Thursday, May 7, 2020

What I am doing

I am using two strategies: 'dividend stocks' and 'market timing'.

Am now 40% invested, all in dividend stocks/REITs/trusts, mostly SGX listed. The big ones are Netlink Trust and Manulife US REIT, with smaller positions in Frasers Centerpoint Trust and Mapletree Commercial Trust.

I think the last month's rally is a bear market rally.  I am waiting for a correction to continue buying Frasers Centerpoint Trust and Mapletree Commercial, plus Brookfield Infrastructure Trust.  This will take me up to 60% invested.

I'm willing to catch falling knives when buying dividend stocks.  Even though they will be affected by the recession (except Netlink), all the SGX-listed stocks above should survive without raising capital, unless revenue drops by more than half.  Once the economy recovers in a few years, I should have a dividend stream that I can live off.  Then figure out what I want to do with the rest of my life.

For the remaining 40%, I follow Hedgeye for market timing. They have called the cycle well, moving to bearish in mid Feb, and warning of a likely 20% correction on 4th March.  I wait for them to call a turn in the cycle before buying.

I've been covering a lot of stocks here lately, so I have a list of things to buy when the market does turn.  The shopping list:

  • Inflation plays (growing inflation, slowing GDP): Oil (Equinor), TIPs, maybe Natural gas cos.
  • Growth plays (growing GDP, slowing inflation): Copper (SCCO),...maybe the travel companies (Groupo Aeroportuario, Booking, Safran, Rolls), maybe Delfi
  • Growth+Inflation plays (growing GDP, growing inflation): Interest rate plays (Banks, Computershare, Interactive brokers), maybe Oil above.
  • The travel companies may also be buys after some uncertainty from the virus clears up, then we are just dealing with a normal recession.
If you put a gun to my head and forced me to buy something today, it would probably be Delfi, Groupo Aeroportuario and Berkshire Hathaway.  I haven't found any high quality stocks that are cheap.

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