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Long time regular readers of ASSI know why AK was able to do much better on the investment front in 2022.
It wasn't only because AK avoided the highly speculative maze of cryptocurrencies and the high growth, zero dividends high tech space.
AK reallocated resources to enlarge an already relatively large exposure to our local banking sector in his investment portfolio.
Investments in DBS, OCBC and UOB did most of the heavy lifting in my portfolio in 2022, raising my full year passive income above the $200,000 mark.
In 2023, for various reasons, income generated from my investments in REITs as a group will likely take a hit as most have reported lower income distributions.
IREIT Global, Sabana REIT, CapitaLand China Trust and Frasers Logistics Trust have reported lower income distributions while AIMS APAC REIT and Ascott Residence Trust have reported higher income distributions.
With higher dividends declared by DBS, OCBC and UOB, I am hopeful that they, in the worst case scenario, would be enough to offset the weaker performance of REITs in my portfolio.
Not hoping for an increase in passive income, year on year, I would be happy to see passive income in 2023 staying the same as the year before.
March is the first month of the year in which I receive more meaningful sums of passive income.
I have quite a few more bills to pay this month as I have offered to pay more recurring expenses for my parents.
The recurring expenses to be added to the list are motor insurance and road tax for the family car.
I must pay for my own car's motor insurance and road tax this month too.
Those are the big ticket items this month, which, thankfully, occur only once a year.
Still, I would have some money left to invest with and, as I shared in an earlier blog, I plan to apply for the Singapore Savings Bond offered this month.
I plan to set aside $10K for that.
Then, with whatever money is left from passive income received in March, I had planned to get some 6 months T-bills as short term yields remain elevated and, therefore, relatively attractive for the income investor.
However, when I took a look at the charts of DBS, OCBC and UOB today, they look pretty bad in a good way, if you know what I mean.
If I wasn't already substantially invested in DBS, the current level seems like a good place to get a foot in, especially with a bumper dividend on the way.
This suggests to me that smart money is still accumulating even as the stock price stays above long term supports provided by the 200 days moving averages.
This could change, of course, and if the longer term supports should break, which seems unlikely in the near term, I would be interested to increase exposure at under $12 a share.
UOB, unlike OCBC, does not have a positive divergence and the stock price breaking a long term support is, therefore, not surprising.
Still, another long term support, the 200 days moving average is at $28.48 and, with momentum staying negative, we could see that tested.
If that should happen, if I didn't already have a significant exposure, I could get some although I would prefer to buy only when I see a positive divergence.
Fundamentally, all three local lenders are well capitalized and well run.
It now looks like Mr. Market could possibly offer me lower prices to increase my exposure to all three local lenders in the not too distant future.
So, instead of putting all the excess money from my passive income in March into T-bills, I might hold more cash instead, just in case.
For readers who have not visited my blog in a while, I published a blog yesterday regarding "Evening with AK and friends 2023."
You might want to take a look if you are interested in attending.
See:
Evening with AK and friends.
Have a good weekend!
Related posts:
1. T-bills and March strategy.
2. March dividends and SSB.
3. Give parents enough money?
4. UOB and OCBC final dividends.
5. DBS special dividend.
6. Largest investments updated.
Bloggy Award
10 comments:
Dear AK
Nice to hear again
In fact, I have already started adding all three, slowly taking turns with small bites daily!
I respect the technicals but do not think I need to wait for them as the macro environment and recessionary fears are taking hold
Any fall in inflation data next week, will reverse the tide- at least temporarily and the three banks might go higher as all three are still comfortably above their 200 DMA
I prioritized UOB first and now will add DBS at 33 and OCBC at 12.30 again after already adding at 34 and 12.50 respectively
Good local REITS are also in the menu but at slightly lower levels from here
Let us see
Best wishes
Garudadri
Hi Garudadri,
Averaging in is not a bad idea.
However, as I am already significantly invested, I should not be in a hurry to add.
Also, there is the fact that the bulk of my passive income will only arrive in 2Q and 3Q 2023.
Lacking an earned income, I am going to err on the side of caution. ;p
hello AK
I know u have sold off SATS but i was slow to react and now ask to buy their rights which i am thinking of not doing it cos i remembered buying rights with mapletree logistic i believed it was at 1.88 a few years back and this share never touch 1.88 since.
What happens if i dont subscribe to the rights? cos i honestly am doubtful
whether SATS would regain its glory days of 3.xx again.
Please talk to yourself and let me eavesdrop. thank you
Hi Ruby,
Apparently, SATS is offering shareholders 323 rights shares for every 1,000 shares.
At S$2.20 each per rights share, it is at a discount to the closing price of $2.42 on Friday.
If we believe the analysts who seem to be mostly bullish about the deal, then, we should subscribe.
All of them have target prices of more than $3 a share, post rights issue.
I cannot tell if they are being too optimistic or not but I know that if I don't subscribe, I will get diluted but, at the same time, possibly, I won't be throwing good money after the bad.
If the analysts are right and if the share price should rise above $3 again one day, I would still do well enough even if I did not subscribe to the rights issue. ;p
hey AK
I like your wink emojii at the end of the sentence. ha ha .
I would like to attend your An evening with AK but i will be in japan. Can you put your meeting on paid for video i like to pay as if i am attending..any way round that?
Hi Ruby,
You like, I also like! :D
Unfortunately, AK is not high tech.
AK is very dinosaur although I will admit that I am comfortable being a dinosaur.
Don't worry about not being able to attend the event. :)
There will always be another one, I promise. ;)
Enjoy Japan! :D
Cracks are appearing in the global financial system as the decade-long era of cheap money ends, with some investors worrying the shock collapse of Silicon Valley Bank signals world markets may be on the cusp of a reckoning.
Over the past year, the US Federal Reserve launched its most aggressive interest rate hiking cycle since the early 1980s and other central banks joined in, leaving global investors to face a gamut of consequences.
The bank's failure will likely increase pressures on companies to become profitable, ending the era in which investors were willing to withstand years of losses for the sake of expanding market share.
Source:
https://www.channelnewsasia.com/business/silicon-valley-bank-collapse-analysis-investors-worry-world-markets-3341586
Reader says:
Yes… must remind myself not to be Chicken Little. 😅
Saving every dollar of dividends from the local banks … to buy more of them when depression hits.
Don’t be Chicken Little, be like AK!! 💪
AK says:
Cheep cheep or cheap cheap? 🤣
From my YouTube video:
Silicone Valley Bank: Casualty of rapid rate hikes!
hi AK,
How would you quantify a depression? Given market uncertainty, how much margin of safety do you think is necessary for SG Banks?
Thanks!
Hi KC,
Looking back, the best times for me to invest in DBS, OCBC and UOB were the times when they were all trading at a discount to their book values.
If I were to feel more sanguine, then, adding at book value or slightly above book value isn't a bad idea too since I would be buying a good business at a fair price.
Now, it looks like Mr. Market might sink into a depression:
Silicone Valley Bank: Casualty of rapid rate hikes! What about Singapore banks?
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