Friday, March 13, 2020

Random thoughts: How are you coping with the bear?

The bear market has brought intense reactions. Everyone has different plans or coping mechanisms.

My friend ask for divine advice. I am not kidding. The advice he got is stay out of the market for the time being. That is when I started buying when STI is at 3000. 

The way I see it, there are a few ways.

1) Exit to a level of comfort, taking some loss if necessary and stay out of the market 

2) Accumulate at various points and continue buying

3) Short the market

4) Rotate your holdings, buy and sell at the same time and liquid some bonds (if u have)

5) Look at signals (whatever sect u below) and trade in and out of market

If u have a different option that I have not heard of, please leave a comment below.

The point I am trying to make is, no matter which path u take, u will most probably be bombarded by views of people walking different paths. They might claim how dangerous it is to walk a way that is different from theirs. 

My advice is: walk your way. It is ok to do a U turn. But it is really not a good idea to run around various paths, fudging in and out of different routes because you wil end up going nowhere.

Before u start, have u plan your path? Why are doubting your own plan now? It is ok to discard a plan due to conviction but rarely it is a good idea to fudge between one path to another. Is the grass greener on the other side? Really? If u have done due diligence in peace time, now is the time to execute your plan and see if it works. Use your own metrics to determine your own success.

I am taking path 2. People who are on different paths, feel free to share why u choose your path, but rest assured I will not listen. LOL. For those taking the same path, I hope my post provide some company in this lonely walk.

First of all, let me explained I have been waiting for this Bear for years. So much so that I admit I might have squeeze the trigger too early. I am climbing up mountain, and have been persuading myself not to go below 60 percent cash before the covid 19 crisis, even though there were many counters I have wished to owned. If I do not accumulate during a bear, when do I do it then? During a bull? 

As the market tanks, I went on a buying spree. I have calculated that I can enlarge my portfolio in 3 tranches. I have fired off the second round for about half of counters in my portfolio. A few counters have been holding up rather well such that I have not yet had the chance to accumulate. I usually wait for a counter to fall 20 percent before I consider if I would enter again, if the counter does not have strong earning visibility after my analysis, I will waited for a bigger drop of 20 to 30 percent, but I usually pull the trigger at 30 percent. At 30 percent fall, I ask myself why I refuse to buy, and will seriously consider selling that counter. So far, I have not made the choice to sell. 

As of now, I still has 35 percent cash, down from the peak of 60 percent. It can be raise further if I choose to redeem my cashback of my policy (no impact on termination value or risk of loss) 

As of today, my portfolio is about 11 percent in the red. Although there is some apprehensiveness, I still lookout for valuable buys. Of course, I am also slowing down my purchases but selling is hardly in my mind - not because I am a stamp collector but because I believe in the businesses that I bought. 

I am sharing what I am buying to remind myself what I have done in a bear market and review what I could have done better after this covid 19 blew over. (for better or worse)

For cyclical play, I am betting that they can survive this crisis. They might make smaller profits but will unlikely go into loss and when better returns, hopefully I will be reward with better valuation. The counters I have accumulated or initiated are:
1) Silverlake Axis
2) Sembcorp Ind
3) Diary Farm
4) Hong Kong Land
5) SIA engineering

For dividend yield, counters accumulate include:.
1) CSE global
2) QAF
3) DBS
4) Cosco 517 (HK)
5) GA pack 468 (HK)

On watchlist for this category
1) Singtel
2) Taisin Electric
3) YZJ

For earning growth. Under current environment, this group is highly unlikely to perform
1) Koufu

On watchlist for this category to accumulate of initiate position 
1) Capitaland
2) Raffles Medical
3) Pan United 

Contemplating Sell counters
1) Singpost

Do nothing counters
1) MIT
2) Ascendas REIT
3) Singapore Shipping 

As I buy DBS from 23 to 22 to 21, etc, the term used by others not in the path is "kena burn" etc. In my mind, I am expanding the weightage of dividends counters in my portfolio. 

