My Investment Portfolio (September 2008)
Volatility is the name of the game this month. But let's take a step back again and analyze the situation. Is the financial markets around the world already in doomsday? Obviously not. Will there be more bank failures? Possibly yes. How many more to fail? Recession?
There is no point answering all these question. In fact, for a long term investor, the answer is very simple - Buy on weakness. Because markets don't like uncertainty. Which is why the markets is very volatile nowadays because everything is uncertain. But volatility equals opportunities.
A lot of people told me that cash is king in the current market. I would say that cash is king provided that it had been put into good use. I would also like to add that cash flow is king instead. For a long term investor, cash flow from dividend payouts, M&A activities, management buy-outs etc will provided the much needed funds for one to re-invest back into the markets and take advantage of current low market prices. If one's portfolio is well diversified and adopt a long term view, there is no need to panic and sell at all.
I have utilized part of the proceeds from Unisteel Technology delisting to re-invest back into the market this month. Will be making some more purchases in October.
My S'pore Stock Portfolio - Top Holdings, cash investment only (correct as at 30 September
Top 30 Holdings (Sing$ Denominated shares)
1. Raffles Education Corp
2. SGX
3. F&N
4. Noble Group
5. SembCorp Marine
6. A-REIT
7. Jardine C&C
8. Cosco Corp
9. Jaya Holdings
10. ComfortDelgro
11. Parkway Holdings
12. CapitaMall Trust
13. KS Energy
14. Keppel Corp
15. SPC
16. Bukit Sembawang Estates
17. SMRT
18. Food Empire
19. CitySpring Intrastructure Trust
20. Wheelock Properties
21. Eng Wah Organization
22. Straits Trading
23. SingTel
24. VICOM
25. Isetan
26. Cerebos Pacific
27. Ascendas India Trust
28. WBL Corp
29. CapitaLand
30. SembCorp Industries
Top 5 Holdings (US$ Denominated shares)
1. Jardine Strategic
2. Dairy Farm
3. Hong Kong Land
4. Mandarin Oriental
5. Datacraft Asia
Top Holdings (HK$ Denominated shares)
1. Tan Chong International
2. Fortune REIT
Top Holding (Aust$ Denominated shares)
1. AV Jennings
Top 5 Holdings (CPF OA investment)
1. Keppel Corp
2. CapitaMall Trust
3. STI ETF
4. A-REIT
5. Eng Wah Organization
My Hong Kong Stock Portfolio (listed on SEHK)
1. Peace Mark Holdings
My Unlisted Company Portfolio
1. JK Tech Investment
2. Automated Touchstone Machines Ltd
My Unit Trust Portfolio:
http://www.fundsupermart.com/main/community/Portfolio_View.svdo?id=P199
Labels: Portfolio
posted by ghchua at 5:35 PM
58 Comments:
ghchua,
people are not convince about your claim to stay through this crisis, but, in the back end, you may be unloading...
Hi jess,
I find it very funny when you said that I have been unloading. As I have said from the start, I am a long term investor and I have a framework in place. There is no reason for me to unload any stocks in my portfolio as I have an investment plan.
If you wondered why I have the cash to invest, I have already mentioned about the Unisteel delisting offer. Unisteel is one of my top 30 holdings and it had been delisted and I have accepted the offer.
You can verify all these information that I have put out at my blog.
ghchua,
are you starting to taste the losses now?
Hi jess,
Try to focus on long term goals rather than short term gains/losses. There is no need for me to "taste" short term losses or "smell" short term gains.
Ultimately, if one have a plan and keep focused, the gains will come in the long term. As I've said before, I have no plan to sell any stocks in my portfolio and there is no need for me to do so as I don't buy on borrowed money or margin.
My dear, i hope you have enough ammunition to see you through the entire crisis....
your plan is going to fail since you are not willing to admit that you are wrong...
you are willing to see your counter popping up and down like a yoyo...
Hi jess,
Of course I have the ammunition to buy during market downturn. The ammunition comes from various sources, i.e. dividends, M&A activities, income etc.
That is why I said there is no need for me to sell any stocks at all. If there is any reason to sell, it is for tactical allocation purposes (i.e. sell one with more allocation to buy another one with lower allocation).
