find SG T-bills much harder to track so is not displayed in my Equity allocation. Same for SSB not in Equity allocation too. Their update frequency is too much. However, I want to to show all their allocation and this probably best resides in Networth Asset allocation.

That's all folks.

Cory Diary

2025-0215

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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 : Portfolio Walkthrough

There are certain amount of truth on long term pick of S&P500 ETF could allow layman investors to ride far with strong return. Will this implied for the next decade or two ? Is all probability and this solely rest on Fate of America and Currency. At this moment in time, that Index is elevated. Will it go higher ? That's hard to determine.

Is also true as well that when there is broad market draw down, chances are both Index and Individual stock pickers may suffer as well. One way to counter such situation in total return perspective is have bonds. Treasury specifically if one want to eliminate company risks. And for US, forex risk. In bad time there is chance the currency will strengthen with high yield and in good time vice verse. All this is probability imo.

In local context, T-Bills and SSB are good enough instrument to negate forex risk and capital loss. However, there aren't capital gain to talk about. So this can't hedge against Banks drawdown in crisis or recession situation. Ofcourse afaik.

Since my portfolio are mainly stock picks, I am the character type that want to beat against ETF if not to learn through the process and do better in next iteration. In this situation as in I do not have much lead way in term of early investing to compound, hindsight on America Economy, limited ammo vs expenses and risk tolerance.

This come back to talk through about my current portfolio again. Banks allocation increased steadily over the years to hedge against rate spikes when the portfolio is predominatly Reits. To hedge it successfully the Bank allocation increased significantly vs the Reit allocation. And then late build up into US market with smaller size for earning exposure diversification. In current context, why I am still heavily in Reits is the believe that the contract cycle will soon be over, and rental renewal catching up with the rate spike that tattered the Reit market so badly. Whether the rate stays high is not in the equation. Meaning Reits that cannot do well in this environment I will not be interested as much.

This equation left out forex risk and so foreign reits suffered significantly in-addition to high market rate impact and recessive local economy. Reason why this segment within the Reit sector should be scaled down to reflect their added risk despite their high dpu that time. Even reit such as Elite UK Reit with such a robust tenant (gov) get impacted severely. The strong S$ put their return further out. iReit situation is not as good imo and may take long time to recover. They won't suffer as much as US office Reits but is a low bar of comparison.

So how did Mapletree Ind Reit managed to overcome this odds ? For one they managed to seek out DCs in Japan with much lower Interest rates quickly. Will there be side effects, time will tell. They also have little or no exposure to EU whereas Ascendas does. In my perspective, I have been reducing my exposure to Ascendas due to low occupancy trend. They have not ben addessing the issue well despite stable dpu.

Interestingly there are Indistrial Reits like Aims Apac Reit despite their small size are doing much better than much larger Reits. They do put quite an amount of work to uplift their properties and this is despite large exposure in Australia which also see weaken currency earning. In what they suffer, i feel they make it up with having long term strong tenants. Nevertheless, investing in this Reit has to be scaled appropriate unfortunately.

A large reit in mind is Ascott Trust whom recovering from Covid period. The tourism market has also been coming back so it may takes some time to play out. There is volatilty in the reit so far and I am not completely sure on their earning power and dpu sustainability. It is worth some diversification so far.

FCT comes in a a key holding on income and stability perspective. They manage local suburb malls and is one that give me a lot calm to my investing. It has grown quite large hence there is some CICT now. It is an essential locally. While there are HDBs Coffeeshops and JB provides competition, they aren't the same but to provide sufficient value checks.

There are two non-reit non-bank local stocks in the portfolio. Netlink BNB Trust and Sheng Siong. Let me get Sheng Shiong quickly out of the way by saying I just sold off all to re-balance. A counter that has profted well for many years. I decided to finally let it go when the yield hits 4%, China exposure not walk in the park and recession hedge not needed since I have fixed instruments to cover. 

Net link bnb Trust always have the sustainability of their dividend in mind. As many may know, they have been increasing their loan but it may take a long time to hit the wall. Probably well over the next fee review. During this time, I hope to see what growth engine or so to speak increase in return they can manage. Is still in monitoring stage.

