Saturday, May 27, 2017

Portfolio Returns

 

Year% ReturnsSTI (Excl Dividends)Remarks
20046%
200535%
Returns/Declines boosted with slight leverage.


2008: Great Recession
2006130%
200746%15%
2008-70%-49%
2009147%64%
201078%10%
2011-46%-17%Declines in S-chips and excessive concentration into 5-6 stocks
201225%21%
201315%-1%Diversified into 19 stocks
20148%6%
20154%-14%Oil & Gas crisis
STI (incl Dividends)
201619%4%
201733.6%21%
2018-11.9%-7%Fail to hold more cash during Jan-Feb 2018
Buying low quality stocks at height of optimism in Jan
20198.4%9%
20203.6%-7.5%Covid 19
202114.7%12.5%
2022-13.7%7.6%Higher % in US and HK stocks
20234.5%4.0%HSI dropped 15%, while S&P rose 25%

Saturday, May 6, 2017

Bull Market, Buying Reits

It is a bull market this year, with STI (Strait Times Index) up 12.1% year-to-date.

Bull market implies, in general, more expensive valuation. I find that the current stock market are quite close to full-value and I expect lower returns down the road. 

As stocks are close to their full-value, it is getting harder to find good stock ideas.

I have sold some stocks recently i.e. FCL, Lian Beng, as mentioned in earlier posts, and thus have some capital to deploy.

The capital are used to buy two reits: SoilBuid Reit (SBR) and Far East Hospitalality Trust (FEHT). Personally, I don't like to own reits, as reits generally have high price-earnings ratio and we are in rising interest rate environment. However, due to the lack of ideas, I have to settle on reits.

SBR and FEHT are bought with the possibilty of 'turnaround' in dividends.

For SBR, its Loyang Way premise is 90% empty now, as it was vacated by an O&G company last year. If it manages to lease out the Loyang Way premise in the next 2-3 years, there will be some upside to the dividends and hopefully share price.

For FEHT, the idea was from 3Fs (A Path to Forever Financial Freedom) blog, who bought CDL Hospitality Reit (CDLHT) and FEHT, in anticipation of the turnaround in hotal room rates in 2018 or later. I have bougth FEHT, but not CDLHT, as CDLHT has run up quite a lot this year. FEHT is around $0.61, not far from its 0.58 low.

SBR and FEHT are low risk, low return ideas to me. You get paid for waiting for the turnarounds. If the turnaround don't happen, you still get your dividends. If the turnaround materialise, you get some capital gains. Of course, I may still lose money in SBR and FEHT, if their operating results are worse than expected. 




Equity Risk Premium in US market

Equity Risk Premium (ERP) refers to the additional return over risk-free interest rate for holding equity.  ERP can be computed by taking ea...