My Portfolio Management Philosophy

Below is a comparison of my Top-10 holdings at end 24 Oct and end Aug 2019.

End Oct-19 End Aug-19
1. Singtel (same) Singtel
2. OUE (up from #10) OUE Com Reit
3. Eagle Hospitality (up from #9) Raffles Medical
4. Centurion (-) Q&M
5. Q&M (down from #4) Accordia Golf
6. Raffles Medical (down from #3) CapitaRetailChina
7. OUE Com Reit (down from #2) ManulifeReit
8. Frasers Prop (-) SPH
9. SPH (down from #8) Eagle Hospitality
10. Ho Bee (-) OUE

As I mentioned in my previous blog, I noticed that there was quite a fair bit of trading (churning) over the last 2 months. Except for Singtel that continues to hold the top position, the rest have been changed.

Noticeably, I added more shares of OUE, Eagle Hospitality, Centurion, Frasers Property and Ho Bee to my holding. Interestingly as I now reflect on this observations, they are all property related stocks.

Hmm … it now sets me thinking if I am overly-exposed to the property sector.

The other major sector in my portfolio is Healthcare and specifically via my holding in Raffles Medical and Q&M. While I am happy to continue to hold them, I took the opportunity to trim my holding recently when they moved up.

Just to take this opportunity to share some of my portfolio management philosophy with you … 

(1) I will avoid having any single stock that accounts for > 5% of my portfolio value. The only exception that I have at the moment is Singtel. But as opportunity arises, like in last one week, I would trim it down progressively.

(2) The other “philosophy’ that I hold in portfolio management is that I try to minimise the number of stocks that account individually for >3%. At the moment, I have Centurion, Eagles and OUE occupying this space. I only do that for opportunistic reasons and only because I feel that they are significantly undervalue. Once the share price re-bounces, I will take profit to reduce my exposure to < 3%.

(3) I am very comfortable to hold those stocks with < 3% exposure for the long term and this, I usually stop the profit taking process below that level …

Sometimes, it is good to take step back to review our trading activities and reflect the health and concentration of our portfolio. The question is how frequent. I think quarterly would be good.

In my view, risk management is an equally important skill/knowledge in equities investment as compared to be able to value a company properly. Precisely for the reasons that stock market is inherently unpredictable, full of emotional behaviour plus we cannot foresee the future and especially black swan events.

Hope you find this useful to you in some ways.

Have a great long weekend.

With regards,

Warriortan

 

 

 

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