Finally, the US Market has been on peanut butter spread to capture growth. There is some hit and miss trying to optimise return. This is something I am still working on. Recent Deepseek does have impact on Nvidia, TSMC and ASML. But quite positive to Amazon and Goggle imo. There is also exploration in Treasury Bills to uplift fixed return and hedge against Singapore local investments.

That's all I have to say on my portfolio. Dyodd.

thanks

Cory Diary

2025-0204

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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 : US Market Strategy Re-Visited

In my earlier article, I written about interests in Big Tech or Large companies that has strong moat and leaders of their field. Primary reason is their earning powers. As I am quite new in this field and S&P500 is at high my thought is to use peanut butter strategy across a group of stocks. This is done in Year 2024.

With Bull Market into two years, will we see a third year Bull ? That's a million dollar question. Even if there is, we may not see it in Big Tech but could be other segment of the market. However, USD has been strengthening for some time since Donald Trump get elected. This currency is precious in the sense if we exchange them for it is not cheap. And if market take a negative turn is double whammy.

One thing we know is that cutting rate expectation has been reduced. From 4 to 2 cuts in Year 2025. Will this happen probably depend on the market situation as the year progress. However, TLT already reflected investor sentiments as below chart.

This will give a nice yield while we may have wait for some periods for rate to lower over time. The added risk imo is USD Forex. As I know there's no withholding tax for this but I am still researching and the best way to find out is to invest myself. Sizing is important as I am still learning. And this investment will help to boost some dividend as well. Nice adventure !

However, I have no funding and with strong USD, is quite costly to tap on my local fund. Hence, i need to re-balance existing US Equities in the portfolio which may have lesser potential. And this is what I did below.

With this move, I have some USD cash left for more re-investment. So why Meta and Msft. Not sure is worth to know from me. The important thing is I did the re-balance. Did you notice I also bought some VTWO. This is something Tom Lee has been shouting for since last year that small cap stocks may have good opportunity especially Big Tech is richly valued. VTWO is another ETF for small caps so that I do not have to know to pick. This is the second time i bought it.

With this moves my current portfolio as follow.

Cory Diary

2025-0118

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Cory Diary : Equity Portfolio in Perspective

Cory Diary

2025-0107

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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 2024 Equity Result

Got a bad bout of stomach issue over the new year. Got myself into hosptal late at night, given a drip, some medicine and sent home. Bedridden for 4 days due to persistent stomach bloating pains after which finally subsides today. I will be doing a clinic follow-up today to see any long term remedy. Health is Wealth.

Got this off my head. Now how's my performance for Year 2024. 

Holding through Emotion Roller Coaster

If we include STI dividend, it will beat me a few percentage points in XIRR. For people who is new to XIRR is simply allowance for compounded return, money-weighted for irregular in/out of positions. Since is just a full year, the result is nearer to 17.4% returns for every $100 invested.

Despite STI performs better I am quite satisfied with Year 2024 result. Main reason being the Portfolio has significant Reits exposure which don't do so well this year. Year 2024 is also a concerted effort to build up US Market and I believe this is the direction to continue pursuing. The portfolio has grown over the past two years and it would have hit my personal target if I have not channel funding to Fixed Returns for Reserve.

So what are the key highlights for Year 2024.

1. Concentration on Banks help to uplift the portfolio. Willingness to allow Bank to exceed 10% allocation for a single stock helps to skew the result to match with STI Index. This move is an exception as bank is a unique asset class in local market that allow me to do that with much less concern. Offensive moves. From a low of 8% bank allocation in Year 2022 to more than 40% with re-balancing and fresh funds till Year 2024. And this despite reducing multiple times after the price ran up.

2. Cutting loss in Reits which has lesser chance for good recovery. Ie. Mlog and Sabana, locking capital in reits which is at higher volatiliy ie. United Hampshire Reit, containing exposure in oversea reits, and most importantly not injecting precious funds into new reits positions to antipcate recovery for capital gain. Instead focus is on strong reits that is able to command rental increase and maintaining dividends. Defensive measures.

