Similar to what I have done previously, I will go through my dividend income first. For my SGD-denominated counters, the trend in dividends received pales in comparison to 2016. This could be attributed to the following reasons: (a) profit-taking on some of my counters in the earlier half of the year, (b) poor economic conditions leading to some counters delivering lower dividends, (c) delisting of yet another income counter (Croesus Retail Trust), and (d) delays in the declaration of distributions (RHT Health Trust). In 2018, I expect dividends to drop further.
In contrast, the dividend payout from my USD-denominated counters increased. This is primarily due to capital injections into such counters. Percentage-wise, it looks like huge gains. However, I would like to point readers to the y-axis. In dollar terms, it is insignificant. I intend to build-up this portion of my portfolio slowly. Partly to get my feet wet and ease myself into the US stock market and partly to minimize the damage in case of a market correction. Whenever the US market allows, I will continue to nibble at counters in my watch list.
In Q4 2017, I could not resist the temptation and bought quite a number of counters, albeit in small quantities.
I purchased small quantities of Yeo Hiap Seng for their investment properties. Technically, it is not an asset play (stock price < cash + real estate + securities), but I am treating it as such. Yes, this is a new position.
I initiated a new small-ish position in SATS in October when the price fell. Using technical indicators, the counter was at its 52-week low and is on a downtrend. However, its historical PE trend indicated otherwise. Being cautious, I intend to gradually increase the size of accumulation in proportion to the extent of price depression. However, the price rebounded shortly after my purchase. Anyway, I am holding this counter for its income-generating ability.
I added to my Singtel position in November when the price fell.
I initiated a new small-ish position in HongKong Land in mid-November when the price fell. Similar to SATS, I intend to gradually increase the size of accumulation in proportion to the extent of price depression. Based on historical trends, HongKong Land usually trades at a ~50 percent discount to book value. If, however, you value it using current yield, HongKong Land still has more room for its price to drop (7% yield at its best during the GFC, see here).
I added to my position/averaged-up in Welltower REIT just last week after monitoring its performance for the past one year (I first initiated a position in the REIT in December 2016). My position is still small.
I initiated a new small-ish position in Thai Beverage just a few days back. I have been mulling over Thai Beverage for quite some time. "Valuation looks good, but what if the market corrects and I could get a better deal?" "Oops, I think I missed the boat." "Let's wait for that entry price again." "Doesn't seems like it will ever hit that particular price again unless there's a market crash." Similar to SATS and HongKong Land above, I intend to gradually increase the size of accumulation in proportion to the extent of price depression.
I have also added some more (physical) gold to my portfolio.
Using the XIRR function in Excel, my portfolio returns is as follow:
For my SGD-denominated portfolio:
Returns for Year 2017: 19.00%
Annualized returns since portfolio inception (March 2015): 11.60%
For my USD-denominated portfolio:
Returns for Year 2017: 20.09%
Annualized returns since portfolio inception (March 2016): 19.61%
My USD-denominated portfolio includes SGX counters that are traded in USD. Specifically, Dairy Farm, Mandarin Oriental, and HongKong Land.
There's no typo error in the portfolio inception date. The first counter which I purchased that is traded in USD was Dairy Farm in March 2016. The very first counter which started my investment journey was Nikko AM STI ETF in March 2015.
Oh wow! The returns from my USD-denominated portfolio comes as a real surprise. I vaguely recall all of my US consumer staples stocks bleeding very badly just last month. They have rebounded quite well. The high returns probably come from my holding of Dairy Farm since March 2016 as well as my complete divestment of Mandarin Oriental in Q2 2017 after the company tried to place the Excelsior on the market (see here).
Meanwhile, the returns for my SGD-denominated portfolio is boosted by the high-quality REITs (MIT, PLife, First REIT, FCT, CMT) as well as other yield stocks (ST Engineering, SGX, FCL) which I have collected cheaply and have been holding on tightly ever since. In Q2 2017, I have taken profit/cut loss on a number of counters, which could have contributed to the returns (see here).
Moving forward, I expect my returns to fall.
It would not be fair if I do not point out the duds in my portfolio.
It would not be fair if I do not point out the duds in my portfolio.
When I do not include dividends, the following counters are in the red: Nera Tel, Starhill, Vicom, Singtel, Kingsmen, QAF, RMG, Yeo Hiap Seng, and Thai Beverage.
After taking into account the dividends received, the following counters are still in the red: Nera Tel, Singtel, Kingsmen, QAF, RMG, Yeo Hiap Seng, and Thai Beverage.
I am not too worried. The potential damage that some of the more-worrisome counters could do to my portfolio is contained through position sizing while I am keen to build a bigger position for some of the other bleeding counters.
So much for trying to time the market and anticipating a market crash. I exited T Rowe Price, iFAST, and Hong Leong Finance thinking that these counters would be hit the hardest in a market crash. Apparently, the market hasn't crashed yet and I look like a complete fool. In fact, I exited T Rowe Price and iFAST at a loss. As of today, T Rowe Price continues to hit higher highs.
Strangely, I am at peace with my decision to divest those counters. I guess it must be my inclination to rather protect my capital from potential losses in a market crash rather than reveling in unrealized gains.
The only counter which I really have to kick myself is United Industrial Corporation. I chickened out and locked in my profits as I am uncertain how the market would react to asset plays during a crash. Oh well.
Along similar lines, I have also divested my STI ETF in Q2 2017. So much for market timing a market crash. -.-
If there is a market crash, I will be reinstating my POSB Invest Saver account to automate the collection of STI ETF on the cheap.
My investing strategy entails focusing on income from multiple sources. There should not be any sort of over-reliance on any one or few counters. As a result, I diversify/diworsify (depending on how you see it) a lot.
What I currently have are small positions across many counters. At one time, my largest counter has a market value of $9000. On average, the market value of each of my counters stands at around $1500. Even though I am sitting on plenty of unrealized gains, it makes absolutely no sense for me to lock in profits for some of my smaller positions. I am unable to sell half of my holdings since commission charges would wipe out the returns (good % returns; poor $ returns). Conversely, selling all means killing the golden goose permanently.
Come hell or high water, I would have to be comfortable with seeing my unrealized gains evaporate in a market crash.
Net worth breakdown
Compared to my Q3 2017 update, there does not seem to be much change in my net worth breakdown. Phew! With all the buying in Q4 2017, I am quite surprised that the pie chart did not change much.
As per before, quoting my Q3 2017 update, "The pie chart depicts the breakdown in my net worth across the various asset classes in percentage (pie chart neither includes my CPF nor my emergency fund). To be conservative, I computed my precious metals allocation at spot price even though I am holding everything in physicals."
Strategy moving forward
I'll continue to build up my cash reserves. As and when the market allows, I will continue adding small positions or small amounts to my existing positions.
With plenty of consumer staples (Dairy Farm, Sheng Siong, Thai Beverage, Yeo Hiap Seng, QAF, Kimberly Clark, J.M. Smucker, Hormel Foods, General Mills) and healthcare (PLife, First REIT, RHT Health Trust, RMG, ISEC, Welltower REIT, Abbott Laboratories) stocks, a relatively high precious metals and cash levels, I hope to ride out the market crash.
Thanks for reading!