Wuhan coronavirus and our REIT investments.

Regular readers might remember a blog from 2018 when I shared a message from a reader:

"I do my own diligence which I think is sound but cannot help but be worried when I see negative things about REITs being posted."

Of course, AK ignored the noise and did his own thing.

If you are new to my blog or cannot remember, read this:
Dumping all my investments in REITs.




More recently, a reader left this comment in my blog:

"Are you still holding this China mall REIT? CRCT?

"Seems to catch a big flu virus.

"Would you be adding to this sick REIT?"

See the comments section of this blog:
Wuhan coronavirus is war and are we ready?




Always ask if a situation that is affecting our investment is permanent or temporary.

Then, we will know what to do.

I have sold a few of my investments in REITs before.

They were always because I thought things could go bad for them and that it would be pretty permanent.

Read this blog where I mentioned Lippo Malls and Sabana REIT:
Cutting losses in S-REITs?




What about the Wuhan coronavirus situation?

It looks like things could possibly get worse before they get better.

Just like how optimism could overshoot on the upside, Mr. Market's pessimism could overshoot on the downside.

Some readers might remember how I accumulated large positions in some REITs during the Global Financial Crisis (GFC).

For example, in a blog back in 2012, I said:

"Off the top of my head, my investments in AIMS AMP Capital Industrial REIT and First REIT appreciated some 40 to 75% in value in the last 3 years.

"This is on top of annual distribution yields of 13 to 17%."

We might not see such numbers again for a very long time unless we expect the Wuhan coronavirus to have the same effect on Mr. Market as the GFC had.





AK is just talking to himself here in ASSI.

AK will not tell anyone when to buy or when to sell.

AK will say that if we are interested in investing for income, REITs are not only relevant but can also be very good investments for us.

See:
Man collects rent from his boss.




You might also be interested in these blogs:
1. Sold Soilbuild REIT.
2. Sold First REIT.

Wuhan coronavirus is war and are we ready?

For those of us who remember SARS, the Wuhan coronavirus is a case of deja vu.

SARS was absolutely horrible.

I am praying hard that this is not going to be as bad as SARS was.

For those who are interested in finding out more, see this short video clip from South China Morning Post:






As a preventive measure, all China passport holders not residing in Singapore are barred from entering or transiting through Singapore.

The same applies to all new visitors with recent travel history to mainland China within the last 14 days.

I believe that this is the sensible thing to do to set our minds at ease so that life can go on as normally as possible for us in Singapore.

After all, deaths from the coronavirus have hit record daily highs.

See:






Mr. Market has not been spared.

While it is unlikely that Mr. Market will be killed by the Wuhan coronavirus, Mr. Market can certainly become quite ill from it.

From a high of 3280 on 20 January 2020, the STI index has retreated to around 3120 which represents a correction of around 5%.

What this means is that Mr. Market has caught the sniffles but isn't bad enough a case of the sniffles to be hospitalised.

If the STI index should retreat to around 2950, we would be in bear market territory which usually means a retreat of at least 10% to 20% from the high.







If we have invested in good businesses with strong numbers, we should not have to worry.

Any big decline in stock prices would be an opportunity to increase our investments in these businesses.

For me, the only thing I have put more money into this year is a AAA investment grade sovereign bond.

Of course, regular readers know that I am referring to the CPF here and the voluntary contributions I have made to max out the CPF annual contribution limit for 2020.

It is during times like this that there might be a greater appreciation of the CPF which is risk free and volatility free.

See:
My 2019 CPF savings.
and
Voluntary contributions to CPF in January 2020.

As for equities, I have yet to deploy my war chest.

Yes, the Wuhan coronavirus is war and I am ready in case the war escalates.

If Mr. Market is sent to the ICU, I will unlock my war chest.

The businesses which are the largest investments in my portfolio (see the related post at the end of this blog) will probably get the most attention.

If we have been building up our war chests, we will be ready to pounce when opportunity knocks.

Having said this, let us all pray for the victims of the Wuhan coronavirus and their families.

"We will ultimately be judged by how we react in times of trouble." - Howard Dean





Related post:
Largest investments updated (4Q 2019).