Portfolio Updates: April - May'16

Okay. I'm late and irregular with my blogpost again, which is not a surprise really.

Can't think of any further excuses so I'm not going to make any up. Take it that I'm plain lazy😌

Anyway, the market has been rather boring for the month of Apr-May'16. Maybe it's due to my lack of wisdom and effort, I was either not able to detect any buying opportunities, or I was hesitant in making buy calls on the stocks I have shortlisted.

As it is the month of May'16, I had to make purchase of ETFs as detailed in my earlier asset allocation strategy. Hence, I made a no-brainer purchase of 55 shares of VWRD during May'16.

On a side note, I have been reading up on several other prominent financial blogs, especially on our "pioneers" in the financial blogosphere. As a novice, reading these blogs is certainly enriching and most importantly, making me much more aware on what I do not know, fueling the hunger in me to learn more.

Thanks to all "pioneers"! Hope you guys will continue with your sharing for I certainly appreciate it:)

Okay, so back to the point of this blogpost; an overview of my portfolio thus far.

AND IT'S GROWING! Wootz!

At this rate, I might be able to hit $50k for my porfolio if the market does not crash and burn for the coming months.

But then again, if it does crash and burn, I will capitalise on  it with my puny warchest.

So do I want the market to crash further, like perhaps up to 30% more? 

Hmm. Can't decide for now. Opps.

But hey c'mon, cut me some slack. I have never faced such epic downtrend while I'm still vested in the market at my current level.

I'll share my thoughts on this when such crash happen and IF I happen to survive it;)

Hokay.. Back to my portfolio below:

Portfolio updates for the month of April - May'16:

• Received dividends from the following counters which was injected back into the portfolio:

         - Lippomalls REIT - $124.50
         - Sembcorp Industries - $24.00

• $600 was deposited into the portfolio.         

• Purchased 55 shares of VWRD, which is an ETF coverings common stocks all around the world, at a price of $88.59 per share. With this purchase, I have a total of 115 VWRD shares, all with an average entry price of $92.44.         
  

Actions I will take for June'16:

• If the price of STI ETF drops below $2.40, I will make another purchase of about $2400 worth of STI ETF. This will bring the average price of my STI ETF purchase to below $3.

• S$2000 will be vested into VWRD when the price of VWRD drops to USD$46.18, which is a drop of 30% from the last purchase price of USD$65.97.

 

• If I follow my asset allocation strategy strictly, I have to make further entries of approximately $1250 each for stocks in my Income Stocks and Growth Stocks categories. For a start, I will begin with the assessment of Far East Hospitality REIT, Ascendas Hospitality Trust, Aimsamp REIT, ARA Management, Kingsmen Creative, Sembcorp Industries and Ho Bee Land. Expect more blogpost in the coming days as I complete my novice assessment of these stocks;)

• In the event that the VWRD and STI ETF does not drop to my target price, I will rebalance my portfolio in the month of Nov'16 accordingly to my asset allocation strategy.

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Visited Kombi Rock recently, which is an unique cafe filled with various vintage trinkets and vehicles ( think vintage volkswagon vans) ! 

Going MIA

Hey guys! Sorry for being missing in action for so long.

Have been preoccupied with exams preparation and work.

Having my last 2 papers this week and if I pass.. horray! I'll get my degree at long last :D

I promise I'll be back once my exams are dealt with. Cya~

A Peon Analysis - Lippo Malls Indonesia Retail Trust (LMIR)

Hihi! 😊

I am starting this blog series to document my analysis of anything (equities, bonds, commodities) that can make me more moolah!

Age is catching up on me and I'm getting desperate to be financially free!

Anyway, I thought of starting this series because ideas are constantly popping up in my mind on how to maximise my returns and yet I hardly pursue these ideas ultimately. Perhaps this series will encourage me to give more thoughts to my abstract ideas and increase my passive earnings!

Hokay. Enough of me yakking away. Let's have a look at this thought bubble which have been in my mind recently...

"Should I divest my LMIR holdings?"

