Sunday, 26 April 2015

What is Your Buy-in Price for XYZ stocks?

A reader dropped me an email to enquire about my "buy in price" for two REITs counter I owned - CRCT and FCOT. My reply to her as follows. 

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

Hi M, 

Thank you for reading my blog and I appreciate your email too. First of all, I apologized that it is perhaps not going to be the straight forward answer you are looking for, as you read on. I am not secretive about my buying price, but worries stem from misleading message transmitted to readers, if only the buy and sell price is the target of interest.

Wisdom and Knowledge

One purpose of my blog is to convey financial literacy to the readers and to continue learn/improve myself too. This includes the art of valuing a company and the development of a philosophical mind, which possibly is even more beneficial for investing. I believe that the better you can think, and the more exposures you have in life, the wiser you become. This wisdom is needed for us to assess the market better. Then together with the technical knowledge you acquired from books in valuing a company, you can then beat the market and compound your returns. There is no short cut from investing. Even if you do gain from a shorter path before, it will be temporary and one day, your money earned will all be returned to the market pool somehow. 

Only You Know Yourself Best

Ultimately it will be wiser to value the companies of interests base on your own knowledge/ judgement, because only you will know best how you will react to every trade you make. Treat every trade as sacred for yourself and research as much as possible YOURSELF. Only you will know how long you will hold before selling, based on your own strategy and the way you structured your portfolio to suit your needs.

Do Not Take Price From Others as Benchmark

The last info you should take into account to benchmark or even reference for your investment, is to know what price OTHERS buy/sell their stocks at! 

For instance you spot a company with very good fundamentals and huge upside prospect at $2.00. But your close friend bought it at $1.50. Due to the general tendency of human nature to compare, most people will forsake the idea of buying into the great company, just because their friend bought it at a lower price. Or at least they will want to buy at $1.60 or $1.70 and not $2.00. Hence a golden opportunity may be lost!

Focus on the Fundamentals

Of course, the most important selection of the criteria is the long term fundamentals of the company. Enough had been said on this criteria, easy to comprehend but not easy to follow when erratic pricing starts affecting your emotions!

Yes, until this point if you are still reading, you may think "enough of crap!" Ok ok ok... what I can say is I bought at prices near to my blog articles released date as below. 


I sincerely believe the above articles on REITs are more beneficial than just the pricing I (a stranger) bought at!

Hope you can continue support my blog.

:-) enjoy your weekend.

Rolf


Friday, 24 April 2015

Diversify OR Not?

I am serving my In-Camp-Training (ICT) this few weeks. For me, ICT is always a time to take a breather from work, where camp mates get together to "talk cock sing song" aside from the military duties on our shoulders. Incidentally, I chatted to two camp mates about investments in stocks. Let’s call them camp mate Mr. A and B. Both of them salaried employees and invest as part timers currently. 

Mr. A – Only Concentrate on One to Two Stocks? 

Mr. A who is just married, told me he is planning to quit his day job soon. It has always been his aspiration to stop work as a salaried employee when he reaches age 35. Now his age the time has come. This is because not only is his age criteria fulfilled, but he had profited from the raging stock market lately. After Mr. A quit, he will devote full-time on stock market. Mr. A is neither a value investor nor a trader. “Any style, as long as it earns money!” Mr. A said with a wide and confident smile.  According to him, he only trade US stocks and normally only hold 1 to 2 stocks. His winner is "Apple!" Strategy is simple. “Just keep focusing on these 1 to 2 stocks, buy and sell, to profit from it.” I was told. 

Mr. B – Only Concentrate on One Sector 

Next up is Mr. B, a family man with two kids. While idling and checking my stock portfolio on phone, Mr. B glanced and out of curiosity, asked those are stocks portfolio. “Wah so many stocks”, he asked. “Yes, more than 20 in SGX”, I replied with a smile. On the contrary to me, Mr. B only hold few stocks, only invested on NYSE, and punt mainly on banking stocks. I then queried if it is a risky to concentrate investments on one sector. Mr. B explained without qualms that his strategy is sound. “Banking stocks are going to enjoy the uptrend when Fed raise the interest rates!” Mr. B said.    

So there you have it. Absolutely NO diversification for campmates A and B. One focus on a particular stock while another focus on a particular sector. Other similarities are; both only invest in US stocks now! Both are very confident about their strategies and none mentioned about the “What If” black swan situation. 


