Straits Times Index Bear Market into 9 months, Sharp Plunge Ahead

If we took April 2015 as the peak and end of the bull market, we are now entering the ninth month that the market has trended down. This is essentially a bear market. As I have written in my previous post, I argued that there has been two distinct phases in the bear market and that there will be one more phase. This is the phase where there will be sharply declines but the mood of the market turns from surprise/disbelief into despair. This is also where the market starts to recover.

I have made some predictions for the first three months of the year and I have been spot on so far. And if history is any indicator, on average, we should see an inflection between one and nine months time or between February and October 2016. In the last financial crisis, the STI was at its lowest around 1,600 points at one level. My opinion is that we will almost certainly (93% +/-6%) not hit sub-2,000 like in the GFC.

Portfolio Review 2015: Portfolio - 22.7% vs STI - 14.1%

After peaking in April, the Straits Times Index fell sharply in two distinct phases (Apr-Jul, Aug-Oct), ending the year at slightly below the 2,900 level, or 14.2% lower than where it started the year. There were many reasons offered for the weak markets ranging from weak oil price, terrorist threats, the end of quantitative easing and the hike in interest rates.

The portfolio lost a staggering 22.7%, making it the third year in a row that I have underperformed the STI. Excluding dividends, it would have lost 24.7%. The biggest percentage loser was KrisEnergy. The stock lost two-thirds of my purchase value because of the oil rout as well as my not subscribing to their rights. The biggest dollar loser was PetraFoods, shedding close to 12K. This favourite of mine is said to be affected by the weakness in sales to its key Indonesia market.

Colex was the only stock to register positive gains given the flight to safety. The garbage collector gained 15.4% the whole year or 3.2K in value. Smallest loser was Hong Leong Finance, losing 11.1% or 2K in value.

There were only 7 transactions for the whole of 2015, mostly at the start of the year. Auric Pacific, Etika and UOB-KayHian were offloaded. Hong Leong Finance and KrisEnergy were new stocks to the portfolio. In December, I added some more PetraFood to my portfolio.

End-January Update

I was way off in my prediction for the the Punngol East By election 2013. The Worker's Party Lee Lilian overcame the People's Action Party's Dr Koh Poh Koon by slightly more than 10% of total valid votes. That was not the reason I was away for a while. For the past 2-3 weeks, I was called away and thus could not find the time to blog my thoughts nor could I access terminals to make any investments.

Back on my computer and my spreadsheet for tracking returns, I was pleasantly surprised that my total portfolio (including cash of around SGD 8,303) increased 14% compared to the STI 4%. This was due largely to news that Sam Goi was on board Etika International and that the monies raised from the earlier placement would be used for expansion plan. Follow the money.

Stocks that have fallen into my radar are Wilmar International, RH Petrogas and SingPost. I see Wilmar International as a short term sentiment play. The consensus is that this is not a SGD 4.00 stock but somewhere close to SGD 5.00. It has taken quite a beating the past few months due to weaker-than-expected margins. RH Petrogas is a small and illiquid stock which markets itself as the only pure upstream stock on the SGX. I feel that there is upside for this stock to SGD 0.80 but it might just be due to slow bid up. SingPost, well, is just the usual dividend play.

SGD 8,303 buy what stock? (updated)

After going through the various savings account that I have, I think I might have enough to make a final purchase for 2013.

My current shortlist includes: