To understand what my personal finances have been going through, it might be useful to review the series of blog articles I wrote when my portfolio was facing the worst drawdown in March 2020. Thanks to private bankers telling their well-heeled clients to deleverage their REIT portfolios, the stable REITs with strong sponsors actually collapsed, and I saw a 45% drawdown within a matter of weeks.
In those days, I was under tremendous stress and had to deleverage as well, as I might be just inches away from a margin call. Worse, the brokers were not picking up their phones, and I eventually got so mad that I terminated my margin account with DBV Vickers. As a final insult, after not picking up my call for days, their incompetent team even sent me a margin call after I had completely deleveraged from the markets!
This marked the beginning of my stronger relationship with IBKR. When the market recovered a little, I went full leverage again, but after recovering some losses, I pared down the margin portfolio and transferred some funds into my CDP account, putting a large six-digit sum into just DBS, which has flourished to this day.
One of the things I promised myself then was that if the market melted up, I would treat the situation with the same urgency and rebalance my portfolio from custodian to CDP. This kind of dramatic trading that I had to perform in the 2020s is not something a 50-year-old should be engaging in, at least not on that scale.
But it would be a happy problem, if I stopped my leverage, it would mean that I have won.
And finally, after 6 years of anticipation, that moment is finally here.
With the STI above 5,200 and PEs above 16, markets, while not overpriced, have become a ripe moment for another round of voluntary "panic" deleveraging and repositioning into the more stable CDP portfolio.
I have taught 42 batches of ERM classes, and now their portfolios, which I have carefully built from scratch, are gone from my margin account. Sums have transmigrated into my CDP and are allocated to ultra-stable blue-chip stocks in a portfolio designed to generate steady cash flows to cover my family's expenses. I still have a happy tech-stock problem: my gains in tech, even in my CDP, need to be shuffled into an underperforming REIT or a high-yielding bank in Hong Kong, but tech momentum is strong, and companies like UMS are not really tied to the AI boom at the moment.
My custodian account is now almost bare, with just over $20k, no longer leveraged, and its purpose has been transformed into a trading account with three algorithms running simultaneously. A trend-follower ETF strategy, a mean-reverting stock picker, and finally a trend-follower SGX stock picker that scans the stocks with powerful momentum and invests in them tactically. The future of my custodian account is to be run like a high-leverage hedge fund with both long and short positions.
What does this mean for my students who have current portfolios?
Absolutely nothing.
I continue to track these portfolios and celebrate their victories.
I continue to hold the majority of these stocks in my CDP account, currently 66.
In Batch 43, I will add a Python script to the training covering momentum trading in a market that is no longer woefully underpriced.
In the next article, I will talk about the training business.
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