Straits Times invited me to give a summary of 2009 and make a guess on how 2010 will turn out. I submitted the following reply. In the end my comments were never published but I'd be happy to share this everyone who reads my blog here.
Just Fire away if you disagree with my projections !
< Submission >
As a person who invests in the stock markets with the objective of covering my basic expenses, my emphasis will continue to be counters with free cash flow despite the good prospects i see for the market in 2010. The difference in my current strategy as compared to the past is that I will focus on equities in 2010 and 2011. I aim to grow my equities portfolio to 33% of my portfolio of REITS, business trusts, and stocks.
1. 2009 for me is like the emergence of spring after a very bitter winter of 2008. My portfolio size dipped 60% despite all efforts to farm my savings back into my investments in 2008. In December 2008, some stocks ( and prices then ) which I held include Ascendas India Trust ($0.435), Cambridge Reit($0.205), Cityspring($0.495), First Reit($0.40), Lippo Mappletree Reits($0.28), Pacific Shipping trust ($0.195USD), FSL ($0.45), MI-REITS($0.26) and SP Ausnet($1.02). I still hold these stocks today, having accumulated my positions since and the current prices in the market today speaks for itself. Some stocks I sold and made some losses because it stopped paying dividends include Saizen REITS, Macarthurcook Properties securities fund and Omega Navigators. A stock which I regretted not holding onto further was Ascott REIT which netted me about 30% gains but would have doubled had I been more patient during the H1N1 crisis.
Not counting the amount I farmed into my portfolio on a monthly basis, I made about $60,000 in capital gains (sans dividends) in 2009. This is very approximately a modest 20% return given that there is almost stock counters in my portfolio. I also made at least $24,000 in dividends in calendar year 2009. ( NB : Actual count exceeds $27,000 for 2009 )
2. My guess is that 2010 is going to be an exceptionally good year. The elections will mean a generous budget for 2010 and the economic stimulus is not likely to be withdrawn this soon. I expect GDP to be revised upwards several times and my bet is that the STI will be in the region of 3400 before year end. The big winners will likely focus on the commodities secular bull trend and emerging markets of China and India. It will also be a year for small caps growth stocks and the return of the retail speculator.
3. Because 2008 has taught me a painful lesson in humility, the best offense for me is still a good defense. These days I ask myself what stocks would I want to own if things do not turn out too well, so despite the obvious possibility of underperformance for 1H 2010, I will continue to build up my large cap dividend stock portfolio focusing on "boring" stocks like Starhub, M1 and SPH for the free cash flow they have. for 2H 2010, I will look for 10 small cap dividend counters to accumulate, I'm still doing my research and have yet to build my watchlist but very likely Karin technologies and Challenger will be part of that list. I hope to end the year with about $8000 - $8500 in dividends every quarter.
4. My only advice to readers for 2010 is to seriously take a good look at your personal finances and determine how much cash you could farm into the markets through your savings. It's tempting to consume and enjoy yourselves when times are good but a recovery like this will not come by every year. If you are not too sophisticated, buying the STI ETF index should reap reasonably good returns for 2010.
< End Submission >