SG Stock Actions 2019-07-17: Selling for Risk Management

With recent US markets going all time high, the risk for overvaluation and future low returns is increasing. Although SG market has not reach all-time high, if the US market corrects leading to a world wide market correction, SG cannot escape. Moreover, the REITs has increased sharply ~15-20% this year while the underlying business does not change much; ie income does not increase proportionally. We believe this is an increase in market multiplier and yield compression rather then improvement in business fundamental. 

Although some of the holdings are still in RED, it has rise from its LOWs along with the general market REIT's rise. Some of the holdings are seeing good profits after holding for a couple of years.

The capital gains realised is equivalent to 3-6 years of dividends. We believe we can buy back these companies at a lower valuation subsequently when the market corrects.

The opportunity cost is lost of dividends and potential price appreciation should this hypothesis of a potential future market correction fails to materialize. However, if the hypothesis is true, we will be spared from the potential 15-30% market correction.

Cash gives you a piece of mind and flexibility to buy the market at discount.