Diversify or Not? 

So THE Million Dollar Question, "Diversify or Not?"

Different people adopt different school of thoughts. Perhaps it is most appropriate to hear from the most successful investment gurus of all time as follows, before we decide.

Warren Buffett
“Diversification is protection against ignorance, it makes little sense for those who know what they’re doing.” 

Warren Buffett has often opposed diversification as an investment strategy, while Buffett's master - Benjamin Graham, on the other hand viewed Diversification as a key idea of achieving market beating portfolio returns.

Benjamin Graham says: 
“Diversification is an established tenet of conservative investment. By accepting it so universally, investors are really demonstrating their acceptance of the margin-of-safety principle, to which diversification is the companion.”

Jim Rogers
“If you want to make a lot of money, resist diversification. Brokers promote the motion that everybody should diversity. But that is mainly to protect themselves. The way to get rich is to find what is good, focus on it, and concentrate your resources there.” 

Peter Lynch
Peter Lynch certainly do not subscribe to the belief of restricting investments to only few stocks. He held as many as 1400 stocks as a portfolio manager at one time. Lynch have faith that as long as few out of the many stocks becomes a multi-baggers, we will be a winner. 

However Lynch do mentioned that over-diversification can be termed di-worsification which is inefficient diversification. 

“There is no point in diversifying just for the sake of diversifying, particularly if it means less familiarity with the firms. Investors should own however many "exciting prospects" that they are able to uncover that pass all the tests of research”. 

Lynch also suggests investing in several categories of stocks as a way of spreading the downside risk. On the other hand, Lynch warns against investment in a single stock.

Rolf's Thoughts 

I am definitely no Guru like anyone of the above. I am just an average home-based conservative investor. As a non-professional, who neither have long hours gluing to the market charts, nor guts to stomach big risk, I will go with diversification to reduce my risk. Ultimately my aim is simple – to gain market index beating returns and compound.

Buffett and Jim Rogers' approach of non-diversification should work well for discerning investors like them, or other professional investors, but perhaps not everyone are like them. 

Nevertheless if you shared the same strategy with my campmates aforementioned, who are part timers, and only invest in single stock or sector, please bear in mind that when Market swing drastically in the opposite direction, things can turned sour really quickly against your favour.  

Whether which strategy is right or wrong pose little significance here. Essentially we ought to have a clear-mind of what we are doing, be responsible of our action and most important of all, know what to expect if things take a drastic turn!

So how about you? Diversify or Not? 





Sunday, 19 April 2015

生存是技能,生活才是目的! Survival is "Skill", To Live Life is "Objective"!

生存是技能,生活才是目的!

The above phrase was mentioned many times by a famous Chinese Host named Tu Lei 涂磊Translated in English as follows, although the wordings are not as meaningful as derived from Chinese character.

Survival is "Skill", To Live Life is "Objective"!

To Survive in Life……What It Means?

To survive, human beings need to acquire skills of survival. In primitive lives, it means the skills of protecting oneself against physical harm and the skills of hunting for food. In today's society, it literally means the ability to earn money for a living. It is important to note that “Having the skills of survival (ability to earn money) does not necessarily means you know how to live a life.

Ever wonder why famous celebrities commit suicide?

For instance, from International stars such as Robbin William, Whitney Houston, Amy Winehouse, Kurt Cobain to Asian ones like Teresa Teng, Leslie Cheung etc. These artists not only have loads of money, they also have fame and being admired by millions! Why commit suicide?

They acquire skills of survival BUT NOT skills of living life. 

Another example is pop star Michael Jackson who did not commit suicide, but he practically struggle to “live his own life” till his death. 

To Live Life......What It Means?


While survival skills is a pre-requisite to living, it does not automatically means we know how to live a life and be happy. In my opinion, aside from the skills of survival, “Living Life” probably means the list as follow. 

  • Know yourself, Be yourself, Think for yourself and finally Create yourself
  • Stay healthy, energetic and keep on moving forward
  • Be positive and forward looking
  • Be open-minded and expose yourself to this world as much as possible
  • Learn to love and forgive
  • Find your love ones and more importantly spend more time with them
  • Find your best pal who you exchanged listening ears
  • Find your passion and do not wait to do it
  • Have a hobby and spend time on it
  • Never stop learning and developing yourself
  • Not afraid of failures, admit and learn from them, then climb back stronger
  • Continuous education for your next generation
  • Know to enjoy and pamper yourself
  • Stop being jealous of others, focus on achieving your own success
  • Stop living in the past, and live today without regrets!