If I am willing to admit that I am wrong, you mean that my plan will not fail? How do you know that my plan is going to fail, since I have not reached my destination yet?
There is no need to be concerned with short term market movements if one have a long term investment plan. The key is to remain diversified, stay consistently invested and reap the rewards with a long term view.
As a matter of fact, i have been monitoring your portfolio for quite sometimes and personally i think it is not a smart move of yours to leave your counters to pick up dividend or wait for M & A activities.. nor even to continue to invest in all counters.
i am sure deep in your heart you must have be lamenting "i should have sell off this or that counter since it tank more than 50% from last year". I believe there are many of your outperforming counters whose value diminish significantly...
And certainly, no matter how diversified you are now, you are still wet since majority of the counters are going in one direction....
The only key thing is to identify good and resilient counters rather than going for all. You are either jack of all counters or master of none.
You know for sure which type you belong to??
Hi jess,
First of all, thanks for reading my blog. Really appreciate it.
I think you have a misconception of diversification. Diversification will diversify away non-systematic company specific risk like business failure, mismanagement, frauds etc. It doesn't diversify away systematic risk.
The risk of holding only a few companies is non-systematic risk like what I have mentioned above. No matter how good a company is, there is a chance that it will fail. I am sure you have seen companies failing recently and mind you, some of them are rated AAA.
Many of my outperforming counters are those that I have not been adding since last year. In any market condition, I will try to find companies to invest in so as to reduce my exposure to any company. So, even if you see some of my companies in the list tanking more than 50%, my portfolio as a whole will not be losing 50%.
I do have some good and resilient counters as you can see. Companies like VICOM, SMRT, ComfortDelgro and even names like Kingsmen, Old Chang Kee, Viz Brandz etc which are not in my top 30 list.
But I am not in my late 40s or above and I cannot afford to invest conservatively. Those good and resilient counters are definitely a part of my portfolio, but I cannot only hold these few. I am investing for long term and therefore I got to have a combination of growth, value, dividend etc in my portfolio. Growth stocks will tank in the current market condition because growth is no longer with expectations. But they will come back and patience is needed for a long term investor.
I really appreciate the long explanation from you too...
I do agree that there are a few resilient counters as what you have mentioned below. But, they are far drawf in number compare to the majority of the counters.
And, i certainly can't correlate what you hsve mentioned to my observation on the market.
I believe most if not all the counters are basically kissing ground zero.
So, if you are into most of the SGX counters, it is really hard to believe that you are still staying above the water since by using the normal average computation, you would have kiss ground zero also.
I agree what you explain about diversification, but, you are towards the extreme which i would not consider diversification (if you would agree with me).
Especially, when the US crisis is looming now, more of such non-systematic company specific risk like business failure will occur which is why i said a concentrated and prudent strategy is more appropriate rather throwing out all darts out without knowing where is the bull eye..
Just another point to add on. you mention that "But I am not in my late 40s or above and I cannot afford to invest conservatively".
I thought you are currently investing conservatively by your so call diversification..
I don't really get what are you claiming. Can you then tell me what is to invest conservatively?
Hi jess,
Personally, I feel that investing 100% in equities is moderate to high risk. To invest conservatively, a portfolio should contain mostly in fixed income, which can be bonds, money markets, T-bills etc.
Good and resilient counters are still equities. Therefore, I cannot consider them as conservative investments, unless I am buying their bonds.
A diversification strategy is also not an equal focused strategy. Which means, I can overweight or underweight any stocks in my portfolio. If you have observed, I don't have much China related companies in my top 30 list. This is because I purposely underweight most of these high risk China growth stocks. Therefore, it is not a normal average computation and throwing all darts out. Some darts are more powerful than others.
Also, some of the stocks had been bought at prices which I am comfortable with at that point in time. I do not chase any of these counters and I will choose undervalued stocks to buy in any market conditions.
Business failure is part of the risk in equity investment. It does not have to be US crisis. Crisis or not, some business will still fail. Those business which can survive this crisis will become stronger and therefore their share price will grow in the long term. Which means, some companies will fail, some will become bigger because they can buy these failed companies assets at fire sale price.
