I haven’t been blogging as actively as I wished for the last few weeks but since my last post, I have received 11 new subscribers. Thank you very much for your support.
Our local STI has not been kind to us in the last fortnight. From its last peak of 3615 points achieved on 2 May, it has now dropped 9%, and last week was the worst week in this decline. STI has now literally returned all the gains it made this year and more. Compared to end 2017, it is down 4% already. Just talking about it feels terrible.
My portfolio is not spared, losing 6% value year-to-date. Thankfully, the 3.5% dividend yield gained so far helps to reduce the absolute loss for the year to about 2.5% of my total portfolio value. Still, heartaches.
However, I believe in staying invested through peaks and troughs and in fact, over time, I have learned not to be afraid of stock market downturn but rather I should take full use of the opportunity to accumulate shares of fundamentally strong and profitable companies. One strategy that I often used in a downturn is to swap shares => swapping shares from weaker to stronger companies, from more speculative SME counters to solid blue chips, from fully valued to under-valued companies.
I did this same trick again in the last one week when the selling was quite ferocious at times. Happy to share what I did …. see below
- SPH at $2.65
- AIMS AMP Capital Reit at $1.39
- Wilmar at $3.26
and used the proceeds to BUY
- Capitaland at $3.2
- Frasers Property at $1.7
- Suntec Reit at $1.65
- Capitaland China Retail Trust at $1.49
which I thought they were trading at good value.
I would have bought Singtel and Starhill Global Reit too if not because they have already taken up 5% each of my portfolio. I think both of them are super undervalued. 5% is my unspoken limit for a single stock to avoid concentration of risk.
Actually, if I have more free cash, I would not have sold any of these stocks. But in reality, money is always limited so in my opinion, the next best thing compared to simply sit there and do nothing in a downturn is to look out for companies to swap and be more ready for the rebound.
I have been thinking of “what-if” scenarios … if the market starts to rebound, I will be most happy to just sit in, enjoy the ride and collect dividends. If the market continues its decline (slowly), I will continue to watch out for companies to swap. If the market has a sharp fall, I will bring out my emergency fund for a quick punt => in and out swiftly.
By the way, I have also opened a margin account after analyzing and thinking that it will be a useful tool to have. I plan to talk more about it in my next blog.
Meanwhile, take care and have a great investment week ahead.
Stay invested if you can 🙂