Never be "Married" to Any Individual Stock
If you follow the markets closely, you will realize that my portfolio sounds like a disaster. This is because year to date as of 15th December 2022, PWLR has fallen by 27.2% from its high of SGD 5.22, STE has fallen by 19.9% from its high of SGD 4.22 while Tesla has plummeted by 60.8% from its high of USD 402.67 (post-split). Thankfully, my overall portfolio declined by a smaller 18.7%, held up by other performers like Oversea-Chinese Banking Corportation (OCBC) and JP Morgan. With this bear market in 2022, I believe that above and beyond my high conviction in a stock, I also need to limit my emotional attachment to it, and analyse it objectively.
In my previous posts here and here, I discussed my conviction for both PWLR and STE, and explained my rationale for growing these 2 shares to be the top 2 holdings in my portfolio. However, looking back at all my posts, I think I need to be more flexible in my thinking and make changes when necessary.
For PWLR, I still have conviction in the REIT. However, with changes in the current macroeconomic environment, I also mentioned that being mainly a dividend investor, I should focus on the yield of quality REIT and shares. As such, I gave myself the 'rule' that I should only inject capital and dollar cost average into REITs if their yield is higher than 6.5%, and for non-REITs, I should only inject capital and dollar cost average into shares if their yield is higher than 5%. To abide to this 'rule', this means that I cannot further inject capital into PWLR in this high interest rate environment as the yield of PWLR is only at a mere 3.5%, which is below fixed deposit rates offered by many banks nowadays. As such, even with my confidence in the manager and operations of PWLR, it does not make sense to continue to buy into PWLR from now on. This is further highlighted by ASSI in his blog's comment section, who has zero interest in PWLR now.
Therefore moving forward, I will still hold on to all my shares in PWLR. I will not inject any capital into the REIT until the interest rate environment turns more favourable. However, I will still continue to reinvest its dividends into the REIT as my conviction remains, but not "married" to the REIT.
In addition, the similar case applies to STE. Despite my conviction in STE, with their stable business in defense, and recovering business in aerospace sector, their high debt levels, with only half at fixed rate, remains a concern. Through the years, we have seen that Temasek-linked companies are not 100% safe (think SPH, Hyflux, Noble etc). No one cares more about your money and assets more than yourself. Thus, I need to closely scrutinize the debt levels of STE, and be nimble in case any negative event happens. So far, the financials of STE is still fine, as both order book and cashflow remains healthy. As such, I will do the same for STE as with PWLR, not injecting any capital into this share in the near term, until its debt level fall to a more healthy range, or when it's dividend yield hits above 5%, for reinvestment of its dividends to compound in the long term.
For Tesla, I am not having any different approach to it despite so many negative news and sentiments surrounding it recently, because my US Growth Portfolio is still small compared to my Dividend Portfolio (Tesla is only 4.6% of my entire portfolio). As such I will just continue to DCA slowly into my US counters, as long as they remain below my average cost.
It is important to remain logical in the investing world. Logical churning of numbers is more important than emotional loving of a stock and be 'married' to it with blind conviction. Sometimes what we do needs to change with the macroenvironment as a lot of circumstances affect sentiments, and investing should remain fluid. As such, remain nimble, and invest flexibly. Barista FIRE, here I come...!
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