Market Downturn! Here Are My Thoughts & Reflections...
I think it's rather apt to say that the market has been an absolute bloodbath in recent times, with REITs as an asset class taking an especially heavy beating. Today's post will be a short one, in which I will discuss what are my personal views when it comes market downturns and how I respond to them.
Firstly, I just want to outline how I've personally been affected by the onslaught on REIT prices. It's no secret that my portfolio is heavily concentrated in United Hampshire US REIT, with the sole ticker having a whopping 65% weightage in my portfolio. The security's price has dipped to levels down to 0.345 USD per unit which is rather far from its previously relatively stable price of 0.42USD per unit. Hence, almost all my portfolio gains were wiped from the start of the year, and I'm now sitting on only a meagre profit YTD. However, my convictions in the REIT are still strong and I firmly believe the fundamentals are still sound. Hence, I am remaining steadfast and holding onto my units, and aim to further increase my stakes up to a certain degree using my monthly NSF pay.
Next, I'll talk about what I've done with regards to the lower REIT prices. I've deployed the bulk of my war chest into accumulating units of Capitaland Integrated Commercial Trust (CICT) for 1.71SGD per unit which has so far proved to be a great decision. I believe accumulating SG blue chips at a forward dividend yield of 6% will be a good entry point in the long run. However, I must admit that I've been deploying capital too aggressively, which placed me in an undesirable position as I'm not able to very effectively capitalise on the recent market weakness, therefore, I will make it a personal rule to always leave more capital for deployment in the future. Not to mention that the current yields that Money Market Funds are currently providing are rather attractive at an approximate 3.75% P.A.
I see a lot of friends panicking when they're portfolio dipped which is why I once again advocate for dividend stocks. When I analyse a company, I concentrate on their capacity to support and grow their dividend payments. Dividends represent a tangible return on investment to the investor, which is not controlled by market forces. If you focus entirely on capital gain, you are subjecting your returns to the whims and fancies of Mr Market, where the disconnect between intrinsic value and actual price can persist for extended periods. This is why I treat buying stocks as buying their underlying cashflow, since I can confidently say that no matter what the market thinks the value of the stock is, I can be safely assured that the underlying yield has been researched and ascertained to be safe by me.
To conclude, I believe REITs are currently at very attractive valuations. Even if the Fed raises interest rates higher for longer, I am willing to get paid in dividends while waiting for a turnaround in market sentiment. I have also noticed that many institutional players have been rotating out of their REIT positions, which is a strong buy signal for me. You don't want to buy counters when the big boys have already had their fill, since that's when they'll offload.
Author's Note: This has been a rather short post which I think is more sustainable than writing lengthy fundamental analysis articles, so you may see me post more often! The reason I have not been posting much lately was previously due to the lack of time due to National Service, but I have only just recently completed treatment for a critical illness, so here's hoping for the best.
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Thank you for reading my blog, and I hope you have learnt something, no matter how seemingly minuscule, ciao!