I’m writing this in the middle of June as I’ll be busy preparing for reservist during month end. In addition to the perfect long storm, inflation has been coming up in all areas. We are also officially in the bear market [Read More: Bear Market Survival Guide]. I have also finally added my position using dollar cost averaging which I will be covering more below.
If you are new to Supplementary Retirement Sum (SRS), please start here.
Disclaimer: This article is not and should not be taken as a buy/sell/hold recommendation.
My Thoughts and Consideration
My SRS Portfolio and Thoughts June 2022
Other than the new pie chart, I have added more into SGX: HST. The new addition is a very simple dollar cost averaging move. In China, Chinese banks cut a key interest rate for long-term loans. This can be seen as a bullish move as this will boost loan demand. However, China still struggles with lock-down from time to time if COVID cases were to arise. Let’s see how it turns out.
Meanwhile in SGX: BTOU, William David Gantt is appointed as the new CEO. Gantt wants to build a higher proportion of growth tenants, and this will be done through capital recycling, not acquisitions, for now. Their new focus will be on building quality income instead of growth. We probably will be looking at a new tenant mix in the quarters to come. I believe that the US office space is having an identity crisis now as working from home is a choice for employees now. If every company start to behave like Tesla (remote work privilege to end), we will see a higher occupational rates in the quarters to come.
I probably will be looking at a few Singapore companies in the quartiers to come.
Final Thoughts
I reemphasize again that this is not and should not be taken as a buy/sell recommendation. Wishing you all the best!
Chengkok is a licensed Financial Services Consultant since 2012. He is an Investment and Critical Illness Specialist. Wealthdojo was created in 2019 to educate and debunk “free financial advice” that was given without context.
The views and opinions expressed in this publication are those of the author and do not reflect the official policy or position of any other agency, organisation, employer or company. Assumptions made in the analysis are not reflective of the position of any entity other than the author.
You might be thinking this is “another of those dollar cost averaging article”. I assure you that this is not. It is always during a Bear Market Survival that the topic of dollar cost averaging surfaces. Rarely, this topic is popular during a upward trending market.
Once a for all, I will discuss on the value of dollar cost averaging and what it can do in your portfolio. If you have been investing in China over the last year, you might think that dollar cost averaging is not working on China’s stocks? Read on and consider the pros and cons.
What is Dollar Cost Averaging (DCA)?
Dollar Cost Averaging is a popular investment method of investing equal amounts of money over a period of time. The opposite of this would be to invest a lump sum of money at once. I will leave you to read up about summary of DCA in this photo below.
One question you can ask yourself today ( 1st June 2022), are you still averaging down?
The Pros
Simple and systematic (if you set rules that continuously invest during ups and down): You don’t really “think” when you employ a DCA strategy. You simply trust the system and invest through the ups and downs. It will work BEST if it is via auto-transfer rather than manually transferring.
Downside protection: In a downward market, you will see a “bigger lost” if you do a lump sum strategy. For example, if the market corrected 20% in a month, your initial investment of $100,000 will be left with $80,000 (lost of $20,000). Now, if you do a DCA investing $10K per month, your initial investment will be left with $8,000 (lost of $2,000). You also have capital to continue investing at the “down” on the second month. For those that is retiring soon, this have great psychological benefits. I believe there is nobody that wants to lose 20% of their nest egg 6 months prior to retirement.
The Cons
FOMO (Fear of missing out): If this is an upward market, you risk missing out on the extra capital gains and compounding benefits. Using the same scenario as above, someone who invested $100,000 with a 20% run-up would make $20,000, while the investor DCA their first $10k would’ve only made $2k.
Being too passive: DCA works best if the asset have a long term upward tread in nature. If the underlying investments are downward/sideways moving (take a look at the Japan market), DCA will not be the best strategy.
Final Thoughts
A big shout out to one of the most loyal reader of Wealthdojo Mr Sinkie. He sums up my thoughts on DCA in a single sentence. “DCA works best for assets that are volatile but have very long history of uptrend”. Thank you for being so patient and contributing to the blog. For those that are interested in his elaboration (I think you should), go over to Bear Market Survival Tips.
Looking forward to more people commenting on the blog.
If you guys need help, please reach out. I will be more than happy to have a conversation with you.
Chengkok is a licensed Financial Services Consultant since 2012. He is an Investment and Critical Illness Specialist. Wealthdojo was created in 2019 to educate and debunk “free financial advice” that was given without context.
