Portfolio Updates

Portfolio Update September 2021 – Worst Month In A Long Time

Calvin Lo

September was expected to be a seasonally weak month for the stock market, and indeed it was proven as such. S&P 500 was down 4.8% this month, the worst monthly performance since the 12.5% pandemic-induced drop in March 2020.

Fortunately, not all portfolios were down thanks to a few concentrated bets. All portfolios actually outperformed S&P 500 this month (by not dropping as much), and the Personal Portfolio even managed to post pretty decent gains.

Like clockwork, there was a market dip around mid-month allowing me to further add to index funds. However, this time the dip kept dipping especially towards the end of the month. Hopefully markets will bounce back in Q4.

Source: Investing.com

The Fed, interest rates, and inflation

Investors were a little spooked after the Fed signalled that tapering might be coming as soon as November, and rate hikes might be coming sooner than expected.

In addition, supply chain issues affecting almost everything from consumer goods, semiconductors, and labor have now also spread to the energy market causing energy shortages and price spikes.

However, the Fed and many other central banks still maintain that this spike in inflation is likely to be transitory and will ease once supply chain issues are resolved. Investors however, seem to be increasingly less convinced as inflation has been stubbornly high for some time now.

Fed signals bond-buying taper coming ‘soon,’ rate hike next year | Reuters

‘A perfect storm’: supply chain crisis could blow world economy off course | Supply chain crisis | The Guardian

Global Shortage To Propel Energy Prices, Higher Commodity Price Trend To Continue, Says Expert (cnbctv18.com)

Covid is not going away

With that backdrop in the markets, the culprit that caused all this havoc is still not going away anytime soon. Delta variant is making its rounds, causing another wave of movement restrictions.

Governments are slowly transitioning to the endemic phase, accepting that we will have to live with this virus for many years to come.

Evergrande threat to China

In China, the Evergrande crisis continues to unfold, threatening economic growth in China and presenting a risk of contagion to other parts of the world.

The only silver lining in my opinion, is that China Tech seems to be out of the hot seat for now. There hasn’t been any major regulatory surprises from Chinese regulators in recent weeks.

Check out my detailed thoughts on the Evergrande crisis here.

Personally, I’m happy to continue to add to US stocks and index funds on dips like these. Since I’ve managed to hit my allocation target for index funds, I can focus a bit more on adding stocks with great growth stories in coming months if the consolidation continues.

See my portfolio holdings and strategy on my Portfolio page.

Family Portfolio

  • September performance: -3.7% vs SPX -4.8% vs NDX -5.3%
  • YTD performance: -1.2% vs SPX +17.7% vs NDX +16.5%
  • All-time performance (since Aug 2016): +9.0% (+11.6% including dividends)
  • September dividends: S$87 (-21% yoy)
  • Bought: VT, QQQ, MSFT, NVDA
  • Sold: ATVI, PLTR, Keppel Infrastructure Trust (SGX:A7RU)

Added to index funds VT and QQQ again around mid-month, rinse and repeat. This will probably be the last substantial purchase since I’ve hit my target allocation. Going forward, I’ll still be buying regularly but only to deploy the monthly investment fund contributions.

Also added Microsoft (MSFT) and Nvidia (NVDA) to buff up exposure in these high-quality stocks in secular growth sectors. I’ve recently transitioned to adding funds to individual stocks on a cost-basis instead of value-basis, in order to direct funds towards my winners instead of my losers.

Sold Activision Blizzard (ATVI) shortly after news of the sexual harassment scandal broke, which was the straw that broke the camel’s back for me. ATVI has been low on my conviction list, so I took this opportunity to let it go. So I’m left with Sea Limited (SE) as my sole gaming play, although it’s not a pure play like ATVI.

Also trimmed Palantir (PLTR) after a huge run recently. I’m still a believer in PLTR’s long-term prospects but I didn’t like the attention this stock is getting from the r/wallstreetbets subreddit crowd. I also feel that the price may have run ahead of itself in the short-term. With the volatility PLTR has been showing, I foresee that there will be opportunities to get back in later on.

Lastly, exited Keppel Infrastructure Trust (SGX:A7RU), my last non-REIT high-yield dividend stock. Besides pivoting away from dividends since I don’t need the income, KIT also posted a net loss in 1H 2021 yet maintained its DPU steady (since it’s paid out from operational cashflow). Income investors might be willing to let underlying net losses slide as long as KIT continues to pay out distributions, but I don’t. I’m also not so sure how fast or even whether KIT can even pass on the costs of higher energy prices to consumers.

As usual, dividends have dropped YOY as I’ve rotated a large part of the portfolio from value/dividend stocks to growth stocks over the past year. I think I’m pretty close to my ideal asset allocation and mix, so I don’t expect any further major changes for now unless the market shifts dramatically.

Slowly but steadily, I’m reducing the number of holdings in our portfolio. I’m now down to 22 individual holdings (17 US stocks, 5 SG stocks/REITs) and 7 ETFs. Still pretty unwieldy, but at least I don’t have to spend much time monitoring the ETFs.

Personal Portfolio

  • September performance: +6.6%
  • YTD performance: +4.8%
  • All-time performance (since July 2020): +38.5%
  • September dividends: None
  • Bought: None
  • Sold: PLTR

This portfolio has benefitted greatly this month from strong performances from both Tesla (TSLA) and Palantir (PLTR).

However, I trimmed PLTR this month for the same reasons as I did for the Family Portfolio. I might either buy back in at a lower price or redirect the funds to another hyper growth stock (if I can find one that’s worthy).

No plans to touch TSLA though. I shall just ride the wave whether it continues to swell or crashes. TSLA is a multi-year horizon holding.

Social Portfolio

  • September performance: -0.95%
  • YTD performance: +0.74%
  • Check out my eToro account for trade activity: https://etoro.tw/3rLL9tX

Lost quite a bit this month after closing positions in Alibaba (9988.HK) and hitting stop losses on Peloton (PTON), Crowdstrike (CRWD) and Fiverr (FVRR), offset by smaller gains in Tesla (TSLA) and Palantir (PLTR).

Cash has been piling up in this account, now sitting at around 65%. Most of my time has been spent re-allocating the Family Portfolio. Once that’s stabilised, I should have more time to ‘play’ with this trading account.

What have you been buying or selling in September? Would love to hear from you.

Disclaimer: This is not financial advice. I am not professional financial advisor nor do I work in the finance industry. Anything I write here is purely my personal opinion. Please do your own research and due diligence before investing into anything. All investments come with associated risks. Best to consult a financial advisor if you’re still unsure.

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