April 2020 Update

How has 2020 been so far for you? This year is indeed a rough one with so many things happening. I thought it would be a good time to pause and take stock of the events leading up til now.

The main news in early 2019 was about trade war; US and China embroiled in countless negotiations, threatening one another with tariffs. At the same period, nearer to home, HK was facing protests due to a proposed extradition law that would have allowed the transfer of fugitive to mainland China, among other jurisdictions.

On 7 Jan, World Health Organisation was notified of the COVID-19 virus.

11 Jan, China reported its first death from the novel coronavirus.

23 Jan, Singapore reported first confirmed case. Wuhan, China goes under lockdown.

13 Mar, Trump declares a national emergency amid coronavirus pandemic

16 Mar, Dow plunges 2997 points in the worst drop since 1987

2 Apr, Global coronavirus cases surpasses 1million

News about the trade war and the HK protest became lesser as the global pandemic took over the daily headlines. Life has come to a grinding halt since the coronavirus pandemic; countries imposing travel restrictions, social distancing measures in an attempt to contain the spread of virus. At home, we are subjected to a circuit breaker since 7 Apr until 1 Jun. Business are adapting by letting their employees work from home and schools have switched to home based learning. Everyone is encouraged not to head outside unless for essential activities like grocery runs or buying of meals. This might be a new norm as we brace for extended social distancing even as circuit breaker is lifted. 

How did the market react to this pandemic? 

The SNP500 dropped ~34% from the peak to a low of 2237.4 on 23 March

Since then, the market as rallied and is only down ~14% from the peak

Similarly the STI ETF dropped ~33% from the peak to a low of 2.24 on 23 March

The market rallied but not as strongly as the US, still down ~22% from the peak

The US economy shed 20.5million jobs in Apr, no concrete vaccine has been discovered, the economy is declining yet the market is climbing! How is this possible?

In my opinion, the market is irrational. On some days it feels good and at times it sends the market crashing. There has been alot of noise out there like: "Buy medical stocks now!", but the important thing is to have your own plan and stick to it. 

Invest only after you have done your due diligence.

Income Portfolio

Added: 3 Banks. I find that the banks in SG are well positioned for the crisis especially since the past financial crisis. With their strong balance sheets and all of them trading well below their net asset value, there would be definitely upside when the economy recovers. 

SATS: Bought this before the airlines were all grounded. Internally cries. This may take a while to recover as the world will not be flying as usual at least until the pandemic is controllable and people are confident to fly again. 

AA Reit: Been wanting to get into this reit but has been on the high side pre-covid. The management has been disciplined with its financials and debt.

Sold: Singtel, STI ETF. 

Decided to sell of Singtel as the telco industry is facing tough competition. Together with STI ETF, the capital could be used for better investment opportunities in the current market. 

Index Portfolio

Sticking to the plan of investing a fixed sum of money to this portfolio. Invested a little more as the market dipped a little.

My strategy would be to continue to invest in a low cost globally diversified portfolio of index funds and ride on the American tailwind like Warren Buffett suggested. At the same time, invest in strong companies in SGX with good balance sheets that pays a lifetime of good dividends.

Til then, stay home, stay safe! 

Cheers,

KO