The views and opinions expressed in this publication are those of the author and do not reflect the official policy or position of any other agency, organisation, employer or company. Assumptions made in the analysis are not reflective of the position of any entity other than the author.
Whatever the reason you are here, I think it is quite certain that we are experience a market that is downward cha-cha.
Disclaimer: It is anybody’s guess where the market is going to be. This should not be taken as a buy/sell/hold recommendation. Please consider your own context or approach a financial advisor for advise.
Bear Market Survival Tips
Despite the fear, bear markets are nothing new. To put everyone on the same page, a bear market occurs when major stock indexes like the S&P 500 fall 20% or more from their most recent peak. They’ve occurred 12 times since 1946, which is on average once every 8 years. Most pullbacks above 20% have been associated with recessions. Hence, with the perfect long storm, politicians all over the world are most concerned about recessions.
On average, a bear market is around 9.5months. This would mean most of us will live to tell the tale assuming we are not shaken out of our position (mentally or by margin calls).
As I get more and more about how to invest in a bear market, I hope this article will be able to share with you some bear market survival tips to prepare yourself for the weeks to come.
Bear market survival tips
#1: Avoid making impulsive decisions
This makes the top of the list. Emotionally, people don’t like to be wrong (whether temporary or in the long run). Hence, when they see their portfolio in the red, many people have the temptation to “reset” their portfolio. This is detrimental to your wealth management journey and it is just a “quick fix” of escaping the mental strain.
Stay calm is the key in bear and highly volatile markets. If your time horizon is decades away, the best thing to do is to invest as if nothing has changed. Let me give you an example of a $1000 investment in the S&P 500 between 1/1/2009 and 12/31/2018 (the last market crash).
If you stayed invested the entire time, you’d have $2,775.
If you missed the 10 best-performing days during that period, your account value would be $1,722.
If you missed the 30 best-performing days in this 10-year period, you’d be left with $918.
I can’t emphasize how important it is to stay invested.
#2: Build your positions regularly over time
With dollar-cost-averaging (DCA), no thinking is really required. However, I recognized that it may not be easy. I saw friends who were excited about the recent bear market and have dollar cost average down the last few months.
However, they are all now NOT adding into new positions as the market is still going down. DCA is somewhat easy to say but not easy to execute consistently unless there is a system that is set up. Personally, I have averaged down on the China Market previously and it is still a bleeding position (Check out my latest SRS positions).
Time will tell. That being said, stay tune for my upcoming article: The pros and cons of dollar cost averaging.
#3: Change your strategy, diversify or play defensive
As a wealth manager, I realized risk management is something that I constantly address. If you’re still active in the markets and it is not working anymore, it might be time go passive with a lazy portfolio. If you find yourself taking too much risk, you might want to seek a more defensive portfolio.
Your current life stage might not allow you to take too much risk as compared to before. It is vital to re-assess your situation, your goals, your risk tolerance and discuss with a professional on your options.
#4: Go contrarian (Not recommended)
If you are a trader, you know better than to go against the trend. Consider taking a buy put options position to bet against a stock or ETF, this allows you to have a limited downside (as you are a buyer of the put option) and able to participate in the downward trending market.
WARNING: I have to emphasize that buying options is speculative. They may expire and be worthless if you do not have a game plan. If you are wondering what this is, do not do it.
Final Thoughts
Stay strong. This may be the pivoting moment in your investment journey. There are so many resources you can turn to nowadays to prepare for a bear market. You can consider what Warren Buffett is doing amidst the noises.
Definitely reach out if you need help. I will be more than happy to have a conversation with you.
Chengkok is a licensed Financial Services Consultant since 2012. He is an Investment and Critical Illness Specialist. Wealthdojo was created in 2019 to educate and debunk “free financial advice” that was given without context.
The views and opinions expressed in this publication are those of the author and do not reflect the official policy or position of any other agency, organisation, employer or company. Assumptions made in the analysis are not reflective of the position of any entity other than the author.
Stock market has been a lackluster as S&P dropped 16.5% since the start of the year. No matter if you are invested into growth stocks or value stocks, it has been a painful year so far.
The cryptocurrency market is now under immerse pressure as stablecoin UST crashed to zero bringing the whole cryptocurrency market with it. People are now reconsidering if cryptocurrency is a true hedge towards traditional equity market.