What I want to do is to get exposure to the market because in the long term, companies which survive will do well in general. I cannot believe that all companies listed on SGX will fail in this crisis. Even if 10% failed, I will still be ok as the surviving companies will become stronger.
I am not going into this game aiming to win every battle. I am going in with the intention to win the war.
Frankly speaking, no matter your dart are powerful or weak ones, the overall effect is still the same....
All will head for ground zero sooner or later...
It is really how fast or how slow it will reach ground level...
It is a matter of times...
Hi jess,
Well, I guess it is the confidence level of the market. Obviously, there are many panic sellers out there and hedge funds are also unwinding most of their holdings to meet redemptions.
But I do believe that markets are leading indicators. When signs of recovery is there, markets will go up before the economy recovers. There is no point looking at which companies will go under next because these are lagging indicators which is due to the credit crisis.
I don't believe that all stocks will go to zero. This is doomsday situation. If that happens, not only stock investors will suffer. Everybody will suffer.
I didn't say that all counters will go to zero. I also know that it is practical impossible or else i would not be in this blog to debate with you.
What i am trying to say is that don't you think by investing in all counters (almost the entire SGX counters) limit your escape route.
Again, i know you will mention that you are a long term investor, but, certainly, i felt that you could have do alot better by taking profit and run. But, you prefer to sink with them. I guess you are over emotional and perhap attach to counters.
But, this time round it is going to be real exciting, definitely than F1.
Hi jess,
Limit of escape route? I don't think so. I can always hedge my exposure by selling futures or buying put warrants. There is no need to sell stocks.
But I don't want to hedge because I am not concerned with short term market movements.
Hi ghchua,
A question. Do you sell when the stock price is obviously way ahead of the business.
For example, you bought a stock with the expected annual return of 6%. The stock price appreciated 300% (equivalent to 50 years of income discounting future growth).
What would you do in this case? Sell all, sell partially, buy, or do nothing?!?!
Hi cif5000,
Because my portfolio is well-diversified, I actually do not need to sell any stock even if it went up by 300%. I think Raffles Education (as an example) comes into your mind when you are writing that post.
What I am doing is that instead of selling Raffles Education, I continue to add onto my other holdings. That will indirectly reduce my portfolio exposure to Raffles Education because the other counters' weightage in my portfolio had been increased.
Although some stocks in my portfolio are overvalued, my portfolio as a whole is not. Therefore, there is no need to sell any stocks at all.
I manage my stock investment on a portfolio basis.
ghchua,
I have been following your blog closely and i must admit you are a role model for me.
I am just wondering if you could share your current portfolio value with all?
JL
Thanks for the answer. It's a good one, I think. I asked because I am trying to develop a selling strategy for extremely over-valued stocks.
Hi john,
I did reveal a bit at sgfunds.com forum previously that my stock portfolio is more than $300K. I don't think I would want to reveal anything more than that.
The size of the portfolio doesn't really matter. What matters is having a framework to start to follow-up on your investment plan. Once the framework is in place, the others should fall automatically.
ghchua,
that is quite sometimes back. what i would like to find out is your current portfolio value.
JL
i believe John is interested in finding out if your diversification work for a drowning market...
or are you planning escape route....
jess, do you have a blog too?
Hi jess,
I think we must be fair to the diversification strategy. It works, but it doesn't mean that you will not suffer short term losses. The key, as I've always said, is to adopt a long term view of your investments. Do not be too focused on short term market movements.
No strategy is perfect. The key is to adopt to one strategy that you are comfortable with and stick with it. There is no point trying to guess the market bottom and then buying and selling according to market condition. Because nobody knows when market will bottom.
Holding cash is also not a good long term strategy as interest rate is low. With central banks cutting interest rates around the world, rates will be lower. People will be looking to get back into the market again after this series of panic selling.
The markets had withstand the test of every crisis. Be it Asia Financial crisis, Oil shock etc. The key thing here is confidence. Currently, what we are seeing is lack of confidence on the part of investors and even banks which refrain from lending money between themselves.
Once confidence is back, market will re-adjust back.
ghchua,
can you please enlightened me on my question. tks
JL
There is something i don't understand over here.
