Wednesday, September 3, 2014

Laying low

What happens when one does not know where the market is heading? There are 2 things we can do i.e. exit or another way is to continue to look for a strong potential company. Or else another thing one can do it by taking short term opportunity.

I have done that in one of the stocks, i.e. Jobstreet. If I can, I would only be putting my money in about 3 - 4 stocks, but can't do that as it is not good enough of a diversification.

For a while, I have not been able to have a good feel over the mid-term prospects of the market. I know that the speculative stocks are flying but for how long? That is always the fear. In previous experience, the hugely speculative stocks could potentially be a dampener to stock market generally especially when it crashes.

It will pull the others down as well. The only difference is that the strong fundamental ones will pick itself back while the fundamentally useless stocks may not make a comeback. Personally, I am not a market timer, and I do not intend to. Gone past that stage thinking of best ways to do market timing and to me it is a waste of time.

On the other hand, I am not a clever seller, hence might as well not sell (which is the best solution). One a few months time, hopefully the dividends from Jobstreet will provide me with some funds while some of those stocks I am holding will continue to provide consistent dividends. They are Padini, NTPM, Jobstreet (continue to provide quarterly cashflow).

One should note that from the portfolio, there is a new stock i.e. Keuro-WE. Well, that is through the rights subscription. For a while, I have not been updating the portfolio, and it is time I do so.

Am I thinking of selling some of the stocks? No, cause there is no better way of putting my money except towards stocks investments. And I am not too sure of it heading south as well. So the best way is to lay low while planning the next move.


Betronist said...

Hi Felice, thanks for updating your portfolio. Good to see it doing well.

Just a personal opinion, I find your 4.6% cash holding is somewhat risky, unless you can pump additional capital into your portfolio in the event of a major correction, to buy more undervalued stocks.

Although cash is bad investment, but the legends like Buffett and Klarman are known for keeping enough liquidity so that they can buy more in the next sales carnival.

Nonetheless, your stockpickings are brilliant! Keep it up

felicity said...

I agree it is riskier than normal and in a usual portfolio there should be other assets I.e. Properties, cash, bonds etc

GL said...

Thanks Felice...the way the penny stocks move does not show a good sign as if not mistaken can be a situation that precedes the start of bearish market! !?? Your blog above had been just timely as I was thinking about asking your opinion too of the market with all those movements.. Am actually contemplating taking some off the table at this moment. ..Anyway. .. perhaps like Fung we can possibly pump in further whilst we continue with the strat of dividend yielding.... Thanks both for the insights!. .. meantime agree with Fung on your stockpicking and writing skills ... Simply brilliant! Keep up the good work!

Betronist said...

Felice, I didnt mean assets allocation. I was pointing to only "cash" vs "equity".

LuPorTi said...

HI Felice,

I agree with your point on keeping the stocks instead of sell off. However, can you share on your plan if the stock market crash? While seeing the a lot of stock selling at attractive price, what will you do? Will you use margin financing to accumulate these attractive stock?

felicity said...

Is anyone predicting a crash? Well I am not so pessimistic. Anyway some of those stocks will have a good floor. Around 18% of those stocks are to be sold soon or it will be paying huge dividends. Another 18%, I think will have a strong support. Other than that I.E the airport, NTPM, padini, parkson, dksh will just leave it there.

Unknown said...

I have been fully invested since 2010. Small long term investors, i believe should be almost fully invested all the time. If not, then they're not much different from traders & mart timers/outsmarters.

Canon said...

Felicity, what is your take on DKSH latest quarterly report?

Although an increase in revenue is seen, the cost of sales has also inched up considerably as a result of relocation to a new office and distribution centre. I have not and could not assessed the necessity of the new office and distribution centre.

This contraction in profit margin makes me wonder whether the relocation is creating value to the shareholders as a whole.

felicity said...

For DKSH, I think it does need the expansion. Its old office and warehouse was located in a prime area. I think over time that costs would be overcome. The growth in revenue is a good thing. At this price, it is fairly valued.

I agree on the point that small investor should not follow the larger funds way of managing assets. if they are open-ended fund, they will need to keep more liquid asset. As for closed end fund, one does not need to keep that much cash unless the fund manager is very confident of market overpriced.

Cash is not a good thing nowadays. I am an investor who is more concern over the quality of stocks and what the future holds for the companies. Market timing is out in this portfolio.

Betronist said...

Guys thanks for your feedback, certainly good insights. With due respect, I beg to differ on some of your points.

Keeping cash, to me at least, is not a market-timing game. In fact, keeping cash is for exactly the opposite reason -- we cannot time the market -- we need to have a contingency plan.

I don't like selling stocks -- especially the good ones -- but being fully invested all the time doesn't give me good sleep.

Unknown said...

I started my small & humble portfolio of Bursa listed stocks in Sept 2008, and was fully invested by end 2010. My portfolio is now about 110% more since inception. I stopped reinvesting my dividends in mid 2010. I'm sure many of you value investors here have performed much better.

If one were to start building a portfolio this year, i would agree that he/she should not aim to be fully invested over the next year or two. Not when mart is in the fifth year of uptrend. But why would a old hand in investing, only start a new value portfolio only this year. Is he timing...?
I'm a trend investor first and a value investor second. A true value investor, only buy good stocks, and why would a long term investor would want to sell a good good long term value buy? Is he trying to outsmart mart?

Okay, can you sleep soundly if you were fully invested in shares like CIMB, MBB, IOI, KLK, Nestle, F&N, Amway, Aji & Shell since January 28, 2000?

I do admit that i had some sleeping problem in 2012, very tempted to trim down my holdings in shares, to wait for a mart correction of at least 20%. Luckily, i only did some rebalancing of my portfolio without switching out of shares into cash.
Now, i'm trying to be a value investor first, maybe a dividend investor secon & a trend investor last.