3. Expansion into US market in larger way when I realised the earning power of Magnificent companies are much less appreciated. Strategy continues to be long term hold on them. Over the years this companies do well every year for the past decade except in 2022 which is a great opportunity that i missed.

Segments

If we are to explore by segment,

US market holds itself well negating Reit losses. As past actions cannot assume future, i did not anticpate Fed will cut rates quickly due to the economy is still runnig well depsite relatively high inflation. However it does rhymes which to me the cut will come. And when this happen at much slower pace, businesses are allowed to adjust and for that key reason i am not so worried on banks position though I wouldn't want to add more. 

What I find it tougher to estimate is the reit recovery. I make it a point few times that is the quick spike and not high rate itself that's the culprit. A strong reit will be able to comman rental increase for the cost. However, if the rental contract takes time to renew, the cost increase could not catch up in time hence lesser rental income therefore dpu gets hit.

Will Year 2025 be the time Reit will have new lease of life ? However 12 months are very long time in the market if the business aren't doing well. What make it worst is when there's politcal dimension to it. Hence, the reason to continue to avoid significant china exposure. It simply not worth the risk when we can get something good elsewhere.

Cory Diary

2025-0103

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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 : Portfolio Management Update

Democrats have suffered a shocking defeat. The concerns I have heard include illegal immigration taking away low-income jobs and depressing local wages, the unfairness faced by legal immigrants who waited in line, and the increasing number of Americans on food stamps in modern America. Many of them probably live worse than those in many developing countries. The numbers are staggering in modern America. Thoughts they should do better with Democrats for the past 8 years but it doesn't seem so.

It looks like Donald Trump has a significant amount of work to do to address this segment of the population. He has his hands full and will likely be quite stringent on foreign policies due to mounting national debt While keeping American employed. The well known concerns today are Inflation Increase which will impact Interest rates.

With this knowledge, we will continue to pursue allocation in the U.S. of strong global businesses to capture some growth for our portfolio. With limited knowledge of the U.S. stock market, I will continue to focus on just a few obvious key stocks that have a strong moat and are large corporations in the S&P500. The recent uptick has put all U.S. stocks in the blue finally ( Picture 1 ). This could easily turn red, but the current expectation is that it will grow more blue until year-end. How blue? No idea.

Pciture 1 : US Stocks P/L YTD

On the local front, banks continue to report strong results unabated despite lower net interest margins (NIM). Net interest income (NII) and other earnings continue to drive profitability across all banks. There are no clear signs of weakening. As our allocation is quite significant, I have done another round of rebalancing, reducing bank allocation back to 40% on this recent run-up. REITs encountered a steep dive in price, and this is where most of the raised funds went.

There are multiple adjustments that I will not mention here. Picture 2 is the current allocation.

Picture 2

With current high allocation in FCT, decided to add another counter CICT for more dividends and diversification. Delisted the investment account counter from the chart to make space for it. Adding another low growth REIT stock is defensive move.

Currently Equity Portfolio YTD performance as follow ( Picture 3 ).

Picture 3

The STI did better when we include their dividends, but I am happy with what I currently have always if the result is always that. The banks may still have some runway as they are above 5% yield. DBS's share buyback will likely mitigate on reduced dividend distribution fatigue in the future. So while they are going to buy at a higher price, this process makes the dividend even more sustainable. The price-to-book (P/B) ratio will theoretically go up if net tangible assets (NTA) remain stable; however, I doubt it will be much, if at all. The focus on banks remains on yield and payout ratio sustainability. 

In conclusion, the recent developments in the political and economic landscape underscore the importance of a well-considered investment strategy. As I navigate uncertainties, my focus remains on building a resilient portfolio that prioritizes stability and growth. By strategically reallocating assets, emphasizing strong businesses with competitive advantages, and diversifying my holdings, I aim to safeguard my investments while pursuing opportunities for returns. Ultimately, these decisions are driven by my commitment to achieving peace of mind for myself,  ensuring that I am well-positioned to adapt to changing market conditions and capitalize on future growth prospects.

