The past week was horrendous for the stock market. Equities worldwide responded to the twin whammy of a worsening of the Covid-19 outbreak as well as the precipitous plunge in oil prices. As a result, the Dow plunged into a bear market in just 20 days, the fastest 20% plunge in history. Unsurprisingly, it was the most volatile period that Heartland Boy has experienced in his investment journey thus far. Friends and readers have written in to ask for updates, reactions and opinions to what has been increasingly termed a black swan event. Here’s the investment decisions I have made leading up to the fastest bear market in history.
80% CASH, 20% Equities
When the first confirmed case of COVID-19 was announced in Singapore during Chinese New Year, Heartland Boy began a methodical process of paring down his stocks to reach the current portfolio as shown in Diagram 1.
Diagram 1: Heartland Boy’s stock portfolio as at 13 March 2020
This was his thought process:
- With mass gatherings banned or heavily discouraged, Unusual would not be able to help organise concerts or family shows. Outlook is extremely bleak- little to no revenue and fixed costs such as staff salaries to pay.
- Flight disruptions, travel bans and advisories result in massive hordes of tourists choosing to stay home. Plugged into the tourist dollar and domestic consumption, Jumbo’s restaurants located in China and Singapore, would naturally take a big hit in its revenue.
- Property is very much sentiment driven. With the Singapore’s economy downgraded to between -0.5% to 1.5%, property buyers are likely to stay on the side-lines. What this means is that APAC Realty would earn less commissions from lesser property transactions.
- Oil prices plunged 30% overnight, and Nordic which provides turnkey engineering solutions to the oil & gas industry would definitely feel the after effects of such a reverberating event.
As a result, Heartland Boy’s stock portfolio is left with Boustead Projects, ½ of Roxy Pacific and Riverstone- a stock that he purchased amidst the coronavirus pandemic. Year to date, his portfolio is down 7%, partially because he acted quickly and early enough. This means that only 20% of his portfolio is invested at the moment. Heartland Boy will be even more stringent with his warchest and would be extremely patient in deploying them. This is a time that calls for rational, calm and cool decision making. Stay safe and healthy, everyone. Hopefully, this virus will go away soon.
For those who are curious, I use both Tiger Brokers and Futu to execute my investment decisions
Disclaimer: The information contained herein is the writer’s personal opinion on his blog and do not constitute an investment advice, an offer or solicitation to subscribe for, purchase or sell the investment product(s) mentioned herein.
This article is actually quite timely. I think the key to timing the market in this uncertain times is to watch those stocks that will trend down from a global macro point of view.
Good article with good analysis.