40 shares of Microsoft at $180

22 shares of Nvidia at $321

3 shares of Amazon at $2293

45 shares of Microsoft at $172

50 shares of Johnson & Johnson at $154

20 shares of Nvidia at $329

All numbers are in USD.

As the value of my leveraged portfolio improves, it frees up more cash for me to go and buy stocks. However, it has been harder to find bargains and my more recent trades were done at the peak, and they have come down pretty much immediately after I bought. Always fantastic when that happens.

I’ve come to regret selling my Facebook, Nvidia, and Activision Blizzard stocks. Their prices have went up way beyond my expectations since. Knowing when to take profit has always been a struggle for me. I’m starting to think that the best time to sell is never. Selling also sucks because you have to figure out somewhere else to put it.

I’m overall neutral about the market now. I don’t think there are great bargains out there, but at the same time, I wouldn’t sell. But I dislike having a large cash balance which doesn’t earn interest. Money should always be making more money. I’m hoping the market will listen to my heart so it comes down a bit, then after I’ve done my trades, the market helps me out again by raising up. Yes, I’m sure that will happen.

The house always wins

I’ve haven’t had much success in using the low interest rates to my advantage. My home refinancing was held up due to HDB closing their offices due to the circuit breaker. It costs me about $600 a month more due to paying higher interest rates, because I couldn’t switch out to a bank loan.

Another even more costly change is my brokerage increasing their spread for margin financing, which decreases the returns on my fixed income portfolio.

To give more background, brokerages can lend you money to buy stocks and bonds, called margin financing. The interest rate to you consists of 2 parts, a spread and 1 month SIBOR, usually totalling below 2.5%. The spread is the brokerage/banks’s profit. The spread for bonds is the lowest at around 1%, with stocks and REITs being about 1% – 2% more, depending on the quality and market.

With the 1 month SIBOR dropping from over 1.6% a few months ago to about 0.45% now, I thought that my interest cost would decrease and I would earn more. But surprise, the brokerage went to more than double their own spread to over 2%, so that I’m actually paying more for leveraging now than in normal times!

The banks also did this for their new home loans, doubling or tripling their spread while SIBOR drops. So net net, many people end up higher interest rates than they normally would.

In bird culture, this is considered a dick move. Lower interest rates fatten the banks’ profits, while the average guy pays the same interest as before.

Nothing can be done about it now, I just hope for things to normalise as time goes on. But I do think higher costs are going to be a permanent feature. Overall business costs are increasing dramatically, which will be passed down to consumers. We are not even getting the full bill now, but it will come sooner rather than later.

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