Monday, January 31, 2011

The dark arts of war

Being Chinese, some of the period serial dramas will focus on the art of winning wars. In some sense, the people in the residing in the vast territory known as present day China, understood that war was more subjective than scientific. In the Western hemisphere, I can only think of Karl Von Calusewitz as one of the rare few thinkers who refused to reduce warfare to lines or number crunching. War is the extension of politics by other means, he once famously said.

Anyway, what I had in my mind, that I wish to blog about is this "Chinese" tactic When surrounding your enemies, always leave them a route of escape. The reason is that if you leave them one way of escape, your enemies resolve to fight will be weak, and some of their troops might want to run than stand ground. Seen in this light, it is a clever tactic.

Can we apply it to our daily lives? Unfortunately, I think the answer is no, if I understand the tactic correctly. If you give people a chance to escape, and they do escape, they will sooner or later be a pain in your behind. That is why one of the common punishment in Imperial China, is to exterminate entire blood lines. Subconsciously, the king or emperor then, was aware that revenge becomes a possibility, if his enemies' progeny were to be allowed to survive. What do you think?

Sunday, January 30, 2011

Investing for retirement or financial freedom?

Do you know something, I don't have to work tomorrow cause I have applied for leave. I know that with the extended weekend, I should be enjoying myself. I did to a certain extent on Saturday by collecting my tailored shirt from a small tailor as well as playing an immense amount of Street Fighter 4 at my friend's place - arcade controllers included.

However, with the non-stop raining on a Sunday, I found myself indoors (I did play soccer in the rain for a while) and reading so many financial blogs. What caused me to worry is that when compared to most of the bloggers my age, they seem to be so much better financially prepared than I am.

I do understand that they have put in a lot of sacrifices, including doing many part-time stints, but the amount of wealth they have accumulated during the short time that they had graduated from university, makes me feel extremely embarrassed. 

JW for example has achieved $100,000 in net investments excluding unrealized gains. That is four times more than what I have at the moment, and from what I can tell, he is the same age as me.

Putting things into perspective

China Milk: One-year anniversary of suspension

It has been close to a year since China Milk Products Group got suspended from trading. To-date, it has yet to complete a special audit and has only released the financial results for the 9 months ending 30 September 2009!. The company's most recent announcement was that it rejected the Singapore Stock Exchange direction for a quantity survey.

Although I am not invested in the company, I have been following the news because I once made a small profit out of it. Nonetheless, I think that the exchange operator has a duty to ensure that any possible corporate mischief is kept to the minimum if it were to be a world class one. As such, I have emailed SIAS and will keep readers informed of any actions taken by the group set up to protect the interest of retail investors.

Friday, January 28, 2011

Readers Say Straits Times Index To Rise 10% For The Year (Updated)

I recently ran a poll asking readers where they think the market will head. This poll had gone crazy for a while but now the number of respondents have been ironed out. Here are the results, even though the poll is not due to close in 2 more days. Most of the the 21 readers who responded, feel that the Straits Times Index will rise more than 10% for the whole year. The median view is that the STI will only be up close to 10% meaning +/- 2.5%. The mean forecast for the STI is approximately 7.4% +/- 2.5%.  

It can be clearly observed that readers are generally bullish about the prospects of the local stock market. Even though there are not enough people polled, I would think that the market will perform below the median forecast. This would mean that the STI will perform down one range, namely the 5% +/- 2.5% segment. We have got a whole year to find out if that is accurate.

Over in the US, Kenneth Fisher thinks that 2011 will be a year that the US market trade sideways. In his January column, he says that there is a good mix of bulls and bears. The net result he believes will be a market that is caught in the middle. In his words,"In 2011 I expect the market to go sideways. There will be widening return dispersion around the averages by category and by stock."

Other stuff

Tuesday, January 25, 2011

Del Monte Pacific - Something's Moving It

I just realized that Del Monte Pacific has started moving out of the high 30 cents and into the 40 cents region. The stock has been trading sideways despite the March 2009 rally, largely because of lawsuit in the United States. Earnings-wise, it is likely to eke out a small profit under US$1 million but dividends should follow, based on its history on the local stock exchange. The stock has been on my radar for some time, but the most niggling issue is the outstanding lawsuit. Nonetheless,given its recent move up, it may be a signal of improved confidence, considering that it was one of the "Loser Stock" of 2009 - reversion to the mean.

Do you own due diligence.

Monday, January 24, 2011

5 ways to lose money in stocks

  1. Buy IPOs on the first day of trading, off the market
  2. Buy S-Chips that have small market capitalization and look like "deep value"
  3. Buy companies that you read in a forum somewhere, that "the BBs are pushing up"
  4. Buy a stock because you heard that a famous investor just bought a stake into the company
  5. Buy a stock because 14 analysts covering all say that it is a "Buy" with potential on the upside

Sunday, January 23, 2011

Stock Portfolio XIRR Is 74.56%

I have recalculated my XIRR with special thanks to CreateWealth8888. Here, some of the figures are revised to exclude the realized gains that have been recycled. Transactions now show Capital added = Actual proceeds - realized profits used - dividends used. I got 74.56% before deducting for any transaction costs and I truly hope this is the correct way this time.

