Reflections on my investment journey in this current bear market

      Recently, many stock markets have went through a series of wild rides. In particular, I have witnessed US stock market triggered circuit breakers for 3 times within 2 weeks in early March 2020. Both COVID-19 global epidemic and the sudden downfall of oil price have surely sparked great fear which sends many stock indices downhill.

      When most of my growth stocks' previous gains got wiped out, I start to feel uncomfortable. After spending some time to think it through, below is the summary of what I did for this month.


1) Re-deployment of capital from growth stocks to Put Warrants
      I decided to sell off all my growth stocks due to two reasons.

      Firstly, it was because the falling share price has defeated the purpose of me to continue holding them. Surely, the share price of growth stocks with solid fundamentals will eventually recover and rise even higher, but I am not so confident if such recovery can be done fast. I can't afford to waste my time to wait for years just for the share price to recover back. I should have slowly take profit in tranches when the growth stocks went above 50% gain before this bear market strikes in.

      Secondly, I needed capital to increase my position in Put Warrants because at that time I felt that the COVID-19 outbreak is getting serious. On top of that, when the OPEC meeting in March 2020 ended in a not so good way, it sends crude oil price downhill sharply, causing massive and fearful selldown in stock market. This means I need to take advantage of that pessimism by adding in more Put Warrant position fast. Since my growth stocks' share price was beaten badly, I might as well redeploy my capital to buy more put warrants.

      I am glad that I made that decision earlier, because as the HSI index falls, my first batch of Put Warrant became profitable. Then I slowly redeployed the capital to buy second and the subsequent third batch of Put Warrants. Although the third batch of Put Warrants are not so profitable, at least I managed to earn more than 100% of these redeployed capital to cover all my previous losses and generate additional cash for reinvestment.
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2) Conviction to hold dividend stocks with solid fundamentals
      When the stock market was in crisis, I found many dividend stocks with good fundamentals somewhat become unusually attractive. So I sold off all growth stocks while continue holding good fundamental dividend stocks. Since I sold off all my Put Warrants to lock in profit not long ago, I have slowly bought in more good fundamental dividend stocks with unusually attractive dividend yield.


      This week is quite a confusing week to me because after the Fed announces unlimited Quantative Easing program, all STI, KLCI, HSI and US indices reported gains with full gap up today, despite both the COVID-19 global epidemic is still barely under control and the oil price is still in strong downtrend. I will need to see how these indices behave this week. If stock market overall starts to show optimism by the end of this week, I may need to initiate Call Warrant positions early next week. We shall see.

Updates on my journey so far

      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.

My Random Thoughts #2

      Regardless of any choices you make, there will always be regrets in life because you forgo other alternatives. Economists called this phenomenon the "opportunity cost". This is part of life because our energy, time and capital are limited. Life is an exchange. If you want something, you got to exchange it with something else. Nothing comes free, there is always a trade-off.

      To me, my vision in life is to retire early without financial worries. I can enjoy finer things in life whenever I want at my own pace and at my own time in peace. However, to retire early means my path will not be rosy as I choose the road less taken.

      First, I will be judged, be criticized and looked down upon because I have given up pursuing social status and symbols which most people valued the most. I don't bother much about these things but since I am still functioning in corporate world, I do receive "advices" and "tips" from bosses, colleagues and friends to often tell me what to do to boost my chances to get promoted and hence better pay raise. Although having pay raise could push my early retirement plan slighly faster, I will have to work overtime more often because of heavier workload and bigger responsibilities, thus diluting my overall hourly salary rate and giving me more stresses in life. In view of this, I think I am better off taking it easy in my career development and take on multiple tuition jobs which has better hourly pay rate. This also means I will be watching my friends and colleagues rise to higher ranks and enjoy better titles and privileges while I become stagnated.

      Second, taking this path of early independence from corporate slavery means I will be embracing singlehood until I achieve my mission. This sounds unusual, especially coming from a guy who is in late 20's where by today's society standards, he is supposed to find a partner, travel around the world  and settle down with her. But I have a dream. To me, freedom is everything. I want to be free from the shackles of the golden handcuffs. I want to bid farewell to my bosses who brought misery to my life once and for all. I want to be able to wake up when the gentle sunlight strikes my face every single day. While having lifelong partner will allow me to share my joy and sorrow with her, she will get in my way because our future requires huge financial commitment. You can save on yourself but you can't save on her. With this in mind, I decided to focus wholeheartedly on building capital in equity markets. This is for her own good as well.

      As the eldest son in my family, I am aware of the expectations my parents have on me. Like typical asian parents, they wish to see that I have a good career ahead and getting married and start a family. But, my life is up to me how I choose to live and I only life once. I understand that I am selfish and there will be a time where I must reveal my grand plan to them and break their hearts in the process. I am not sure whether I still can cope with the pain in my heart on that day.

      I can only hold on to this English poem I learned in secondary school:

"I shall be telling this with a sigh

Somewhere ages and ages hence:

Two roads diverged in a wood, and I—

I took the one less traveled by,

And that has made all the difference."

- The Road Not Taken, by Robert Frost

      Yes, that has made all the difference. Regardless of any choices you make, there will always be regrets in life because I give up on other choices. I choose the path to freedom because it is an unconventional path to most people and it is all that matters to me. I will seize it!

My Random Thoughts #1

      Perhaps, it is a form of luxury to know what you must no do in life and you are able to do it without the fear of not having enough money to survive later on.

No goals in life! No plans in mind! Nothing!

And you know what?

I like it this way very much, truly.

No politics and related bullshits to deal with so that you can truly focus on enjoying the present in great peace.

Just lazy strolls, sitting on a beach, reading some books with some nice, calming and soothing music being played in background.

Perhaps, such moment is yet to come. I really want this day to come true.

I miss it, madly.