As people talk about preserving cash and sell, I ask myself if the company is going to see better days and survive this without going into loss. If the answer is yes, I will hardly sell. The next question I ask is whether the counter is a market leader that has the competitive edge to ride the way up with lesser competition after the blood is shed? If the answer is yes, I ask for a lower mangnitude of drop before I buy. I am telling myself that I must be prepare to see my portfolio go down 30 percent if I manage to use all 3 tranches and market really go down 50 percent . The more u buy the more you lose. But I am planting the seeds for harvest when autumn comes.

I am also telling myself I am accumulating a portfolio at low prices and not at market high. This enlarged portfolio should yield 4 - 5 percent with some safety of margin when the black swan sail away.

There might be a better path. I wish sincerely all those in other paths the best. That path might also be more rewarding. But similar to life, we walk the path we want, and most importantly, we be at peace as we walk, since it's our choice. If someone walks with us, great. If someone walk another way, say hi and may we meet again. 

How are u doing ??

34 comments:

  1. Hi, are you not buying ETFs/Indices (like STI)?

    ReplyDelete
    Replies
    1. Hi IW,

      Nope. I did consider STI when I wanted to buy DBS. The 3 banks and Singtel would make the bulk of STI already, and I am interested in all 4 anyway.

      But for better returns I decided to go for co concentration. If u look at the 3 banks, although they have slightly different overseas market focus, they are mostly correlated in terms on mangnitude of fall. No risk diversified imho.

      But if u look at bank yield and STI yeild is diluted ...

      Delete
  2. I am one arm market player and addicted to Panadols so the only skill I have is doing path 2. Bo pian!

    ReplyDelete
    Replies
    1. No worries, CW.
      I can only do path2. Take heart, u already coming down mountain, I am sure portfolio not that badly affected with 10 baggers in place. The realised profits would have also be super pain killers or rather drugs for treatment le

      Delete
  3. My SG portfolio poised to do point 2. Tranche 1 buying just started.

    Then my separate US portfolio... do point 3 and one which you have not listed - buy the dips, sell the rebounds short term.

    ReplyDelete
    Replies
    1. Hi Rainbowcoin, welcome! Your timing definitely better, I have started tranch 2 ...

      How is buying on dips working out in US now? With the consecutive share falls, did it still work? Are u able to navigate that?

      Shorting the market and buying the dip is high level trading if u ask me, as timing need to be impeccable.

      Respect !

      Delete
    2. Hi SI,

      Navigating volatile markets (albeit with different triggering factors) all take the same 3M (Mind, Money, Method) stratgey.

      My first encounter was the trade war in 2018. Whacked upside down by market.

      If you want to surf the rough water, pick up the surf board and go out there after the "basic safety course". That's when the true learning begins.

      Delete
  4. Hi SI

    Just be emotionally disciplined and execute your strategy in a disciplined way. Be careful about managing drawdowns in your war chest as the market oscillates between fear and greed. It can be a long marathon...

    I see discussions about people claiming they bought Citi at USD1 in the 2008 GFC in forums all the time. I dont see many millionaires making rich with this strategy. Trolls are aplentry so stick to your plan!

    ReplyDelete
    Replies
    1. Hi InTJ, thanks for your advice. No illusion to get rich. Just wanted to have an good portfolio that can last a long time

      Delete
  5. Hi Sillyinvestor

    Doesn't matter whether if you have made the "best" strategy. When nobody knows what can happen tomorrow, it's all pointless debating about what's the optimal strategy.

    What is important is that you have STARTED ACCUMULATION at a relatively better price than before. If tomorrow suddenly everything goes up, at least you have caught some good bargains along the way. If tomorrow prices continue to tank, then you can continue buying with your remaining warchest.

    Either way, you won't lose out completely.

    So long as you stick to your path, you'll be able to sleep soundly and wait for your harvest to come eventually - which I think is a good outcome no matter.

    Good luck, and all the best in your chosen path! :)

    ReplyDelete
    Replies
    1. Thanks Koala,

      Hope u prospers or at least survive well. We do what we plan, and it might turn out for the worse. :)

      The pay cut will be coming soon for many industries is this dun tamper off soon

      Delete
  6. Hi SI,

    I'm on the same Path 2 camp as you. Used to do some shorting with CFD but during a time like this, some counters which we think is a sure win bet can't be shorted! The market maker obviously won't want to take the bet like bookies won't accept 'red horses'. LOL.