I rememember previously you did mention in your blog that diversification strategy take care of all type of market: bull, range as well as BEAR. Simply because in any market, some counters will be up, some will be down, hence, by having diversification will take care of all these noises...
But, it seems the noises are getting louder and louder and i have even warn you in my earlier blog that all counters seem to be kissing ground ZERO and i believe we are heading there. So your method won't work over here. Take a look at your UT portfolio and you will agree that you are falling from a high or over 100k to around 80k now.
So, maybe you should have warn all people over here on your strategy else they may unknowingly follow your footstep and sink deeper and deeper.
Just my 2 cents worth...
Hi jess,
I think most investors out there are too focused on short term market movements. If you are a short term trader (investor), whether you diversified or not doesn't make any much difference, since you are attempting to time the market movements or cycles.
I have previously stated that diversification reduces non-systematic risk like company failures. What I meant was that with this diversification strategy, one can ride through any market conditions, be it bull, bear or range. It doesn't mean that one will not experience short term losses with this strategy.
But having said that, one should have an asset allocation strategy too. No matter how much you have diversified in stocks, it is still only one asset class. And therefore, you are still experiencing equity risk.
My UT portfolio is for very long term investment, since it is invested using CPF monies and most possibly I will cash out at age 55 or even later. There is still a long way to go and one should not judge this portfolio by looking at short term returns. I am looking at a time horizon of at least 20 years for my UT investment. If CPF Board changes its rule again, it might be have a longer investment term. :(
ghchua,
Why are you ignoring my question. Can you please response? I believe we are all interested in knowing your portfolio value now.
JL
Hi john,
It is not fruitful to focus on portfolio value alone. Because I have been adding new funds into the portfolio every month and I didn't calculate returns, portfolio value can be very misleading, simply because it can be increased with new funds added from my income and not only generated from the portfolio alone.
What I can reveal is from my last month's CDP statement, it is still above $300K.
ghchua,
sorry to say that i am quite suprise by your answer since most of the counters are way below their IPO prices.
Unless you are buying all below ipo prices, which is a practical impossibility.
JL
Hi john,
IPO prices? Sorry, I don't get what you meant.
Some counters had been listed for quite sometime. I don't even know their IPO price. I guess you should be focused on the value of the stock, rather than the price of the counter.
ghchua,
how do you determine the value of the counter?
JL
Hi John,
Few methods you can start exploring. P/Es, P/B, DCA (Discounted Cashflow) etc.
Basically, what value investing means is to buy a stock at a price which is less than the intrinsic value of the stock that you have estimated. I said estimated because one can never be 100% sure.
Hi ghchua,
Thks for visiting my blog :)
Wow, you have such a wide diversified portfolio. Graham style of investing?
Take care :)
Hi la papillion,
Hmm. Not really Benjamin Graham as he advocates buying net net stocks. But I do like his diversification way of investing. You can say that I am a fan of Graham though.
In this current market, I can start using his net net strategy though. :) But when I construct my portfolio, I wanted a combination of growth, value, dividend etc stocks. Also, I like the cash flow from my portfolio in a form of dividends flowing in every month.
ghchua,
i am soo happy...i believe you are also happy, right...
all the support level are broken, is your portfolio support level broken too?
Hi jess,
There is no support level for my portfolio. But current levels are attractive for me to buy some of those stocks which I might not consider last time due to valuation grounds.
ghchua,
i believe you know the situation, but you are trying to sound brave and cool...
you know yourself the best and stop deceiving yourself...or the rest...
Hi jess,
I am not deceiving myself. As I've said before, I am a long term investor and therefore, the current downturn presents good opportunities to add onto my current portfolio.
Our very own GIC, Temasek etc are also long term investors. Do you see them panic and sell out all their holdings? Obviously not. Unless you are seeing them as deceiving themselves too.
ghchua,
Again you are wrong...
I believe GIC, Temasek buy into good counters and they will realise profit once it is achieved.
You are different, you do blanket investment.. you buy all counters as you claim and you hold on to them tightly and prefer to sink with them....
In doing so, you are misleading some investor into adopting your so call "blanket investment" approach which is even more risker.
