Wednesday, 14 December 2016

4th Quarter 2016 Portfolio Review

Welcome to AT's first and last portfolio review for 2016. The main purpose of my portfolio review is for my personal reference and to share some ideas guiding my investment decisions. I love dividends, but I am not a hardcore yield hunter. My portfolio was built up on cyclical play over the last 2-3 years and it is too heavily overweight on commodities. Albeit the lack of diversification, it was an excellent year as my portfolio increased significantly due to rising commodities prices (after they hit rock bottom for the past 2 years).

4Q 2016 Portfolio Value: Between S$60 - 80k at age 28

The breakdown of my portfolio allocation is as follow: 

50% in commodities related counters. 
11% in REITs
10% in precious metal counters
9% in oil & gas related counters
8.5% in SGX Bluechips 
5.5% in banking
4.5% in technology 
1.5% in cash 

Macroeconomic trends that I believe will impact my portfolio heading into 2017. 

1. US FED rates hike 
2. OPEC production cut 
3. Commodities recovery 

First, US FED rates hike would lead to an increasing US Dollar. The strength of US market with higher interest rates environment would be detrimental to our stock market, especially REITs. In this aspect, I am looking to inject more funds next year to take opportunity of even lower REITs prices. This can help reduce my concentration of portfolio in other sectors while building up solid dividends with possible capital appreciation for years to come. With the outlook on stronger USD due to rates hike, my precious metal counters do not look promising too. However, I intend to keep them as a hedge against any market downturn. 

Secondly, I believe that most oil & gas counters have recovered from rock bottom and unless OPEC reverses its stance, most of these counters will be having an uptrend in 2017. One thing to look out for though is the impact of shale producers being back in the market when oil prices are high enough. Might be looking to add to this sector when there are opportunities. 

Lastly, I am looking to further ride the trend of commodities recovery in 2017. I might liquidate some of the commodities related counters to take advantage of any high yielding blue chips like Telcos and blue chips to reduce risks on my portfolio and increase passive income in the long run. 

Many "experts" have predicted a stock market crash is looming, and I am increasingly wary of being fully invested, due to the poor economic outlook. Overall, most of my holdings (commodities, oil & gas) are expected to continue growing in 2017 and will need to inject more funds in 2017 to grab any opportunities offered by Mr Market.


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Financial freedom = Passive Income > Expenses. Always remember that there are two sides to the equation of financial freedom. Beside working on how to improve our passive income through investing, we should never neglect the expenses portion. By striving to improve both side of the equation, we can achieve our financial goals and win in the game of money.

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