2024 Market Sentiment & Positioning

[revhappy]

For me double whammy from S-Reit and HKSE... S-Reit easily 100k gone from a 500k investment which is 20% paper loss. I check SReit index and 2 major Reit ETFs in Spore also lost > 20% ytd.. and probably > 30% from 2 years chart... Just to console myself

The iEdge S-REIT Leaders Index has fallen 22% from its 52-week high hit on 3 Feb 2023.

I know as a dividend investor your accounting method, looks at dividend gains seperately and capital gains seperately. The Yahoo portfolio most likely is just ex-dividend. So, it is better to construct your own excel and look at the wholistic picture. I know you are already doing that as part of your blog.

I beleive, this is how "diversified investing" works; at any point in time, there will be some or the other part of your portfolio which will make you cry and you wish you didnt have it. But hopefully there are other parts of your portfolio which reduce the volatility.

In this particular cycle it has been brutal for many sections, except for the magnificient 7 nasdaq stocks.
The good thing is you are still working and earning, so keep investing and look at your portfolio as a whole. Eventually, the bear market will end and we will have a bull market.

 

[homer123]

I know as a dividend investor your accounting method, looks at dividend gains seperately and capital gains seperately. The Yahoo portfolio most likely is just ex-dividend. So, it is better to construct your own excel and look at the wholistic picture. I know you are already doing that as part of your blog.

I beleive, this is how "diversified investing" works; at any point in time, there will be some or the other part of your portfolio which will make you cry and you wish you didnt have it. But hopefully there are other parts of your portfolio which reduce the volatility.

In this particular cycle it has been brutal for many sections, except for the magnificient 7 nasdaq stocks.
The good thing is you are still working and earning, so keep investing and look at your portfolio as a whole. Eventually, the bear market will end and we will have a bull market.

Yahoo portfolio will not account for dividend or realized gain/loss.. I track my dividend in a separate excel sheet. It makes me feel good as I received 100k this year and 90k last year. However, all investment need to account for total return otherwise it is cheating ownself..

 

[sohguanh]

Yahoo portfolio will not account for dividend or realized gain/loss.. I track my dividend in a separate excel sheet. It makes me feel good as I received 100k this year and 90k last year. However, all investment need to account for total return otherwise it is cheating ownself..

That I agree but your time line for REIT need to be longer. Perhaps from the time the S-REIT IPO in 2000s till today total of 20+ years. Then see again despite the brutal slaughtering are you still in the green. Possibly 2000s you are still studying or maybe just born then no choice.

 

[revhappy]

Yahoo portfolio will not account for dividend or realized gain/loss.. I track my dividend in a separate excel sheet. It makes me feel good as I received 100k this year and 90k last year. However, all investment need to account for total return otherwise it is cheating ownself..

It is not really cheating. If you believe that this downturn is temporary and the REITs will eventually bounce back, then you dont need to consider the paper loss. Since you are not really going to sell it now.

If you goal is to build a portfolio for the dividend income, which I beleive your goal is, then you shouldnt be concerned. As long as the REITs you chose are solid and the dividend payout will remain stable. The fact that now the REITs are cheaper is a good thing because you still have a job. Your new deployments(salary savings as well as dividend reinvestment) will be bought at lower cost.

But anyways, it is always good to look at your total portfolio size beginning of the year and then end of the year. WIth new contributions, if the size is more or less stable, then dont worry, you have bought cheap during the year, so that is good thing. Keep earning and deploying.

 

[DevilPlate]

Let say u have 1M cash now.
Whack reits etf at 5.5-6% yield now or hold cash at 3.5-4% yield?

10years later, will reits outperform cash?

 

[sohguanh]

Let say u have 1M cash now.
Whack reits etf at 5.5-6% yield now or hold cash at 3.5-4% yield?

10years later, will reits outperform cash?

For me I will diversify. Some to reits some to cash. The key difference lies then how much to allocate to reits and how much to allocate to cash. It varies among different ppl.

 

[homer123]

That I agree but your time line for REIT need to be longer. Perhaps from the time the S-REIT IPO in 2000s till today total of 20+ years. Then see again despite the brutal slaughtering are you still in the green. Possibly 2000s you are still studying or maybe just born then no choice.

I only started investment around 2017 and I probably bought most of my stocks at high from 2017 till the covid crash. Despite buying at a high price, the dividend collected still put me in the green.. However, if I calculate total return , the 2022 and 2023 crashes have almost negated my return to less than 2.5% annually. This is worse than CPF return. I don't have long runaway for capital gain. I can only hope that dividend can be maintained but DPU will most likely to drop in coming year. That will be another double whammy losing anticipated dividend and huge paper loss.

 

[homer123]

It is not really cheating. If you believe that this downturn is temporary and the REITs will eventually bounce back, then you dont need to consider the paper loss. Since you are not really going to sell it now.

If you goal is to build a portfolio for the dividend income, which I beleive your goal is, then you shouldnt be concerned. As long as the REITs you chose are solid and the dividend payout will remain stable. The fact that now the REITs are cheaper is a good thing because you still have a job. Your new deployments(salary savings as well as dividend reinvestment) will be bought at lower cost.

But anyways, it is always good to look at your total portfolio size beginning of the year and then end of the year. WIth new contributions, if the size is more or less stable, then dont worry, you have bought cheap during the year, so that is good thing. Keep earning and deploying.

I believe interest rate will probably stay elevated for many years.. This could be a decade of new norm just like ZIRP has been the norm in the last 15 years.

