Saturday, November 30, 2013

When is the market going to crash down?

This has been the Billion dollar question for everyone since we had Dow hitting record high 16,000, S&P hitting record high 1,800 and Nasdaq hitting record high 4,000.

It has been common that when major indexes hit their respective record high, retail investors become more wary of their reversal turnaround and expecting a crashdown in the stock market.

My colleague at work says that Mar 2014 is the turnaround day the market will come crashing down. Another colleague says the Fed will extend its buying program and keeps interest low until 2015. Research Analyst at UOB mentioned investors to be wary of Fed tapering in Jan 2014. Marc Faber, Dr. Bearish, has been warning investors that stock market could gone crashing down next year worse than the state of economy in 2008.

What about some market statistics?

We have the Shiller PE ratio, which measures PE based on a 10 year adjusted inflation, currently at a high of 25.42. Historically, it has a mean of 16.50. Based on past statistics, the higher the Shiller PE ratio, the lower the returns investors are going to get in the future.

We also have another indicator in the CBOE VIX, where it is a key measure of market expectations of near term volatility. Currently, VIX is hovering around 13 to 15, which currently is at the 52 weeks low. As this is only an indication, it might stay low for a good number of years. But nevertheless, it is still a good indication that your returns would be lower in the future with a lower VIX than a higher VIX.

As we enter towards the final month of the year, there will probably be volatility in the market due to markets hitting recent record high which makes investors cashing in on profits. Fund managers have also been seen taking off profits off their portfolio by rebalancing their respective weightage during the window dressing period. Until then, not you and I can predict where's the market heading in 2014, but we can do so more prudently by playing our trump cards cautiously, even if it means obtaining lesser returns in the next couple of months.

Wednesday, November 27, 2013

The Myers Briggs Personality Test and How much should you be earning?

Many companies have now used the Myers Briggs Personality Test as the first round of elimination to search for suitable candidates. I remember the time when I had to do some sort of the Myers Briggs test for my current job. Applying for an Accountant position, it is a no brainer that they are looking for some sort of good organization, set-up and comfortable with numbers. If you are a creative type of person, then perhaps you might want to consider being an Accountant.

The Myers Briggs test are broken down into 4 main categories which is then further broken down into sub-categories. 

It is interesting to see that the ENTJ commands the highest household income amongst all other types. These are the types of people who are "Reformers" - Innovative, Leadership and Strategic being their main strengths. These are the people who are CEO in the company. They lead the entire team structure and have to be objective with their goals.

Maybe not surprisingly so, the "Idealist" are at the bottom of the foodchain in terms of their household income. These are the types of people who works for charitable and non-profit organization and  make the world a better life to live in.

So which personality do you belong?

Wednesday, November 20, 2013

Recent Actions - Boustead runs on Steroids

With the recent Dow and S&P hitting the high 16,000 and 1,800 respectively, it seems no stopping the market going higher and higher. This is despite all the tapering noise that we are hearing for months now.
On the local market, we don't seem to have a run-up well above the 3,200 mark on the STI. It seems that markets are lost for directions and there simply no company that can well lead the way for the STI.

One position I've made today is liquidating all my shares for Boustead. I've divested them away at $1.585 for 6 lots and S$1.65 for 1 lot. Overall, this has been a good profits made well over 50% since I've purchased them couple years ago. I think this is a good stock for the long term run by a well managed management but the risk has gone up by a lot with current price sitting at the $1.65 range.

The reason I've decided to sell Boustead is because I feel the recent run-up has priced in forward earnings and expectations which the markets expected to be very good. Multiple PE valuations based on forward earnings have also gone up beyond their historical valuations and it is easy to see the risk. Sure, Boustead has a good upstream catalyst in their Iskandar investment, potential industrial pipeline, etc. But should the market suddenly turn southwards or any news that will affect Boustead, we can easily see its price go all the way to the $1.30-$1.40 range, which is the range I will be comfortable to pick them up again.

I've also divested small lots of FCOT today at $1.265 to reduce my exposure in Reits and raise further cash holdings.

With all the selling so far, my cash position has increased and it is in the comfortable range to pick up any opportunities should the market turn southwards.

Friday, November 15, 2013

"Nov 13" - SG Transactions & Portfolio Update"

No. of Lots
Market Price (SGD)
Total Value (SGD) based on market price
Allocation %
FraserCenter Point Trust
FraserCommercial Trust
First Reit
Ascott Reit
SembCorp Ind
China Merchant Pacific
Plife Reit
Second Chance
Ascendas Hosp. Trust

Total SGD


It's the time of the month again where I share with readers my updated monthly transactions and purchase for the month. I get excited whenever I update this section of the posts as I can see the fruits of my labor grow each day by each day. As the market price tends to fluctuate during any time of the economy, I usually tend to focus more on the dividends I will receive from each individual lots of my 14 holding shares. I hope it will be an inspiration to new young investors more than just showing off the value of the portfolio.

This month's stock performer in my portfolio is Boustead. With most companies reporting their quarterly results, prices are bounds to fluctuate during the month as there were some who did well and some who did not perform to expectations. But the story for growth for Boustead keeps going, from winning contracts and doing well all across the 4 segments of the business.

The only purchase I have made for the month is on Ascott Reit. As previously mentioned on my posting on Ascott, my strategy was to purchase to round it up to the best combination possible odd lots. It will probably ended up with 14 lots by the end of Dec once the rights application is open.

I think with quarterly reporting now behind us and many shares going ex-dividends in Dec, there will probably be opportunities to deploy some of the cash I have on hand. ST Eng, Plife Reit, Jardine and Neratel are a few of those I am monitoring closely. 

