Markets have been recovering nicely, and my portfolio has been looking healthy. Everything’s green, and all the recent trades I made are up 10% or so. Last night wasn’t great, but the trend has definitely been going up.

Have been neutral towards the stock market recently. I haven’t found anything compelling to buy or sell. Things are in the middle of being the bargain prices they were recently and the highs they were at the start of the year. Too expensive to buy, and too cheap to sell.

I’ve not been following the recent meme stock frenzy either. It’s just exhausting, and I can’t monitor it through the night. I’ve bowed out of the whole Reddit crowd and gotten fairly cynical about it. People are mainly out for themselves, and you don’t know how they are really buying or selling, and who’s manipulating who. Tired of all the rocketship and moon emojis. So I rather just stay out of the game entirely.

Fixed income

As a result, I’ve moved some funds over to fixed income. Added a new holding in the Blackrock China Bond Fund, which I mentioned here. Deployed $46,000, maxing out my remaining credit line of $132,000. Picture below shows the numbers from my bank.

In the end, my leveraged yield went up to 17.7%, up from the 13.5% before. I’ve decided to bump up the LTV used, and reduce my buffer. As these are mostly government and government-linked bonds, there is little reason to have a lot of buffer. The LTV of 80% is the highest you can possibly get for an investment loan, which also shows the confidence of the lender in the underlying asset. Essentially, the bank is willing to lend you $4 for every $1 you put in, usually only possible for the safest of investments such as property and insurance.

The margin call breach occurs at $9.43, lower than the Mar 2020 lows of $9.60. The probability of it reaching such levels again should be minuscule. But I think there is a good chance of the principal slowly sliding with rising interest rates. Even so, I think a double-digit return should be within reason.

I can’t find a better risk-reward proposition than this now. I’ve looked at the fund’s top holdings, and a good deal of it consists of government and bank bonds, which can be considered nearly risk-free. In case you didn’t know, Chinese banks are the largest in the world by a long shot. Backed by arguably the world’s strongest government and economy. I honestly think you have better chances of the Fed failing. Mulling over if I can add/should another $40,000 to it.

Summary

22 May 202116 June 2021
Stocks$947,000$1,001,900
Fixed Income$230,000$320,000
Cash $15,000$10,000
Margin $207,000$241,000
Total $985,000$1,091,000
Gain from previous month-$80,000$106,000

Networth has increased to $1,091,000, a gain of $106,000 from the previous month. Still trailing from my highs of ~$1.25 mil in early 2021 due to steep falls in the growth stock portfolio. That’s a long-term game for me, and I expect periods of feast and famine. I’ve added all I want at this stage, and not planning for big moves here.

Fixed income has shot up as Temasek and Pimco have been gaining, and I’ve added the Blackrock fund. In addition, I’ve adjusted how I calculate fixed income investments. I used to do a straight 30% of the investment value, and assumed a static LTV of 70%. But the reality is that LTV can fall as the asset gains. So I think recording gains as pure profit is more accurate, rather than a percentage of the holding.

Cash has been falling as I’ve been spending more in May for hobbies. I’ve been wanting to do a post about that for a while, and I’m getting around to it. I think I should raise a bit more cash and pay down margin, perhaps will sell a bit more Amazon and Nvidia. No real hurry there though.

Hope your portfolios are doing well too!

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