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Why do I not panic? Added Sabana REIT.

Wednesday, August 10, 2011

In my last blog post and probably a couple more before that, I mentioned that we should stay calm and rational, have a plan and act upon it. This is my personal mantra and it has not changed.


Some wonder how I could act so confidently and decisively. Here are some reasons:

1. I am not investing using borrowed funds or funds which I need in the near future for other purposes.

2. Of my total investible cash, only 50% or so has been deployed in the stock market. In the last few sessions, it could have bumped up by a few % points.

3. I am informed by FA on a counter's value and by TA on a counter's price. I buy when I see value and when prices are at supports.

4. 80% or more of my investments in equities are for passive income and I sleep well with the knowledge that I will have regular cashflow from my investments.

5. I know I will divest partially if prices should rebound to test resistance levels. Yes, I am not one to fall in love with my investments.

This list is probably not exhaustive but they are five reasons off the top of my head.


Today, the only counter that hit my target buy prices is Sabana REIT at 88c and 87c. At these unit prices, we are looking at distribution yields of slightly more than 10% per annum. My overnight buy orders at these prices were filled.


Some ask me if I will be buying more units of Sabana REIT if its unit price were to weaken. Looking at the chart and using three sets of Fibo lines, I have identified stronger supports at 83c and 80.5c. If the immediate support at 86.5c should break, those are the prices where I will be adding to my long position.

Related posts:
Seven steps to creating passive income from the stock market.
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STI drops 2.2% to 2,821.09 at closing
Wednesday, 10 August 2011

22 comments:

FoodieFC said...

Any idea how come Sg market went down despite the rest of the regional markets going up?

u do have lots of cash reserves! good for u. I am far from your state! I do have Sabana REIT too. wonder how low it will drop.

AK71 said...

Hi FoodieFC,

It is probably because we were closed for National Day and did not experience the huge sell off yesterday. Playing catch up. ;)

I don't wonder how low Sabana REIT or any other counter would go. My actions are informed by FA and TA. Have a plan and stick to it. :)

Anonymous said...

Motley:

Your plan is good.

Europe is still the unfolding story.

And Fed said .. I think ...the market is on their own.

daryl0707 said...

Hi,

Did u manage to buy AIM?r u going to q for aim and sabana tonight?@ wat price?

AK71 said...

Hi Motley,

Things could get worse before they get better. That is probably true.

However, I will stick to my plan. That is all I can and will do. Good luck to us all. :)

AK71 said...

Hi Daryl,

If AIMS AMP Capital Industrial REIT should test its historical low of 19c, I hope I will get some.

Sabana REIT, I have identified the next two levels of support if the immediate support should break. ;)

Good luck. ;)

financialray said...

This roller coaster ride seems a little steep and a little too fast for my heart.
I still agree with your strategy.
Some gurus have advocated their students to get out of the market when STI < 2800 for more than 10 days. Sounds like capitulation coming. Thought that would be the most painful step to take, almost akin to financial suicide.
Let's nibble together all the way down, at our nails.....if nothing left to nibble....

Anonymous said...

Sometimes I wonder if I am that dump to hold on to the stocks, instead of cutting losses.

Assuming that the quarterly DPU for Aims & Sabana are about the same or improves, I take comfort that the yield is 9+ % PA based on my average cost. However, this gain would be wiped out by the falling stock prices within a days.

So, what should I do ? Hmmm...

a. Top up more holdings on a bargain hunt and lower the average cost.

b. Cut lost and wait till it bottoms out, dunno when also.

c. Stay put and do nothing - bocoz I don't have the funds for Option A.

Sadly, I am in (c).

Lesson learned but won't borrow $$$ or sell my kidney as yet.

AK - thanks for the inputs and looking forward to your next updates and soon. ^-^

SnOOpy168

AK71 said...

Hi financialray,

This came fast and furious. I agree.

Paper losses must be ballooning for many long only investors and to cut when the index is forming new lows is just mind boggling. Not something I would do, as you know.

Totally riveting action today. My buy orders at the supports I identified have yet to be filled.

Let's see how things pan out by end of the day. :)

AK71 said...

Hi SnOOpy168,

You have to go back to basics.

