Markets at all-time low in 2022, what have I done in the stock market?

September 2022 was a terrible month for global stock markets and proved that August was merely a bear market rally. My portfolio took a beating that was far worse than the market because it was heavily weighted towards Riverstone Holdings. Unfortunately, I think it got tarred with the same brush as Top Glove which announced a stunning quarterly loss.

At the beginning of August, realised and unrealised returns in my portfolio was still hovering above positive territory. By the end of September, it had sunk deep into the red. The magnitude was significant because the swing was in the low teens. Thankfully, I did not watch the horror show unfold without taking some decisive action either. With markets at all-time low in 2022, here’s what I have done in the stock market.

Disposition Effect

In behavioural finance, the disposition effect is such that investors usually cut winners and hold on to losing positions. I was definitely guilty of this and here were the winners that I took profit during the month of August.

1) CapitaLand Investment Limited

I bought CapitaLand at the $2.60 range and sold it as CapitaLand Investment for $3.70. This excluded the handsome cash and dividend in specie that were distributed as it shed its real estate development business. All in, I estimated total returns to be almost 70% over a 2-year holding period. As a blue-chip company, I am definitely very satisfied with such returns. Anyway, I sold it for personal reason so I choose not to disclose it.

2) Uni-Asia Group Limited

I sold Uni-Asia at $1.11 in August as I noticed that chartering future rates were falling rapidly. When I initiated a position in May 2021, charter rates futures were pointing towards US$36K/day. Unfortunately, 1Q23 futures had plummeted down to US13K/day but still below Uni-Asia breakeven price of around 9K/day.

My initial position was $0.68 so with the dividends collected, the returns were quite handsome at close to 70%.

3) Bumitama Agri Limited

Falling global demand due to recession fears had caused plenty of commodities prices to drop. It is a similar story for Crude Palm Oil which I had a proxy position via Bumitama Agri. As a result, I sold it at $0.61 despite it reporting record financial results.

My initial cost of purchase was $0.51 and including dividends collected, this stock returned just over 25% over the 2-year holding period.

In case you are in awe of the profit I made from the aforementioned sales, here is an example of a position that I was able to put a stop loss to.

4) Japfa Ltd

This was a speculative play as it announced that it was going to list its China dairy arm in Hong Kong. I went in at $0.71 thinking that it was severely undervalued. I eventually sold it at $0.60 as I got frustrated by the amount of waiting and the opportunity cost of my capital. It turned out to be the right call as not only did the proposed spin off got extended, its share price continues to deteriorate further today.

Conclusion

Despite all these moves, my portfolio’s realised and unrealised returns for YTD 2022 stands at negative single digit territory. This is due to the tech and crypto sectors dragging the overall portfolio down. I am not optimistic it will improve before the year-end as I think the equity market has more room to fall further. In other words, things will probably get worse before it gets better. Fellow investors, I feel your pain too.

Meanwhile, I would also like to stress that timing the market usually works against you. Despite knowing this, the reason why I did it is because it coincided with my personal financial circumstances to raise my cash holdings.

Finally, on a separate note, I decided to transfer my crypto holdings into a hot wallet. The decision by Celsius to suspend withdrawal was the proverbial straw that broke the camel’s neck.

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