    I have bought some Silverlake Axis yesterday at 25.5cents. There has been consistent share buyback at higher prices.

    I got some SembCorp Ind too at $1.89 believing the oil prices crash would not last too long or SembMar will be a drag. Dividend payout is paltry. I'm almost about to give up on this counter but decided to buy just a bit.

    I'm totally out of Diary Farm. Most of its income is derived from HK and after Covid-19, the political turmoil could continue festering. Probably if the price is ~USD3 and below I'll re-enter.

    I'm still waiting patiently for CSE Global. Bought the dip in 2017 at 34 cts and sold on 28 Jan 2020. Hoping to buy some around 38cts. :)

    I bought some YZJ too on Thu. Would scoop a lil' bit more if a bigger sale comes!

    Good luck and keep healthy! School hol is here, so can chill this round. No school activities.

    ReplyDelete
    Replies
    1. I will still be working for the next 3 days. Lucky for me, some part of these 3 days I will be seeing my pupils.

      I will bored to death if it is just office work. But given current circumstances, I will be very thankful to just hold on to my work

      Delete
    2. Walau CFD got red horses too. i just learn.

      i heard of many other complains from people who had thrown in the towels too.

      Someone said it like CHAP ZE KI in the old days, betting against house how can U win in the end.

      i really don't know because i am in the 4Ks camp when come to all these things.

      Shalom

      Delete
  7. Sillyinvestor,

    For a change, I did not comment immediately as I was trying to figure out your "motivation" for this post.

    I think your statement below sums up best your current state of mind:

    "I am taking path 2. People who are on different paths, feel free to share why u choose your path, but rest assured I will not listen. LOL. For those taking the same path, I hope my post provide some company in this lonely walk."











    ReplyDelete
    Replies
    1. Yup, that's kind of sum it up. Smol.

      I am kind of "pissed" with people saying one thing 2 months earlier and swearing by it and saying another 2 months later.

      I am not sure if they even notice teh change of tune.

      I understand we all have fear, but like your post said, say buy sound like sheepherd, say sell also sound like sheepherd

      Delete
  8. Hi,

    I think you did greatly in terms of portfolio/cash management, investment strategy and its actual implementation! In fact, I think you did/will do much better that some other "experience bloggers" like FFF, AK etc overtime.

    However, I think you may want to reconsider your choice of companies selection. Many of your picks seem to face structural issues in the first place. Why not choose something simpler? If your picks are wrong, all the good strategy/actions may become futile. Just my comments. Pls ignore my comments if you think otherwise, as I am also not an expert. All the best! Hope you do well and change your blog name to "smartinvestor".

    M

    ReplyDelete
    Replies
    1. Hi M, thanks a lot for the reminder. I remember the consumers ETF. Any other u are looking at , hahahahah share lei.

      Yup... Maybe time to venture US exchange too. Truly diversify...

      I think my downfall will start when I call myself smart ...

      Delete
    2. Sorry Si,

      May U spare me the temerity and allowance in good faith that i may be wrong:-

      i think i tend to agree with him, though some of the companies i really don't know much.

      Many boring companies in SGX but survival is the 1st principle in a Bear Market when choosing a company as far as i am concerned. Make less money
      is 101% better than lose some money.

      Shalom.

      Delete
  9. Hi SI,

    Been awhile. Hope all is good and stay safe and protected.

    Maybe can consider giant Oil companies in US such as Exoon or Chevron.

    I just wrote a similar article. Better to spread out your deployment over a period.

    ReplyDelete
    Replies
    1. Hi Rolf,

      My deployment is rather dependable on the mangnitude of fall rather than duration like DCA

      My stress test show that I can still buy and nagviate a market of 50 perce t fall...

      Anything more than that, I will have to watch show. But it's fine. Able to capture 50 percent is good enough for me

      Delete
    2. Agree SI. My earlier post states using E.g STI magnitude of drop. So maybe both Magnitude and Time factor are important.

      Thats why in Graph we always have Y axis Magnitude and X axis Time.

