2019 is coming to a close, and we are soon entering the third decade of the twenty-first century. It has been an eventful year, and the best is always yet to come.
After suffering a scare during the Christmas period of 2018, the markets had recovered when 2019 began. For the U.S. markets, using the S&P 500 as a gauge, its year-to-date (YTD) performance up till 26 Dec 2019 stood at about +29.08%1, despite the trade war roller coaster ride that prevailed throughout the year. The STI’s YTD was about +6.17%1, which was not that bad despite the lower than expected local GDP figures for 2019.
I had used 3 ETFs that represented my long-term trend views for cybersecurity (HACK), payment solutions (IPAY) and alternative energy (ICLN). Let us see how these three perform YTD for 2019 (as at 27 Dec 2019):
The known fact is that we cannot really predict the future, but based on factors and indicators, and sans black swan events like the Hong Kong protests, we may be able to derive some “educated guesses” to guide us in our decision. Let me share with you some of my “guesstimate” opinions.
I would see some volatility in the U.S. markets given that it is an election year. Although a new challenger has yet to be nominated to challenge the incumbent, the candidates’ various stands on policies and opinion polls may swing several sectors or the markets as a whole. If you are an active investor, stay close to the news and use the ups and downs to your advantage on your buy or sell decisions.
In the local scene, the S-REITs run-up that was experienced during the whole of 2019 had showed signs of tapering, but with interest rates likely remaining low and there might be a chance of the gearing limit increasing from 45%5, we may see a boost in this asset class again in 2020 if both of these fall into place.
On the technology front, though there will always be new stuff and concepts invented and created respectively, the mainstream ones that were seen as disruptive a few years ago (such as e-payments, ride sharing, etc.) are, using the technology adoption cycle, at the border of early adopters/early majority, based on my personal observations in the developed world. This is good news for growth investors as there is still room to go, but not so much for value and dividend investors as most of these companies are still burning cash to sustain the growth. Hence, in my opinion it is better to use ETFs for exposure to the emerging technology sectors, and/or identify matured sectors/companies that provide upstream or downstream support to the former.
I would like to reiterate (again) that it is prudent to stay diversified (e.g. The Bedokian Portfolio’s asset class allocations) in order to optimize your gains and ride out the losses while maximizing capital protection and minimize risks.
As at 27 Dec 2019, Bob’s Bedokian Portfolio had grown to slightly above SGD 59,000 (excluding the cash component which is not shown) and gained a dividend amount of SGD 1,955.89. All asset classes (except cash) had shown healthy growth for 2019. Bob will rebalance on 2 Jan 2020 with another SGD 5,000 injection, so stay tuned to his portfolio.
The Bedokian is vested in ICLN.
1 – Yahoo Finance. 2 Jan 2019 – 26 Dec 2019 (accessed 29 Dec 2019)
2 – ETFDB.com. ETFMG Prime Cyber Security ETF. https://etfdb.com/etf/HACK/ (accessed 29 Dec 2019)
3 – ETFDB.com. ETFMG Prime Mobile Payments ETF. https://etfdb.com/etf/IPAY/ (accessed 29 Dec 2019)
4 – ETFDB.com. iShares Global Clean Energy ETF. https://etfdb.com/etf/ICLN/ (accessed 29 Dec 2019)
5 – Meixian, Lee. MAS seeks views on raising 45% leverage limits for S-Reits. Business Times. 3 Jul 2019. https://www.businesstimes.com.sg/companies-markets/mas-seeks-views-on-raising-45-leverage-limits-for-s-reits (accessed 29 Dec 2019)