It has been an interesting couple of weeks. My portfolio was significantly hit by the market turmoil and I became worried about being margin called on my leveraged bonds. This is about $1,000,000 in value. While I had a $20,000 buffer in my margin account, it was lower than what I was comfortable with. I thought I could wait for the coupons to build themselves up, but things got bad fast.
I also had extraordinary bad timing to buy one HSBC bond at a high price, which dropped 3% or around $8,000 in a week. Oh well. Timing cannot be helped.
But prices are stabilising and I was assured by my relationship manager that I still had another 5% drop before I get margin called. At these prices now, it doesn’t seem super likely.
In all of this, I had over $200,000 in cash equivalents. I didn’t really need to be very worried. In fact, the Temasek bond I had moved up a lot, given the demand for safe harbours. I don’t want to be forced to sell it since the return is so fantastic but I can and will if needed.
I think a good lesson is holding power. If I had pumped all my available cash in the roaring market just a few weeks ago, and be margin called now…. I could have panicked or forced to sell and be out tens of thousands. Better to shut off the market news and just ignore the noise.
I’m actually looking to buy back into USA equities. Can’t think of anywhere else that is thriving as much. Also looking to look to lock in some attractive yields. Quite big discounts now.
Be fearful when others are greedy. And vice versa.