To offer a brief summary, I actually got into LMIR during Year 2012 at a rather high price of $0.4075.

Fast forward 4 years later and we have seen its price dropped to $0.33 recently, representing a loss of 19.02%!

So now the questions to ask will be whether the drop is merely temporary due to factors not within the control of the company? Or is the drop due to deep seated structural issues with the company?

If it is the latter, I would want to divest immediately so as to cut my loss. 

However, if the drop is merely due to external factors that will vanish in time to come (currency fluctuation, cyclical nature of industry, etc), then I'll want to hold on to LMIR for a little longer.

As always, I'll start off with my analysis using my standard template:

Oooh.. looks like LMIR performance has actually improved compared to my previous assessment of it (click HERE to read my previous assessment)!

With all things being equal to my previous assessment, Distribution Per Unit (DPU) has actually increased from Year 2014.

Based on my standard template for analysing equities, LMIR has achieved an overall score of 63 out of 100, which is higher than my sell signal of 50 points and below. Hence, there is no compelling reason for me to sell it right now.

However, a score of 63 is not very high either and I may consider divesting LMIR should any of the following events occur:

• LMIR starts to acquire properties that are non-accretives, i.e.,acquiring properties that will actually reduce DPU to current stakeholders;

• LMIR offers private placement at a discount to current market price, thereby diluting the equities of existing shareholders (I'll take up any rights offer though);

• The incoming CEO replacing the incumbent CEO, Mr Alvin, does not provide a clear direction of how he/she is going to lead the company forward.

And this is it. I am done with my analysis and I hope I am right to hold onto LMIR.

Cheerio~

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Experiencing tranquility at Fo Guang Shan Temple, Kaohsiung, Taiwan.

 

Portfolio Updates: March'16

Ho Hum! Looks like someone has been really lazy recently. My excuses?

School, projects, wedding preparations and holiday trips to Taiwan and Genting!

Oh yea, March had been really enjoyable due to the holiday trips :D

But I am freaking broke now, with my spending account in deficit currently (read HERE on my concept of spending and savings account).

Luckily, my portfolio is not in deficit though and with the recent sales of Saizen REIT, I have in fact made a tiny weeny bit of monies :D

Hence, my portfolio has also grown by a tiny weeny bit for the month of Mar'16. Please see below! :)

Portfolio updates for the month of March'16:

• Received dividends from the following counter which was injected back into the portfolio:

         - Lippomalls REIT - $121.50

• Withdrew $400 from the portfolio for my personal expense (thou shall control my spendings with immediate effect!). 

• Sale of Saizen REIT completed and all gains from the sale was injected into the portfolio immediately. Got really lucky with this buy. I divested at a price of $1.056, netting me a net gain of more than 56% from an initial investment of $4890! 

         Tee hee hee, please allow me to bask in my glory

        

Actions I will take for April'16:

• If the price of STI ETF drops below $2.40, I will make another purchase of about $2400 worth of STI ETF. This will bring the average price of my STI ETF purchase to below $3.

• Continue my purchase of VWRD by investing my second tranche of S$5000 when the price of the VWRD drops to USD$54.72, which is a 20% drop from my last purchase price of USD$68.40.

• The third and last tranche of S$4000 will be vested when the price of VWRD drops to USD$38.30, which is a drop of 30% from the last purchase price of USD$54.72.

 

• I have to search for promising equities to purchase so that I can fill the gap in my portfolio that the sale of Saizen REIT has left behind. Hence, I aim to purchase about $3000 worth of income stocks and $3000 worth of growth stocks in order to meet the allocations that I have set out in my asset allocation strategy. For a start, I will begin with the assessment of OUE Hospitality REIT, Far East Hospitality REIT and Ho Bee Land.

• In the event that the VWRD and STI ETF does not drop to my target price, I will rebalance my portfolio in the month of May'16 and Nov'16 accordingly to my asset allocation strategy.

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Cherry blossom trees blossoming in Taiwan! Who says you can only get pretty cherry blossoms in Japan? :p

Portfolio Updates: January'16

Oh wow, what a month! If you have been following the news, you would know that the market did very badly within the 1st week of the year.

