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Mr. Market is coughing blood from COVID-19.

Sunday, March 15, 2020

Good or bad, things happen everyday.

When things happen, people react.

How we react will depend on our situations.

When the stock market crashed, I am sure there was a whole gamut of reactions.

Some might find it surprising but the crash didn't affect me emotionally.

Readers who have been following me for a long time might have an idea as to why this is so.





Basically, I have achieved all that I had set out to achieve in order to have peace of mind.

For an idea of what I am talking about, read the following blogs:

1. How much passive income do we need?

2. 4Q 2019 and full year 2019 passive income.


A saying comes to mind once again:

"We only need so much money in life, the rest is for showing off."

Having said this, I still want to grow my wealth.

Yes, it is probably more a want than a need at this point, I feel.






Anyway, as stock prices crash, all else remaining equal, we will get better value for money.

So, with lower prices, I have nibbled at certain stocks.

Which stocks?

See the following blog for some ideas:

3. Largest investments updated.

There isn't a need and I don't really have any motivation either to look at other counters outside the ones listed.

Did I say I nibbled?

Yes, I only nibbled.

I have yet to roll out my war chests.






The COVID-19 situation looks like it is more serious than SARS.

Things are likely going to get worse.

Of course, I still believe that Mr. Market will recover from COVID-19 but it might take longer for it to happen compared to the recovery from SARS.

World Health Organisation (WHO) declared COVID-19 a global pandemic.

COVID-19 cannot be contained anymore.

COVID-19 will spread.

All we can do is to try and slow down the speed at which it happens.






No thanks to Donald Trump, the world economy was already slowing down before COVID-19 happened.

As whole countries lock down and economic activities slow to a crawl, it is only natural for recessionary pressure to set in.

More bad news is to be expected in the coming weeks and months.

Having said this, I will stay invested because I believe my businesses will continue to pay me even so.

What about increasing exposure to stocks?

Like I said, I have nibbled at some stocks as their prices plunged but I am in no hurry to buy a lot more.

There could be some rebounds in stock prices as, in a bear market, prices go down a river of hope.

However, until I see signs of the downtrend breaking or, better still, a trend reversal, my war chests stay locked.






Like I told a friend recently, stay calm and play Neverwinter (or anything else that we enjoy).

My mind is at peace and it will probably stay that way.

Yours should be too.

Until the next blog, wash our hands more often, practice good hygiene and stay safe.

We should always try to remember that there are more important things in life than money making.







Related post:
Mr. Market is sick and AK talks to himself.
(Read the comments in the comments section of the blog if you have not done so.)

28 comments:

WTK said...

Hi AK,

I totally agree with you on the peace of mind. The ongoing market selloff do not bother me as I go about indulging into my interest which cost minimal. No doubt, the investment portfolio takes a heavy hit. However, I am ok with such circumstance. This gives me the opportunity to purchase some counter at the current low. It will be great if I still had the full-time employment which would have given me more warchest to take advantage of such circumstance. I know that one cannot have the best of the two world.

As long as the generated dividend from the investment portfolio is able to cover my expense, I am fine with the current situation. Any extra will be a bonues. In the event if the generated dividend from the investment portfolio cannot cover the expense, I have two options to solve the shortfall:

- Reduce the yearly expense.
- Return to the part-time or full-time employment to cover the shortfall. I only require a monthly salary of $300 to cover the current shortfall based on the current circumstance.

There is no rush in making the above decision on the option to pick. I have the unwanted third option of liquidating part of the investment to cover the shortfall. The investment portfolio takes 36 years to deplete based on the current circumstance.

I have the comfort of leaveraging the CPF monies which has been left intact (taking into consideration of the yearly interest for 36 years) while the investment portfolio taking the hit in the depletion. This is with the assumption that I have such lifespan.

The circumstance is dynamic. One makes decision in accordance of the existing circumstance. The most important thing for me is the peace of mind.

My two cents worth of views.

WTK

AK71 said...

Hi WTK,

Seems like you have a plan that works for you. ;)

Superolio said...

Hi AK,

Had been learning a lot from you. Do appreciate it.
Something i cant understand..
If interest rate drop, it should be good for REIT cos of its high leverage.
But why are REITS like AIMS and others dropping by around 7-10% today?

Thanks

Invest Sg said...

hi AK,
Always happy to see you talking to yourself.. thanks! :)

Possible to share "nibble" as like 1%, 5% or 10% of the warchest?

AK71 said...

Hi Superolio,

When the bear wakes up from its long hibernation, none is spared. ;p

This creates buying opportunities for some people, I am sure. ;)

AK71 said...