A quick comment. The Straits Times Index is now 3.89% lower than its 3-month high of 3313.91 set on 9 November last year. After a furious start to the year, it looks like a possibility of the Index returning to the 3,000 mark looks very close, my time frame being the next three months. There will definitely be rallies, but 3,000 with the next three months is what I am guessing may come to fruition.

Saturday, January 22, 2011

Sgxstockpicker's Stock Portfolio XIRR - 31.04% or 91.42%

I went to read up more on how to calculate my portfolio returns and here is what I found. To do so, you will need to use the XIRR function, available on most desktop computers which have Microsoft Excel installed. Here is the list of things you need:
  1. A relative who has and knows how to use MS Excel 2003 (minimum and you need to toggle XIRR)
  2. A record of ALL your transactions – date and amount securities purchased 
  3.  The amount of dividends received.

Working Till 65 - Myths and Realities

Why has the government recently raised the statutory retirement from 62 to 65? It has also increased the minimum sum to be set aside as well as the age you can start drawing out those monies. It had previously introduced the CPF Life scheme, which is compulsory for those born from a certain year then on.

Those belonging to the ABPAP (anything but PAP) side will argue that this is just a scheme to lock up CPF monies from Singaporean, until they day they die. Rather than approach the question from one predetermined side, let us try to connect the dots from the recent headlines. Of course, what qualifies as dots and how we should connect them, is a matter of interpretation, but for starters consider the following, which have hit the newspapers one way or another:

Thursday, January 20, 2011

Why is PSA Chief retiring?

Today's Straits Times carried a piece reporting that Eddie Teh, PSA International's CEO, intends to retire in August. He had been with the port operator since 2002 and will be 62 when he retires. I have some thoughts with regards to his retirement.
  1. Will the person replacing him be a Singaporean (born in Singapore regardless of race), preferably from PSA itself? After all, it is the ports that has made Singapore what it is today, and it is only congruent.  PSA did mean Ports of Singapore Authority. However, from the article, I get the feeling from the papers that they are looking for some one with a global perspective, meaning someone from the western Hemisphere, like Chip Goodyear.
  2. Eddie Teh is only 62, why should he retire or is her retiring? He will probably cite "personal reasons" but the move will not seem congruent with the fact that the government has/will raise the statutory retirement age to 65. I am guessing that it is really stressful running PSA, due to strong competition from China's ports and also that Eddie Teh has the right to a slightly leisurely personal life. But if we were to bring in someone else, given that we have for the longest time been "the world's port of call", it will be hard to justify that his replacement come from outside of PSA International.
  These are just some thoughts as I still read the printed papers.

Wednesday, January 19, 2011

I am not a value investor

If anybody asks, I am not a value investor. Although I tend to look for stocks with low liquidity, my record shows that I tend to put my money on growth or cyclical stocks. Of course, as long as the market is battered enough, any stock will be undervalued. But my purchase of C&O Pharma sometime ago, shows that I get easily excited by the sight of growth stocks.

What about Auric Pacific? Is not it a value stock, considering that it is trading at a steep discount to its book value and has a huge stash of cash? While the traits may point towards Auric Pacific being a value stock, the catalyst for my purchase, was the company going into real estate. If its core operations return to good health, particularly its Delifrance outlets, upside will still be limited. It was only when it made concrete steps towards establishing a real estate fund, that I took action.

Food for thought: if you find a stock that looks remotely undervalued, but buy it for growth prospects, are you still a value investor? My preliminary thoughts are that the dichotomy between growth and value is very blur, intention/rationale is more important that aesthetics of the stock.

Tuesday, January 18, 2011

The Story of Uncle Chua

Worth a read in my opinion. Although there is a feel good element to it, it really tells us that we should not do too fancy stuff when it comes to investing. Very often, people do not use common sense when it comes to investing.  I will pursue this idea and write another post in the future.

On another note, I happened to read an article about investment-linked policies on another website. It kind of pissed me off because they hardly mentioned why sales people like to sell ILPs. While TKL may advocate buy term and invest the rest, I would say that buy term and save the rest, might even outperform buying ILP, on a risk-adjusted basis.

Wednesday, January 12, 2011

10 SGX Stocks That Are Worth A Look

The Straits Times Index closed at 3,244.94 for Wednesday trading. There was not much news in the market after last week's crazy run. Volume on a wet and sleep inducing mid-week did not cross the $2 billion mark.

Being bored, I decided to run a screen from my brokerage platform. My disclaimer would be that I do not know where does the brokerage source their figures from. Also, some of the ratios may have been calculated on a different basis. Nonetheless, the criteria set was,

Sunday, January 9, 2011

Have you seen them recently?

Every now and then, the stock market index gets reviewed. New companies that are suppose to reflect the vibrancy of the underlying economy are added, while those that have slowed down are removed. 10 years ago, the Straits Times Index comprised 50 odd companies listed below. Can you share with me your thoughts on how they have been? Which ones have since had their name changed? Which ones have since been bought over? Which ones have been delisted?