Let’s hear from some famous people……

"Life is really simple, but we insist on making it complicated." - Confucius

"We make a living by what we get, but we make a life by what we give."- Winston Churchill

"There are two ways to live: you can live as if nothing is a miracle; you can live as if everything is a miracle." - Albert Einstein

"It takes half your life before you discover life is a do-it-yourself project." - Napoleon Hill

"If you love life, don't waste time, for time is what life is made up of." - Bruce Lee

"Life is too short for long-term grudges." - Elon Musk

"In the end, it's not the years in your life that count. It's the life in your years." - Abraham Lincoln




Sunday, 12 April 2015

My Portfolio – 1Q15 Review


(S$)
wk15/2015
wk52/2014
YTD % Change
STI Constituents
3,472
3,365
3.2%
Coca Cola Amatil
11.550
9.893
16.8%
Raffles Medical
3.880
3.910
-0.8%
Comfort Delgro
2.880
2.590
11.2%
CM Pacific
1.165
0.980
18.9%
ARA Asset Mgmt
1.640
1.675
-2.1%
CapitaRetail CT
1.725
1.600
7.8%
Lippo Mall Tr
0.355
0.340
4.4%
Sembcorp Ind
4.540
4.440
2.3%
Croesus RTrust
0.945
0.915
3.3%
Swissco
0.435
0.545
-20.2%
Mapletree Log Tr
1.240
1.170
6.0%
Overseas Edu
0.865
0.840
3.0%
Suntec Reit
1.855
1.960
-5.4%
Fraser Com Tr
1.510
1.420
6.3%
Asian Pay TV Tr
0.885
0.850
4.1%
Aims AMP Cap Reit
1.500
1.425
5.3%
Super Group
1.495
1.165
28.3%
CAO
0.855
0.660
29.5%
SGX
8.210
7.820
5.0%
OUE
2.170
2.020
7.4%
Courts Asia
0.440
0.475
-7.4%
Ezion
1.090
1.155
-5.6%
Starhub
4.400
4.140
6.3%
Kris Energy
0.510
0.650
-21.5%
  
The above table shows my 24 stocks portfolio, all listed in SGD. It is listed in order of descend in terms of % allocation. This means, Coca Cola Amatil (CCL) is my largest portfolio while KrisEnergy is the smallest.

STI

It has been a good start for STI this year. The index rallied to 3,472 closed this week, a 3.2% increase YTD.

My Major Portfolios

Coca Cola Amatil (CCL) is listed in ASX. It is my largest portfolio one of the top performers since the start of the year. In AUD, this counter escalated from A$9.3 end last year to A$11.0 now, denoting a >18% rise. But for reasons that A$ has weakened against S$ since start of the year, overall share price increase were negated to >16%. Refer more on CCL here.

My second biggest portfolio Raffles Medical (RMG) remains fairly unchanged YTD. RMG is looking forward to twin engines of growth by 2016. 1) Extension of current Hospital facilities 2) Launching of a new 5-storey building at Holland Village. Refer more on RMG here and here.

Since start of the year, both Comfort Delgro and CM Pacific have shown stellar performances in its share price, climbing to double digit % gain. For Comfort, reasons could be the drop in oil price, reducing petrol cost, as well as future revenue from rail Downtown Line (DTL) phase 2 opening in 1Q16 and phase 3 by mid-2017. For CMP, the rise may be supported by its strong balance sheet and attractive dividend yield, with potential headroom for more toll acquisitions. It could also be attributed to the recent bull’s run in the China stock markets.

ARA price remains fairly unchanged. Short term resistances stem from interest rate increase and new MAS regulations imposing stricter rules on managers’ fees. In the long term, we derives confidence inferring from its past ten years yoy impressive increase in earnings, led by strong management. Refer here for more of ARA.

Yield Stocks

For Reits and Trusts stocks such as Asian Pay TV Tr, AIMS AMP Cap REIT, CapitaRetail CT, Fraser COT, Lippo MIRT, Mapletree Log Tr and Suntec Reit, I had set a conservative target of minimum 5% dividend yield on cost. So far, all are on target and above. So I am happy.

