Final Score for 2011

The local stock market has closed for 2011 and it is time to update some scores.

Same basket of stocks on end-2010 vs STI year-on-year 

Sgx Stockpicker -26.8 % vs STI -17.5%

This has been a terrible year! For most long-only investors such as myself. As I have written before, almost everyone on the street and the CBD were over optimistic and what hit us hard was the resurfacing of the Eurozone crisis which does not seem to seek resolution. Most market watchers expect a flattish 2012 and for myself, I expect an exact opposite as I expect Obama to work his magic. I could be wrong.

In 2011, I have been buying stock at a higher total transaction value due to better cash flows. This has resulted in difficulties in tracking the portfolio. It does not help that I am not very adept with Google documents.

As usual, I will try to find some way to keep score, but on the simplest level, however:

A. Current cumulative investment: SGD 30,000

B. End-2011 Portfolio value (to measure for against 2012 and includes all new stock): SGD 37,018 and SGD 265 free cash
C. B divided by A divided by 3 years gives me approximately 8%
Frozen till further notice: C&O Pharmaceutical of about SGD 4,400

I have been in the stock market for close to three years and using all the convenient points, my returns on the cash invested out of my pockets amounts to just 8% and maybe 6% if we take a haircut. Most of the large gains were from the earlier rounds of investing during the recovery phase and my recent purchases have fallen flat.

I am not sure how much more money will I dump in the stock market as I feel like accumulating my wealth in cash, for contingencies as well as expected big ticket items. Given that I expect C&O to buyback what is now my shares in the form of physical certificate, SGD 4,400 is a decent amount for me to start hunting for value in 2012. Let the researching begin.

Have a bountiful 2012! Cheers!

Portfolio annual review

I am on leave for the whole week so let me start by reviewing the portfolio. Considering that there have been several additions to the portfolio, it would be convenient to measure the performance of the basket of stocks that were held at the end of last year, and those very same stocks now.

On this basis, I did very badly. I ended 2010 with SGD 45,350 and of of just now, those very same stocks are now worth SGD 33,313, or a 27% decline in value. Since running this blog for about 3 years, this is the first non-market beating performance recorded. No wonder they say that it is bear markets separate the boys from the men.

The stocks that lost the most dollar value were Etika International and GMG Global, with both stocks losing at least 40% of their price year-on-year. Etika International made a steady decline after announcing its one-for-one bonus and adjusting it. The same story for GMG Global, which announced a one-for-one rights issues not so long ago.

I still have about SGD 4,500 locked up in C&O Pharma. I received the physical certificate about two weeks ago and had to read their announcement again because I was unsure if there will be money credited. So far, my understanding is that the money will only be credited much later in January or February. Once I have access to this money, I may plough them back into Etika International or research into more small caps.

Overall, 2011 was a very humbling experience in the stock market and it really thought me the importance of not over extending yourself. The problems that we face right now is the very long tail of the global financial crisis which the Europeans are unable to get a grip on due to the structure of the EU.

Some housekeeping

Went to buy some long overdue furniture over the weekend - bed frames and a bookshelf. The old one that I had bought from Ikea gave way and I have been sleeping with the spring mattress on the floor for quite some time.

Bought the furniture from a corner shop in the neighbourhood. I realise that I was very bad at bargaining. No doubt there were no list price on the photo file that I was given, and he quoted me a price verbally, I could have used better bargaining techniques such as by telling him my budget first.

This was a lesson learnt. Eventually, should I move out, I will have to get more furniture and hopefully nicer looking and matching ones. That will be where my enhanced skills should be used.

That is not the point however. My point is that, I have been buying some interior design magazines and I realise that the cost of a having a photogenic apartment costs about 5 kidneys. There were some HDBs I saw, that costs SGD 100,000 for their interior design and that is without the furniture. Can you imagine how much more it would cost for that nice looking sofa and bed as well as the fanciful top-to-bottom storage unit?

A case of over optimism

It is time to revisit this post. I had accidentally removed the poll results from the sidebar but in narrative, most of the readers polled expects the STI to be up 5% from the start of the year. Unless there is a remarkable rally all the way to the end of the year, we are no where near that level required (3,350). This has been a case of over optimism and readers were joined by the stock analysts.

Now, at least in the newspapers, analysts are expecting next year to be flat and are suggesting alternatives such as corporate debt and convertibles.

I will still hold on to my stocks. They are most likely to perform better next year. But in the interim, I will be offloading all the weak performers. These are mainly the small caps that have lost their way and are now having cash flow problems.

SGD 30,000 invested level

Using some creative accounting, after subscribing to GMG Global's rights issues (20,000) and some excess (2,000), I have invested  SGD 30,000 of my own money in the market. "My own money" excludes those money from sales and dividends. My current portfolio is estimated to worth just under SGD 40,000. That means if I were to cash in everything, that would mean that my profit would be about SGD 9,500 after deducting the commissions.

This does not look like a good return, considering the effort put in. Oh well, I think it is time i started watching the portfolio carefully and trim the weeds. Comments please!