Adding Positions with Caution

So much has happened this first quarter of 2022.

The market is gripped by the war in Ukraine. There is also the surging inflation that weighs heavily on every investor’s mind. In addition, there are the escalating energy crisis and impending food crisis to worry about. The future does not look bright, and the overall global investing environment looks just a tad dim and gloomy.

Hence, since January this year, I’ve been adding positions with a lot of caution.

Just before the advent of the new year, I liquidated my positions with MoneyOwl and Syfe, pocketing about $7K in profit. On hindsight, I was glad I did it because the market has not been performing very well this quarter and I had gained from taking profit off the table.

Even so, I am still continuing my monthly plan with MoneyOwl, buying the dips during market lows. My wish is the low market sentiments will continue to persist throughout the rest of the year, thus allowing me to buy in low with MoneyOwl.

As with Syfe, I decided not to return to my former Global ARI and Equity 100 portfolios for the time being. I’ve joined Syfe Trade instead. I like Syfe trading for the following reasons::

1. It is just so easy to use. The interface is straightforward and navigating it on the phone is an absolute breeze.

2. Access to US market on the cheap: 2 free trades after promo period (ends 30 March) with super low fees of USD 0.99 per trade thereafter.

3. Fractional shares: I can buy Amazon shares for as little as USD 10 instead of forking out USD 3000+ for one complete share.

I have since bought a few counters on Syfe Trade:

1. Alphabet

2. Sea (share price has fallen about 48% year to date).

3. Mosaic Company (Fertilizer Supplier)

4. Nutrien (Fertilizer Supplier)

5. Compass Minerals (Fertilizer Supplier)

I bought fertilizer companies to take advantage of higher fertilizer prices as sanctions on Russia threaten fertilizer supply. I was, however, too late to act on oil and gas companies. I shall wait for a better time to enter the market for O&G stocks.

Apart from US stocks, I also loaded more China/Hong Kong stocks. Up until mid-March, Chinese stocks have been badly battered. For a good one-year period, Chinese tech stocks have been under constant sell-off pressure. The rout eventually came to a halt when in mid-March, the Chinese government came out with a pledge to keep markets stable.

Very thankfully, I was able to load up on Alibaba, Tencents and Lion-OCBC Hang Seng Tech ETF during the 2-week period before the rally started.

As of now, the rally seems to have lost some steam, and buying opportunities still abound. That said, I am still a little cautious on buying more Chinese stocks as I am not too sure of how China will be “persecuted” by the West for directly or indirectly supporting Russia. There is also China’s challenges in battling the current surge in Covid cases and the overall economic slowdown.

There was also price weakness in the Singapore market from mid-February to early March. I took the opportunity to load up on Ascendas Reit and MapleTree Industrial Reit, 2 high quality reits, at SGD 2.80 and SGD 2.46 respectively.

Without a doubt, global economy outlook does not look particularly promising. Mr Tharman highlighted five woes that the world is currently facing and will continue to face in the future*:

1. Geopolitical insecurity

2. Risk of stagflation

3. Climate crisis

4. Pandemic insecurity

5. Inflation/Slower growth

Just last week, Mr Lawrence Wong, while assuming the Singapore economy is on a growth path this year, asserted that “a recession or stagflation cannot be ruled out, owing to uncertainties arising from the deepening crisis in Ukraine.”**

Hence I choose to be careful with investing going forward. Getting the margin of safety right is even more significant and consequential than ever before. It is extremely difficult committing capital to the stock market during uncertain times. And yet, as history has shown, there are often huge rewards to be reaped in the long run. I just need to find my own sweet spot in the risk-reward conundrum. 

Investing scared will push you to go through due diligence, employ conservative assumptions, insist on an ample margin of safety in case things go wrong, and make you invest only when the potential return is at least commensurate with the risk. Investing scared will result in making fewer mistakes.”

Howard Marks




Disclaimer: I am only an amateur investor and nothing you read here on my blog constitutes financial advice.  I write here to detail my investments, strategies, and analyses.  Feel free to read at your own risk.  Should you need financial advice, consult a licensed financial advisor.