Thursday, 7 January 2016
This could be the real thing..
Market tanked again today, following China bourses that dropped more than 7% which triggered the circuit breaker at Shanghai and Shenzhen.
From a STI high point last year at about 3550 pts, till the current 2740 pts, STI has dropped by 23%. As of now, it has broken the previous low of around 2770 last Sept.
Some of its component stocks fared even worse. Keppel wrote a new 52w low today, at $5.91 or 5% lower than previous 52w low of $6.2; Sembcorp broke its key support $3, currently at $2.76.
So what would the majority of retail investors, the young PMETs, uncles/aunties, relatives, taxi uncle that your encounter daily, do in view of the blood bath this few days?
I think they will be very frustrated assuming they are vested, and quite panicky at this moment. After all, its not fun staring at big loss in your portfolio. If they have bought during the brief market rise around Oct last year, thinking that it was merely a correction from May to Sept 2015, and hoped to capitalize on the low point back then to ride the market back up, they will be proven dead wrong now. It was not a correction after all. Events this few days showed that the correction is not over yet, and since STI broke the 2015 low now, it is likely to go over. They will sell now.
So, I am hazarding a guess that the market drop is not over yet, and further drop is highly probable. And I do not think it is the time to buy yet.
Fortunately, I cashed out some of my Riverstone holdings a while ago, and still have about 24% of portfolio in cash. This will come in handy when market dropped further. I am contemplating if I should raise cash level through further selling, or just wait for incoming dividends next few months and the regularly capital injection to beef up my liquidity. But this will be a slow process.
What if the market does a u-turn at this juncture and rised back up swiftly? Well I will rejoice at the remaining 76% of my portfolio increase in value, and be happy to collect dividends along the way. But… I am guessing again this scenario is quite unlikely.
Am also taking this chance to do a summary of my 2015 performance. I posted early last year that I hoped to have a $5k dividends, and achieve a portfolio size of$130k. Well I did not meet the $5k dividends (short of few hundred bucks), but exceeded the $130k target. My returns in 2015 was about 6.7%. Happy to beat the market.
I aim to have $7k dividends in 2015, and amass a portfolio of $165k. Lets see if I can attain this early next year.
And I will try to write articles more often in 2016. Had been lazy in 2015 with only 3 blog posts which is pathetic. Hope to write at least once in 2 months.
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