Hi jess,
I beg to differ with you. You said that basically all stocks are kissing ground zero. So, does it make any difference if you realize profits and re-invest them into a few counters? No difference I am afraid, since almost all stocks are down at the current moment.
And if you look at GIC and Temasek investments, most of them are for very long term. The only difference is that I am holding a lot of stocks and they are holding less.
And my portfolio is not a "blanket" investment. As I've said before, I do overweight and underweight counters in my portfolio. Remember that when you are buying a stock, you are buying a business. Which means, you trust those people managing the business. Whether it is crisis or not, those people will have to manage the business for you. You have to give them time to show their results. Stock prices is just a reflection of the value the market gives the business. It doesn't mean that the company is worth that much.
Lastly, I never call on everyone to adopt my investment approach. I am sharing, not recommending. Therefore, you cannot say that I mislead anyone here.
ghchua,
As i have mentioned earlier, their style of investing is to buy into good counters and realise the profit when it is reached. I believe they have realised it when it is at the peak period and not now...
Now, the only way for you or for other retail investor is to buy and buy and buy. I have heard you mention about your portfolio in a few blogs in sgfund that it is still above $300k.
It is really hard to believe that since any counters x Zero = Zero and we are all getting there soon... ;p
Hi jess,
They realized those profits and then re-invest into US banks? If they realized those profits and re-invest back into the market, they are still sitting on paper losses.
As you can see, in bear markets, all companies go down, regardless of whether they are good or bad ones. So, those who realized their profits earlier, congratulations to them but when are they getting back? Don't tell me that they are going to sit on those cash and do nothing. They can't retire anyway by sitting on cash.
As I've said before, those money that I have invested into the market are my spare cash for retirement. I have no intention to cash out at this moment, since I am not retiring now anyway. Therefore, I can hold onto my portfolio while collecting dividends at the same time to re-invest back into the market. Yes, markets can go down further but I am not focusing on short term movements.
Maybe you can enlighten me what are you going to do next? Sit on cash and retire comfortably?
ghchua,
This is the first time you are admitting that in bear market, every counters tanked no matter if they are good or bad companies. I remember you saying that even in bear market, some counters rally instead.
My point to you is again any counters x Zero = Zero so what is the diff if you are investing in all counters or single counter, you are still not being insulated...
Now, your portfolio should be shrinking in size dramatically since all the bluechip counters cannot defy gravity.... and i really do not think your portfolio can still maintain the support value of greater than 300k anymore
Hi jess,
The difference is that having a diversified portfolio will reduce the impact of company failures. Stock prices moving down in a bear market is not much of a concern of a long term investor. But a company that failed will no longer be able to come back even when the market recovers.
That is the main difference of investing in a diversified portfolio and a single counter.
Yes, this crisis had been much worse than I had expected. But it didn't change my view as I still maintain that with long term investment, one should not be too concerned with short term market movements.
As I've said before, one can't retire by holding cash and collecting miserable interest.
ghchua,
I do not totally agree with what you mentioned about company going under..which causes you to diversify.. The more powerful or less powerful darts will all ended up at the ground.. that is for sure...
At the end of the day, i am really glad that you have acknowledge that "this crisis had been much worse than I had expected" after you have proclaimed so much about your portfolio going through the 911, SAR, etc..
You should have know it is going to be worst and instead of painting a bright picture in the blog, perhap you should have warned the bloggers. There is alot of indicators around (since last year) if you are to read widely. (Even the Joseph Cycle predicted that).
This is to save those innocent retail investor from being getting burnt in adopting your method.
And, i am not saying that by holding cash, one can retire. One should know when to ENTER... and when to LEAVE the market... that is the most important thing...
Hi jess,
It is true that my portfolio went through SARS, 911 etc. In fact, during 911 period, SGX was trading at below $1, CapitaLand below $1 etc. We haven't seen this kind of levels yet in this current crisis.
But I hold my portfolio throughout all these crisis. And at the end of the day, that is the most important thing - I have faith in long term investing. Whether this crisis had been "worse or better" than I have expected doesn't really matters.
I don't time the market and therefore I do not subscribe to Joseph Cycle or technical analysis. I don't try to time market entry and exit because I am investing in business. You pay director fees for those people inside the business to manage it for you, including all these business cycles. I am a long term investor and therefore, my investment plan decides when I allocate my assets and not by market cycles.