Ask yourself why are you investing in what you are investing. If you are investing for income, then, get in at a good price (with good fundamentals) which gives you a good yield and you should be happy.

If you are after capital gains, then, it is a different ball game. You want to limit your losses and this is where more knowledge of TA than FA is useful.

When we are unsure of what we want, we do not know which path to take and that will cause us much angst. Self-inflicted, no less.

So, ask yourself what you want and if the path you have taken is the right one. If it is, all your questions become unimportant. :)

Anonymous said...

AK

I am in for the passive income stream. The more the merrier.

just I am a bit unsettled by the value of the holdings dropping.

But on the foundations that if DPU remains about constant & consistent in payout. The 9.x% yield is still very acceptable, for the moment.

Lets hoped that I am able to take some advantage of this down turn to do some small shopping.

Keeping up the hope & smile.

SnOOpy168

Hwang said...

I am getting more and more negative over the days. Wondering if fear has finally set in or because my investible cash is <10% now.

I bought an ETF just days before the bloodbath, thinking about diversifying my asset class. Oh well, no one can beat Mr Market after all.

So i finally decided to take a loss and transferred into Sabana today. I guess an attractive yield is better than uncertaities.

Lesson learnt? Hope so :)

Anonymous said...

Motely:

It is hypocritical and politics if France does not get downgraded. And in the minds of bond buyers, France is not AAA so it already downgraded in their minds and that will force the rating agency hands. if ECB continues to fund purchases, Germany is getting deeper and deeper into financing the debt. And even Germany credit worthiness will be question and that is an event by itself worst than France's issue now.

Unintended, and unimagined consequences are increasing in probability.

This is the bond traders party ... and their play will drive the equity market crazy.

I reaffirm your strategy and will, initiate the sustain buys through the downward spiral. But i have withdrawn at 0.84. I am not relying on technicals but i am reading your analysis to gain an understanding how technicals would react.

AK71 said...

Hi SnOOpy168,

Just emotional then. Not a big issue as long as you got your motivations clear. :)

Yes, as prices fall, value becomes more compelling. I am waiting at supports to buy more. Double digit yields? I'm in. ;)

AK71 said...

Hi Hwang,

Pace yourself and buy slowly with smaller positions. Is that a good idea? You decide. :)

As the market sinks deeper on the back of more negative sentiments, I feel that we have to be less negative as value becomes more compelling. ;)

AK71 said...

Hi Motley,

I am a follower of Dr. Marc Faber who thinks that bonds are a bad idea and it is better to be in equities and hard assets.

You are interested in Sabana REIT too? TA is about probabilities with some degree of accuracy. Never certain.

TA tells us where the supports and resistance are but it doesn't mean they will be hit. Good luck to us all. ;)

financialray said...

Somehow I have an uneasy feeling this roller coaster ride is far from over. My poor heart

AK71 said...

Hi financialray,

Well, you know what they say, it is not over until it is over. ;)

Since we have already gotten on the ride, just hang on tight and try to enjoy it. Of course, people who are mentally and physically prepared for the ride will enjoy it more. ;)

INVS 2.0 said...

Hi AK71,

In the graph's trading volume, the red volume indicates sell while green volume indicates buy?

AK71 said...

Hi INVS 2.0,

I usually do not pay attention to the color of the volume bars although if I remember correctly red means more selling down and green means more buying up.

If I am mistaken and if any reader knows the correct answer, please let us know. :)

Anonymous said...

Hi,

I'd just like to say thanks. I was also panic selling and then I read your post; it helped me calm my nerves somewhat...

It wasn't easy emotionally, even after experiencing 97, 9-11, Sars and 08 GFC. Somehow all the rules went out of the window when the crash came!

Seems like it's a better idea to adopt a hit and run attitude in this market eh?

(was doing buy and hold... not working!... many quarters of patiently and hard-earned dividends can disappear within days in a crash!)

tree

AK71 said...

Hi tree,

I am glad my blog post has been helpful. :)

I have discovered time and again that some of the worst decisions I made in life were when I was emotional. ;)

I actually do not mind holding onto paper losses if my investments are fundamentally sound and giving me good dividends. I invest primarily for income and if there should be capital gains, it is a nice bonus.

So, if we are clear as to our motivations in the market, it is easier to make decisions in a collected manner. :)

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