Cory Diary

2024-11-09

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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 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 : Portfolio Equity allocation updates

Here's a quick update on what i did so far recently.

Sold a small chunk of DBS. Taking profits. This shares were acquired during the recent correction of Yen Crisis. Free money must take else lightning may strike. LOL. The rationale is quite simple. 6% yield on one of the world safest bank is not hard to pick. Even if there is a reduction in NIM this not going to hit the dividend largely because the payout ratio is only slightly more than 50% of earning unless management really want to. What makes it even more attactive is the NII which is still growing.

One of the learning I picked up is if the position is for trading, we need to treat them so too when is time to sell. And this is what I did exactly for recent share sales. And my allocation for DBS on my equity portfolio reduced from 28.8% to 27.6%. Good move right ? Well, wrong. Reason being I am expecting new large fund inflow (hopefully) coming in next month. And if i am to deploy them, i could be buying back those shares I just sold.... Well, we human can't be perfect. We can learn to try to ... end of story.

That's all i did mainly. Ah yes, i did bought back alphabats at higher price. darn. The plan is to have kind of peanut butter spread on a small group of selected US Tech stocks. So I may buy back Msft when market allows. Trying to minimise my transaction as this group of shares are in cash management account that don't go easy on trading fees.

Finally, what's the score so far ytd ? Meaning, from closing value on the last day of trading last year till today.

August has been kind to my portfolio. Hopes this end well for everyone by year end.

Cory Diary

2024-0901

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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 : Yen Carry Trade Crisis

The recent Carry Trade Crisis is a wake up call on how vulnerable our market is. It also reminded us we can't time it but will happen when it accidentally got triggered. The mosre important thing to me is what did I do considering I just recent expanded my US segment to 10% of Equity Portoflio.

My Nvidia position went negative together with recent addition in iBit and Tom Lee's favourite Russell 2000. Amazon took a beating as well but as most of the shares were acquired much earlier the impact today seems mute for recent days recovery. I sold off Msft to lock-in profit so as to mitigate the portfolio and now I have excess USD to content with. As the overall US positions are relatively small the impact is not enough to put a dent to the portfolio.

What really hit harder is when SG Bank stocks are sold down as well. This drives the DBS yield to more than 6.5% range which i deem too attractive not to collect more bank stocks. Yes more .... .  It doesn't makes a lot of sense unless people are forced to sell. Probably many people do carry trades to buy local banks or on margin long. See below allocation.

However, it doesn't trigger my warchest yet and the market starts to recover after Japanese authority reassures the market they aren't Alan Greenspan. This guy has a sadist strategy that market has to bust before boom at national level.

What I sorely missed in this sell down is to buy more Meta. Otherwise I think we are good to hold on most of the portfolio. Do I miss Microsoft. Probably not yet. Will we see a V-Shaped Recovery ? hmmm

Cory Diary

2024-0815

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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 : An Insight into DBS CIO Hou Wey Fook

I chanced upon an article about DBS Chief Investment Officer Hou Wey Fook. I have noticed him since his appearance in The Woke Salaryman interview. As an engineer who has excelled in finance, his educational background likely provided a solid foundation. I admire his advice and thinking, so I wanted to do a quick comparison for reference.

Hou Wey Fook's Investment Strategy

1. The Barbell Strategy

   • Income Generators: Assets that generate consistent income, such as Singapore T-bills, government bonds, Singapore REITs (Real Estate Investment Trusts), and Singapore bank stocks for their dividends.
   • Growth Equities: Investments in companies that are innovators, disruptors, enablers, and adapters. These are best-in-class global companies with wide economic moats – competitive advantages that enable them to maintain profit margins and market share in the long term.

2. Measured Exposure in Gold ETFs

3. Additional Retirement Income from CPF SA income for retirement.

4. Well-Diversified Portfolio: Prefers bonds ETFs rather than single bonds.

5. Income and Growth Allocation: 60% of his portfolio is in assets that generate regular income streams, while the remaining is primarily in growth stocks. It is likely that, closer to retirement, the 60% weightage of income-oriented investments will rise further.

