Saturday, January 23, 2016

Personal Update : Two years have passed since my last paycheck !

It's time for a another update.

It's been two years since I had a pay-check, if this were a disaster recovery exercise, I would say that it has been rather successful so far as I still did not draw upon my capital.

a) My son is not here yet.

At the personal level, I am waiting for the birth of my son. It can happen any day now. Right now I am more afraid than my wife who seems to be quite calm.

b) Financial markets

For all the doom and gloom, the markets did not faze me at all.Maybe I have more urgent priorities balancing school work with families.

Results wise, like most of you I continued to lose money since the new year. However, as my portfolio is defensive in nature with a beta around 0.5, I tend to lose about half of what the STI would lose. I will recover a bit every three months when dividends get issued but I can only farm back about $2000 a month this year as I should be focused on my family expenses.  As my savings are humble as a student, I would be putting it to reinforce some of my heavily beaten down small cap dividend positions.

But this is a great time to have a job and savings !

The STI ETF is yielding a big fat 4.2% and trading around a P/E of 12, so stock selection is not really required to get a good price from the markets. It might be time to start hankering for a SG-REIT index ETF, at a time like this passively holding such an index fund would lock in about 7% yields, not bad at all if you are planning for retirement,

Yes, the main thesis is  doom and gloom and this would have to run its course.

But are things that bad ?

Chinese manufacturing may be contracting but China might counteract it with a growing services sector. A lot of consolidation may stem from corrupt officials curtailing their spending. The economy may well become even less corrupt and the Chinese economy might become cleaner and more transparent over the long term.

Oil prices are low and oil firms are suffering. Sure, this is bad for oil firms, but households can now have more income for other things after spending less on gasoline and petrol. I imagine a GDP surge in some economies which are dependent on oil. I can also imagine companies making quite a bit on the re-opening of the Iranian economy.

Singapore real estate is heavily regulated. Prices will hit a low but the government can remove some cooling measures and things may rebound after that. Real estate prices are something that's never out of the government's control. Nevertheless, if you are betting on real estate going up indefinitely, you might be wrong over the long term as SIBOR is not going your way at all. ( I bought an EC. I was  betting on price gap narrowing between my EC and private condos around the area over a period of 10 years which is different kind of gamble. )

At this stage, I don't think things will be as bad as painted in the media. My bet is that markets may be down slightly, up slightly or up by a lot. But markets are unlikely to be down by a lot in 2016. One upside is the TPP although the consensus is that SG would not benefit from it that much at first.

As in all bear markets, there are market neurotics who say that the sky is falling, these are the buggers who have no business buying any stocks. There are also non-investors who are spreading gloom because they have no skin in the game abetting the neurotics to further depths of despair.

My job is to stay calm, keep in touch with the news and continue collecting my dividends and use my new found legal skills as a fall back plan. Markets will recover eventually and it's good to come up with a plan to exploit that after all the neurotics have fled and their homes have been foreclosed.

c) School - Finally started to look for an internship / training contract !

I've been procrastinating in this area. I spent my first year clearing my community service requirements and the last holiday was spent worrying over my mum's health problems. But I can't procrastinate anymore as I fear that my grades would drop to a point where I would not be welcome in the better firms in Singapore.

There is also the shadow of ageism lurking in the corner as I know of seniors my age who have not scored a TC yet. So today, I seem to be the only Year 2 in a Legal Career fair for students to find training contracts and internships. I left my resume with some firms and one fairly large firm is already showing interest in my profile. I'm crossing my fingers that I can get a TC by this semester.

Anyway, this semester seems more ridiculous than the last one, some of us get out of lecture rooms visibly confused. There is now no attempt to systematize or build a framework around the course material anymore. We are at the deep end. Everything is a just a stream of consciousness, not unlike the last two David Bowie music videos....

d) Books I an reading

I am actually going to stop my Economist and Edge subscriptions to clear my backlog of books. I am reading a very amazing book by Cal Newport called Deep Work.This books has interesting insights which fundamentally change some of the ideas in my own line of books.

This will be discussed in another posting soon enough...












No comments: