Portfolio Snapshot: Brace for Impact

Disclaimer: The views expressed in this post are my own opinions and does not constitute financial advice or a recommendation to buy or sell securities.

Disclaimer 2: This is a stream of consciousness writing mess, so take from it what you will.

I was 6 years old when the 1997 Asian Financial Crisis happened. I started college just as the global banking system collapsed in 2008. In 2013, the European debt crisis was at its tail-end when I started my first job.

Even as I lived through 3 market collapses, I was too young and oblivious to comprehend their damaging effects. Though, I heard and read countless stories about those times; people lost their homes, businesses went bust, stock prices spiralled down fast, and every day felt worse than the day before.

Perhaps it’s this early exposure and awareness, or perhaps it’s my inherent risk-averseness – either way, I was subconsciously prepared for the inevitable. I knew that one day, I’d experience a market crash (or several) and actually feel the ramifications reverberate in my own life. That day is here. But who would have thought that a global health crisis and a near-complete halt of all human activity would accompany this market drop?

Real talk

As someone with a history of bad reactions to uncertainty, our current situation hasn’t been the most ideal. I’m writing this at 3.35 am, after 2 weeks of escalating anxiety culminating into an acute sense of helplessness that keeps me up at night. Not to mention, self-isolation is driving me crazy. I’m trying to hold it together but honestly, it’s tough.

Oddly, I don’t seem to be that worried about my investments. I suppose when you’re confronted with your mortality, your investments aren’t the first thing you think about. Regardless, it’s important to manage and monitor your investments wisely, especially through a black swan event such as this.

As such, here’s a (long overdue) update on the portfolio:

A -28% decline in my portfolio is not pleasant. Given our current circumstances, I’m bracing for further declines. I know that I’m in this for the long haul, which means doing nothing is probably the best idea right now. After all, this crisis is only temporary.

That said, I can’t be complacent and expect that the stocks in my portfolio would emerge unscathed from this global pandemic. Already, these stocks are affected by the virus outbreak in various ways:

• INARI is part of an international supply chain for the technology sector
• MAYBANK has a high correlation with the Malaysian stock market
• UCHITEC and LIIHEN derive revenue from economies hit hard by COVID-19 (Europe and US).
• People will cut back on spending, which will impact the automobile sector and MBMR.

The only thing we know is that we don’t know

Despite feeling out of control in my day-to-day, I can rely on the stock market to act exactly how it’s supposed to in any given situation. In an age of instantaneous information flow, stocks price in news quickly. This kind of crash, though unprecedented, is logical. Two days after the Movement Control Order (MCO), the KLSE slid to an 11-year low. Over in the US, the Dow and S&P 500 plunged from their record highs when the number of COVID-19 cases dramatically increased.

The thing is nobody knows what’s going to happen in the next few weeks, months or even years. Nobody knows how much and how long COVID-19 will impact the economy. Nobody knows when we’ll get back to our regular lives. Will we ever go back to the way things were? Or will we now change the way we do things? Your guess is as good as mine. And this is the reason the stock market is reacting the way it is now.

Recession, maybe?

Before the virus even hit Malaysia (and the globe), there were already indications that Malaysia’s economy will slow down this year. For instance, Bank Negara Malaysia (BNM) cut the OPR in February to boost growth. The virus has caused more stress in the Malaysian economy and BNM further cut SPR rates to shore up liquidity. Personally, I think there’s a high chance we’ll see a recession in Malaysia.

Now what?

And here’s where I start asking myself: What should I do now?

There’s no point trying to make a quick call in this uncertainty because every day the market makes big moves, either up or down. So, I’m holding for now. But I’ll spend the coming days and weeks looking at these companies’ balance sheets and financial ratios to assess their resilience. From there, I’ll have some indication on whether it makes sense to add more, hold or cut these stocks from the portfolio.

That’s all I got for now, fam. In the meantime, stay home, stay safe and take care of yourselves. I’ll see you on the other side.

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