Sunday, April 9, 2017

Accepting what the market gives you

I am on investing note platform. Recently, investing note has a few post noting the possibility of market correction, and taking steps to prepare for the possible correction (e.g. buying low beta stocks at 52 weeks low, holding more cash).

Personally, I don't know if a correction is near. The market current seems more optimistic than in the past few 12 months. But, this was the market that fell from its high of STI 3,500 in 2015. Will more optimism lead to correction? No idea. I do note that the world economy is in a better shape now compared to last year, and the stock market reflected this.

Instead of preparing for correction, I will try to accept of what the market gives me and act accordingly.

If the market rises a lot and benefit me, so be it. As the market rises, more stocks may reach my target prices and I will start to reduce my position in them. In addition, I will be unable to find stocks meeting my criteria to replace the sold position. This lead to me holding more cash, if the market rise.

If the market corrects later and erase my gains, so be it. As the market fall, I may find new stocks meeting my criteria or average down on my stock holdings and hence increase my stock position. Currently, including CPF, I am around 60% in stocks. Thus I have ample funds if I am to buy more stocks.

Wednesday, April 5, 2017

Selling Developer Stocks

I own 2 property stocks sometime this year. One is Fraser Capital Limited (FCL), the other is Lian Beng. The position in each stock is not large. (It is around 2.5%-3.5% of my portfolio).

FCL was bought last year in July at around $1.50.  Last month, I sold it for $1.72, as it rose by fair bit, after the Government announced cooling measures on the property market. I sold it because I thought that the cooling measures do not really affect the property market. On hindsight, it seems that I sold too early. FCL traded at $1.765 today.

Lian Beng was bought some time in Jan this year at around $0.48. I bought it due to its low price to book value of 0.45. Some forumers have concerns on its high debt to equity ratio. I think that the high debt is mitigated by Lian Beng's diversified property portfolio and its prudent overseas ventures helps. (i.e. Lian Beng join other developers on overseas projects.)

Yesterday, Lian Beng run up by a fair bit and I sold it at $0.62 today. The run-up seems to be due to its 10% stake in Gaobeidian. I think that the 10% stake seems rather minor and may not affect Lian Beng's value a lot. Hence, I take the opportunity to sell it today. If Lian Beng falls below $0.50, I may consider buying it back.

After selling FCL and Lian Beng, I no longer own any developer stock. This is fine with me, as I find developer stocks hard to value. This is also why my position in property stock will not be large.