Other Portfolios

Retail climate in Singapore is still poor with high cost from labour tightening.  Courts Asia last quarter’s earnings is badly affected by forex loss and losses from opening of Indonesia Bekasi megastore. Weaker MYR also does not help. After Apr 15, retail revenue in Malaysia may be affected due to GST implementation.  

Super Group was one of my most depressed stocks last year. Since start of the year, the stock had rebounded with an impressive 28% increase in share price. Reasons could be the reduction of coffee price, Branded Consumer (BC) revenues back on track and Food Ingredient (FI) margin expansion. There is also a one-time gain from sale of factory premises, strengthening balance sheet.

Share price of Overseas Education rise 3%. Sentiments fairly neutral. On the negative, it is likely due to the continual rising expenses and potential students leaving the schools in new semester due to new campus locations. On the positive, the new campus in Pasir Ris has completed last month ahead of schedule in May15. Management believed most students should stay on after relocation from Orchard to Pasir Ris. New facilities, higher capacity (from 3940 to 4800) and potential of fees hike should outshine the negatives. 

OUE has risen >7%. The catalyst is likely because of RNAV due to assets transferred into its REITs. I might consider to take profits, since most of the quality assets were already re-injected into the REITs. 

SGX and Starhub are stocks in my SRS account, investing on a longer horizon up to retirement – maybe? Their short term results do not bother me too much.

Oil and Gas Stocks

It requires no explanation how depressed the O&G industry is now due to the plummeted oil price. Sembcorp still remained relatively unchanged, buoyed by the utilities sector and its Marine Division’s ability to still receive O&G orders. Swissco tumbles >20% YTD painfully. Worries are rife, due to its rig fleet’s existing charters with the troubled Mexico PEMEX cancelled/not-renewed, as well as oversupply in OSV market. Similarly, Ezion may frown over the feasibility and profitability of its liftboat charters with other oil companies. Nevertheless, within the gloomy O&G industry, I believe Liftboat is one sector that still emits light. KrisEnergy constitutes less than 1% of my portfolio, therefore I shall not go into the details. 


Stocks Added / Removed

I have not added many new stocks this year. The only new addition is China Aviation Oil (CAO). Refer why I added CAO here. CAO has achieved an astonishing close to 30% increase YTD. Since start of my purchase, it has risen over 20% within less than 3 months. I had also divested Vallianz entirely due to the gloominess in O&G.


Rolf's Summary 

Overall, I am happy with the performance of my portfolio except for the depressed O&G stocks. 

Since the start of the year, I had further increased my cash position from 20% of Stock Portfolio cost last year to more than 30% this year. 

Two reasons. First, to take advantage of any potential bearish situation. Second, I anticipate more time to be spent in my career this year than on my personal investments, so less invested monies.  



Thursday, 9 April 2015

The Seminar of Financial Freedom?

It was more than 10 years ago when I was still very fresh from school into the working world. One day my computer ICQ alerted "Ooh Ooh! Surprisingly, one uni acquaintance named GJ initiated the chat and invited me for lunch over weekend. I am open and more than happy to get to know a new friend better. So "Yes", I replied. 

The lunch was at Shenton way Burger King The venue seems weird for me, but I was too naively kind to ask why. Just minutes into lunch, with my burger half-finished, I was told that we need to make a move to another place. I follow suit, just to be kind and polite but smelling rat! Very soon, I appeared at a seminar of over hundred. So the lunch was obviously an excuse, the main motive was for me to attend the seminar.

I was told it is THE SEMINAR of "FINANCIAL FREEDOM (FF)!" Multi-Level-Marketing (MLM) to be exact!  

With a half-filled stomach, I exhausted half a day of my time. In the seminar, you will find all sorts of jewellery MLM members.. Diamond, Sapphire, Gold, Jade, Silver etc. These members will give spectacular speeches/stories on how they achieved FF effortlessly and able to retire at a very young age. After the fairy tale stories, I was introduced to Mr. GJ's mentor members. They were the ones nearer to the top of the pyramid. It is also time to receive "Bose" stereo surround sound CHANTS on never-ending reasons why I should join their memberships to stop working early. 