 

[sohguanh]

I only started investment around 2017 and I probably bought most of my stocks at high from 2017 till the covid crash. Despite buying at a high price, the dividend collected still put me in the green.. However, if I calculate total return , the 2022 and 2023 crashes have almost negated my return to less than 2.5% annually. This is worse than CPF return. I don't have long runaway for capital gain. I can only hope that dividend can be maintained but DPU will most likely to drop in coming year. That will be another double whammy losing anticipated dividend and huge paper loss.

Thanks for sharing the magic year 2017. Actually if you still think S-REIT story is not finished, now is actually the time to slowly buy in some to lower your total average buy in price. But I guess just like any other stock not only specific to S-REIT when it is a bear market no one want to buy as most want to guess the uptrend and only start to buy upwards to a bull market instead. You just need to formulate your own investment strategy. All the best.

 

[DevilPlate]

I believe interest rate will probably stay elevated for many years.. This could be a decade of new norm just like ZIRP has been the norm in the last 15 years.

Yes, i also think so…..

I posted this article earlier this year. Can recap again haha
https://www.oaktreecapital.com/insights/memo/sea-change

 

[homer123]

Yes, i also think so…..

I posted this article earlier this year. Can recap again haha
https://www.oaktreecapital.com/insights/memo/sea-change

Very informative.. will take time for me to digest

 

[stanlawj]

I believe interest rate will probably stay elevated for many years.. This could be a decade of new norm just like ZIRP has been the norm in the last 15 years.

I think REITS buy-n-hold forever like property investing is mainly for retirement cashflow, eg retirees who need the cashflow from dividend. Only an adverse event will trigger the sale of the property.

To make REITS a capital gain compounding vehicle, these things I have picked up from others are:

1. Selecting an ideal REIT that is growing DPU organically
(may not be possible in current bear market for REITS)

2. Reinvesting dividends to buy more units at lower price during downturn
(this requires one to be fully employed with excess savings as buffer for emergencies).

3. Borrow money (eg. home equity loan) at low interest rate to buy REIT units with div yield higher than loan interest rate
(someone promoted this heavily during ZIRP or low-interest rate era).

4. Trade the REITS within the support and resistance: keep only a small core position, sell some at fair or over valued, buy back at undervalue, using some form of technical indicator and/or fundamental analysis.
(works in all kinds of market, need trading skills).

 

[aurvandil]

Barring a return to ZIRP, it is next to impossible for REITS and dividend stocks to recover to where they were pre 2022. The FED has indicated that interest rates are going to be higher for longer. The bond market is saying is that is more likely to be higher forever.

If you look back, current interest rates are in fact at the historical norm. The years from 2008 to 2022 with near 0% interest rates were the exception as a result of GFC 1.0.

 

[homer123]

I think REITS buy-n-hold forever like property investing is mainly for retirement cashflow, eg retirees who need the cashflow from dividend. Only an adverse event will trigger the sale of the property.

To make REITS a capital gain compounding vehicle, these things I have picked up from others are:

1. Selecting an ideal REIT that is growing DPU organically
(may not be possible in current bear market for REITS)

2. Reinvesting dividends to buy more units at lower price during downturn
(this requires one to be fully employed with excess savings as buffer for emergencies).

3. Borrow money (eg. equity loan) at low interest rate to buy REIT units with div yield higher than loan interest rate
(someone promoted this heavily during ZIRP or low-interest rate era).

4. Trade the REITS within the support and resistance: keep only a small core position, sell some at fair or over valued, buy back at undervalue, using some form of technical indicator and/or fundamental analysis.
(works in all kinds of market, need trading skills).

I find myself buying SSB and short term bond yielding >5% with every penny I earned. This is unlike 2009 to 2022 when TINA with ZIRP. Tough to buy any stock when you know it is getting lower.

 

[DevilPlate]

Barring a return to ZIRP, it is next to impossible for REITS and dividend stocks to recover to where they were pre 2022. The FED has indicated that interest rates are going to be higher for longer. The bond market is saying is that is more likely to be higher forever.

If you look back, current interest rates are in fact at the historical norm. The years from 2008 to 2022 with near 0% interest rates were the exception as a result of GFC 1.0.

More likely FFR to be in the range of 2-4% barring any black swan event.

 

[aurvandil]

More likely FFR to be in the range of 2-4% barring any black swan event.

If that is the expectation, the yield curve should maintain a slight inversion. Instead it has gone almost completely flat from 2 year to 30 years.

 

[churnmaster]

If that is the expectation, the yield curve should maintain a slight inversion. Instead it has gone almost completely flat from 2 year to 30 years.

Technically, we should see 1/3rd of the 20% down move of the last 4 decades over 1/3rd the time period (over 12-15 years) with periods of consolidation and retracement along the way.

 

[d5dude]

https://www.cnbc.com/2023/10/31/boj...ield-curve-control-keeps-rates-unchanged.html

No change to policy rate or YCC, I think the BOJ is trapped with Japan's debt to gdp at 270%.

 

[d5dude]

Let say u have 1M cash now.
Whack reits etf at 5.5-6% yield now or hold cash at 3.5-4% yield?

10years later, will reits outperform cash?

The problem is the yield is not in anyway guaranteed compared to cash or bonds. Sreits appear to be highly levered and most of the increase in IR have not bled thru to their P&L yet, DPU will get hit if rates remain elevated for just another 2-3 years because they need to rollover their debts.

I'd never treat any sort of equity investment as fixed income, I think reits have the risk profile of high yield (junk) corporate bonds so they are more like equities than fixed income.

 

[stanlawj]

https://www.cnbc.com/2023/10/31/boj...ield-curve-control-keeps-rates-unchanged.html

No change to policy rate or YCC, I think the BOJ is trapped with Japan's debt to gdp at 270%.

BoJ is slowly removing YCC but market perceive it as weak and ineffective.

Eventually the politicians will be roasted with fire when the JPY weakens enough.