Saturday, August 17, 2019

Correction or confirmation of bear market

I am a like broken clock. I am right only only 2 times a day. I am calling the recent poor market a correction. This is because there was a correction from April 2018 to October 2018, a bear cub. The way ahead until 2020 should see more gains than losses. Once we enter 2020, I expect more downside and I believe portfolios should move to cash heavy allocations.

Current holdings
Hong Leong Finance

Saturday, July 27, 2019

Mad grab for Huawei phone shows clever marketing, human weakness

Videos have been circulating showing mature people of at least 54 years forming long queues at Huawei stores across Singapore on Friday. They wanted to get their hands of one of the sets that usually retails for $200, at $54. This was part of Huawei's marketing campaign for the period leading up to Singapore's National Day. Predictably, supplies were short and those who queued for long hours were upset. Some even fought in the queue and the police were called in.

To remind, this is not the first time that queuing in Singapore turned ugly. In 2000, the McDonald's Hello Kitty promotion caused rioting and more recently, police had to intervene to stop a company from giving away money in Raffles Place.

The marketing tactic was clever and prayed one of our greatest weakness, greed. Some of the 54 year old people in the queue were probably hoping for a cheap and affordable phone for their own use. There were probably more who were intending to flip the phone on Carousell. Of course, you can fault Huawei for not declaring upfront the amount of stock they have. But why would they? It is after all their plan to generate publicity after suffering some reputational loss from a US ban. For new launches of iPhone, Apple also does not state upfront how much stock they have.

The marketing departments know that greed alone is not drive throngs of people to their store. The presence of queues is necessary because it is social proof. This then drives herd mentality, because we seek safety in numbers whether to seek pleasure or avoid pain. apart from clothes, we are no different from pigeons flying to a existing, feeding crowd, or fish chasing after what they think are bread crumbs.

Saturday, July 20, 2019

Watches do not make good investments

If you bought an expensive watch thinking that it is a great investment, you probably have been duped. This is because not all watches can appreciate in price. Rolex is probably the only brand that has consistently appreciated in price over the past five years and can appreciate over the next five years. This is because of the brand has been great at marketing, stimulating demand for its watches. At the same time, it has controlled the supply and distribution of its watches. For example, you cannot walk into any authorised dealer and buy a popular, stainless steel model. Unless you are a foreign tourist, you probably need to have a big book of business with the authorised dealer to get your hands on that popular model (with a slight discount) and flip it. 

Then again, what is your actual return on "investment"? Say you buy a popular stainless steel model, such as the Submariner, at USD8,000. But before that, you had to buy 3-4 pieces of Rolex in precious metals, making your outlay at 4 x USD10,000 plus USD 8K, USD48,000. When you eventually sell the Submariner at USD10,000, did you really make a 20% ROI? Other issues that will eat away your ROI are servicing costs, seller's commissioning, import/export taxes, etc. 

Moral of the story, you want a good investment, buy stocks. If you want people to know you have plenty of money on your wrist, buy a luxury watch.

Thursday, July 11, 2019

My Plan for DBS

I plan to offload DBS by September or October this year. This is also the plan for the rest of my portfolio. My thinking is that any upside for 2019 will be limited, and we should go into cash for 2020. This is the 3rd year of Trump's presidency and stocks tend to perform well. Going into year 4, we should be cautious as the most important country in the stock market, elects its new leader. 

Thursday, July 4, 2019

Breakdown of the portfolio

At the end of 4 July 2019, the portfolio is

  • 79% Singapore shares
    • Delfi
    • DBS
    • Colex
    • Hong Leong Finance
  • 21% cash
Onwards and upwards.