Saturday, January 8, 2011

2011 Top Stock Picks for Singapore Stock Exchange SGX

I have updated the page containing my stock picks for 2011, inserting the closing price as end of last year in parentheses for reference. The page can be found here. The local stock market has rallied strong in the first week of January, with 2010 laggard's picking up pace as funds open long positions in these relatively undervalued counters. Noble Group and United Overseas Bank have posted good year-to-date nominal returns. 

And for those still unaware, I will post my portfolio update at the end of each calender month. This will allow more meaningful commentary (I hope) as well as more time for myself for work, study and leisure. I am also trying my best to insert the proper tags to each post, for the companies mentioned, for your easy reference. Enjoy the weekend.

Show me where the money will go, not where it has gone

The following is an abridged version of what Teh Hooi Ling wrote on her "show me the money" column. I have read her earlier article on the use of the Piotroski F-score and I think that beginners who can try to come up with such a scoring matrix, will make a positive step in improving their investing process.

Most of the companies that she has listed out as a result of using the F-score, are all very big companies. This will end up neglecting to include small cap stocks that have the potential for supernormal returns, volatility notwithstanding. That said, it is possible while during portfolio construction to use a separate screen altogether when allocating money for small caps. To be sure, Teh has written on how to select small cap stocks before.
In search of good long candidates (Link here)

Friday, January 7, 2011

What did he really mean by volatile and choppy?

I was reading Today yesterday evening and I saw one of those seminar advertisement.  In the small colored space was a claim that the speaker had correctly predicted the nature of 2010's stock market - volatile and choppy. I pity the fool who believes everything he reads in the newspaper, what more marketing paraphernalia.

Wednesday, January 5, 2011

Recommended Readings

Taking a break from writing proper posts considering my work year will begin in earnest. Nonetheless, here are some articles scoured from the various blogs and websites that I found to be interesting. For instance, I calculated my XIRR after reading CreateWealth8888's post and found it to be 49.6 percent. Side note, considering that it only costs US$10 to have a custom domain, I am tempted!

  1. Auric Pacific
  2. Will Sarin Shine In 2011?
  3. Thoughts about STI
  4. Measure, measure, measure (4) 
  5. Scrip Dividend Scheme - The Details
  6. Is property truly affordable?
  7. NextInsight Stockpicking Contest
Happy reading!

    Tuesday, January 4, 2011

    Bought Auric Pacific Group

    Bought 3 lots of Auric Pacific Group at $0.68 with some of the savings as well as dividends from last year.  This makes it $22,000 of capital injected pumped in so far. Hesitated a bit about what price to enter but given the stock's relative lack of liquidity, I scooped them up somewhere between hi-lo price for the day. I really hope to stop buying stocks for the rest of the year or I will be holding not enough emergency funds.

    Nonetheless, I am keeping my fingers cross that most of my stocks that are due to report their full year results in end February, declare sweet dividends. For the calendar year 2010, I received dividends of $1,280, which works to 6.8% yield-to-cost. That amount is still much smaller than the five figures that MusicWhiz got for the full year that has just past.

    So for the first two days of trading has been positive with the STI surging past 3,200. Let us hope the momentum continues for the rest of the year.

    How much are you making compared to your peers?

    Something for you to reflect on 2010 in terms of how much money you are making for your job compared to your peers. This is a follow up to the post where we found that most readers here make more than $75,000 per annum.

    Monday, January 3, 2011

    Returns and Volatility of the STI: 1988 to 2010

    The chart above shows the day-to-day returns of the Straits Times Index from 1988 to 2010 group according to months. Based on the data, April and December have presented investors with the best day-to-day returns, showing gains of 0.141% on average. August and September were the worst months to trade, providing on average days with negative returns of 0.127% and 0.06%.

    Saturday, January 1, 2011

    Stock Portfolio Review 2010: "Better than I had expected"

    The S&P500 index started the year at 1115.10 points and ended at 1257.88 or 12.8 per cent higher. Despite the possibility of a double dip recession, the American stock market managed to chalk up positive gains on the account of more stimulus from the Federal Reserve, notwithstanding the lack of jobs created.

    Over in Singapore, the story was much brighter. Not only did the economy surge by double-digits, unemployment rate was also supposedly at its lowest. The Straits Times Index started the year at 2897.62 and added 10.1 percent to close 3190.04.

    If you were able to recall, many analysts were very bullish at the start of the year, calling that that 3,200 mark to be easily broken by the middle of the year. The STI only traded in that region for the month of November and has since been weak. I myself was calling 2010 a year that the market will move up a little and this has been accurate to the extent that I did not give specifics.

    For 2011, if this is part of a long term secular bull run, I am guessing that the STI will move up 5-8 percent. At the moment I can envision plenty of scenarios that will cause the stock market to trade weaker - China raising interest rates, America raising interest rates (very unlikely), Eurozone meltdown II - but I am a net optimist because there is just too much money avoiding the developed countries. The inflow of capital to Singapore and the region will be the main driver of higher asset prices. That said, I do hope that the MAS increase interest rates to prevent the US dollar from slipping to ridiculous levels against the Singapore dollar. 

    How did the portfolio do?