Market Sentiment vs My Sentiment

Past few weeks I am finding it difficult to adjust my sentiments to how it is being played in the stock markets. Referring to my previous post in mid August "Final Push", It is getting harder to stand my ground or belief that there will be a final bull swing before another major crash. Since the month of August has been a bloody one, markets all around the world taking a huge hit. If there is one thing i still do believe in, its that always stick to valuations. 

Chinese stocks for me seemed undervalued with a lot of upside. My timing has never been perfect but my investments in China Life Insurance and BYD have yet to drop below my buying price, which tells me that I bought them at strong support levels. 

On the other hand, Singapore stocks have not fared well in the past few weeks. Mixed feelings arise as prices drop reducing my profits but also creating opportunities to add into my portfolio. 
As for REITs, where do i begin? Sabana REIT has fallen by almost 20cents/share. Cache REIT (see pic below) It has become even more attractive at $1.10 - $1.20 range. Since their dividend payouts will give you >7% for just holding onto it at those prices. I am happy to hold onto my shares of CACHE but not going to buy at those levels. Since the last drop broke through their supporting trendline, technically there is no way i can say with confidence that it has reached a bottom. I have a feeling it will keep falling to the dollar region before news around properties and interest rates are not looking good. People (investors) are anxious about REITs and the smart ones are pulling their money out of it. As for me, It would make sense to buy more below $1.00.

 Ascott REIT also tells a similar story but it has not seen such a big drop. Maybe the investors of Ascott REIT know what a great investment it is. Especially since they are expanding strategically into rest of Asia. I like their business plan, and their dividend payouts even more. Its a steady stream of income. Just a note of the price levels. It has been trading around $1.20 this week, going forward, I think it will come back up to >$1.35, no doubt. 
Those people who missed the opportunity to get a piece of this REIT should do so before its too late (*Of course do you own research first and then make an informed decision)
Here the graph of Ascott REIT below:

Yes it has crossed the supporting trendline (that is worrying me) but it is being supported by a resistance turned support line at $1.15. Also note the volume being traded. Comparing it to CACHE REIT above, volumes being traded are below low. At $1.20 it is still very attractive to me. I have to say, still not worth add onto my position unless i get it at close to a dollar. 

I suppose my investment philosophy is simple. Always reserve money for further reinforcements. Usually break up your investments into 4 parts. Buy in more as it gets cheaper. Sell it higher to reap the benefits if the stock is not worth holding onto. Don't speculate and dont surround yourself with negative thoughts. There will also be people telling you negative things, "Get out now, while you still can" and "I told you so". You decide when its time to get out. Patience is a virtue, so be patient.  If you have been following my blog posts, you will realise that we are still in the late stages of a 3 year bull market. I would start to worry in the 1st quarter of 2014.  

Did you pick the right REIT?

As we all know by now, REITs have outperformed the general index. High yielding REITs were plenty back in 2010, slowly they are becoming overpriced. If you have positions in it, you are probably holding onto them till the last minute to see how much further they can go. I know i am. I decided to highlight some winning REITs who are still offering above average dividend returns. 

 Of course, this is not an invitation to buy into these selected REITs because most of them are already quite expensive. Did you pick these REITs back in 2010?
I held 4 out of 5 of these top yielding REITs in the past. Recently sold Suntec REIT and First REIT at a very good profit making me happy. While i still hold onto Ascott REIT and Sabanna REIT, i do ask myself how much longer do i have to hold them? The average current yield in each sub-group is already close to 5. Will we see a drop in popularity when this average drops below 4? That is definitely a yes. 

For the time being though, let me be greedy and hope for bigger returns. We should be worried when average yield goes below 4%. But i suppose Ascott REIT is something i will have a hard time deciding to sell.

Current Investment Strategy

Referring to my previous post, the market is due for short-term correction worldwide. I feel that the bull market is not over yet, this is only a temporary correction. I am going to liquidate 50% of my holdings and prepare to load up on stocks with higher growth potential. I say 50% (in my case) because some of my holdings have actually surpassed their target price, being greedy, I did not sell them too early. For example Cache Logistics Industrial REIT, this one is way over my valuation, it seems trading houses keep upgrading it to BUY and raising their TP. I can understand why, they also cannot determine how much higher this stock might go. If you are happy with a decent 30% profit, lock in your profits before it starts to fall. 

The other 50% of my holdings are value stocks which i will accumulate for as long as i can.(e.g. Singtel, Starhub, HPH Trust, Ascott REIT). I also hold Hyflux for the long run, not because i love it too much to let go but because i got in at a higher buy price and have been dollar-cost-averaging it down to $1.50 since 2011. (One of my biggest error in judgement, but we learn from our mistakes don't we?) Remember Warren's rule number 1: Never lose Money. 

Disclaimer: I just wanted to put down my thoughts in this post, It should NOT be taken as a basis for making any specific investment decisions.