To think that I was recently anal enough to boast of outperforming the market for 2015. Within days of posting my self-glorifying post, Mr Market made me regret putting that blogpost up :(

But hey! Not everything is dark and gloomy!

Initially, I thought that my portfolio would be down by about 20% in the recent market crash. However, thanks to two lucky buys (Saizen REIT and Fortune REIT), my overall portfolio loss has been kept to below 5%.

Although it can be claim that my asset allocation strategy is working as my portfolio did not do that badly as expected, I would rather attribute it to good luck. 

Honestly, I did not do much analysis of the two buys other than ensuring that they fulfill the following metrics when I made my purchase:

- Purchase price lower than Net Assets Value (NAV) 

- Gearing Ratio less than 35%

- Yield of more than 5%

- Consistent or improving Distribution Per Unit (DPU) on a year-on-year basis

- And some other general study of their management and the market trends.

So yea, those two were really lucky buys and I can claim no credit to that. 

Anyhow, here's a look at my portfolio as of Jan'16.

Portfolio updates for the month of January'16:

• Purchase 400 shares of Sembcorp Industries at $2.65 apiece (and watched it drop by 20% in the next few days. Scary time indeed!) 

• $400 in cash was injected into the portfolio.  

     

Actions I will take for February'16:

• If the price of STI ETF drops below $2.40, I will make another purchase of about $2400 worth of STI ETF. This will bring the average price of my STI ETF purchase to below $3.

• Continue my purchase of VWRD by investing my second tranche of S$5000 when the price of the VWRD drops to USD$54.72, which is a 20% drop from my last purchase price of USD$68.40.

• The third and last tranche of S$4000 will be vested when the price of VWRD drops to USD$38.30, which is a drop of 30% from the last purchase price of USD$54.72.

• In the event that the VWRD and STI ETF does not drop to my target price, I will rebalance my portfolio in the month of May'16 and Nov'16 accordingly to my asset allocation strategy.

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A snippet of my staycation at Quincy Hotel earlier in this month. And yes, the stay was awesome!

How to React to a Market Downturn

Oh wow, what a tumultuous start to 2016. So how has it been for you?

Given that within the first month of 2016:

1. The Chinese equities market crashed yet again;

2. Price of oil fell below $30, a level not seen since a decade ago;

3. Investors around the world seems to be reeling in shock from the above news and are withdrawing from the market, bringing assets prices (equities, commodities, everything!) crashing down; a reminiscence of the market crash in 2009.  

On a personal note, my portfolio has decline by about 20% during this period of market uncertainty. 

However, I am taking comfort in the fact that I am not the only one who is experiencing the heartache as well as the myriad of emotions that comes with a declining portfolio. Right guys? 

In fact, I believe you will have at some point of time, become confused, fearful, and panicked over your position in the market.

Likewise, so am I. 

But what have you done in reaction to this sudden downturn in market condition? Beside panicking of course..

Now now, please allow me to give a disclaimer first. 

This post will not be a guide on what you should do to maximize your returns in a crashing market. I am far from qualified to be able to do so.

Instead, I am just going to share my plans and thought processes, which has enabled me to remain as calm and rational as possible in such a volatile period. 

What's the major benefits of staying calm and rational you ask?

1. You are less likely to make hasty and silly decisions that will adversely affect your investments returns in the long term.

2. Hmm..Instead of having sleepless nights due to the constant worrying, staying calm allows you to get a good night sleep baby. Every single night. 

So what are my thought processes and plans during this period of great upheaval in the market?

• I sat on my portfolio, à la the "lazy style", with no plans for divesting any of my downtrodden assets during this crazy period.

• This is because I know that my plans are for the long term. Studies have shown that 20 years down the road, my plans such as the purchase of ETF, will still give me positives returns regardless of how badly the market is currently doing.

