Thursday, 16 June 2016
June Strategy - BREXIT: buying opportunities always come with risk
14 Jun: I changed S$ to US$ at the start of the week and started buying ADRs of UK companies.
I considered changing to US$ less risky than changing to GBP. If I changed GBP on Monday, and didn't use up the GBP on Monday, the cost of just holding GBP would be high as the GBP would continue to drop in value which is what happened.
My focus is on companies with decent international revenues, as opposed to a company with revenues mainly in GBP. That meant I added Aviva, Prudential, HSBC, & Vodafone. I also added the Australian bank Westpac as the price was good due to the double fall of share price and A$.
Lloyds, the 'M1 of the London Stock Market' (stocks that analysts love to recommend but price goes nowhere) is more vulnerable to GBP devaluation than HSBC, but if it goes low enough, I think there is a sufficient 'margin of safety' to initiate a position.
There is definitely a downside risk (I think the bookies put it at 30%, and bookies could be more accurate than polls which claim 50-50), but I am buying for the long term. It is not as if a company like Prudential and Vodafone would suddenly stop generating income just because UK votes to leave.
On the bright side. Brexit would also make my country retirement home in UK cheaper (if Singapore temperatures keep on going higher and higher, I think retirement I downgrade to small flat in Singapore and buy a 2nd home in a cooler country), and if I have children that want to go to UK to study, cost is also cheaper.
Added Ascott REIT. I have a decent position in ART and my average buying price is under $1, but looking at recent moves, including their yield acretive acquisitions, I don't think its going under $1 anytime soon. So I've taken this opportunity due to Brexit fears to accumulate a bit of ART.
GLP: Just making use of the last 2 months of no-minimum comm trading on SCB to do FIFO with this counter just for practice and to learn something about trading. Already FIFO last week, and took a new FIFO position at $1.775. I will keep some for long term and set aside some for FIFO practice till 2 August when there is no more minimum commission...