6. Universal Life Policy: Acts as a mortgage protector, ensuring that in unforeseen circumstances, his wife and children can continue living in the house without the burden of servicing the housing loan.

7. Drafted Wills: This saves his children from unnecessary emotional stress.

8. Real Estate and Lifestyle: He bought a landed home 20 years ago and owns a Tesla.

My Portfolio and Comparison

It looks like we have a similar strategy regarding the Barbell approach. Recently, I added Russell ETFs and iBIT. These are small positions, but I hope to grow the Russell ETF smoothly, in addition to the similar growth stocks we have. iBIT is an insurance product that seems to match his measured exposure in Gold ETFs.

He is 61, which is seven years older than I am. However, my growth assets are significantly lower at only 11%. I think my allocation is too conservative on the income side and may not be less risky considering the amount of REITs in the portfolio. This is something I need to address.

Regarding insurance and wills for the family, this is something I need to plan for the mid to long term. I don't think I can do much about owning a landed home as he does.

His top investing tips

Time in the market beats timing the market. Frequent traders often fall prey to anchoring bias, a cognitive bias where investors place excessive emphasis on an initial value, and fail to adjust it adequately as they acquire new information about the company or market conditions.  

Conduct thorough due diligence and invest in securities with strong long-term potential. With comprehensive research, investors are less likely to panic over short-term market volatility and make impulsive decisions that could harm their portfolio.

Start investing early, and limit what you borrow. To borrow the words of physicist Albert Einstein, compound interest is the eighth wonder of the world.

Cory Diary

2024-0728

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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 : Portfolio Re-Balance and Result

From time to time, we may need to re-balance for the better or worst. There are people who swear we should do nothing but bear that in mind that doing nothing is a deliberate action too as is solely tied to one expertise. How often we trade depends on our capacity, knowledge, cost and likely emotional state.

The hardest to master is managing our emotional state so personal preference is to keep it at the most stablised level aka "Sleep Well Test". This could mean more re-balancing effort and regular monitoring of reports to contain unexpected risk level increase.

So what are the changes so far for 1H24 Portfolio ?

Deleted : Venture, Google, UOB (add/del), SABANA, UTD HAMPSHIRE

Added : iFast, TheHourGlass, Nvidia, OCBC

DBS/OCBC are the key profit drivers in-addition to dividend. Their large allocation shielded the portfolio. US Market is in net profit ytd. Reits are still in special care. A few of them such as iReit and Elite see large reduction in capital.

Currently,

Equity Portfolio XIRR YTD +4.5%

Investment Account Cash 7.4%

In-Progress,

US Market expansion, Nvda etc

Reit on-hold mainly otherthan special exceptions

SG Non-Bank opportunity

Cory Diary

2024-0704

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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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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 : Turnaround of Reits

With the current high rate and coming Fed meeting announcement soon when will it be a good time for Reits turnaround in stock price ? Looking at the Rate (below chart ) which max spike in Aug 2023 and probably well felt by end of 2022, when will rental reversion be able to catch up assuming no more rate increase ?

If we are to take Mall Reit example assuming 3 years cycle of contract, full update maybe Aug of 2026. There are variables on reit types, management ability and probably loan cost which varied with their own renew or expiry. There is no definite answer we can know unless we are insiders.

To be safe, I would think early next year 2025 will be a good timeframe to review Reits allocation increase. Anything before will need good conviction, sizing and unique Reits performance.

Will rate cut helps ? Maybe shorten the wait accordingly. This could be a slow process of unwinding. So may not help much near term.

Cory Diary

2024-06-10

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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 : Equity Portfolio Review

Equity Portoflio - 2024-0519

In this review, I'll provide a brief commentary on each counter.

REITs

There are 9 REITs in the portfolio after selling off United Hampshire. Ascott Trust yields look quite interesting. If there is a correction, there may be consideration to add a little more. This is despite strong bank yields, planning for necessary transition options.

