The Hong Kong companies that owned in my portfolio have been generating lots of free cash flow but their share prices have been depressed. Hence, my portfolio was dragged down by the Hong Kong stocks. This has changed recently. Due to the recent stimulus by China which allows companies to borrow from PBOC for share buyback, cash vouchers to encourage consumption, and funds and brokers are allowed to borrow from the monetary authority to buy stocks. Hong Kong stock index prices have ramped up by 13% within the past few days.
Firstly, we are net buyers of assets. We should be happy when the share prices are depressed and sad when the share prices are rising. In an “expensive” or overvalued market, you cannot find “discount” or undervalued stocks or assets to buy. When the stock price is low, you can acquire more quantities of stock. When the stock price is high, you buy less and the risk of losing money is higher.
I explained this to my mother before. We are in the business of buying chickens. The chickens lay eggs and they grow into chickens. The chickens will lay more eggs and again grow up to become chickens. Soon we will own a lot of chickens that lay more and more eggs. I do not like to sell the chickens because they lay eggs for me. My mother always ask me to sell my stocks when the stock price rises. My wife does not even tell me that. Don’t always listen to your mother, they may not know what’s best for you and may not be always right. Your wife will always be right. Just remember the difference and your life will be good.
In short, you want to become an accumulator of assets. Just keep buying over the entire course of your life.
Am I happy with my Hong Kong portfolio?
Yes and no. Yes, it is doing well. No, if you sell them later when it hits 100% return, what’s next?
I like my Hong Kong portfolio because I bought them when they were depressed. They are like the golden geese that lay gold eggs for me. They range from 6% – 10% yield. When we return to a low interest rate environment, where do you find this yield?
If the companies do not become overvalued, they will sit tight in my portfolio. I would just utilize the dividend income to buy into other assets. Currently, I would like to buy more TLT and VWRA. TLT is like my cash war chest and pays me interest while I wait. VRWA is to diversify from my Hong Kong and Singapore portfolio and increase my exposure to the US market. Our SRS monies are invested in Dimensional Fund’s Global Core Equity Fund and EM Large Cap Core Equity Fund.
Hong Kong Portfolio ~ S$1,800k
US Portfolio (includes VWRA) ~ S$624k
SG Portfolio ~ S$564k
AU Portfolio ~ S$2.7k 🙂
SRS DFA Portfolio ~ S$137k
Unit Trust ~ S$18k
P2P Lending ~ S$7k
Cash War Chest ~ S$263k
Current Assets ~ S$3,415k
These are all current assets, liquid that can be converted to cash. Some are cash. The cash portion is parked at ~3% per annum fixed deposit. We need to park them for mortgage purposes to enjoy better rates. When the interest rates start to come down, it will be time to refinance, which will free up this trapped cash for better allocation. Cash gives my wife peace of mind that we can deploy them in the event of a market crash.
Do note that we still have 2 mortgages to serve. There are 2 liabilities to be paid for.
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