Portolio and other updates

This is an interesting read from Uncle8888. He shares with us his very long experience and journey holding on to a stock that eventually rose multiple folds in price. My only issue with his post is that the returns will only be fantastic if the whole portfolio comprised multi-baggers. Anyway, I have provided an update of my portfolio on my other blog. Feel free to read.

Some random things that have caught my attention this week, were the scandal that has rocked the Ministry of Home Affairs and the one that have affected the Worker's Party. I bumped into my friend and while talking about it, I told him that last time, Goh Chok Tong did tell people to leave Steve Chia alone, when news broke out about his inappropriate relationship with his maid.

But my friend pointed out that one reason why no one in the PAP has told the media and public to steer from discussing the private lives of politicians, was that its own house was in disorder. That did not occur to me. My own take is that this even will cost both side votes. More interestingly, I would not be surprised that more skeletons will appear from the MHA closet, as investigations probe further.

Why should you publish a book?

I read this link from that was fed to me through my LinkedIn account and it has reignited my desire of publishing a book. To summarize his article, he says that bloggers should self-publish due to the ease and channels available to them in this current age. Furthermore, bloggers already have content, they just need to repackage and enhance that content to monetize it. Although his article is America-centric, I do observe one or two bloggers having done so, one investment blogger who I really cannot remember his name but received plenty of online flak after he published. Another is a political blogger, who published his poems. Interestingly, self-publishing is something a lot of "entrepreneurs" who have made it  big through real estate investments or internet marketing have done. When I go to my local Popular bookstore, I see stacks of them with their faces plastered but I am sure it is used to drum up their "credibility".

Considering that I only have three years of investing experience, I do not think I have enough experience to publish into a book. Once you publish, you lose your online anonymity that drove you to blog under a pseudonym. Furthermore, there will be a lot of time and money (lesser than before) involved to put what you have said into ink. That is despite having published them in your blog. Ultimately, the reward for self-publishing is just the act itself. You may not get the money or recognition but you can consider it a mission accomplished.

Buying a pair of jeans

I am going to buy a pair of Levi's jeans soon for casual occasions. This would make it my fourth pair in my short life. My first two pairs of Levi's were heavily "discounted" because I used vouchers to offset the total bill. The vouchers were given to me by an army mate who went off with the cheap jeans I had loaned him!

I had to throw away the first two because I slowly put on weight (sigh) and as a results, not only could I not fit into them comfortably, they developed "holes" where the sun does not normally shine. Apparently, this is a common problem faced by people with big thighs.

As most people know, a pair of Levi's jeans is not cheap, costing on average SGD 120, depending on design and season. I have worn other brands of jeans before, and the differentiating factor is their design. Some generic brands either ride too high or ride too low, with no texture in the fabric. This makes is slightly difficult to match the top you are wearing, a comment which I have received. For these reasons, I am making a trip to the Levi's store nearby instead of some other brand.

What have I learnt over the past three years?

My official journey into the investing world started about three years ago. As I have always repeated, I bought my first stock in the now de-listed Singapore Petroleum Company with most of the monies borrowed from my mother and brother. The company eventually got bought over and I made a small fortune. In those three years, I have grown that one-stock portfolio into something slightly bigger, whose market value is worth SGD 44,000 built upon SGD 30,000 of cash injections. Apart from capital appreciation, I have also learnt many valuable lessons, of which I will share.

1. Have a decent paying job. One of my regrets during my university life was not being proactive participating in events as well as not earning some money to tide through things. Thus when I came out, I was in an unenviable financial position of having to eventually pay off my student loan (I still am paying) and not enjoying the lifestyle of an adult. As a consolation, this is a position shared by most of my peers. 

It is important to have a decent paying job because it has an impact on future income as well as your emotional health. What constitutes a decent varies from education level, my definition of a decent paying job is the amount of money that a non-high flier makes. For me, I joined an SME, but my benchmark was the entry-level civil sector. This is because about 60-70% of my university course mates went to work for the government.

A decent pay is also important because so many other bloggers such as MusicWhiz and WealthBuch have shown that the more you can earn, the more you can save and invest. At SGD 45,000 after working three years, I know its not a significant amount compared to those already in the market but I feel that I am slightly ahead of the curve. To that end, I am trying to explore what options I have to increase my monthly earnings.

2. Do your research before buying. There are many investment styles when buying a stock - fundamental and technical analysis being the dominant strands. What is common between the two styles is that they involve a significant amount of research before the order is made. In the first style, an investor goes through all the financial reports and relevant marker studies. In the second style, there is plenty of interpretation of data.

Just because you did your research, does not guarantee that you will make a profit. Random walk theorists will argue that it is not statistically conclusive that more research leads to market beating returns. However, it will be clear to you what your motivations are for buying the stock. And by devoting sometime to the research process, it clears your mind and lets you "see" better. This is a better course of action that buying due to herd instinct or emotions. Once the stock does not move according to plan, you will also be in a better position to cut loss, which is the next point.

3. Be prepared to cut loss. As I write this, I have stocks whose initial sizes were around SGD 1,000 and are now in the red. As mentioned in an earlier post, I have sold off my stake in Asiatic. We must always be prepared to cut loss when the stock does not move according to the story you had envisioned, even more so when the stock does not move with the broader market. I have seen for myself how friends and relatives around me had the opportunity to cut loss at down 20% (a good threshold) but refuse to do so. Worse still, they average down on the stock only to see shares slump even further. Recently, I read that a blogger got stuck in Berlian Laju as the counter has been suspended pending debt restructuring.