I guess readers should adopt a long term view of their investments if they follow my investment method. I have said it many times here. I am in for long term so don't judge me based on short term market movements.
Hi jess,
I guess it is ok to have a difference in views and it is not the first time that we disagree. :)
My view about diversification is very simple. I am in for long term investing and therefore I will diversify to reduce company specific risk. A trader do not need to diversifiy, since he/she will be doing short term trades and therefore there is virtually no risk of being stuck with a company that failed.
A company that failed doesn't mean that it can recover during market recovery. You might get nothing back and the stock is delisted. That is permanent damage being done and the only way to avoid this major damage is to diversify.
Share price movements is different. As long as the company is around, there is a chance that the share price might recover. Therefore, I don't view share price movement as a major risk, but company going under is a major risk to me.
Hi Jess and ghchua, interesting dialogue between you 2. Just a little thought of mine here.
Let’s assume that Jess assumption that all counters in the world go to ground zero, meaning worthless.
What will happen next?
We know stock prices reflect earnings potential. All stocks going to ground zero will mean that all companies are expected to earn zero earnings and will eventually go bankrupt.
There will be massive unemployment including civil services as governments will be unable to finance salaries since there is no tax revenue from businesses and employees.
There will be no use for money anyway since most if not all businesses have collapsed.
Banks will also collapse since there is no business to lend and money serves no purpose.
Finally, the government will collapse as it is unable to solve bread and butter problems.
We may revert to barter trade and growing our own food.
Caveman era?
Even if you are sitting on 10 million dollars, it would not make any difference too. Investors and non investors will suffer in ground zero scenario.
We can see from the past 100 years’ history that market crashes occur, rather frequently. However, market recovery also takes place definitely.
Are we looking at slow but sure recovery or the ground zero scenario?
Which is more likely?
Market timing is important only when you are right. But how accurate can we time to enter and exit at the right time?
Can we do it all the time?
Even for Buffet, he has never bought at the bottom and sold at the peak.
It is a tad too early to fault ghchua’s investment plan when he is only halfway the journey.
Hi sgbluechip,
Stock prices won't go to ground zero. It will be end of the world if that happens. It not only mean that the business of company is worth zero. It also meant that the assets that the company is holding are all worthless. If that is the case, then our HDB flats will be worthless as well. A scary doomsday situation.
Instead of looking at doomsday, we should be positive. When we invest in stocks, we invest in the company's assets and business. We also invest in the talents inside the company to manage the business for us. If we try to time the market based on cycles, when we are trying to do is actually to do our own timing while still hiring those people inside the company to manage the business for us. A kind of contradiction right? And by timing market cycles, we didn't give the people inside the company time to manage the business for us. Remember that good companies can tide through various market cycles, and some even profitable during recession.
Unless you are just trading stocks, look at stock price levels and only treating them as counters, then it is a different story. Long term doesn't matter for traders as they are basically managing their own risk and doing short term trading. In this case, instruments like CFDs, futures, options etc might be more suitable for them instead of stocks.
I view stock investing as business investing.
sgbluechip & ghchua,
I do enjoy & like the well coordinated speech from both of you.
sgbluechip,
In your blog, i believe you have also time the market as evidence from the various bluechip counters that you have taken a liking to... You have taken a profit, so isn't it timing the market? If not, you would not be buying low and selling high, am i right to say so. So what is timing the market? It is to buy low and sell high, as simple as that, so, is it plain evidence that you too are timing the market.
(I understand some bloggers have even questioned your strategy).
Maybe, i should have refined my saying about counters going to ground zero, it can also mean company going brankrupt, delist especially for now, etc... where you will get peanut back.. ghchua is very experience in all this... since he has a large no. of companies under his care.
Also, Dennis Ng's article in today Sunday Times is a good example of investment. He painted a good picture to see if one should stay invested throughout the course or wait to get the best opportunity in the market. From the start of the downturn till now, certainly you can't sell at the highest, but, you would not have gain much then if you were to hold on to the basket of couters. ghchua know the best that if he is to take profit last year and buy back now, he would have double his fortune, am i right to say that. It is not about timing the market, this trend is soo obvious to even the taxi driver. The only thing to stay invested is in landbanking, that is "buy to wait", but, not in stock as it don't applies anymore.
