Posted by: donmihaihai | December 17, 2020

2020, what a year!

2020 is almost all about COVID 19, but if one is talking about investing, there are a lot more to it. Seldom would I say what a year, but I think 2020 is going to one of those years.

When China finally admitted to the seriousness of COVID 19 at the beginning of the year, my initial reaction was to check the stock markets and see if a crash is coming. Lot of thunders but hardly any rain. It was only in March that Markets started to drop seriously and followed by a sharp crash when COVID 19 finally hit US. As if the market is telling everyone of us that, US still matter, or in fact the only market that matter in terms of influences and we keep seeing it being playout throughout this year.

Almost instantly, I knew that SGX is flooded with bargains, STI or banks was at reasonable valuations at the start of the year and the border market was actually way cheaper. I have increased buying in 2019 after years of little activities and of course, upped my gear during CB period.  But the panic period was short and all markets went up. Extraordinary times doesn’t last and what a short window.

Fast forward a few months, STI, made up of mainly “old techs” underperformed big time so much so that the multi-years underperformance against US market and many more and many investors started to notice it. I used investors because this underperformance hurt buy and hold investors way more than traders. And surely, the SG version of death of equity start screening real life. With the exception of some REITs, Singapore stocks were being thrown out and Foreign Tech stocks became the favourite new holdings. Hardly any surprises that this was the time where local bank valuations were in the cheapest portion for months for a period of more than 25 years. In fact, if I remember correctly, other than short windows during AFC or GFC, local banks are cheapest for a big part of the year and if you are in wrong sectors, the valuation is even more rock bottom. Basically except for some REITs, the shows ended, crowds left. For a cheapo like myself, all I did is keep picking up these “old and unless tech”. So happy when investors pour cold water on local stocks like SPH, SCI, SCM, Singtel, Jardine, etc. whether I am buying or not.

 Excitement move prices but the market weights in the long run. Out of the blue, just when many were thinking that STI is a goner, it staged one of the best gains in a month for many years in Nov and IPO market start to look interesting after years of boredom. And the markets look like it is to be going insane for a much longer period. All these happened in a COVID year!

It is easy to has views on the direction of the markets but looking back, how many got it right? I wrote this sentence because as always, when I say I don’t know where the market is heading, they will surely tell me what their crystal balls tell them. It is hard to tell peoples I focus on thing that I know and in control, and what will happen next to the market is something I don’t know and I don’t bet it with my money.

And I know, at this point, a big portion of local stocks are still cheap. Local banks are cheap when they are trading at PB of 1X or less with ROE at a little north of 10%. And that is just the banks, there are many more “dead stocks” in forgotten industries.

The future is great.

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