Friday, June 4, 2021

What did I buy and sell between Jan to Jun 2021?

The stock market rallied for a good 7 months from Oct 2020 until Apr 2021. Usually when the market rallies, I will look at selling stocks which I feel have reached prices that exceed their market value.

I sold Wilmar in Feb 2021, which was a stock I bought in Feb 2018 when the market was sluggish. The thing about Wilmar that I liked back then was that it had very very good cash flow and it wasn't pricey, near historical mean. The thing I dislike about Wilmar now is that it's debt laden and pricey, way above the historical mean. Although fundamentally they are a lot bigger, they IPO-ed some parts of the company, but as a whole, they took on a lot more debt and I wasn't convinced that they were yield accretive acquisitions. It was a good run with 80% capital gain and 11% total dividends, so overall it was up 91%.

I bought Vicom in Jun 2021, few days ago. I didn't have to buy anything, but I thought I should buy something since I haven't bought anything for a long time (since Sep 2020). REITs are fairly/overvalued, so I decided to look at other stocks and settled with Vicom, which is a stock that I had been looking at but had never initiated a position. What I like about Vicom is that it is a boring and transparent business with high cash flow. It's also like a monopoly business because vehicle inspection and certification services are highly regulated and you won't have new players enter the market so easily. It also has low float, low volume, so it's unlikely to be in the radar of big fund houses -- I like such stocks, because prices are relatively stable.

Autowealth bought some ETFs for me in Feb 2021, mainly US ETFs, under their portfolio that charges performance-based fees instead of the standard yearly management fees. I generally don't know how to choose funds, although some people tell me that funds are not meant to be individually analysed like stocks. So for now, I am paying others to choose funds and manage them for me, while I continue to pay myself to choose and manage stocks. Only time will tell if this is a good arrangement.

My friends had asked me if it's a good time to buy stocks. I would say that if you are just starting out, you probably can just get into any stock at any time, but don't go all out, because historically, prices take a breather in Aug and Sep and sometimes through Nov. If you already have stocks on hand, then you probably can afford to wait a bit because usually stocks go on sale 1 or 2 times a year (about 10% correction from peak for the year, which could mean STI at about 2920) and this year, it had not happened yet, so if you think you will be lucky, then wait for it. It may not happen too, like in 2009, where prices only went up, up and away.

Personally, I am expecting the "pandemic effects" to set in this year, i.e. government hand-outs will be less generous, savings dry up, lenient loan policies will be tightened, interests will slowly rise, income will be squeezed. I also feel that some sort of "balance sheet recession" effects will hit the mass market non-essential retail businesses, where people opt for cheaper alternatives or totally cut back on spending. Although the economic forecast is positive growth, I believe that the growth will be rather invisible, in the form of bio medical or electronics production and property asset inflation, and will not translate to salary growth.