Cory Diary : In Search of Golden Cross P3

This is continuation on my personal portfolio tracking against STI Index Part 3 (P3). It has becomes a study of how market dynamic changes STI and me. Since I last blogged few weeks on this subject, the broad market has turned for the worst. I was hoping for market rebound and hope to be able to align to the recovery with STI if not better.

It appears Singapore economy are more tied to China to Shanghai index with the trade war. On such days, US market can go opposite or has relatively minor retraction whereas Shanghai index could fall like "waterfalls" and this means bad news for STI Index.

Looking at chart (Left), this how the tracker goes so far till yesterday. Yes ! Is a cross but a death cross. I have finally beat STI by 1.2 percent point. Well, not exactly. Technically speaking since both lines are pointing down that's an obvious downtrend.

The cross is make possible due to sell down of bank stocks and my "Fixed Equity" acting as a strong buffer. I think US stocks helped some. I do not think it has much to do with my Part 2 in overall strategy sense. It was planned for a rebound not a downtrend. At this point of time, I do not have much stocks to sell so it could be a hold till recovery comes. I have build some war chest to benefit from further downside as I sold more than I buy past month net-net. Max possible dividend by year end could hits just above 40K.

There were few other observations in the market. One is surprise Keppel significant sell down despite oil price holding relatively well. Reits generally have corrected down a level on average which I think is healthy. While Singtel has moved down, M1 and Starhub got further sell down as well in-addition to previous selldown ...pardon my english. And sold down in Singpost, ST Eng, Comfortdelgro and those tech stocks . Stocks are certainly selling at discount now. Have we seen enough value ? I would watch China and Trump next move.


Cory
20180623

Cory Diary : Portfolio Management 20180619

I have been holding this article for 3 days for the fear of my first attempt to time "my escape" when Trump suggested Tariff list. However the market crawl back quickly and I feel wolfed. Will this time be another "fake news" ? Well, Trump up the fight immediately right after China hit back. That's round 2.

With battle started, STI is possibly entering the down trend phase. My portfolio is down and to date performance -1.9% this year whereas STI Index -3%. Looks like it takes a market dive for me to catch up as bank falls have larger impact to STI index. Now that the trade war is back again on the table we could see much large volatility in the negative direction. Personally I do not like China to react equally to the US action. Being a developing nation, an equal reaction is bad to their economy if US keeps countering. So I hope is the start to earnestly resolve the dispute. Unfortunately, China hit back. Trump do a side kick immediately. How is this going to end ?




Here's my logic. The US buys world products using USD printed money. While imports goods becomes more expensive to USA, printing money is not going to get much harder. What would happen is manufacturers will move out of China over time. There could be instability to China many times ZTE impact to jobs. Sometimes is better to be at short end of the stick than no stick, if one feel mistreated. The American is hitting every trading partners and not just China so I think this level of confidence probably means they think will win outright.

Banks

I do not have much luck with direct investment in banks so far. Even relatively recent exposure in OCBC sees some correction whereas STI Index returns are relative better. Timing matters. So I always managed my size in banks to be small versus STI Index ETF. However, my recent adventure in WFC (US) do ok as I took the dip opportunity to secure some. Securing enough MOS is good.

Singapore Saving Bond (SSB)

As I have max out my investment in SSB, I did a switch switch to higher 2.43% yield. Submitted again this month to replace my low 2.04% batch for 2.63%. I won't be adding more to treasury for now. 

Reits

With recent correction, Parkwaylife, CMT and Ascendas are good options as I do not yet see risk in their dpu which is golden. They covered Medical, Malls and Industrial Parks.

FCT is good too but decided to boot to preserve my capital. CMT Reit, I have much bigger stake as their size provides more risk comfort with relative good yields. Parkwaylife is still relative expensive relative to other reits but like First Reit which I have good exposure into, they command a good premium due to income strength. I like to retain them as Core.

Industrial Reit wise I would put Ascendas higher up than Aims Reit which I sold off recently. It has large foothold and good track records. I could returns to Aims Reit if there is good correction in price. Industrial warehouse income is ranked lower. MIT reit (correction), I have some exposure but do not have enough confidence and familiarity. The price is at good premium so I only have it to provide some diversity. I won't add more. But is nice to have a maple in me so I am happy. My timing to sell FLT is not so good. I could have save some money from the rights. But no use to cry over spill milk. I do make good profits from it though so "Spread the Wealth !".

Blue Chips

Companies like Singtel, Keppel, ST, SIA, ComfortDelgro, Vicom etc. I have good enough exposure in Singtel as mentioned earlier with competitive markets around regions. I made the right choice to reduce my holding. It has since corrected at new recent lows. I also have some stake in ST. It would be nice to get another one. Probably SIA or Keppel. I am leaning more to Keppel. A good option is to expand ST stake so that I do not need to monitor too many counters. I hope the recent Trade War between US/China will help me to get them at good price. Possible return to Vicom if the price correct significantly. This one not easy.

Growth

I prefer large corporation tied to world for growth and this likely to be found only in US stocks.

One of them is Facebook. I also benefits quite an amount from HPQ which is not in tracker and probably is time to offload as they record quite significant gains. They manage to beat expectations for 16 consecutive quarters against lowing tide of World PC market share. The future world probably belongs to software that hinge on their products but I do not see the company taking advantage of it to tap on their hardware to do that like Apple do. Not that is easy.

SME

No plan to look at new or increase my SME counters.

Cory

20180619

Cory Diary : Inflation and Currency

There are 2 things to watch that can manipulate what we think about how much asset we actually have with time.

Inflation

The typical one is the lack of understanding of Purchasing Power. The typical normal is I have $100,000 today and as long we lose no money in scam, investment, spending etc, 10 years later and is still $100,000, mentally people will be ok. And that will be a big mistake in the current world. In the past 10 years, for the same property, price has doubled. This excludes the possible rental income we can extract from it less interests.

The important question to ask is that where is the middle ground of this extremes ? Is zero the right answer in order not to lose real money ? Let put this way. If "inflation" is 3% annually, after 10 years, $100,000 will have to grow to $134,400. What this mean is $134,400 is the break even of not losing money. And if we do nothing, that is 34% loss. That's huge.

Currency

The world is connected and supply chain is efficient. In the ideal world, an iphone price in Singapore vs one in US assuming everything the same, after currency rate, should be about the same. But then interesting we often hear about Mac Donald Burger index when we translate the same burger in USD term, can be vastly different between countries. Why ? 

There are few few reasons I could think of. First is property space efficiency. In Singapore, the Malls are highly developed. The rental psf on average is costlier relative to less developed countries. The other is Singapore employee cost is much higher despite large foreign workers intake. However this allows more locals to move to higher value jobs aka higher salary. Singapore being a city state also means that most of the raw materials are imported which will command a higher cost structure on average. Imagine when Singapore dollar depreciates against the dollar. The cost will just escalate. The good way about it is to be in better value job that can command higher earning power.

Ideally we need continuously higher salary to maintain the same level of living cost. While this can compensate,  our saving in the bank couldn't since they aren't a function of salary increase. So many people needs to keep working and longer to keep up with inflation as saving in the bank is not working at all. The rich knows that and need to make their wealth work hard. The most average will be able to get by with good job and prudence. The poor will be in the rat race immersing themselves in conspiracy theory and negativity. Hard Truth ?

I wrote this to remind myself not to slip into one of no return.

Cory

20180609