      50% capture is alrdy very good. Most important is to keep ur employment income flowing. This I know u will be fine.

      Stay safe bro.

      Delete
    3. Thanks Bro,

      Definitely very thankful for having my job. Now I spend more time with kids. Really happy being with them.

      I know my job is relative safer compare to others ... Cannot complain.

      Doesn't really matter I can't take full advantage of 50 percent, maybe just some nibble here and there by then. Really do not wish to use my Insurance cashback and my father gift if not necessary

      Delete
  10. Hi Si,

    Quite sometimes no see.

    How's everything.

    To tell U, i started in 1987/88 i decided to choose path 2 after schooling myself half-past-sick about investment in the market at the age of 40. At that time i wasn't quite sure about my choice. Now 2020, after so many years what do U think, i think?

    No matter how i want to try, i can not bring myself to do CFD, shorting, hedging (except going into cash in a bullish market). i feel i not smarter enough than the market professionals.

    Someone said and may have laughed at me why fight in the Market with one hand only, when we have 2 hands.

    i take it with a pinch of salt till this day, if i can fight like Wang Yi in his movie - "The One Arm Swordman" in the market, i am O. K. already if not "Fatt Tatt"" lol after 30 years! LOL!

    What do U think?

    One Caution Sign must always try to remember - "Why i always not satisfied with my buying and selling till this day"

    "Don't buy too early & sell too early" should be our "Motto" i think for path 2 people.

    Even now i have been buying too early.

    Of course sold too early already.

    So that our perpetual challenge for taking path 2?

    So i have been doing path 2 for more than 30 years, i don't think it can not be done by someone else.

    But No One is Me. And Me is No One.

    Rest assure what i write here is first time typing as the thoughts come to my mind, except maybe for correction of spelling. i like the way U write, directly also , i think.

    Timing the Market is indeed very hard. Must get it right both ways, always. Sell too early won't make U much money after so hard getting timing right in buying.

    It really a waste of effort and money.

    i know for it happened to me more than once.

    But it's O.K. making some what lesser money is 101 % better than losing some money.

    No complain.

    Shalom.

    ReplyDelete
  11. Hi uncle temp,

    Yes, it's been a while. Wish u the pink of health. Yes. Sama Sama, I buy a bit too early. But it's fine. I think I would do reasonable well in this bear, the next bear, I might be able to play it like this as I might be past for 50s.

    Anyway, like want u say, I am.mentally quite stupid. I do not think money once we have enough is really a very dominant factor in our life. In fact, I always feel a lot of money is a problem for a lot of people

    Peace be with u

    ReplyDelete
  12. Oh no!

    No one on Earth should think U are mentally stupid. how can it be possible? A great teacher.

    i respect the way U write quite a lot. If not i won't be here.

    i believe the way a person write tell us about his characters and his outlook in life. And how he thinks about himself inside his mind.

    I am only trying to share what WB taught me.

    He said,

    "Whenever U buy or invest in a company, ask yourself 1st, is this company going to be around 5 years time, 10 years time,...." - the rest seems to be secondary to me at least.

    Especially for path 2 investors like us, we have to be extra 4ks.

    We are not fly by night traders which fundamentals are nonsensical to them almost 99% of the time.

    Anyway even when the company is still around, no one can guarantee it is still a great company(aka SPH).

    So....

    Please again, i never say what u think i say. (aka Anyway, like want u say, I am.mentally quite stupid.)

    God fobid me to even think like that.

    Again, i won't be here if i ever think like what U think, i think.

    That's not in my characters.

    Shalom.

    ReplyDelete
    Replies
    1. Hey uncle temp,

      No worries. I think u got me wrong too. I never has the faintest idea u trying to Suan me. I know there is no malicious intent. Hahaha my English and my quick.mouth.

      I just feel that what I think is usually very different from others, so I guess I. Am stupid haha

      Delete
  13. In that sense, i believe U can count me as one of U lol.

    How come i can't just fit myself in a group or crowd, knowing i will suffer.

    Or how come i can't say what people want to hear, again knowing i will suffer for it.

    i just say what i think i see lol.

    No regret.

    ReplyDelete
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