Portfolio Cost: S$510, 412
Portfolio Market Value: S$710, 451
Portfolio Overall Unrealized Profit: +S$200, 039 (+39.2%)
Portfolio XIRR (FY2021): +14.93%
Dividends Collected (FY2021): S$3, 451
Current Warchest: S$26, 300
(*All figures are accurate as of 31 Mar 2021)
Portfolio Actions in 1Q2021:
2021 Strategy - Discount Shopping For Quality Tech
The yield of 10-year US treasury bills kept rising in the first quarter. When long-term rates trend up, investors start to discount future earnings potential of companies more heavily. Those high-flying tech companies with stretched valuations had come under selling pressure after outperforming the market in 2020. Another market force in play was the sector-rotation out of tech and into 'post-pandemic reopening' sectors such as hotels, airlines, cruise, transport, oil and F&B. Global covid-19 cases and deaths have been declining as countries raced to vaccinate their people. The tech sector correction gave me a rare opportunity to scoop up some Apple shares.
Over in China, big tech companies like Alibaba and Tencent have been hit with anti-monopoly investigations by the Chinese regulators. This sent the Chinese tech market into a tailspin. The share price of Alibaba has fallen more than 25% ever since the Ant Group IPO was scrapped. Investors were wary of more stringent regulatory measures from the Chinese government. Again, I took advantage of the correction to initiate positions in Alibaba and the Hang Sang Tech ETF.
The Biden administration wasted little time in 'jump-start' the US economy by passing a $1.9t covid-19 relief package and proposing a $4t infrastructure spending plan. The US unemployment rate also dropped significantly by March. All these factors have increased the prospects of the US Fed hiking rates earlier than expected. By now, all of us should that a rate hike cycle would probably cause weakness in the REITs sector. But the veterans would know better than to panic. We diamond hands and HODL for the Power of CD!
My overall strategy for 2021 would be to compound the dividends I received from banks and REITs into tech stocks. It is widely expected that the dividend payout restrictions on DBS, OCBC and UOB would be lifted in 2H2021. In DBS' recent AGM, the management has expressed confidence in restoring dividend payout quite 'rapidly' once MAS gives the go-ahead. Certain REITs that retained distributions last year in order to provide rental relief to tenants should also start to return cash to unitholders in 2021. Footfall and tenant sales revenue at malls have been recovering steadily since Phase 3 re-opening in Singapore. And starting from 5 April, work-from-home would no longer be the default mode. Suntec City used to resemble a ghost town a couple of months back. Now, the office lunch crowd is well and truly back on weekdays!
No Need To Choose Sides
Society has become more divisive. Politics has become more divisive. US-China tensions look set to continue for a long time. Everything seems to be binary. You are either with me or against me. Making forced choices. Well, there is no need to 'take sides' when it comes to investing. As an investor, my sole objective is to invest in companies that make money and grow. Plain and simple. I don't care if it is an American, Chinese, European or Japanese company. Some investors went too deep into the internet rabbit hole. Getting confused and distracted by the media noise. My fellow dividend investing friend, DK, summed it up pretty well in his latest post. The last time I checked, almost all consumer tech devices still run on Android, iOS and Windows. Never count the Americans out. Doesn't matter if the cat is black or white, as long as it catches rats, it is a good cat.
Keep An Open Mind So That New Wisdom Can Get In