Sunday, June 12, 2016

Do you position your portfolio base on market events?

This post is triggered by this article:

Wow, the edge portfolio is selling out everything. Well, since it is a virtual portfolio, it is easy to "take profits" and press reset button.

There is also another article in the edge magazine about a fund manager hedging against a "Brexit" event.

I wonder if I should increase cash by selling some of the counters in my portfolio?

I had wanted to add a particular counter but decided to hold my fire instead.

But I wondered if I should increase cash further, especially those with high correlation with the STI.

I increase cash holding as I profit-take, but I have not really increase cash in anticipation of an event of an Brexit.

I think Brexit is scary because of the tonnes of uncertainty it will generate. I think it will definitely impact the Euro Project more than Greece. The "who is next" will be enough to freeze the market IMHO. Unlike recurring events like Fed Meeting, where there will always be another one, Brexit will not be reversible, as least not like you can vote again in 4 years time, or you can meet again in 1 month.

Lets go through the Pros and Cons of increasing Cash so as to crystallize my thoughts (I am talking to myself):

1) More cash to take advantage of the volatility if Brexit does happen.
2) The upside if Bremain happens is smaller than the downside if Brexit happens.
3) I still have plenty of counters in the game to take advantage of if Brexit does not happen.
4) Even if Bremain is the conclusion, how long can the bull run?

1) The amount of cash to increase might not be significant anyway. From 20% cash to 30-40% cash, depending on the amount I would want to let go.
2) Brexit and Bremain might be a non-event for the markets, or for my counters and those in my radar.
3) I might have to buy back at higher prices if Bremain happens.
4) Market might crash on Monday, rendering my mental exercise useless.

What would you have done?

I think I will start selling if I still have the chance come tomorrow.

Then what to let go?

I am not letting go Accordia Trust because I think Yen is only going to go even higher if Brexit happen and I am prepared to accumulate it further.

Think non-dividend paying and speculative FSL will the first to go.

If I want to increase cash further, I could also:

Reduce ST engineering at no-loss
Reduce SembCorp Industries as cut-loss exercise
Sell Venture which is already sitting on a good 12% profits (Including recent dividends)

or if driven to the extreme, all profit making counters can go. Or should it be dividend paying counters that are still under their purchase price?

What to let go should to be a tougher question to answer than if I should let go.

If you increase cash, how do you decide what go under the chopping knife, and how much?

Comments appreciated... LOL

I would most probably go for very measured cash increase.


  1. When Saudi decided to flood the market with Oil. I cut loss significantly on Oil and gas related counters except for one reduced. The Saving is huge. The one that is reduced has low 5 digit losses. Needless to say it could have been easily bad 6 digits range if i did not cut loss.

    1. Hi Cory,

      Thanks for your weighing in. I am
      Still thinking about it. I think I will blog about it soon.

  2. I think selling some and put them in gold and silver. Anyway, it is good to have some gold and silver in your basket.

  3. i feel brexit is already mostly priced in.

    I have not positioned for this event due to recent commitments of stability to life.

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