Wednesday, June 12, 2013

Weakness on S-REIT

The recent selldown on S-REITs has wiped out my capital gain as of 12 Jun. The weak sentiments on STI has affected not only REITs, but most of the dividend-paying stocks as well. Seems to me that investors are cashing out on their profits from the 1st half of the year. Telco stocks are affected as well, but not as badly as REITs. StarHub is still above $4.

If you asked me if I am worried about the selldown, I'll be lying if I said I don't give a damn. Fear and greed are still the worst enemies for traders and investors alike. Anxiety do creep in as I see the value of my investments going down rapidly in value.

This is, after all, my 1st year in dividend investing coming from trading for capital gains. 1 year ago, I would have abandoned ship to lock-in whatever profit or cut-loss under similar circumstances. As my current strategy is to obtain regular income rather than capital gains, I have chose to remained vested. Somehow the feeling that decline is cushioned by the regular income, has managed to relieve some of my anxiety. Knowing that if income is not affected negatively, my entry price would be offset in time. With a say 5% yield, the capital cost will be fully offset in 20 years! (That is of course assuming the yield is sustained at a constant 5% each year)

I would be interested to see the fruits of my effort to stay invested at the end of 2013. Hopefully, by then I would have accumulated enough new funds from my passive and earned income to reinvest for higher yield if valuations remain lower (which I doubt so, but I may be wrong), or if valuation recovers, it would improve my capital gains as well. 1 thing which I gained from the experience so far, is the importance of having a war chest ready to take advantage of market weakness, and not to be over-invested.

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