The only thing that i see probably in ghchua style of investment, is that even if market rallies before it set for a crash course, he can't do much since he is holding on to every counters in SGX. Which one should he sell first? That is so many balls on his hand for him to sell off.
Hi jess,
There is no need for me to sell my stocks if let's say I wanted to protect my portfolio from market movements. I can short futures. I can buy put warrants. But I didn't do any of these as I am in for long term and I do not want to make my decision based on short term market movements.
So, no. I do not need to sell even if I predicted that market will come down.
Then the question will be - When will I sell? My answer is based on my investment objective. If let's say I am now in my late 40s/early 50s, I will progressively sell out my portfolio slowly to reduce allocation from my equities holdings. That is part of my asset allocation strategy based on my investment objective, and not based on market movements. Then you might ask, what if the market crashes during that time? No worries. I will progressively sell out, and not sell all in one go.
As for Dennis Ng's comments, his view is that one can buy when he sells. My view is that I can still buy even if I don't sell. Because I can re-invest my dividends, my income, my proceeds from M&A activities etc. So, although I am holding onto my current portfolio, I am still adding onto it every month. While if one sells last year, he is buying everything now? Can he buying everything in one go? Or can he time it so accurately this time and buy now such that it is near bottom? Is now the bottom? Yes? No? Questions.....
Remember, people are calling for doomsday just a few weeks back. I guess maybe you should ask Dennis when he is buying.
As for me, I just ignore all these "noises" and continue buying every month.
Hi jess,
Interesting that you bought out landbanking. You said "buy to wait" for landbanking but you said that it didn't apply for stocks. However, my question to you is - Why it didn't apply to stocks? You mean you do not need to "buy to wait" for stocks? You buy a company and then no need to wait? You need time for a company to grow and generate profits for shareholders, which will be reflected in the form of increasing share price and dividends in the long run.
You see, it is the same concept. It is just that one had been "forced" to wait in landbanking because they have been "locked in". While one can choose to sell a stock at anytime since there is a price every second and it is more liquid.
Hi Jess, thanks for replying. I do enjoy your thought provoking comments which set me thinking on investing.
I do have my fair share of questioning and nasty remarks on my portfolio management throughout my investment journey. No doubt I am also timing the markets, finding the best price to buy and hoping to sell at a profit. I aspire to be a hybrid investor and be nimble to take profits whenever prices reach my comfort levels.
Embarrassingly, my strategy has not worked wonderfully but till date I have managed to contain losses to an acceptable level.
I am not defending ghchua's strategy because I follow his style or endorse his strategy. However, I do admire his steadfast attitude and belief in his investment style. This style has enabled him to face the harshest turbulence of the market and yet be firmly rooted on the maxims which form the foundation of his strategy.
I do not know about you, but I find it extremely important to discover one’s investment strategy that fits one’s character. The sound principles behind his style will give one the strength to withstand all odds that will come along to sway him away from his original principles. It is in fact easy to give up on one’s style and drift to another seemingly profitable sphere of thought given the market turmoil today.
Perhaps I am looking at an investment style like a religion, but it is all up to an individual belief right? We are ultimately only accountable to ourselves in the investment world.
Even without the benefit of hindsight, you have mentioned several times that ghchua strategy is not going to work, but would you have expected that market would tank 30% last month? I doubt so or you would have profited millions from derivatives instead of buying shares.
I still do not think that market timing can be use to form the core strategy of anyone’s portfolio. To attempt predicting the future markets movement accurately is attempting to be God. I guess I still have to admit I am only human then. Haha…
sgbluechip & ghchua,
It sound very exciting now that we have 3 parties debating. Certainity it would serve as eye opener to the bloggers.
Again i am not against anybody investment strategy over here. I am just trying to share my view. No offend at all.
Landbanking have its fair share of investment pitfall. There is a saying if you were to invest in landbanking, that is to adopt buy to wait, rather than wait to buy approach. The reason is obvious as land is getting limited, so if you buy the tier early, you will get in at a better pricing compare to another one getting in at the 2nd or 3rd tier. Just like the case of buying a property in Singapore now vs 10 years ago. I believe right now everyone is lamenting that he should have buy earlier because property price would not fall back to what it is 10 years ago.
