Exiting bank stocks positions using the rebound

I took some positions in DBS and OCBC last week to get some bank stocks exposure in Singapore when the market fell badly. I started asking myself over the weekend why I was doing that if I’m on a current ETFs and individual stocks averaging down strategy. Not supposed to have any more new individual stocks exposure but I couldn’t resist buying the bank stocks then.

So I took the opportunity with the market rebound today to offload these bank stocks positions at a small profit. It’s a stupid move to strategy shift now just because prices of bank stocks are low. I haven’t done any research into them and assessed how badly the Covid-19 situation can impact them. Just bought them because their prices dropped quite a bit.

You see how bad of an individual stock investor I am. Which is why I keep reminding myself to stick to ETFs. I can average down on ETFs as long as I have selected them well upfront. I don’t have to worry about their performance because of the diversification in underlying stocks. It’s not the same for individual stocks when I do have to monitor for business performance and structural deterioration in core earnings.

Anyway, the markets seem to be rebounding but I’m not risking it with new individual stocks anymore. My current ETFs and individual stocks averaging down manual investing strategy ensure that I capture any downward price movement in the markets. While my monthly Dollar-Cost Averaging automated investing strategy keeps increasing my positions in the markets even if this turns out to be a sustained rebound and tracks upwards.

To be honest, I don’t see any reason or trigger for this to be a turning point signalling an economic recovery. If anything, I’m seeing more signs that it’s going to get worse with the economic downturn. No amount of government stimulus and monetary policy can help a country in a major lockdown. Because so little economic activity is happening. In fact, country lockdown measures are getting more severe locally and globally.

The worst part is there doesn’t appear to be an end date to these country lockdown measures. Which means we could go on like that for a longer period of time than expected. And the negative impact to businesses is likely to be massive. If governments are forced to step in to help stop businesses from failing, it creates a terrible cycle of both the private and public sectors spending even more and going into debt together.

I’m still okay to continue with my manual current ETFs and individual stocks averaging down and automated monthly Dollar-Cost Averaging investing strategies. But I’m spreading my investing cash out more now with each batch of purchases. As this increasingly turns out to be a long and drawn out global recession.

Gives me more time to get more investments in closer to the bottom of the market. And we could be a long way from it if economic activity continues to remain frozen for an extended period of time. I have already invested about S$150,000 or 30% of my total cash into the markets (after unwinding my bank stocks positions).

So I don’t have a fear of missing out if this becomes a sustained rally and point of economic recovery. I just have to be patient and wait to find out what it is. And keep rebuilding my total cash in the meantime.