Bought STI ETF at $2.3423 during the market selling down below STI 2400. This is the first cash purchase since the Covid-19 crisis.
STI 2400 might be just a round number to most but from my personal analysis, this level is an indicator for whether Singapore economy will or will not get into recession. It is not a number plucked from the air but rather based on previous peak and trough value coupling with EW analysis. As such, this indicator shall be of different level comes the next crisis. How much lower can STI go below 2400 will determine how deep the recession shall be.
STI ETF is pretty much a "no brainer" stock. Unlike stock links to corporate it does not have much of a fundamental to talk about. It's function basically just track the STI index. Thus, unlike company stock, it will never under-perform STI. When stock market recovers from crisis, it is not necessary stock price links to company will follow as it has its own fundamental issue to look into. However, this is not a totally no-risk investment as when the sponsor of STI ETF should it go belly up, the stock will be highly affected.
STI ETF is always be the very first stock that I should buy when come to any financial crisis without any doubt. The most common strategy was "for every 500 points (for example) STI drops it will be time to buy part of STI ETF". However, this is not the strategy that I am interested in. Bottom fishing is also not the strategy that I'm looking into. From those EW analysis I did, it is clearly that STI has still some more downside to go. What I am doing here is practically following the 孙子兵法 system that I used since 2015.
The first purchase amount, not even 5% of the cash holding I have allocated for this financial crisis is practically the "testing shot" which will eventually lead to 孙子兵法第十二篇 -- 火攻篇 to complete the purchase during this financial crisis.
In ancient warfare, using fire attack is the most lethal, deadly and very high probably of winning the war. One great example is 三国演义 -- 赤壁之战 when 曹操百万大军 almost wiped out entirely by 周瑜 strategy of 火攻. However, for fire attack to be successful and effective, weather condition must be in favor of it. Rainy day won't work as fire will be put off by the rain. Incorrect wind direction also won't work as the fire will not burn and spread towards the direction of the enemy. 周瑜 actually fainted when he realized the wind direction was wrong that resulting in the phase 万事俱备，只欠东风. Only for 诸葛孔明 to perform ritual to "borrow" 东风 then the strategy works.
The "testing shot" that was fired is a mean for me to test, check, determine the "weather", the "wind direction" before executing the 火攻篇.
Now come the interesting question. Should I put this into the non-Strategic or Strategic section of the Investment Portfolio ? For the Strategic section, it mainly consists of stocks that either at very low cost or absolutely $0 cost and will be divested away when time is right. Non-Strategic section is for stocks that I would put in capital, lock that in for long term investment and divestment will only base on fundamental reason rather than stock market criteria.
STI ETF is something that I will divest away in the next peak of the cycle so it fits into the criteria of the Strategic section but it is also stock that I have to put in capital, lock it in to hold, exactly like what the non-Strategic section do. At this moment I decide to temporary put it under the non-Strategic section as I do not know what other stocks that I could buy for the non-Strategic section during this crisis. Furthermore, I also do not wish to overload the Strategic section.
