Saturday, December 6, 2014

Portfolio -1.6% vs STI

I am writing this as I prepare for my third flight since the last blog post. I will write more about the trips to South Korea, Thailand and Hong Kong later in December. 

Despite the gains to the Straits Times Index (STI) over the past few months, the portfolio remains weak due to the slide in Super Group's share price. My fully invested in cash portfolio is down 1.6% against the STI on a YTD basis.

Not included in the portfolio for the year are my additional purchases of Super Group during the year and F&N late in November. Including these purchases, the dollar value of the portfolio touches the SGD 100,000 mark which is one of those milestones in an investor's life. Month on month, the portfolio did chalk up some gains but were not enough to reverse the losses. Interestingly, I have observed that my defensive stocks Auric Pacific and UOB Kay-Hian have each shed about 20-30 cents each since the start of the year. Because my cost of purchasing them is low, I have thought it nice to keep them for dividends. However, if the decline is a leading signal of greater difficulties, perhaps it is time to cash out.

The portfolio has done horribly so far in 2014 and it will be third year out of six year that I under perform the benchmark. There are many learning points and worthy of an lengthy reflection post. 

Sunday, October 26, 2014

Lowest Price to Earnings, Price to Book Singapore stocks.

I went through the SGX website and discovered that they have a new and useful section called StockFacts. This is part of the exchange's initiatives to encourage retail participation by providing research tool. The ratios were supplied by S&P Capital IQ.

Given that the information now exists, I decided to copy and paste the ratios of the listed copies for screening purpose.

I decided to multiply Price to Earnings (PE) against Price to Book Value (PB), and rank the listed companies. Based on hazy memories, academic research has shown that stocks with low PE, PB and high dividend yield are stocks that will give super returns, although they tend to be illiquid. Teh Hooi Ling narrowed it down to low PB and high ROE. I used PE in place of ROE since it is not provided by the website.

The lowest ten and twenty percent of stocks based on the product of their PE and PB are and  shown. Excluded from this list are REITS and property counters. The reason is that REITS will have much higher yield, and property counters are distressed now. 

The lowest decile.

The second lowest decile

Saturday, October 25, 2014

The first SGD 100,000 is the toughest

Most of you would have probably read this article about achieving SGD 100,000 by 30 years old and wrote or commented on it before. I I am not going to rehash the article. Instead, I want to point out some of people on the internet that have achieved this amount by that 30 years old milestone. This is motivated largely because I realise that my Singapore equity portfolio has struggled to cross that mark.

You can click through the links and I counted about 6 of them at least, who have accomplished 100 by 30, based on  trawling through the sginvestbloggers link:

I follow some of the bloggers and for those I am not familiar with, I went through some of the older posts. Granted that n=40 would be a better sample, I found some interesting points from the 6:

  • 5 out of 6 were male
  • All 6 were born around 1980
  • 5 of them possibly had slightly above-average income benchmark against graduates of their time (insufficient data for "lady").
  • The same 5 had technical degrees most likely, engineering.

Sunday, October 19, 2014

Protect your profits with a trailing stop loss?

After failing to achieve supernormal returns on the sale of Action Asia, Biosensors and FJ Benjamin, I decided to create a simple trailing stop loss Excel worksheet. What I discovered surprised me or may mean I just need to improve my Excel skills. A trailing stop loss combines for lack of a better word, three "things" we know about the stock investments. 

Firstly, we have to cut loss mechanically because our emotions makes it difficult. Secondly, while we should let our winners run, we do not know how long before they start losing steam and start declining in price. Lastly, we can only identify a peak (or bottom) in stock prices or indices only after the fact.

Using weekly historical prices, I setup my Excel as follows. 

Friday, October 17, 2014

The shrinking of balls

After getting fully vested in stocks on 13 October, the last thing I wanted to see was a stock market meltdown. The American stock market fell steeply this week and this spread globally, with the STI falling 44 points on 16 October. Given that my basket of stocks is mainly defensive,  I did not expect to be hurt badly but I was surprised to see Petra post a one day fall of 35 cents, wiping out SGD 2,500 in my portfolio's value.

That said, the timing of my recent acquisition was premised on this article by Kenneth Fisher, whom I turn to for indicators. It was written in May and argued then that the fourth quarter should see some gains amid volatility. He has been correct on the volatility part. Reading Fisher's piece that reinforced my impulse and convictions, and so I pulled the trigger on the F&N purchase

What ever left needed to be convinced about F&N, was in the form of a Motley Fool article. To a large extent, F&N replaces Etika (now Envictus) in my portfolio as the latter has already disposed of its dairy business. I am not convinced that there will be future growth in Envictus' remaining business given that they have been weak traditionally. Management has hinted at the possibility of property development, but I am skeptical of Malaysia property. I am just waiting for an opportunity to offload the stock. 

I've also been reading bad things about Super Group to the extent I am regretting my purchase, which was done pre-bonus. The Super buy was done at relative high average prices and forms the biggest chunk of stocks by original value. The chronic weakness of the stock has left a gut wrenching feel to my stomach. Nevertheless, I will probably sit on this investment for a while more. If the market improves, and the stock does not move in the same manner, I will probably let Super Group go. Two more stocks on the sell list are GMG Global and Envictus but that is for another time.