Sabana Trust is in a more complicated situation as its share price could go either way due to ongoing internalization complexity. With current cash conservation needs, it seems a luxury to have exposure to this in my portfolio at this time. It poses elevated volatility risk. The pro is the strength of the REIT, which may mitigate some risk, but it's uncertain how much it can help.

Elite Commercial REIT is in a deep drawdown due to the ongoing UK macro situation. As the position is not significant in the portfolio and the REIT has mainly government tenants, I do not plan to relinquish the opportunity of a rebound if any. Currently, they aren't in distress and are well-capitalized from a recent rights issue. However, we can't say with absolute certainty there is no risk or surprise from what we don't know.

Mapletree Logistics Trust has recently been hit due to China exposure in their valuation and negative rental reversion reflected in it. Despite this, the REIT has managed the issue well. With management actions on how they position the REIT, it seems investors may take some comfort. Nevertheless, as an earlier article mentioned, asset sales to support income distribution are a fight against the Fed. They likely will pull through well. Planning for China macro-wise is much harder due to ongoing tensions between the powers. Technically, if we use MA 50/150, the chart has yet to reverse to an uptrend, so I will continue to monitor.

IREIT positions in the portfolio have been sized much smaller in proportion despite being popular among investors in foreign REITs. They have all the ingredients to be successful. This was the case before the interest rate spike and the Ukraine War. Unlike UK REIT, they are fortunate to have locked in their loans until 2026. Like most foreign loan exposures, the high rate spike and poor sector segment hit them hard.

Core Reits

There are currently 4 core REITs in the portfolio: AIMS APAC REIT, Ascendas REIT, Mapletree Industrial REIT, and FCT. They all have significant exposure to the local economy, which shields them quite well. Ascendas and Mapletree benefit from lower loan rates as well. Their well-managed hedging and fixed loans help keep their DPU stable.

AIMS APAC REIT used relatively expensive perpetuals before the rate spike, which tied them over well for the past years. With the perpetuals scheduled to expire, it may face much higher costs for their loan or perpetual rollover. Being a small REIT, I decided to reduce the position by roughly 40%+ to reduce portfolio volatility from top REIT allocation to the last of the core REITs. FCT is strong in suburban malls. They too face daunting loan costs over time. Nevertheless, it has a strong business, and I am happy to hold it through its current allocation.

US Stocks

Amazon, Microsoft, and Tesla roughly make up 3% each. They are all strong in their respective markets with world-leading businesses. Currently, they hold less than 9% of the portfolio in total. If opportunities arise, there may be consideration to expand in this segment. I am quite comfortable with what I currently have. Microsoft and Amazon are expected to provide a strong base support that will keep this group steady. Tesla is quite volatile but can have explosive upside if they execute their developing projects well. The hope is not to further inject fresh funds into US stocks unless there is a good rationale. The main reason is I already hit my 50s and view cash flow from dividend stocks as a key priority.

Banks

DBS and OCBC have outsized allocations in the current portfolio. UOB, which had a small allocation, was sold just before results. As mentioned earlier, they are a hedge against REITs due to high rates impacting them. So far, they have nicely filled the capital loss gap on the REIT side well—too well, as high rates continue to prolong. There is temptation to inject more funds into them due to the high yield they can provide over the REITs. What's more, they have a good business environment. Unfortunately, this could put the portfolio at higher exposure risk to one segment. Not my time.

Non-Bank Local Stocks

Venture, Sheng Siong, and Netlink NBN Trust. Venture is a test with a very small allocation. There hasn't been much investigation into it, whereas Netlink and Sheng Siong are more familiar. Both latter stocks are sized to support the portfolio if the economy goes into distress. There is no motivation to expand their allocation further.

The latest report from Netlink is within expectations but also reminded me there aren't catalysts out there yet that can mitigate their direction long term on cash flow. This can grow into a problem if not managed carefully. Sheng Siong is boring but awesome as usual. They have a lower yield; however, there are opportunities.

Cory Diary

2024-05-20

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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 : 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 : Portfolio updates

Cory Diary

2024-04-21

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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.