Thursday, 15 October 2020

Global Diversification Continues

In my last blog post, Birthday's and Berkshire B, I wrote about how I recently accumulated a sizeable chunk of Berkshire B at $212 as part of my strategy to diversify my portfolio and garner steady growth over the next 10 years. 

Looking back at the buy, I still believe this was a decent price and that the fair value of the company is closer to $300 per share.

When I started investing in the stock market back in 2015 or so my plan was to build a dividend machine that would give me a regular income and hopefully facilitate an early retirement. 

So far, this has gone mostly to plan, but in hindsight, I would do things slightly differently. 

Over the years, I have overpaid for some counters in an attempt to get stability and yield, and in doing so, I've made a few glaring errors - chasing yield being one of my main downfalls. 

Of these mistakes, the biggest are buying the following counters: Kingsman, Starhub, Singtel and First REIT. Anyone else in the  same boat here? 

I'm still holding on to these 4 counters for dear life, in the hope of a turnaround, but I don't have a ton of hope. 

That said, all 4 companies pay good dividends, but the question is for how long will this continue? 

However, I've also made some excellent purchases including Keppel DC REIT with a weighted average cost of just over $1. Also, Sheng Siong at $0.9 approx. 

There are others good picks in the portfolio as well, but I won't bore you with all the details right now.

So why the strategic move to the USA?

To be honest, I've become a little bearish on the Singapore economy over the past while. What with the US-China trade war meandering on, Covid, and the STI moving sideways at best, I feel perhaps the good times are over for the foreseeable future. 

This doesn't mean that there are not great companies in Singapore - there are - but it does mean that growth catalysts are few and far between. 

As a result, I want to spread my wings and diversify in the USA with one of the world's best run and diversified companies, Berkshire B. 

Why not invest in the S & P 500?

The answer to this question is easy enough:

1. I think Berkshire B is better value than the S & P 500.

2. I think Berkshire B can weather the bad times more effectively than the S & P 500.

3. I like Berkshire B's railroad and insurance businesses

4.  Passive funds buy stocks when they are expensive and sell when they are going down

5. I don't like passive ETFs. They have done amazingly well over the past 10 plus years because of QE, but what their future holds I'm not so sure.

6. I believe in paying for the quality business ethos and philosophy that Berkshire has now and which will continue into the future - with Buffet or without Buffet.

So, I have no doubt this is a quality counter moving forward, and one that will continue to add to when opportunity arise. This is the key cornerstone in my diversification plan.

Are you only diversifying in the USA?

I've also picked up a chunk of ICBC as I feel China's growth will move in tandem with this banking giant. Of course, I recognize the headwinds of mobile payment and loans etc. but traditional banking isn't going to disappear overnight. Also, ICBC has a history of paying handsome dividends, so it's nice to tap into this wellspring. 

OK, so that's where we are presently. More soon. The beat goes on...

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Morning Musings 27-10-20