The second half of 2019 is definitely not an easy one for me. Lots of things happened during this period and I decided to briefly pen down my thoughts here.
My Career
Perhaps it is true that I am not entitled to anyone's opinion, until I get paid for it. I learned this lesson the hard way. Well, to cut the story short, just because I am quiet and generally don't like to get involved in political affairs, my superiors decided that I was underperforming their expectations. As a result, I was being "coached" and "advised" on how I should conduct and behave myself. Since I refused to change, I was being micromanaged. All these happened after a new CEO came in to downside several departments and roll out multiple cost saving initiatives.
After several rounds of difficult discussions, I decided that I should make a move to quit. Fast forward, I am now working in a highly regulated industry which is completely different from my previous one.
This is a good reminder to me that as long as my finances are completely dependent on someone else, I will always be at their mercy. When situation is becoming dire, they will manipulate and dispose me like a damaged good. In order to avoid the pathetic fate of me being someone else's slave for the rest of my life, I need to have another income source as my backup. Hence, this entire unpleasant experience has strengthened my resolve to grow my investment income as quickly as possible for me to live a life of dignity.
My Investment Knowledge
Due to my new job nature, I am not allowed to have margin accounts with any financial institutions. This is unfortunate because with margin account, you can unlock some funds at anytime you want when opportunity of buying new shares arises and then pay back those borrowed funds later even though you have limited cash at hand right now. Because of such restriction, now I have to set aside more idle cash into my investment warchest to wait for investment opportunities.
The good news is, my knowledge on brokerage/investment industry as a whole has been rapidly expanding. For instance, I saw the backtesting data and learned that even some of the famous trading gurus' trading strategy will not always work and most of the time you will make losses. Yet, they were constantly advertising on how well they earned and then charged you exorbitant trading course fees and subscription fees for real time trading alert. In addition, no matter how well research/investment article is being written, I must take it with a grain of salt. I think that most of the content writers wrote articles solely to attract people to trade with them but they may not neccessarily put the money to where the mouth is. After all, if they invest based on what they wrote and if they are consistently correct, they should have achieved financial independence long time ago and not to report to office anymore. Also, brokerage firms generate revenue through commissions, trading fees and finance charges. So, they are incentivised to encourage people to trade frequently with them. Regardless of whether you make or lose money, you have already lose money to these trading commissions and charges first.
Perhaps, to avoid becoming a loser in stock market, I must believe in my own research and not someone else and only invest in good companies for long term at the right price for as long as they perform.
My Investment Portfolio
As for my investment portfolio, I have made some changes.
Now, I will avoid companies that have to rely on contracts with their customers or campanies that has major customer concentration risks even though their financial metrics and track records are impressive right now. I don't like to see dividend cut or suspension on top of share price falling by over 10-20% because they are unable to secure new contracts or something undesirable happened to their major customer. Also, the company will always be at their major customer's mercy and thus they will not have much bargaining power in pricing their products or services.
I will also avoid companies whose revenue and income are mostly contributed from mainland China. They are prone to accounting fraud allegation and once such news came out, they often end up being suspended by the exchange for further investigation. You can refer to Yangzijiang Shipbuilding Holdings Ltd (SGX: BS6) and Best World (SGX:CGN) corporate action this year in SGX for reference. For Best World, it was suspended from trading on May 2019 and now is still being suspended. To save myself from such trouble, I would rather skip these companies all at once.
Also, I decided to allocate at most 30% of my portfolio into growth stocks because I want to grow my wealth slightly more efficiently. After all, capital gain is the larger component of total stock market return, not dividend income. I am looking at the US stocks right now because I think that US companies have huge addressable and homogenous market within the US and thus they have huge growth potential, unlike Singapore and Malaysia market. Not to say that the latters are bad, but I do think that most of the growth stocks over there are suitable to hold for about 2-5 years only as I saw most of them grows consistently for 2-5 years before their performance degrades.
The growth stocks I added this year are Guan Chong Bhd (KLSE:5102), Kronologi Asia Bhd (KLSE:0176) & Visa (NYSE:V). The two Malaysian counters were added into my portfolio first before I decided to venture into the US market and subsequently I added Visa (NYSE:V) into my portfolio. I may add a few more growth stocks next year.
As for my portfolio performance this year, it seems like I was saved from my Singapore REITs because most of my Malaysian stocks are not performing well. Perhaps, it was all thanks to the new Malaysian government's fiscal tightening policies on top of new taxes coming up next year, KLCI index has been consistently falling down and foreign institutions are withdrawing funds out of Malaysia. This lesson has taught me to diversify my portfolio geographically and not to place all my funds in Malaysian stock market alone. I am lucky to have Singapore brokerage account.
Well, I think I will spend more time to hustle as a part-time tutor again next year in order to generate more cash for my investment.
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