Hi Invest Sg,

I am very wary with sharing specifics with so much blood letting going on in the market.

I am OK with sharing the general direction I am taking.

Even this might change.

I don't want anyone to latch on to any specifics which I feel comfortable with.

Better to leave it to readers to do what they feel is comfortable for them. :)

Potatoish said...

Yo AK,

woah the bear has woken up! Was caught abit by surprised as i got most of my funds locked up else where. Nevertheless yes it is indeed good buying opportunity, even if we don;t know what is bottom is, i am sure based on calculated risk and some luck we can always slowly nibble..

That said 1/3 of my portfolio allocated to the OI & gas sector in the US got burnt because of the collapse of oil prices (T_T) These are always cyclic.

For now, i probably need to eat porridge for lunch tighten my belts to accumulate funds to gobble in the market.

BTW, I wanted to check your opinion, IMHO i feel Reits are lagging indicators for the stock markets with banks leading do you agree? Does it means they should dip more considering what is going on?



wash your hands and keep clean!
Jing Quan

JH said...

how do you know when is the right timing to open your war chest and start investing?

AK71 said...

Hi JQ,

I don't know what lags and what leads. :p

However, if banks are able to give dividend yields comparable to REITs' distribution yields, what should I do?

Hmmm...

AK71 said...

Hi JH,

This is where I put my charting skills to the test.

The answer you seek is in the blog above. :p

Potatoish said...

AK should start to teach charting :P
OF course the one with possible highest capital gains and comparative dividend yield.

What have you been up to? can't be forever gaming?

Jing Quan

AK71 said...

Hi JQ,

Teach charting? Me?

Nah. I am a pleb when it comes to charting.

Actually, I am a pleb when it comes to anything, including Neverwinter. ;p

I am not forever gaming, of course.

I eat, drink, sleep, shower, use the toilet etc.

You know the usual stuff that people do. ;p

If you have some spare time, follow me on Twitch and you will hear me talking to myself sometimes. ;p

Reference:
AK tries streaming on Twitch.

SgFire said...

Ak

would you share your TA findings with readers?

AK71 said...

Hi SgFire,

Although it might not be a blog on TA per se, I have shared my observations in my recent blogs as well as in their comments sections.

I will probably continue to do so but it is important to remember that TA is always about probability and not certainty. ;)

SgFire said...

Thanks AK

I smelled so much blood and fear in the market now.

I bet value investor such as ASSI and readers are in for a treat.

JH said...

lol...
I like this
"However, until I see signs of the downtrend breaking or, better still, a trend reversal, my war chests stay locked."

CupcakedCrusader said...

Hi Ak,

Having went through the reports for ireit the Reit seems to deliver steady dpu and can manage their debt. However given their short history there isnt much historical data to compare the historical yields. With the price free falling thus far, could you talk to yourself on it

AK71 said...

Hi SgFire,

The fear is palpable.

Cheap could get cheaper, of course. ;)

AK71 said...

Hi JH,

You found it!

Yeap, that is the extent of my TA.

I am such a pleb. :p

AK71 said...

Hi CupcakedCrusader,

IREIT Global has been around for more than 5 years.

Pretty good track record, in my opinion.

I don't have anything new to say about IREIT Global.

See:
1. 3Q 2019 passive income: IREIT Global.
2. IREIT Global is going to Spain.

Unknown said...

Hi AK,

Any views on accordia given the situations right now?

JH said...

lol... that is call guts feeling rather than TA... hahaha

so i guess you are looking at signs of recovery after things bottom out?... and not trying to get the best bottom price right?

almost everyday stocks are tumbling 10%.... i think how many more 10% can be tumbled daily

AK71 said...

Hi Unknown,

So many unknowns right now. ;p

Your guess is as good as mine. ;)

AK71 said...

Hi JH,

Really?

That shows what a super pleb I am then. ;p

If I am able to buy at the absolute bottom, it is just pure dumb luck.

It is probably safer to wait for the dust to settle before taking bigger bites.

I should try to avoid eating dusty food. ;)

Jake said...

Hi AK,

quick question, while your war chest is locked away for the moment, does that mean you're not selling any of what you've bought?

Sand said...

Hi AK, any REIT counter are you looking at? Any consideration of capitaland reit or mapletree reit?

AK71 said...

Hi Jake,

The answer to your question can be found in this blog.

You might want to read the blog again. ;p

AK71 said...

Hi Sand,

Other than what is found in my list of largest investments, I am not looking at anything else.

My plate is quite full. ;)

Reference:
Largest investments updated (4Q 2019).

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