If you have already forgotten, we still have the Russia-Ukraine conflict, the dealing with post COVID-19 and Johnny Depp-Amber Heard trial ongoing. It is one perfect long storm.
Coming back to wealth management, it always interest me to see what the experts in the field are doing. In this case, one question that fascinates me is what would Warren Buffett do?
What Would Warren Buffett Do?
What would Warren Buffett do?
In 2020, COVID19 brought about a new trend. A trend on investing in high growth companies. Cathie Wood became an instant celebrity with her ARKK fund performing being up 300% from the bottom of March 2020 at one time. Warren Buffett hit the news around the same time. However, it was one where people thought he was losing his magic as his fund was underperforming the ARKK drastically.
As time passes, you can see from the chart above that there was a huge reversal and value investing is now respected again.
Disclaimer: The below discussion will be on the actions of Berkshire Hathaway (BRK) or Warren Buffett. This does not constitute any investment advice.
What is Warren Buffett doing now?
What would Warren Buffett do
Warren Buffett invest with a mindset called value investing. In the very simplest form, it means investing into a wonderful business at a sensible price. The challenge is always to find out what is a wonderful business and what is a sensible price.
In the first quarter of 2022, BRK increase their exposure to Chevron (4th biggest position in BRK). This is a timely position as the world reconsiders to purchase oil from Russia.
Personally, I think Warren Buffett has a good grasp of business flow in the United States. Since Biden took office, one of the things he did was to revoke the permit for the Keystone XL pipeline. I read with great interest but have no idea on the implication. Perhaps, this might be a reason why he started investing into oil.
The investment into ATVI was probably a value buy. In an interview Buffett said “It is my purchases, not the manager, who bought it some months ago. And if the deal goes through we make some money, and if the deal doesn’t go through who knows what happens.” Buffett said his decision came down to the fact that Microsoft’s purchase values Activision Blizzard at $95 per share. Activision Blizzard was trading at $75.60 per share as of the close of markets on Friday. Perhaps, he was buying for a good arbitrage opportunity.
Lastly, it is about investing in yourself. Buffett spend his time investing into himself. He reads at least 80% a day. During times of uncertainty, it’s more important than ever to be as valuable as ever, and as Buffett said, the best thing we can do is “be exceptionally good at something.”
Final Thoughts
What will you do?
Personally, I will be reviewing my own portfolio. I believe this is a good time to add new positions even in this current situation. Valuation has been depressed and perhaps a good time to dollar cost average now.
What will you do?
Chengkok is a licensed Financial Services Consultant since 2012. He is an Investment and Critical Illness Specialist. Wealthdojo was created in 2019 to educate and debunk “free financial advice” that was given without context.
The views and opinions expressed in this publication are those of the author and do not reflect the official policy or position of any other agency, organisation, employer or company. Assumptions made in the analysis are not reflective of the position of any entity other than the author.
What an epic start to 2022. In just one quarter we are now in the amidst of the Perfect Long Storm, Russian-Ukraine Tension and Will Smith slapping Chris Rock. Maybe the saving grace is that we will be able to travel to Malaysia (with more freedom) from 1st April.
In any case, this is the SRS update for March 2022. If you are new to SRS, I would encourage you to start from my most read SRS article, 5 Things You Need To Know About SRS to begin.
Disclaimer: This is not and should not be taken as a buy/sell recommendation.
My Thoughts And Consideration
My SRS Portfolio and Thoughts [March 2022]The most glaring underperformance continues to be my exposure into Chinese Technology Stocks (SGX:HST). The price is already 41% down since the last time I entered. The question I get asked frequently is how will China do moving ahead.
I reemphasize again that this is not and should not be taken as a buy/sell recommendation. Wishing you all the best!
Chengkok is a licensed Financial Services Consultant since 2012. He is an Investment and Critical Illness Specialist. Wealthdojo was created in 2019 to educate and debunk “free financial advice” that was given without context.
The views and opinions expressed in this publication are those of the author and do not reflect the official policy or position of any other agency, organisation, employer or company. Assumptions made in the analysis are not reflective of the position of any entity other than the author.
![My SRS Portfolio and Thoughts [March 2022]](https://yourwealthdojo.com/wp-content/uploads/2022/03/My-SRS-Portfolio-and-Thoughts-March-2022.jpg)