The month of October has been marred by lots of divestment on few non-performing counters. Few highlights:
- Fully divested San Teh, continuously reduced holdings in Stamford Land and Casa Holdings. Details analysis here
- Made small acquisitions in Cache Logistics Trust & Global Investments Ltd to further strengthen dividend returns.
- As a result, the war chest balance has increased to 6%.
I’ve always been a fans of football & like to put a comparison between investment world and football world. In the case of my portfolio, there should be a clear understanding on what the game strategy is. There are few well known football formations, such as the 4-4-2, 4-3-3, or 3-5-2. I try to put every counter in its most suitable position:
- Goalkeeper – is where we should put our money into the safest instrument, in this case, our war chest.
- Defenders – a combination of strong counters with good history of giving sustainable returns. Just as in a football match, defenders’ task is to prevent the opponents from scoring goal. Of course it would be good if the defenders can score a goal too (i.e. giving high capital gain). But this is a rare case. Most of the time, defenders are acting as a cushion during unexpected recessions.
- Midfielders – midfielders act as a bridge between defend and attack. They are a combination of growth players who also give good dividends. Combination of strong midfielders, wingers, and play maker can determine the outcome of the match.
- Strikers – strikers are expected to score many goals. As an analogy, those counters who are acting as strikers, are supposed to give above average annualized return. This is mostly from capital gain.
By looking at the proportion of each counter in my portfolio, it appeared my portfolio tends to be an aggressive one: 3-4-1-2. Cramming a lot of midfielders in the center of the field, and having enough strikers to increase the chance of scoring goals. While keeping few defenders just enough to hold the fort. Of course having a good goalkeeper (i.e. lots of war chest) can help tide the portfolio during recession & provide us with enough dry gunpowder for counter attack.
Separately, my child’s portfolio has also grown quite a bit this year – mainly driven by higher fair value of investment in Hotung & Guocoland. Guocoland has recently announced its 1Q’2018 result with quarterly net profit grew by almost seven times year on year. The strategy of Child’s Portfolio is rather defensive, focusing on consistent dividend. With more than three quarters invested in high-yielding investments, such as REITS – while the remaining one quarter is invested in growth stocks, such as Guocoland.