Cutting loss is one of the toughest things to do because we realise the loss. But it is a necessary thing to do to minimize the damage done to your wealth. My own rules are not more than 20% down and not out of sync with the market.

To conclude, what I have shared is not groundbreaking but lessons that are very close to my heart. If you feel there are things that I have missed out, do let me know.

Losing weight through walking

I have recently started walking for about one hour in the evening. I do this when I do not feel like going for my run at work or if it rained at the evening slot. This was also motivated by my pregnant colleague's. nurse's advice. She told her that she should try to walk for an hour after each meal. My colleagues felt that it was a difficult task considering they have to lug their swollen tummies around. Moreover, where do you find so much time anyway to walk at least three hours? Anyway, for those who are health conscious, you can visit this website, Calorie Counter ,where you can have a reference how what you have to do to burn off the calories from a Snickers bar for example. Some of my friends and colleagues have also used it as their daily calorie counter, for diet purposes.

Bought 20 lots of Etika, sold off Asiatic

I bought 20 lots of Etika after selling my stake in Asiatic. I had thought of selling all losing positions but I felt that that would be too drastic. That would also require me to sell off my stake in China Animal Healthcare. Nonetheless, I am monitoring the market to sell into strength. I has been quite some time and some of these stocks do not seem to recover.

2011 Top Picks Review

Name	Action	31-Dec-10	31-Dec-11	% Change
Loyz Energy	Long	0.36	0.46	-20.88%
Kreuz Holding	Long	0.32	0.44	-27.27%
GMG Global	Long	0.11	0.30	-62.71%
Auric Pacific	Long	0.54	0.66	-17.56%
Biosensors	Long	1.43	1.13	26.55%
Keppel Corp	Long	9.30	11.32	-17.84%
UOB	Long	15.27	18.20	-16.10%
Wilmar	Long	5.00	5.63	-11.19%
Genting	Short	1.51	2.19	68.95%
Transcu	Short	SUSP	0.08	N/A

About a year back, I recommended some stocks that I thought would make readers money. On average, an equally weighted portfolio would have lost about 8.7% compared to the almost 15% shed by the STI, and that is not including dividends. The equally weighted portfolio would have a slightly smaller loss had Transcu not been suspended.

It can be seen that 2011 was not a very good year for stock picking. My suggestion to long Biosensors, short Genting and Transcu were the only profit making ones and that would give me a hit rate of 30%, which is worse that flipping coins.

My choice of small caps took more damage than the large caps, which is not unexpected as small caps tend to suffer from higher volatility. GMG was the worst performer of the lot as it had announced a 1-for-1 rights issue. Of the large caps, Wilmar did the best and this was probably because it had faltered for quite sometime due to uncertain outlook as well as the failed listing of its China arm.

We have seen a strong start to 2012 and the optimist in me tells me to wait for the dust to settle down either in February or March before committing. The mistake is always to buy into a strong market.

A dollar saved is a dollar earned

The moral of today's post is that your path to financial freedom must depend on the lifestyle you want to lead.

My colleague shared on Thursday that he has a very big piggy bank that he kept his change. He stashed away enough to eventually buy an iPad. Last night, I paid off one of my largest credit card bills ever since taking on my own card. The bulk came from lessons I had signed up and books I had bought on Amazon.

Financial freedom depends on the lifestyle you want to lead for the obvious reason that whatever you can save to spend at a later date, depends on how much you can earn and how little you can save, adding in the interest. Some people have no qualms taking SQ  while others camp on the websites of budget airlines for that super-fantastic offer. Some people prefer taking a cab to work even if they are not in a hurry to get to work.

However, there is a distinction between sloppy spending habits and lifestyle preferences, unless of course sloppy spending is part of your lifestyle. A simple example of a sloppy spending habit would be that you drink Coke everyday at home. But instead of buying a big bottle from the supermarket, you buy a can from the 24-hour convenience store. This is sloppy because it is much cheaper to buy your fix from the supermarket and furthermore, you do not have to consume it immediately.

Hence the piggy bank photo for today's post. I will set aside an amount for my daily expenses, and if there is any left, I will put that in. Alternatively, if you have higher spending power, you can try having a bank account that is for such surplus. I have a ex-classmate who told me that using a certain card to pay for her renovation gave her a considerable amount of cash back, although there is a cap. One way round the cap is to use different cards but that might prove to be an administrative inconvenience.

For myself, shopping for books on Amazon is much cheaper than buying from the local bookstore because the books I am looking at cost at least  SGD 100 and buying from Amazon gives me great savings. If the book is a small item, I will still buy from the bookshop as I do not have to wait about 1 month for it to ship over.

I do recognize then when you do save money on something, you spend it elsewhere. Piggy banks and savings account are not immune to those with a weak will. However, it is always a first step towards financial freedom by rediscovering simple saving and better spending habits. Sedikit-sedikit lama-lama menjadi bukit.

It is the Chinese New Year weekend, perhaps you too could start saving bit-by-bit on Wednesday!

http://investorsingaporean.blogspot.com/

Dear All,

I hope your New Year has been great. I have since started posting at http://investorsingaporean.blogspot.com/ .
I will do an as-and-when update there, so do continue your support.

Many thanks.