Monday, March 7, 2016

Another day, another dollar

At the MRT, on the way to work, a colleague tapped on my shoulder. While catching up on the weekend's football matches, he told me that he had tendered his resignation and that his last day was in the coming weeks. He is a relative senior colleague in his late-30's. He shared that he was joining a competitor but I couldn't quite guess which one it was. It was good for him. Our company has been having a few bad quarters and retrenchments - or reduction in force - has been on going. Budgets have also been scaled down although I would point out that investment in organic capability was scarce. The company preferred to grow revenue by acquiring other companies.

Colleague who had tendered agreed with us that the company didn't really care about employee feed back, despite appointing "champions" to better understand the issues that affected employee happiness. The track record of being ignored has been consistent during both our times with the company

Lunch. It was a very warm day but I made my way with some other colleagues to the nearby hawker centre. I had salad because I have not had enough fibre in my diet. The others had Malay food as well as some famous wanton noodles. I ended my lunch with ah balling. It almost caused another of my shirt button to explode. The first one came out in the morning and I shoddily sewed it back on with thread with a non-matching colour.

Lunch discussion escalated quickly after one colleague asked if I knew this person was a new colleague. She said she was busy this week because she was tasked to give colleague M training on how to use one of our products. Others in the lunch party started to chime in with their thoughts that another colleague D should be the one providing the training. The lunch party suggested that our product was easy to use and training could have been self directed.

Back at the office, I stood along the hallway that joining the lift lobby and the cubicles. The hallway was much cooler than the rest of the office, offering me respite from the stifling heat and humidity encountered on the way to and back from lunch. At my seat, I knew I hardly spoke to my team mate as we both had our own research agenda.  Most other days, we exchanged the daily pleasantries an nothing further. It was colleague K's gym day and so he did not join the lunch party. I let K know that another colleague had tendered his resignation.

The day came to a quick end. It was uninteresting. Deadlines loomed closer for me but I did not make significant headway as more research was needed. Research which included literature review. I was drained by the mental exertions. Nevertheless, I slowly made my way to the west for my dinner.

Saturday, March 5, 2016

Three stages of Singapore's bear market

I believe that aside from liquidity, sentiment is a key driver of stock markets. A few posts earlier, I wrote about the the three distinct phases of a bear market. I found a well written article which describes the idea that I probably stumbled upon while reading finance literature. It says that the denial, concern and capitulation are the three stages of a bear market and it defines capitulation as:

"At this point the market may rally again as many observers feel that the decline has ended and that a new bull market has begun. This rally, also characterized by weak breadth and low volume, subsequently fails and heads down. At this point the majority becomes exceedingly bearish and throws in the towel, fearful of further declines and the potential disappearance of their assets. This is the capitulation phase, when stocks are sold on fear and emotion rather than on rational analysis. It is at that point that the market is finally ready to make an important bottom."

I have called 21 January 2016 a the bottom of the market in my recent post. Some have told me that it is too early to call or too risky to time the market. However, I believe that we capitulated. My own capitulation came on the last week of January when I received news from my company regarding the state of affairs for 2016. I believe that we are entering a recovery phase that started with somewhat a bang. A bull market does not announce itself but this is just the initial recovery stage. Interestingly, I came across a blog post which said that when the market is at the lowest and thus the best time for investment, it is also a time when you may lack the ability to invest because you might have lost your job or not received a good bonus!

I am writing this in response to an article that talked about people's fears of missing out or FOMO. I initially thought it meant the fed's open market operation. As long as there is FOMO, I think the market will be on the path to recovery, speed notwithstanding. The bull market needs to climb the proverbial wall of worry. Other walls of worry I expect the market to climb would be the American Presidential elections. Suddenly, concerns about ISIS has taken a back seat to the race to the White House.

If you do have any way of measuring sentiment, do share. It will be useful in refining my sense of an already abstract indicator. My next major alert is when the market starts to get a little too frothy.

Thursday, March 3, 2016

Bought more Super Group

Decided to put my money where my mouth is. I bought 4,000 shares of Super Group at SGD1.04. This brings my average cost down to SGD1.26 from SGD1.60 at the start of the year. My capital injection of SGD10,000 for 2016 has been maxed out. Perhaps will build up a smaller cash portfolio of SGD5,000, in case more opportunities arise. Was contemplating between F&N and Super Group. However, Super's yield is much higher than F&N (same amount, but Super has a lower share price). Fingers crossed.

Wednesday, March 2, 2016

Are we missing out on the recovery in the Singapore stock market?

In my 16 January post, I mentioned that I expect the market to hit a bottom between February and October 2016, with the bottom to be around 2,200-2,400. The market has recently touched the 2,700 mark (2 March 2016). It could be that we have reached the end of the third phase of the bear market, with 21 January being the end of that phase and the bottom of the market. A silent recovery could be quietly taking place. Or it could be the calm before the storm, when the market does plunge to 2,200-2,400.

My take is that we have probably (75% +/- 12%) past the market bottom. A lot of China money is recently entering the market after efforts by the PBOC to cut rates. This is has the knoock-on effect of reinjecting liquidity into local markets but might not be sustainable for China.

My personal approach will be to wait one to two weeks before deciding to enter market, looking out for market drops to enter the market. If the market can stay above 2,700 for more than 2 weeks, it is probably recovering quietly. There is limited downside from current levels to 2,200, if it indeed a calm before the storm scenario. I still shun oil and gas stocks, preferring companies that have have taken a beating but have good business fundamentals.