The past few weeks has been a roller coaster ride for the stock market. We saw the market hitting all time highs at the end of August and then a panic selloff which resulted in a market correction. The stock market is irrational and those who cannot control their emotions will lose out and fear investing for a long time.
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Is this a bubble bursting? Or is it just a healthy retracement of the stock market? No one knows. Instead of guessing what is the outcome (which is really pointless), just stay invested and avoid using your emotions to try and time the market, because you will fail 99.9% of the time if you do so.
Regardless, during the August bull run, I took profits and cut some losses of my Singapore positions such as DBS and Singtel based on my own due diligence. I was lucky to have exited some positions since you knew what happened next.
I bought into the correction using the fresh funds from the Singapore stocks, averaging in on the 2nd and 3rd red days respectively, switching from defensive Singapore counters to aggressive USA counters. On the red days, I bought in stocks aggressively which turns out to be a bargain.
Below are some counters which I entered during the decline as well as the entry price:
|Counters||Entry Price||% of Portfolio|
|Alibaba Group Holdings ADR||USD271.73||3.66%|
|ARK Innovation ETF||USD90.03||2.30%|
|ARK Fintech Innovation ETF||USD39.44||1.50%|
|Taiwan Semiconductor ADR||USD78.627||1.59%|
After adding some Tesla shares on my own due diligence , Tesla has risen to become my 3rd largest holding and the price fluctuations of the market has indeed been a roller coaster ride. (Went from +8% to -21% to now -10% in a matter of days.)
Although returns now may be great, I am totally fine with it since I am looking long term and I believe these positions are poised to grow exponentially in the long run. One needs to understand that price fluctuations and market volatility are part and parcel of investing in the stock market, and it is mostly driven by market sentiments in the short run.
I will not dive into the individual tickers as to why I invested into them, since I have done my own due diligence and researched thoroughly before making any investment decisions. I may write about individual tickers and why I invested into them such as the one I wrote on Berkshire Hathaway and Tencent.
For those who are curious, I am using Firstrade Securities as my US stocks broker since it offers free commissions trading and a myriad of other benefits which you can find out more in this article here. Definitely a great article to check out if you are interested to invest in the US stock market.
Overall, the US portion of my portfolio gained +23.39% this year while the SG portion of my portfolio is still sitting in an overall loss position of -3.19%. Not too bad considering STI is still down -15% this year. (Which means I am currently beating the market :b)
With significant outperformance of the US equities, (be it my own stock pick or Syfe Equity100) I decided to make a few adjustment regarding the allocation weightage between SG stocks (defensive) and US stocks (aggressive). I am shifting away from dividend investing and with the change of my portfolio, it is now more capital gains focused and overall dividend yield sits at 2.41%. (was 5.4%)
Singapore’s very own Strait Times Index is also underperforming compared to the rest of the market around the world.
As you can see here, while the S&P 500 ETF and Total World Stock ETF has already became positive, STI ETF (Singapore) is still negative and in fact still in bear market territory. Those that invested into the STI in March vs those that invested into S&P 500 in March will be sitting on very different returns respectively. (With the latter probably laughing at the former)
Moving forward, I will shift my focus more onto US stocks albeit the higher levels of volatility and forex risk involved when it comes to US stocks. In the long run, US stocks will most likely give me a higher return as compared to SG stocks.
On the Singapore side, I recently averaged up into Capitaland Mall Trust (C38U) given it’s good long term prospect as well as the incoming merger with CapitaLand Commercial Trust . With a strong parent backing the REIT (Capitaland), the newly merged entity Capitaland Integrated Commercial Trust will become the largest S-REIT by market capitalisation, overtaking Ascendas REIT and also to become Asia Pacific’s second largest REIT, it presents a good chance for potential opportunities to enter as this is good news for the REIT. So in this instance, I will still buy into SG stocks if a good opportunity arises as a recovery play, if not, my main focus will be on US stocks and emphasis on growth stocks.
