October 2022 Portfolio Update

Portfolio allocation as of Oct '22.

• SG Shares: CDG, DBS, SGX, Valuetronics
• SG Reits: Syfe Reit+
• US Growth: BABA, INMD, PYPL, SHOP, TDOC, UPST

While reconciling last month's numbers with this month's, I realised a small mistake. My QUAL allocation for Sep ‘22 should be 8.5%, while IQLT should be 8.7%. Thus the allocations for the rest of the Sep ‘22 numbers are slightly inflated as the QUAL and IQLT numbers should’ve been higher.

In October, I continued investing aggressively and deployed a few months worth of salary. It was the highest monthly inflow for my portfolio YTD. I bought 2800HK at 15.5 HKD (avg. 22 HKD) and HSTech ETF at $0.59 (avg. $0.82) to lower my average costs for them. It may feel scary to invest in China right now, but as I don't check stock prices daily and have an extremely long time horizon, these somewhat mitigate that fear. 

For my SG positions, I bought CDG at $1.25 and averaged down on Valuetronics at $0.50 (avg. $0.54). Briefly, my reasons for investing in them are: CDG as a Covid recovery play (prefer this to SATS due to SATS' acquisition mess), operating an essential service with about 80% of its revenue from public transport (contrary to popular belief, not taxis). CDG's cash position is roughly 1/3 of its market cap and netting this off, I'm paying ~0.7x book value for the firm. Reasonably low debt (23% D/E). Operating metrics have mostly recovered to pre-Covid levels whereas the stock remains 40% lower. 

Valuetronics is mainly a deep value play with cash of ~$0.37/share vs the current share price of $0.50. Management has been aggressively buying back shares since mid-2022 and has repurchased around 4% of o/s shares. The existing buyback mandate allows up to 10% of shares to be repurchased. I may do more detailed posts on these two companies if time permits.

My portfolio allocation has shifted to become rather SG-centric this month, and that's mainly because of the strong USD and I'm unwilling to buy USD at the moment. GOOGL and ADBE remain my top targets, along with some 2021 tech darlings which have fallen to levels where you can evaluate them based on P/B ratios and look at their net cash positions vs burn rates. 

That's all for this month's update, may opportunities be abound for the final two months of 2022! For my monthly portfolio summary, please follow my Instagram Page @alpacainvestments

Random musings on the Financial Independence journey

The Financial Independence, Retire Early movement is a controversial one for sure, and I've written extensively on my thoughts on this in a few blog posts. The following paragraphs won't be a rehash of my reasons for wanting to "Retire Early", but rather, to emphasise on the "Financial Independence" aspect, which I believe is more pertinent than ever, in times like these.

Since the beginning of this year, we have seen layoffs, particularly in the tech sector, as the economy is being weaned off cheap credit. In the past month, high profile layoffs among top tech firms including Amazon, Meta and Twitter have dominated the headlines. Tens of thousands of people affected. These numbers are not merely statistics - these are real people with families to feed, with bills to pay. 

And as I've written in my previous posts, these layoffs often happen for reasons beyond our control. The deteriorating economy is beyond our control. Or a billionaire could buy over the company that you work for, and decide to sack more than half the employees. That's beyond your control as well. You could be the hardest worker in the team, the first to come in and last to leave everyday, but if the CEO decides to shut down your business unit due to "strategic reasons", you're gone as well. The point here is that very few people are truly indispensable. Like it or not, that's the reality of capitalism. The earlier you realise and accept this, the better. No one else would act in your best interests except yourself. 

Therefore, focus on the things that we can control. Live below your means. Have an emergency fund set aside for contingencies. Invest prudently and consistently. Build up streams of passive income that can one day replace income from your day job. 

To me, "living below your means" does not mean only buying second hand stuff or only buying groceries that are close to expiry dates just to get a discount. It means not dropping your first bonus on a Rolex. It means not overleveraging yourself to buy an expensive property. It means only buying a car out of necessity and not for "lifestyle" reasons.  

I know that there are "FIRE advocates" out there, who preach an extreme version of frugality to achieve FIRE. Scrimping on meals or having cup noodles everyday just to save that extra dollar. I completely disagree with that perspective. Frugality should not be to the point of deprivation. What's the meaning of life, if one is to suffer in the present, simply for a goal that's decades away?  

Expenses are only one side of the equation. Equally as important would be earning power. I've reproduced a comment I made on another forum below, on a post regarding FIRE:

"Think a huge factor is earning power. A fresh grad earning the median income of 4k and spends 1k, will save 3k per month. Another fresh grad at the 75th percentile earning 6k, could spend 2k (double) and yet will save 4k per month. What’s clear here is that the 75th percentile person will have both a higher quality of life (spending double) and also reaching FIRE faster (saving/investing 33% more). In the end it’s about how we balance delayed gratification but yet not to the point of deprivation."

Aim to be Financially Independent; whether you choose to Retire Early or not, that's up to you!