Thought I will write this article a little earlier to share it in December rather than wait till January 2023, anyway the value of the portfolio is likely to keep dropping. Very discouraging to be writing portfolio reviews for 2022 and going forward for 2023.
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Q4 2022 has been interesting with some recovery but definitely not optimism that the market is bouncing back even though the FED’s Jay Powell has kinda hinted that they will slow/lower interest rate hikes as many explain that once the interest rate hikes stops, we will still be in an environment of high interest rate and that will prove to be quite detrimental to companies, economy and the stock market. I am accumulating with my DCA-ing into index ETFs and also diverting funds to produce cash flow for the future (Syfe REIT+) with the spare cash going into ETH. So let’s dive right in!
Stocks Portfolio
Tesla accounts for roughly half of my portfolio and the other half are mainly index ETFs like QQQ, VT, VWRA and VOO. Q4 has been rough for Tesla share price as Elon Musk officially took over Twitter, made sweeping changes and with high interest rate, people are expecting lower numbers for in total for 2022 due to supply chain issues and inflation as Tesla vehicles are pretty expensive. Twitter also has high debt and Elon Musk has been selling Tesla shares to fill that as well, sentiments just change.
I would be lying if I said I did not regret taking profits on Tesla when I could but of course, this is all on hindsight. I also think that even if I were to turn time back, I would still hold on to my current positions not knowing that Tesla would drop so much, so yea, let’s see how it all pans out 5, 10, 20 years from now. For now, just adding index ETFs to the portfolio.
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Crypto Portfolio
Crypto is not really on my mind right now, I am still contributing but mostly with the spare change that I have like at the end of each month after accounting for savings, investments into index ETFs and REITs as well as my expenses. So not really any huge contributions but crypto is tough especially after LUNA/UST crash as you can see from my chart, April 2022 drop to May 2022 and then FTX collapse and many other dominos effect. Anyway, the value of it has also significantly dropped from it’s all time highs but is still holding on pretty well considering everything that has happened. I am also consoled that I haven’t lost my whole crypto portfolio yet, it can happen anytime as I might forget my seed phrase or lose them and then goodbyeeeeee! For now, still safe.
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Syfe REIT +
I am periodically buying into Syfe REIT+ as a build up for retirement and cashflow in my later years. I know that some have given feedback or concerns firstly is that when you are young, it is good to be investing in growth or US index ETFs and looking for ways to grow your money first instead of putting it into dividends/REITs as the stock price tend to be stagnant and with a small capital, the dividends don’t quite matter.
I do believe that when you are younger, you have a longer time frame and less commitments hence you can take more risks however, compounding even a small amount does build up over time and I believe diversification helps as well periodically contributing. I think no one knows what can be a good investment over time as the future is unknown although data and past results can give an indication but no one can absolutely guarantee. So it’s good to also spread it out.
Another thing is the rising interest rate that definitely isn’t beneficial to REITs. I think a good viewpoint for REITs is from Financial Horse where he uses examples and explains why the interest rates staying high is likely to happen until inflation falls back to 2% as per what the FED is suggesting at the moment and talks of interest rate cuts are still too early. He also clarifies that he might be wrong but his analysis is great on why tough times are ahead for REITs, there are definitely exceptions but yea, you get it.
To be honest, it’s going to be huge pain to get inflation to 2%. We are currently at 7.1% boy oh boy, 7.1% to 2%? Lots of unemployment and pain needs to happen to cut all that inflation. But I am still just periodically going in with it and we shall see how long I can last. The value of my Syfe REIT+ is included together with the stock portfolio.
Allocation of some cash/emergency funds
Put aside some cash as well, putting them into SSB. Easy to withdraw and it can earn some yield at the same time. Still putting aside cash every month as a cash buffer, not for any investments as I do DCA every month.
Concluding thoughts
Going through this market downturn, I have gained so much more from the few months compared to the few years of bull market previously. And it has also cemented some changes to my buying habits. I have to say that experiencing 2021 to 2022 was really a crazy but enriching period. Lost money, didn’t make it back and losing more but glad that it happened in my first few years of investing rather than 10 years later.
It’s tough especially when job security is one of the concerns. Our generation of fresh graduates faced the pandemic and now inflation plus the FED fighting inflation. I have to say I am considerably lucky to not graduate into the pandemic but it’s tough seeing a future where difficult times are expected and recovery is uncertain. Every generation faced their own issues of course, it sounds really childish considering the older generation faced survival issues. The war in Ukraine, climate change and geo-political issues are also things I am concerned about but I think it’s important to be grateful and live in the present. Ending the portfolio reviews for 2022 here! A special year and looking forward to 2023. Happy holidays and stay healthy!
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F.U money lol!
ReplyDeleteFed needs to play bad cop otherwise a resurgent financial market will lead to looser financial conditions & the "wealth effect" which will make their job harder. Their 2% target is actually the Core PCE, which is now at 5%. Next release is this coming Fri 23 Dec with consensus estimate for 4.7%
My gut feel is that the Fed pause will be end Q1 & will surprise with a rate cut in Q3. Inflation readings will start to fall off a cliff by Q2 ... suspect the Fed knows this but they can't say it & instead must preach and forecast about "sticky inflation".
Next 6-12 mths will be tough for reits due to high interest rates and possible recession / near recessionary conditions. But will be the best time to accumulate as price recovery will be fierce when Fed starts rate cut cycle & economy strengthens. Compare the previous 2018-2019 mini rate hike & cut cycle on sreits.
As for DCA into index funds ... keep at it. It only works if you continue regular buying thru hard times.
Appreciate your comment! Yes, 2023 will be tough, great time to accumulate if I am able to as long as I have my job around. Will definitely be keeping the habit of DCAing into index funds. 2022 has taught me lots and I am sure 2023 wil do too
DeleteHi there,
ReplyDeleteVery good and honest sharing.
Just wanted to tell you not to despair. Markets go in cycles. If now is a bad time for market, the next time would be better.
You have made one very important point and that is having a job. We (the human capital) are our most important asset! As long as we have a job, we still have income even when markets tank.
However, please note that this market crash is not the first nor will it be the last!
This market crash is the 7th bear market I have experienced. Yes, it can get very discouraging and even stressful especially during the 1998/9 Asian Finacial Crisis and the 2008/9 Global Financial Crisis when we had two home mortgages to service. The only thing that kept us going was our jobs and the regular incomes from them. So remember, job first, investment second!
What we have learnt from the crises:
1. Keep our jobs. Make sure to keep our job skills relevant and be of value to our employers.
2. Never over extend ourselves in terms of loans
3. Maintain an emergency fund of up to 6 months of expenses if you are single with no dependents. And up to 1 year of expenses if you are married with home loan and dependents
4. Dont panic sell your stocks. Crises are the worst time to sell stocks when the prices are badly beaten down
5. Keep a healthy war chest. Crises are good opportunities to accumulate / acquire good stocks at great discounts!
6. Always remember to pump some money away to a safe haven. In S'pore, that would be our CPF savings. Dont look down on the 2.5% to 4% interest we can get from it. If built up well, the CPF savings can provide a steady source of income to support our retirement.
So, you may ask, what do we have to show after surviving the last 6 bears and the 7th bear that we are currently experiencing?
We have grown our passive income as a couple as follows (we achieved the following this year 2022):
1. Dividend : $88,000
2. Rental : $39,200
3. CPF interests : $99,000
Total $227,000
And only the interests from CPF is stable and increasing every year!
So once again, not to despair, recognise what is important to you and stay the course.
All the best!
Amazing portfolio there and great tips! Thanks for the learnings which I very much need since it is one of the more major bears right now.
Delete