All of us were in our twenties back then. They started to dream talked about how they can retire before age 35. Yes, they were saying, doing nothing every day and yet getting huge streams of income. They even fantasized on pitying their poor friends slogging their lives in 8-5 work, while they were all relaxing at Hawaii beach with cold beer, babes and hunks! All of them were laughing their hearts out then! Unwillingly, I join in the fun awkwardly! 

End of the day, I felt cheated. Of course GJ will remain as acquaintance for the rest of my life since. So are the rest of the people I know on that day. 


Yes, I Am Still Working 

Now more than 10 years had passed. I am not retired yet, neither am I relaxing each day at Hawaii doing nothing. I wondered if the rest were all relaxing? 

Yes, I am still working. Not so much because I am tied down financially to work, but because I had found more reasons to work than just income alone. 

I love the industry I am working in. I also love the forefront technological projects I am involved in. I love the rewarding feelings when complex problems are resolved. I love a job that allows me to meet/interact with new people with different backgrounds and in different countries. The exposures and experiences received are going to be more valuable than what money can ever buy! 

Still Striving For Financial Freedom? Why?

Yes, striving is good. In fact, I am striving each day not just for FF, but health, family, work, friends etc. It motivates and makes life more meaningful. 

Perhaps FF does not only mean relaxing at Hawaii or Bali? To me, the single most important benefit of financial freedom is it allows a person to be 100% focus on the things he or she really want to do. Some people says Choice! Yes, provided that the person already know long ago what he wanted to do before FF. Yes, I repeat "know long ago, what you want to do before FF." 

What To Do After Financial Freedom? 

You should continue to work hard if it is for the love of your work or business. If there is love, it is called "Work Passion" NOT  "Boring Job"! 

When your bosses or clients tick you off for mistakes, you should never feel that you can rebuke unreasonably and quit anytime, just because you are already FF. On the contrary we must continue be professional and provide better service to clients. Continuous improvement of ourselves!

After FF, I will still continue to feel extremely excited about pay increment, bonuses or increased earning. That is if I love my job! Ultimately, it is not merely the money that makes you happy, but more importantly it signals the appreciation of our effort in work. If you do not really feel excited about appreciations after FF, then maybe you are stuck in a routine job to kill time only. Not true passion. Most people are like that and there is nothing wrong, but of course it is then difficult to live life to fullest even after FF.  

The rewards in work also exemplifies the progress we make in life! This is what true FF is all about! 

Know Ourselves Early, Before FF!

There are people who strive very hard for FF each day. Tens of years passed, on the day of FF, often are also the day when they no longer feel motivated in life, although they still continue to work in a job. Suddenly a feeling of emptiness. Trust me, I witnessed people like that.

I always felt that instead of spending so much effort striving for FF, we should really spend more effort knowing our ourselves. KNOW WHO WE ARE, WHAT MAKES US HAPPY, WHAT WE REALLY WANT TO DO IN LIFE and possibly still make a living out of it.  This is why my blog is called ROLF SUEY. You need to re-assembles the letters to make it YOURSELF. 

Some people will say, once I am FF, I will then automatically know what to do after that? True?

Know The Extremes At the Other Side, Before FF!

Others will tell you, Wah.. so good life... do the things you like? There are people without food? Or they will tell you how tough your parents life are. 

To be honest, being reminded of the extreme poverty at the other sides of the world is very important for Singaporeans. But then again do not compare among countries or generations since there is a theory called relative poorness! You are not really poor, when everyone else beside you are poor!

Nevertheless, I encouraged you to go Africa, India or even outskirts of Indonesia if you have not been there before. See with your own eyes what is poverty!  Yes, we must not forget to do charity. We must not forget about there are places where people are struggling with hunger. Yes, we must not forget our parents' generations hard work to build for us what we have today.  Yes, we are lucky to be Singaporeans! 

Exposures Early in Life

Use the aforementioned comments as encouragements! We should be reminded that there are people struggling without food. But that should not stop us from striving to do the things we really like? it is not all impossible even in today's society (in Singapore) where the struggle to earn money overshadowed things you like to do. Of course, we must be practical in choosing the things we like to do so that it still earn income. The key, is to know what you really want very early in your life. One way to speed up finding your love is through constant exposures to many things in life early.  

Rolf's Conclusion

And yes, more importantly we should focus on ourselves, and our current life! 

Even if you are FF, you will be living in real poverty, if you do not know how to live an enriched life! 

Now, look back at your life.........