Part 3? Where are parts 1 and 2? They are still work in progress. Decided to publish Part 3 first as it does not require the final data from the last day of the year.
Note on 30 Dec: With the end of trading for 2017 yesterday, I have completed Part 1 and Part 2. You can access them by clicking on the link.
To me, this is the most exciting part of the review. This is where I am going to gaze into my crystal ball and predict what will happen in the coming year. But be warned, typically the predictions are fuzzy and might turn out wrong!
Will the market Crash?
Yes. But I do not know when. It could be next year or perhaps 2019 or 2027? Historical data has shown that market does not go up in a linear manner. Time and again it will correct or crash due to market sentiment or a black swan event.
I am wary of it. For one, market has an extremely good run this year and there are more reports that the run will carry on. My last experience with a major crash was in 2008 during the sub-prime crisis. That year my portfolio dropped by about 40% after hitting a record high return of about 50% the previous year. The fact that I had such a good return this year sounded a warning in me – will history repeat next year?
On the other hand, I am also aware that human (like me) love to look for pattern. Fortunately (or unfortunately), the world does not always function in the same way. So while I am wary of a repeat, I would argue that even if the local market is no longer cheap, it is not extremely expensive either. The mood seems to have turned positive from past two years but it is not exuberant yet. So if a crash is to happen, it is most likely to be triggered by a black swan event.
Learning from the previous crash and other investors’ opinion, I think I am slightly more prepared this time round. I have took some time to think about this and decided that appropriate asset allocation is my solution. As written in this post on asset allocation, I will be holding a 30% cash (inclusive of emergency fund) and invest the rest in the market. So if the market continues to do well, I will take money out and maintain that allocation. On the other hand, if a crash does happen, I will ride it out and use part of the cash (excess of emergency fund) to increase my core holdings.
What excites me in the coming year?
This part was edited on 7 December as I found it similar to Part 2 of my review. Instead of looking at what will happen to my core holdings, I will be more succinct and highlight what I am looking out for.
- Food Empire
Looking for an increase in dividend after a record year of performance. - Raffles Medical Group
Am really interested on the impact of the new extension to the bottom line. - Straco
Looking for an increase in dividend as it continues to build up its cash pile. - Frasers Centrepoint Trust
AEI for Northpoint is completed! DPU should grow for the 12th consecutive year. - Parkwaylife REIT
Core DPU should continue to increase. - Valuetronics
Looking forward to more growth in ICE segment with announcement of more contracts on automobile. - UMS
Expect that it will be able to maintain its dividend. Will it surprise with an increase? - IFAST
Continue to increase its quarterly dividend. And more progress in its China growth. - 800 Super
Contribution from WTE and its sludge treatment plants, resulting in a lower net debt. - Starhill Global REIT
A boost in its DPU for the second half of the year after AEI completion in Australia? - Frasers Logistics and Industrial Trust
It should continue to surprise the market with better DPU. - Japan Foods
Continue to report good response from new franchised brand Shitamachi Tendon Akimitsu and hence resulted in an increase in revenue and profit. - Thai Beverage
More revenue and profit generated from its alcohol segment after the mourning period.
What else?
Since I set my new goal and strategies in 2015, I have tinkered with my portfolio quite a bit. There should be a lot less actions this year but with the divestment of Best World and my foray into overseas market, I have traded quite a bit.
For next year, again I would set out to take less actions. Effort will be focused on monitoring of existing counters and building of my overseas portfolio.
Barring any unforeseen circumstances, I believe that I should be able to hit my goal of at least 8% return for 2018.
Towards Financial Independence 