Now, back to shares. Buy to wait is not applicable in the current economy because you never know when the price will recover. (i have to put a disclaimer that this refer to last year). If you know the economy going to turn sour, probably the best bet is to liquid your investment and wait for opportunity. So, instead people just adopt wait to buy approach which is to wait for good opportunity as it equal bad crisis..
Again, you will be commenting that you are a long term investor...blah blah..I am fine with it since at the end of the day as what sgbluechip commented, one is "accountable to ourselves in the investment world".
My point is that certainly one can get away from all the noise and one need not be selling at the extreme top or buying at the extreme bottom in order to make a decent profit... am i right to say that.. since no one i believe is able to repeat this skill at all.. unless you are facing a few computers monitoring the counters at the same time... day in day out.. and you can get what other thousands of investor, punter, speculator are thinking in their head...
I am not God like either of you, but, i do feel that you need not be God inorder to know what is brewing in the market.., etc... The market is driven entirely by sentiment.. We are all inter-related to HSI, DJIA, etc...
The point that i am driving across is that by selling and buying back certainly will matter much to a person portfolio compare to buy and hold strategy since you are treating all your counters like yoyo..by adopting a buy and hold approach....
Hi jess,
If you believe in long term investing, you should try to ignore short term price movements. Yes, price move like yoyo in a volatile market like these days. Ignore it. It doesn't matter since you are not near retirement and therefore there is no need to sell anything. Invest with your spare cash only. You can choose to ignore noises even if you are in the market. The solution is to have an investment plan. If you have a plan and stick to it, you can ignore these noises.
Economy not doing well doesn't mean all companies will not be profitable. In fact, market will rally even before the economy recovers. If you wait until things are better, markets would have moved up way above bottom.
So what if it is a long recession? Again, nobody knows whether this recession is short or long. But if it is a long drawn out recession, a long term investor with an investment plan would have consistently buy into the market anyway. The longer the recession, the longer the period which a long term investor can accumulate shares at low prices. The shorter the recession, a long term investor can still benefit since the market will probably rally ahead and he is almost 100% invested at all times.
As I said before (on a hindsight though), if one had predicted this market downturn and sold out last year, then my question is when is he getting back into the market? Now? 1 month later? 3 months later? 6 months later? Is now an opportunity? Yes? No?
Remember that when you sell and buy back again, you are making two decisions. You have to get both of them correct. i.e. Sell last year and buy........now?
If you choose to hold on, you only make one decision. Which has a better chance of succeeding? Making one or two decisions?
ghchua,
Again i don't agree with what you said now.. It don't make sense at all..
Ask yourself, in this current situation (from last year till now), it is very difficult to make sense of when to sell and when to buy...?
Is it soo difficult to get it right...even taxi driver can get it right, not to mention that you are in the investment field for such a long time....
see how much has the market come down and even though you get in at this point in time or later, you will still stand to gain if you have offload last year....
The thing is to be opened to what is happening out in the world now and make decision basing on that...
Do not constantly blame it on the market noises, etc.. In engineering term, i do not think this is nosie, i think this is more of a system having to go into equibrium...
Certainly, the economy turn around is clear to all and even you, so it don't sound as if it is difficult to make 2 decisions that is to sell and buy..
Don't you agree with me...
Hi jess,
I don't agree with you here. Just because a taxi driver got it right doesn't mean that it is a no-brainer. If it is a no-brainer, then why the central governments around the world got it wrong? If they had got it right, they would have implemented policies earlier to stop this recession, rather than dishing out money into the system now.
The thing about hindsight investing is that it is always right to look back. A lot of people had said that they "got it right" by selling out last year. Then the question I ask them back is, "Since you are so sure that you are right, why don't you short the market all the way down from the top till now? You would have made more money by shorting, rather than sitting on the sideline.....".
As I've said before, I don't make investment decisions based on short term market movements. To me, short term market movements or even cycle is noise to me. I am looking at a long term horizon, which means at least 10 years or more.
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