• In fact, the current market fall of 25% from its height is to be expected and I have already factored in such market crashes during my planing. During the 1997 Asian Financial Crisis and the 2009 Global Financial Crisis, several equities market, such as Singapore, crashed by more than 50%! And then the market recovered abruptly.

Look! There will always be a recovery after every crash.

• Hence, whenever I feel like panicking and off loading my equities at a loss in this bearish market, I will tell myself not to be rash and think long-term instead. 

• If I still feel uncertain and worried, I will refer to my previous posts where I have detailed my investment plan. When I read my previous postings, I am reminded that I have a plan and the downturn has been factored into my plan. Hence, I should continue to stick to my plans and not be swayed by my emotions.

• We must also realise that a market downturn is also a good buying opportunity if we wish to remain vested for the long term. By re-reading my previous posts, I am reminded to purchase undervalued assets when my target price is hit. This is contrary to my previous experiences when I did not have a plan and hesitated to invest when the price was attractive, causing me to lose awesome opportunities to be vested in greatly undervalued assets.

• There is also my personal experience in the market since 2008. Throughout these few years, I recognized that at the first sign of a downturn, speculators and so-called industry "experts" will bash the market mercilessly, either through very pessimistic analyst report or by aggressively shorting the market, causing further panic and mayhem in the market.

• But yet, as if on command, all these speculators and  industry "experts" will suddenly sing praises of how the market is set to recover, and manipulate the market to recover swiftly. While the majority of us, the retails investors, are left in their wake and will not stand to benefit from the sudden market recovery if we had sold off our equities in a panic during the market crash.

My point is this guys. There is no need for us to do anything during a market crash if we have a well thought-out plan. Get on with your life for the world is not going to end and things will normalised in time to come.

Instead of panicking and trying to cut your losses, why don't you take this opportunity to observe the market and see for yourself that the market indeed functions in a cycle. Gain some knowledge and experience in dealing with a market crash, and factor what you have learnt into your investment plan. And stick to it!

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Photo of Missus PassivePeon, taken at the Singapore Sport Hub.

Assets Allocation - 2016

Asset Allocation.

Ah, please do not be frighten off by this pair of imposing words my dear friends, just like how I once was. 

But Mr.PassivePeon is no pussy though, as I made the effort to do some simple research and grew to like this easily implementable and understood strategy.

Asset allocation is merely a very systematic strategy to maximise your returns based on your risk appetite, by adjusting the proportions of different assets class (equities, bonds, cash, etc) in your portfolio, and most importantly, you abiding to the system at all time.

However, today, I am not going to break down into details the essence of this strategy as it has been very well covered online.

Instead, I am going to share the 'whys' and 'hows' of my assets allocation implementation. 

At the start of 2015, my assets were very disproportionate, highly skewed towards equities, particularly REITS listed in Singapore {"S-REITS").

	Percentage
Portfolio Allocations
Cash/Bonds	45.29%
Equities	54.71%
Total	100%
Equities Allocations
ETF	4.62%
Income Stocks	95.38%
Growth Stocks	0%
Total	100%

After reading about diversifying, assets allocation, index investing, I became smarter wiser aware that there are a few critical disadvantages with the above portfolio allocation: 

• My overall portfolio returns will be adversely affected if the S-REITS sector is facing headwinds as I have placed all my eggs in one basket. 

• I wouldn't be able to ride on the uptrend if the other market segments starts being looked upon favorably by investors as I wasn't vested in them. 

• In order to generate some meaningful returns, I have to be really good at analyzing all the individual stocks that I am vested in; either that, or I have to be really lucky.

So I started to think of diversifying to other segments, in order to reduce concentration risk, as well as to increase my earning opportunity.

But I know nuts about others market segments! And as the world greatest investor, Warren Buffett once said, "Never invest in a business you can't understand.".

Luckily I discovered this magical instrument, which is the Exchange Traded Fund (ETF)!

ETF are funds that tracks the markets by investing in a basket of assets that encompass the markets it is tracking, such as the local STI ETF and the global VWRD. This allows me to diversify my assets easily without me spending millions of hours to understand the business nature of all the vested businesses!

