Terrible February - Portfolio Plunges As Bad Things Happen

The portfolio lost a staggering $3,400 in value during the past month and this brings the year-to-date portfolio loss to slightly more than 10%. Ouch! The Straits Times Index during the month dropped below the 3,000 level, supposedly on fears that the turmoil in Africa will spread throughout the region, pushing oil prices higher. Incidentally, I predicted that the 3,000 level will be breached and it has happened within my define time frame. No prizes for guessing right.

Closer to home, for those of you living under a rock, inflation as measured by the CPI rose 5.5% on-month for January. This exceeded most private sector economists' forecasts, and the government has had to raise its forecast for the year to 3-4% from 2-3% previously. Curiously, the inflation figures were announced after the Budget was revealed. 5.5% inflation makes the goodies that are to be given out look minuscule, compared to the bonuses that ministers and civil servants will be getting for record growth (at all costs) in 2010.

Portfolio-wise, a few of the companies have announced their full-year results during the last week of February.

1. Action Asia: Managed 14% growth in revenue and announced dividend per share (DPS) of 1 cent.

2. Auric Pacific: Revenue shrank 5.9% but recorded a FY10 profit from a previous loss. 3 cents DPS.

3. C&O Pharmaceutical Tech: 1H11 revenue, earnings up about 5% but no dividends declared.

4. China Animal: Revenue up 35% but earnings down 24% on higher tax. DPS of CNY2.2 cents

5. GMG Global: Revenue and earnings surged. DPS of 0.3 cents declared

6. UOB-KayHian: Revenue up 10% but earnings up 22%. 9 cents DPS declared!

I am still awaiting the results for TPV Technology. So far, I am happy with what I can see. And since coming back from my overseas trip, I am itching for some more action in the stock market. Radar mode on. Going forward, I expect March to be more or less the same as February. The turmoil in the Middle-East and Africa does not look to be stabilizing, giving more reasons for people to stay out of stocks on cost push inflation fears. When people head for commodities, equities will suffer. I am hopeful that everything will turn around somewhere down the road so that 2011 will be an up a bit year.

The Olam and CLSA Saga

Or why being a stock analyst is not easy

I am sure by now that you are aware of what has happened between listed company Olam International and brokerage firm CLSA. CLSA published a report critical of certain aspects of Olam International's business model and accounting practices, sending the latter's stock price to plunge. Olam International in return has clarified the issue.

This episode is interesting because it highlights the fact that at least most stock analysts, cannot be aware of every intricate details relating to business operations and accounting practices of the listed company it is following. Said in a different way, unless Olam International came out to clarify the issue, most stock analysts would not have known much about how the Nigerian Export Incentives work. Most retail investors do not really care though.

The more banal point that I would like to talk about is, that listed companies hardly take any action when a too positive a report is published. They seem to only want to hear only the good stuff, and will go all out to fix those that say otherwise. Notice the irony in its press release clarifying CLSA's point:

We refer to CLSA’s Analyst Report on Olam dated 21st February 2011 containing adverse comments on some issues to which we feel we should respond. Olam as a policy does not comment on analyst’s reports regarding the company. There are currently around 21 analysts covering Olam (please refer to Appendix 1 for the current list of Olam’s analyst coverage) and on an average they issue four reports a year after each quarterly results announcement and additional reports covering any major announcements the Company makes from time to time. We respect the important role that analysts play and we strive to provide investors information about the Company in a timely and transparent manner to enable them to assess and model the Company’s prospects.

The question is, do the 20 other analyst know something that that CLSA analyst does not? Or maybe they are all wondering the same thing but dare not ask? Or even worse, maybe they might not really care to dig further but just accept the company's line in its entirety. In good faith, these analysts have to cover results of more than a handful of companies, which tend to announce their earnings at about the same time. There might not be enough time for reflective or critical thinking.

However, considering that analysts often act as some form of intermediaries between its investment banking division and prospective clients (although a firewall is prescribed), it would not be surprising that certain critical information is withheld from its for-distribution reports, but passed on internally. I really think that happens.

Update Due Monday

My Portfolio update is due Monday. I hope I can come up with something. Work is picking up because there has been business. Also, since coming back from overseas, I am having difficulty sleeping. I am not used to the timing here somewhat.

Sgxstockpicker - back for duty

I came back from my overseas trip just yesterday in the evening. It was a 12 hour flight from Schipol Airport in the Netherlands, the second but longer leg of my journey back from Aberdeen. The most memorable thing about the flight was that for both of the longer legs of the journey (to-and-fro), I sat beside very big people. Considering the duration, it was definitely very uncomfortable being forced to a corner by big men. But I am back now, no back problems.

Sgxstockpicker - not in the country

will not be in the country for the long week ahead as i will be overseas for work. i do not think i can get internet access at my hotel as i did not bring along a laptop. The STI is down close to the 3,000 mark as funds flow out from the region, spooked by the interest rate hikes in China. Even local minister Mah Bow Tan advised would be property owners that the interest rates are likely to go up in Singapore. My portfolio is down 2.4 percent on a year-to-date basis. Hopefully by the time I get back, things will improve.

FJ Benjamin Posts Strong 2Q

FJ Benjamin yesterday posted a strong set of results for its second quarter ended 31 December 2010. Earnings for that three months was about $4 million, bring year-to-date earnings to slightly more than $7 million. The company's results were boosted by the recovery in consumer sentiment as well as the weakening of the US dollar against the Sing Dollar.

Elsewhere, the stock market has been very weak, affected by movements in China. Read the earlier post shown below.
http://sgxstockpicker.blogspot.com/2011/01/stock-portfolio-xirr-is-7456.html

Off to work!

Strange. Why are all of them China companies?

I was going through my emails and followed a link that led me to the website of another investing forum. Strangely, one of the stories had only China companies inside. I went through the rest of the site to look for stories containing locally-listed companies and I found that most of them were "repeat" companies. Strange.

10 tips to be a better than average stock investor

Based on my calculations, assuming a 3% initial yield reinvested and 2% inflation rate, the Singapore stock market returned a compound 6.9% to 11.7% over the past four twenty-year periods starting 1988. Although it might not seem a lot, due to the compounding effect, an initial $10,000 investment 20 years ago could grow to as much as $91,211!

However, based on anecdotes as well as studies done on the American market, the average retail investors probably achieved returns less than that. I am guessing that the average stock market investor in Singapore over the same period probably did not make any money. The most common reasons for the under performance were retail investors only buying when the markets are hot or that there were high expenses occurred on their mutual funds.

Comment on Trading System

Back testing is a way to see if your trading system is profitable, by using historical data. Recently, I came across a back test of one such system on a blog, and the owner claims that it works, based on a period of one year. I only have one comment, that is, if it is really works, it should work over and even longer period. Nonetheless, I understand that every system has certain precepts, which I am not clear about. Off to the doctor again!

portfolio dips as golden rabbit beckons

I am trying out a new format of updating my portfolio. One of the downside of updating at the end of every month is that it may not coincide with a weekend. That said, the upside is that I have lesser need to stare at my portfolio as often. The coming portfolio updates are stated in the chart seen above.

As can be seen clearly, my portfolio excluding dividends, is down 3 percent for the month of January. I had a very bright start with UOB-KayHian chionging as a result of the privatisation of Kim Eng. However, once the dust was settled, the counter fell back to slightly higher than previous levels.

The coming weeks will see more results being announced. Biosensors has showed a positive set and I expect the rest in my portfolio to do so, with those having a dividend policy, announcing one that is much better than last year. That's all for today. I think I am getting the cough from my dad.