My portfolio value had reached its peak at about $530k mid of April and fell all the way down to about $380k mid of June. It was just 2 months away, my portfolio value had been up and down in 30% variation.
This tells that investing in stock market will never be easy. It involves human emotion: greed, fearful, daring, worry, eagerness, willing and unwilling, and all macro issues around us.
As for me, i am doing my best to create a System for my Investment - will call it BSPA.
A system that is able to work well and make me sleep well at anytime in the market: bull or bear.
How does BSPA work?
BSPA stands for Buying Selling Portfolio Allocation.
How does BSPA work?
BSPA stands for Buying Selling Portfolio Allocation.
These 3 things are very important in order to create and maintain a Sustainable Portfolio.
I just want to focus on BSPA - the things i can control.
(1) Buying Strategy:
I should allocate a specified percentage of my portfolio to every counter.
Case Study (example):
I am 35 years old and holding 500k in cash.
I wish to buy Tat Seng Packaging as it meets my Buying Criteria from the System.
(1) List down all the criteria in buying Tat Seng
(2) Set an intrinsic value for Tat Seng: e.g $1.20 per share.
(3) Will allocate 10% of my cash into this company.
(4) First time i will buy 50% of my allocation: (50% X $50,000 = $25,000 ) = 31,500 shares at $0.80 per share.
(5) If the share price continues to go up to $1.00 - do nothing.
(6) If the share price falls about 10% ($0.72) from my initial cost, i will add 10% of my remaining (10% X $25,000 = $2,500 ) = 3,500 shares at $0.72 per share.
(7) If the share price falls another 20% ($0.56), will add another 40%: (40% X $22,500 = $9,000) = 16,000 shares at $0.56 per share.
(8) If the share price falls another 20% ($0.40), will add another 40% : (40% X 13,500 = $5,400) = 13,500 shares at $0.40 per share.
(9) If the share price falls another 20% ($0.24), will add all the remaining amount ($8,100) = 33,750 shares at $0.24 per share.
(2) Selling Strategy:
Before buying the company, i should set a target selling price based on the last FY reports, quarterly reports to derive:
(1) I am buying for which category? ValueGrowth? Deep Value? or Dividend?
(2) Intrinsic Value of company based on all the numbers including dividend.
(3) Maybe i am more comfortable with intrinsic value of 4 years going forward.
(4) PE, Sales Growth, ROE, Free Cash Flow, and Dividend are major components in deciding when to sell.
(5) How should i partially/fully divest the shares? --- will cover more on this in my next post.
(3) Portfolio Allocation:
I wish to buy Tat Seng Packaging as it meets my Buying Criteria from the System.
(1) List down all the criteria in buying Tat Seng
(2) Set an intrinsic value for Tat Seng: e.g $1.20 per share.
(3) Will allocate 10% of my cash into this company.
(4) First time i will buy 50% of my allocation: (50% X $50,000 = $25,000 ) = 31,500 shares at $0.80 per share.
(5) If the share price continues to go up to $1.00 - do nothing.
(6) If the share price falls about 10% ($0.72) from my initial cost, i will add 10% of my remaining (10% X $25,000 = $2,500 ) = 3,500 shares at $0.72 per share.
(7) If the share price falls another 20% ($0.56), will add another 40%: (40% X $22,500 = $9,000) = 16,000 shares at $0.56 per share.
(8) If the share price falls another 20% ($0.40), will add another 40% : (40% X 13,500 = $5,400) = 13,500 shares at $0.40 per share.
(9) If the share price falls another 20% ($0.24), will add all the remaining amount ($8,100) = 33,750 shares at $0.24 per share.
(2) Selling Strategy:
Before buying the company, i should set a target selling price based on the last FY reports, quarterly reports to derive:
(1) I am buying for which category? ValueGrowth? Deep Value? or Dividend?
(2) Intrinsic Value of company based on all the numbers including dividend.
(3) Maybe i am more comfortable with intrinsic value of 4 years going forward.
(4) PE, Sales Growth, ROE, Free Cash Flow, and Dividend are major components in deciding when to sell.
(5) How should i partially/fully divest the shares? --- will cover more on this in my next post.
(3) Portfolio Allocation:
1. How many % of portfolio in every company?
2. How many % of cash to deploy at 1st time buying?
3. How many % of cash to deploy to average down?
4. How many % of cash during bull market? when the valuation of my companies reach high market value? - cash holding should be high here.
5. How many % of cash during bear market? when the valuation of my companies are undervalued? - cash holding should be low here.
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