Due to the huge percentage allocation I currently have in Reits in my portfolio, I would probably not further add more Reits. So Plife is probably out of the way. Jardine is a little expensive to me in terms of the price it is priced in per lot (in fact, the current valuation of the company looks reasonable) and a little over my budget at the current closing price of $34 so unless it is going down to $28-$29 range I will probably give it a skip too.

We have only one final month left to the new year so be cautious, plan your cashflow accordingly and prepare enough funds if there's a sale in the market or if there is one in ... the New Robinson Mall ^.^.

Thursday, November 14, 2013

Does your workplace practice Curvebell Ranking Appraisal?

I remember the days when I had to take classes and exams that used the curvebell system to determine one's grade. This means that even if you scored 80 out of a 100, you may still score a C, provided the rest are as or more competitive than you do. Those were the days.

Moving to working environment, I've always thought that only the investment banking and the front sales people get graded based on their performance metrics. That means the more sales you pull in for the company, the more commission you make and the better your appraisal at the end of the year. That's at least what everyone thinks right. But if you are those working in the back or middle office, do you still need such a system? Can't it be a system where everyone works in tandem and improve and help each other? What is the need for such competitive environment for people working in the back office?

This article shows that Microsoft used to have such a system for their employee's grading appraisal. To me, it is just plain brainless for them to begin that system in the first place. Competition, in a sense, is healthy. I don't see any wrong in pushing the employees to be at their best feet all the time. But in such environment you usually get a lot of politics, unhappiness and back-stabbing in the process. Not the type of working environment I am completely comfortable at. Luckily enough, Microsoft realised it and they are changing the grading system. Now it sounds like a much better environment to work at with One-Microsoft Strategy (sounds exactly like the project I had at my current company)

What do you think? Does a competitive environment brings the best out of the employees?

Saturday, November 9, 2013

Dividend Updates - Loving the early Christmas presents

We are almost towards the final few months into the new year and I am thrilled to see my early Christmas present in the form of passive income dividends.

It's great to see when your dividends income are growing and which will get closer day by day to covering your expenses.

Although not as impressive as the ones I previously received in the traditional month of May and Aug, I'll still take this with a great leap of pride. A pride that shows constant improvement year after year and their organic growth which will increase over the long haul of my investing journey.

CounterDividend (S$)Payable Date
SPH1,050.00 20 Dec 13
FraserCenterpoint Trust (FCT)894.00 29 Nov 13
FraserCommercial Trust (FCOT)290.00 29 Nov 13
First Reit255.00 29 Nov 13
Plife Reit80.00 10 Dec 13
Boustead140.00 12 Dec 13

I'm still awaiting for AHT and the early distribution from Ascott. So the total figure would probably be closer to S$3K. Still somewhat a far cry from the goal but it's getting there... a day by a day.

Thursday, November 7, 2013

Marco Polo Marine CEO to marry Actress Vivian Hsu

I know Vivian Hsu from watching the showbiz.

AK71 knows Marco Polo Marine CEO as he is vested with the shares.

What do they have in common?



Wednesday, November 6, 2013

Ascott Reit - Subscribing to Rights Issue?

As investors of Ascott Reit, the news surrounding is whether you will subscribe or reject the offers for a 1-to-5 rights issue at $1.

The Management has stated its intention to use the gross proceeds of approximately S$253.7 Million from the Rights Issue in the following manner:

(i) approximately S$204.9 million (equivalent to approximately 80.8% of the gross proceeds) will be used to pay down Ascott REIT’s debt;

(ii) approximately S$45.0 million (equivalent to approximately 17.7% of the gross proceeds) will be used to fund capital expenditure and asset enhancement initiatives, and for general corporate and working capital purposes;

(iii) approximately S$3.1 million (equivalent to approximately 1.2% of the gross proceeds) will be used to pay for the underwriting commission ; and

(iv) approximately S$0.7 million (equivalent to approximately 0.3% of the gross proceeds) will be used to pay the estimated professional fees and expenses and other fees and expenses expected to be incurred in connection with the Rights Issue.

This means that upon dilution of the additional shares, the immediate yield will go down as the company will use the majority of the proceeds to lower down their debt gearing. So should you be interested? Well it depends on whether you are bullish about hospitality stock in the near term. If you are bullish about it, I would think this is a good opportunity to exercise your rights to accumulate. Even with the dilution, I would think the yield will stay above 6%, which is reasonable.

The thing is with 41% gearing, we would expect the company to raise equity sooner or later. For me, I'll take it as the company is raising equity to make an acquisition in the near future. So yield goes down temporarily but will be back nearer term.

What about me??

Currently, I am vested with 9 lots of Ascott Reits in my portfolio. With a 1-to-5 rights, I would be allocated 1.8 lots of the rights at $1, which left me ended up in odd lots scenario.

Since I am bullish on the stock, my strategy is to purchase an additional 2 more lots from the market before it goes XR such that I will end up with 11 lots upon XR and be allocated 2.2 rights lots. As some of the experienced investors might have gone through other rights issue process, they would have told you that you are more likely to be granted excess rights if you are currently holding odd lots upon the XR and in case you are wondering 11 lots, it is because it is the best possible combination figure to ends up with odd lots scenario.

Hence, my plan is to apply for an excess rights of 800 shares so that I can have a total round up lots of 14.

If you would like to have more information about applying for rights issue shares, you may refer to the explanation by LaPapillion which gives a much more detailed sample.

Anyway, here is the timetable for your easy pleasure.

The date to exercise your rights will begin from the 19 November to 3 December. If you are not interested in subscribing, please take note to sell your nil-paid rights within the trading date above.