I Sold All Of My Bank Shares | The Final Step Towards Financial Freedom

One of the best investing decisions that I have made during this pandemic is to load up on Singapore bank stocks (DBS, UOB, and OCBC) when they crashed to very low bargain prices in 2020.

The 3 banks are the linchpins of the Straits Times Index (Singapore stock market) as they have more than 40% weightage on the index. They have excellent fundamentals, strong cash reserves and consistently growing their profits. They also give a decent payout of 3 to 5% per year. The bank stocks are like the fat geese that lay golden eggs.

So why did I sell all my bank stocks when they are such great companies to hold? Why am I selling away all my golden geese?

This decision has definitely nothing to do with the Russia-Ukraine War.

Here are my reasons.

Reason 1: They have reached All-Time-High (ATH) prices
These bank stocks are now trading at their all-time-high prices and the chances of them doubling are pretty slim. Assuming they give an average of 5% dividend each year, it will take 20 years to achieve 100% profits of the invested capital.

I think another 10% growth in their share prices in the coming months is possible but it is unlikely to rise more than 30% growth of their current share prices. Thus, the room for growth is limited.

Reason 2: The catalyst of the Federal Reserves’ multiple interest rate hikes has been factored in and any U-turn from the Fed will send the stock price down
The financial sector has been a beneficiary for the Fed’s policy to increase interest rate this year and many financial institutions have seen their share prices increase significantly over the past few months. The market always looks forward and I believe these catalysts of the interest rate hikes have already been priced into the share prices. However, nothing has been confirmed yet. If the Federal Reserve decides to do a U-turn and become more dovish than hawkish, the banks’ fortunes will be reversed and their share prices will start falling.

Reason 3: Unrealised profits will remain unrealised
While the unrealised gains were increasing with the share prices, they remain unrealised until the day I sold my shares. If any unforeseen events were to occur, e.g. the Fed’s U-turn explained in reason 2, then these unrealised gains would slowly become lesser as the share prices drop. Thus, selling away my bank shares allow me to finally lock in the profits on these gains.

In my latest and last sale of bank stocks, my average price in DBS stock is $20 and at $36, my profit is 80%. For my UOB stock, my average price is $21.5 and when I sold at $32, my profit is close to 50%. All these profits are realised and in the bag, regardless of what happens in the future.

Reason 4: I have better plans for the realised profits and newly available capital
The biggest reason that propels me to make this huge decision is that I have greater plans for the capital that I can release from this sale. Owning the bank stocks gave me passive income through the dividends but I am seeking higher returns through options trading. And these returns will come in the form of extra monthly income that I can either reinvest or use to pay my expenses so I do not have to rely on my day job anymore to provide me with the income I need.

In the worst trading month of my trading journey, I still managed to get SGD5.5k, despite cutting huge losses on some counters. Thus, I am confident that I can earn an average monthly income that is higher than $5.5k. With the new capital (around 100k) that I get from selling my bank stocks, I will be opening more options contracts relating to the Wheel Strategy and thus increasing my monthly income through trading.

I am actually very interested to sell and open another PUT contract on Tesla. If Tesla’s price is going to fall back to USD600 or lower, I will be selling a PUT contract on Tesla using the new capital that I have now. If Tesla’s share price rebounds and does not hit my target price, I may increase my stakes in Nvidia, another of my high conviction stocks, which can help to generate higher returns due to its volatility.

Concluding Thoughts

Without reason 4, I probably will still hold onto my bank stocks and let them generate passive income through their dividend payout. However, I believe in life, we sometimes need to take a calculated risk to gain a greater reward.

Keen to learn about options trading but do not wish to pay for expensive courses, this newbie guide will help gain the knowledge and fundamentals to understand options better. And it’s totally free!
The Newbie’s Guide To Options Trading

The LEAPS Strategy has helped me make more than USD120,000 in 2021. Here’s all you need to know about this strategy that can help you increase your wealth exponentially:
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Looking for ideas on what stocks to invest in or which stocks to trade? You can take reference from what I have been buying or selling. I try to update them as soon as I can in this section, as well as share my thoughts behind executing these trades:

Excited to start your trading journey or perhaps try out with a paper trading account to build your confidence in trading? Check out this step-by-step to help you get started:
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If the bear market in 2022 is making feel depressed as your stocks come tumbling down, read this article to find out how you can use options trading to help you claw back some of your losses as you await market recovery:
How I Do Earn Even When The Stock Market Is Bearish?

I watched tons of videos on YouTube since 2020 and if you are wondering if there are any useful channels that you can subscribe to for learning market trends, TA, FA, check out this compilation here:
My Secret Weapons For Options Trading: I Watch These YouTube Financial Channels Every Day

I concluded my first year of options trading with more than USD160k of gain, see how I do it and the capital I use for every month to give you a sensing of the percentage yield I get out of my gains:
1st Year Options Trading Recap: The Journey Towards SGD$217,509 Profits In 2021

This blog is as authentic and as transparent as I can share, I do not just show the wins and hide the loss. I have made some very bad decisions in the first 8 years of investing and paid a huge price for them. Here is the loss I have accumulated during these years. I hope you learn some lessons from my mistakes.
I Cut $135,715 Worth Of Losses In The Last 1.5 Months

Want to learn more about Technical Analysis (TA) but find it difficult to grasp the concepts? This article brings you TA at a glance, and helps you understand key terminologies, indicators, and techniques used in TA to equip you with the knowledge that can empower you in your investing/ trading journey.
The Newbie Guide To Technical Analysis (TA)

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2 thoughts on “I Sold All Of My Bank Shares | The Final Step Towards Financial Freedom

    1. Thanks Bro Raymond! Yes, taking on calculated risk in exchange for higher returns 🙂 The SG bank stocks are at sky-high prices while the US market has presented so many opportunities with many stocks crashing, so I think now is the right time to switch the funds around.


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