So early last year (2015 I mean), I decided that in order to diversify risk and increase my chances of riding on any random markets uptrend, I will try to allocate my assets in the following proportion:

	Percentage
Portfolio Allocations
Cash/Bonds	17%
Equities	83%
Total	100%
Equities Allocations
ETF	50% (All 50% in STI ETF)
Income Stocks	40%
Growth Stocks	10%
Total	100%

During mid-2015, I learned about a global ETF, the VWRD, which made me realize how small my local Singapore equities market is, when compared to the rest of the world (Creative vs Apple, anyone remember?). Hence, I decided to allocate some VWRD into my portfolio, so as to gain some global exposure and increase portfolio diversification.

By the end of 2015, my portfolio allocation is as follows:

	Percentage
Portfolio Allocations
Cash/Bonds	20.15%
Equities	79.85%
Total	100%
Equities Allocations
ETF	49.24% (34.33% STI ETF, 14.91% VWRD)
Income Stocks	50.76%
Growth Stocks	0%
Total	100%

Close but still some way off my ideal asset allocation. But this is not what's important!

What's important is the question on whether the strategy of assets allocation and diversifying has helped me?

And my answer will be.. Yes of course it did! Although the Singapore equities market fell by about 15% last year, my diversified portfolio has made a gain of 0.97%.

Which means I outperformed the market!

Woah woah, seems like this is the first time I used the word, 'outperformed'.

Okay, that's a very big word to use and kinda lame I know =_=" 

But for an inexperience and lousy investor like me, it's a damn freaking awesome feeling to beat the market!

Another reason I believe this strategy has helped me is the reduction of my eye-bags. I'm serious! Apparently, I am sleeping better nowadays, assured by the fact that my improved and diversified portfolio has better resilience to market shocks.

However, I gotta continue to work hard and keep up with the momentum. Currently, I am underweight in VWRD and I have no growth stock in my portfolio. I believe I can still squeeze a better performance if I improve on my allocation. So for 2016, I will work towards the following target allocation:

	Percentage
Portfolio Allocations
Cash/Bonds	18%
Equities	82%
Total	100%
Equities Allocations
ETF	50% (25% STI ETF, 25% VWRD)
Income Stocks	40%
Growth Stocks	10%
Total	100%

18% of my assets will be either in cash or bonds, to function as my warchest so that I am able to make opportunity dips into the market during crashes.

82% will be allocated for equities, which has been proven to be one of the better performing assets class over the long-term.

For my equities allocation, I have choose three equities class to be vested in.

10% will be set aside for growth stocks, which offers better returns at a cost of higher risk. Getting some growth stock will also aid me in my personal development, as it will hone my skill in researching and analyzing companies to be vested in.

40% will be allocated to income stocks, such as REITS and business trust, which tends to offer a steady yield at a cost of slower growth. This equity class will form the backbone of my portfolio as it is capable of offering a steady flow of passive income via regular dividends payout.

50% of my equities will be focus on ETF, with an allocation of 25% for the local STI ETF and the balance to the global VWRD. While income stock will be my backbone, ETF will form the main 'body' of my portfolio, offering sustainable growth by diversifying among some of the largest companies in the world (Macdonald, Apple, etc). 


Done! I  am done with planning my asset allocation for 2016.

While my method of assets allocation is definitely not the most ideal ones. I figures it suits me the most given my current financial knowledge, age, laid-back(aka lazy) personality, as well as my moderate risk appetite.

If you have only just started out on your investment journey, I would feel that it will be good if you read more about the various strategies (asset allocation, permanent portfolio, dollar-cost averaging, etc) and slowly nibbles on small positions and tweak your portfolio in which the risk-reward is at a level where you will be comfortable with.

If you made any losses, do not take it too hard and just treat it as tuition fees for a lesson on Mr.Market.  

All the best and may the force guide you and bring balance to your life (sorry, couldn't resist. Star Wars season).


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Sunset photo taken during my trip to Kukup, a small fishing village off the coast of Johor, Malaysia.