Although there are a few SG counters which presents a good opportunity as growth stocks with good capital gains potential such as AEM, Micro Mechanics and iFast. Unfortunately, these counters have already been priced in and I believe that they are overvalued and may have limited upside potential. USA being a more mature and more sophisticated market have much greater room for growth given its size, economy and consumer base.
That being said, you still need to do your own due diligence and research properly on the stock tickers you are interested in. People spend so much time researching on which computer to buy, which potato chip to eat and which restaurant to go, but when it comes to stock, zero research is done and most people would rather pick what’s popular and hot right now in the matter of seconds.
Investing Beanstock’s 10 Commandments of Value Investing
- Always look at fundamentals (Determines intrinsic value)
- Stay within your circle of competence (If you don’t know, don’t buy)
- Always have a margin of safety (Measure your upside potential and downside risk)
- Diversify but don’t do it for the sake of diversifying
- Don’t speculate based on price
- Have a long term horizon (5 Years or more would be great)
- Buy undervalued good business, not cheap and useless business
- Don’t develop feelings for your investments (Know when to sell)
- Ignore market noises
- Always stay invested
It is far better to buy a wonderful business at a fair price than to buy a fair business at a wonderful priceWarren Buffett
Just want to leave it here: Buy a fundamentally good business when it is fairly valued or undervalued. Don’t buy a stock just because it looks cheap. (eg SIA)
The price of a stock alone tells you nothing at all and only helps in speculating. If you buy stock X at $5/share when it was $10 a few months ago, does it mean it’s a good time to buy? What happens if it drops to $2/share after you went in? Then drop to $1/share, are you gonna sell it? Think about that.
If you understand how the business works, even if a good business drops to $2/share, you won’t be afraid to sell since you know it will eventually reach its intrinsic value but you will have to be patient.
Most times, investors do not have the holding power to hold on especially in times of high market volatility and would rather try and time the market. They exit the market during a 10% decline, sit on the sidelines and only buying back in when the market tells you that the next bull run is here. (Buy High Sell Low phenomenon)
Are you gonna let Mr Market decide when to enter and when to sell? Are you going to follow the crowd or go against the crowd? It is up to you to decide. If everyone buys the same stock, what are the chances it can still go up another 10%/20%/50% or even 100%? If every single investment banks and fund houses are buying into the same stock, what are the chances of a selloff when market conditions are bad?
Your goal here is to find your own undervalued stocks and hold them for the long term. If not, you are better off just buying into index ETFs and get market returns (before fees) and just do it at an automatic and consistent basis. (Dollar Cost Average)
This way, you can at least stay invested for the long run without ever trying to time the market. With technological advancement these days, you can do so at a very low cost through a Robo Advisor such as Syfe. I wrote a few articles regarding Syfe which you can check out here. I wrote an insight into Syfe’s Equity100 Portfolio here and the updated performance of the portfolio in August here. I also wrote an article comparing Syfe and Stashaway and cover which will be more suitable for you based on your capital, risk profile and time horizon and you may want to check it out here.
So my last question to you is: Are you invested? Are you going to buy into US stocks and take opportunity of the market correction/bubble/retracement? Or are you afraid of the market volatility and rather shy away from the market? I leave this question for you to think and decide for yourself.
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I use StocksCafe to keep track of all my investments (include Robo) + research on stocks. You can also view my portfolio as well as many others so you can compare your own performance with other investors. If you are interested in signing up, you can use my referral link to sign up and access premium features for 1 extra month for new users. (3 months)
University workload is really piling up and it is becoming increasingly difficult to churn out articles on a weekly basis but I will still try my best to come up with interesting and insightful articles that can value add every single one of you.
As always, thank you for reading the article. I am sincerely thankful for the support and faith and trust in my articles and hopefully I can always value add to every single reader whether you are a beginner or an experienced trader/veteran in the stock market. If you have any questions, do reach out to me and I would love to talk with you.