Rotated out of US and moved more into HK/China

[nuketay]

My first post in this quiet space.
My reflections on the first quarter of the year as it comes to an end. From Q4 2024 till January 2025, investors/traders were very bullish about US equities and crypto. Particularly when Trump won the elections. Major indices or even crypto hit an all time high. Many believed that his presidency and administration will be good for the US stock market. It was simplistic at best but nevertheless a belief held by many experts, retail investors that stocks and crypto will shoot through the roof. Well, the exact opposite has happened so far. S&P500 retraced by up to 9%. NASDAQ retraced by almost 14%, BTCUSD by more than 20%. ETHUSD by more than 50%. We may find all sorts of reasons to study and justify why this happened. Maybe it was Trump’s isolationist , inflationary policies with tariffs. Maybe it was China demonstrating its technological prowess with Deepseek that dented all the hype in AI investment. Maybe it was BRICS trying to move away from using USD in their trade transactions. Whatever it is, we should probably not underestimate how geopolitics shapes market sentiment. At the end of the day, it is the results that matters and I do not think the Trump administration is trumping (excuse the pun) China on the world stage at the moment. Just as some people had a simple belief that Trump will be good for US equities, I do have an alternative but equally simple view. Whatever is bad for the US markets will be good for the HK / China stock market and vice versa. For the simple reason that money being pulled out from one market has to be invested somewhere. At the moment, I think it is China.

A few things to learn from this episode of market correction in the US:

1. Never fall in love with any stocks or market indices. Be objective. Sure, it can go higher because of irrational behaviour and one may have short term gain as a result. But if you do not realise those gains and think stock prices will continue flying, then all you have are just theoretical gains that will eventually dissipate when market corrects. Take profit when there is extreme market exuberance.
2. Following from point 1 above, if you cannot stomach significant retracements in your portfolio, it probably means your portfolio is weighted too heavily in specific industries, concentrated on certain types of stocks (i.e Mag 7), specific geographical markets. Lesson learned is to diversify across industry sectors, geographical markets and asset types (i.e SG bonds, money market funds, precious metals etc. Did not mention BTC or its alt because I am not a firm believer of digital assets ).
3. Related to point 2, to mitigate the psychological impact of market volatility and seeing your portfolio value dropped double digits, I do think dividend stocks have a role to play in any portfolio. It may not have the 10x growth that you will see in the likes of some US equities. But at least there is some satisfaction in being paid regularly when the company performs well. Just have to be selective of the companies that has consistently paid dividends (or even increasing dividends) over the years.

That’s it for my reflections in Q1 2025. Nothing new here.

[evankoh]

@nuketay

I do think dividend stocks have a role to play in any portfolio. It may not have the 10x growth that you will see in the likes of some US equities. But at least there is some satisfaction in being paid regularly when the company performs well. Just have to be selective of the companies that has consistently paid dividends (or even increasing dividends) over the years.

Strongly agree on this point. A friend recently came to have a chat about investing and was initially thinking that since many US stocks went double digits down so far this year, he wanted to go 100% into US stocks.

I did my best to share/try to convince that diversification is important and how having good amount of dividends stocks that would likely pay money month in and month out is good for many reasons like helping us sleep well at night, give us confidence to hold on to more volatile stocks (like US stocks) when they are going down etc. Let’s see how he would allocate his portfolio

[shaunlimks]

Thanks for sharing your thoughts.

I’ve been reflecting on my portfolio a fair bit in the last few months. Initially I was convinced I need to “diversify” into US. But further digging into why I was thinking that way made me discover it was a case of FOMO rather than me not being able to stand the volatility in my portfolio.

I am heavily into SREIT. Beyond what will conventionally be responsible. But thinking through my position line by line, I am comfortable with my holding and will not panic sell if the market crash 50% overnight and instead be comfortable buying even more due to my conviction.

After that thought process I have decided to have more exposure into Europe (through ETF) but will be open to purchasing more SREIT if price permit (recently added Keppel Infrastructure Trust - I know not SREIT but Reit like).

My china allocation is still down 20% I think, but recovered a fairbit from its all time low. Allocation was sensible enough to hold through the volatility in the market cycle. Good reminder to allocate only so much you can ride through the volatility…

I like to play with the kelly criterion as a play on allocation as % of portfolio

[nuketay]

US$6 trillion lost in two days. There will be many mass protests across the US this weekend. I wonder if Trump is shorting the market as he imposes tariffs. The real test of China decoupling from the US is how their markets reacts on Monday after their long weekend. I am expecting a marginal decline; unlike the 6% drop in the S&P 500.