“This is really happening, isn’t it?” This is a thought that I’ve been battling with for the past 2 weeks, and I am certain I’m not the only one. Within a short span of time, the Coronavirus has managed to drag markets around the world down to their knees, and some are already in recession/bear territory.
Let’s be honest, we have all been expecting the bull market to end, just not this way and not so soon. And by soon I mean at a frightening pace that most people like me would not have had the time to pull their investments out in time. Within 2 weeks, I have seen my portfolio go from a +5% to -40%, and it is indeed frightening.
I’m not gonna lie, I am scared shitless. My current holdings which amount to about 10 thousand dollars in unrealized losses currently make up about 30% of my portfolio, and I have another 20% held up in government bonds. My heart breaks seeing the dollars I have scrimped and saved one by one being drained away by the coronavirus situation. Nevertheless, it is during extreme situations like this when one’s capabilities as an investor shines.
This is the first time I’m witnessing a meltdown, and what’s more,I am caught right in the middle of it. Years of investing, saving, working, down the drain just like this. I have been beating myself up a little over the fact that I knew this was coming. When the situation was growing in Wuhan, I had a premonition that all hell was about to break loose, and within a single month in February, I offloaded Raffles Medical, Lendlease REIT, Suntec REIT, and ST engineering. However, the greedy devil inside of me forced my hand from offloading Mapletree NAC trust and Singtel, as they were making minimal losses at that point of time. What’s more, I impulsively subscribed to United Hampshire REIT’s IPO when I knew that it would tank. But what’s done is done, and there is no point hating myself over it. Just imagine if I had not offloaded the 4 counters, or the opposite, imagine if I had offloaded everything when my gut feel told me to. Things would have been pretty different.
True enough, economies are going to suffer, industries will be hit badly, and on a global scale things really do not look good. Although this pandemic is not on the scale of SARS, which is why investors like us are fearing, history still serves a good lesson and that is that what goes down, will come back up.
Moving forward, what should we as investors do? Or more like what did I do?
Firstly, I looked at the fundamentals of my current holdings. All 3 have iron sponsors, have had good credit standings, are leading players in their industries (except United Hampshire), and distribute consistent dividends (>5%). Nonetheless, United Hampshire is a very unique REIT with good fundamentals and a high payout.
Secondly, I took a step back and brought myself back to ground by assessing that even if for the short term, markets suffer and we sink into a recession, the cyclical nature of the economy dictates that it will rebound so as long as I am able to hold on to these counters without selling them due to fear/impulsiveness/urgent need of cash, I will be able to ride this out + obtain dividends.
Lastly, I intend to average down with what remains of my spendable capital. That amounts to another 15 thousand or so. This is so that I do not miss out on the opportunity to buy value stocks at a good price.
So there you have it, this is my first time witnessing a crash and being in the thick of it, and here is my gambit moving forward. Although I am sitting on 10K/40% losses, I will not panic, and will keep calm.
We are all in this together, stay strong!