Sunday, 30 March 2014

STI performance

In the last couple of weeks, STI had a spectacular performance. At closing, it is now near to where we had started beginning of the year 2014 by just a few points below. In this post, I want to look at how did STI compare against some of the other indexes such as Indonesia, Brazil and China. Hey, isn't this the BRIC without Russia.

Below is the chart which I had done to compare these indexes, Brazil(blue), Indonesia(orange), China(green), STI(red)

Since February, Indonesia is the strongest of the group, having rebounded strongly as shown in the chart. Brazil is the next strongest, rebounded strongly after a second correction. As compared with these 3 countries, STI has not been doing that well, mostly in the range bound and had just started trending up but not much.

In the table below, it has shown clearly how each of these market has performed for the last 6 months as compared with closing on 28Mar.

What are the factors that is likely to cause this ?
Starting with Indonesia, this is an election year for them, and as mentioned in an earlier post, this has a positive effect on the Jakarta composite index based on the last 2 elections.
Brazil has got 2 major events this year, one is the coming election. For the soccer fans, it's the World Cup in June, so will the World Cup fever spread to the stock market.

So will this trend continue ... no one knows, but remember to cut loss if you are wrong.

Disclosure - I am long on EWZ and IDX.

Related post: Where to invest in Asia

Saturday, 29 March 2014

NOT to do before 35 years old

Following my previous posts of 35 and broke, I thought I will share what are the NOT to do things financially before 35. These are some of things which some of the people around me had committed, and spend years making it right again. By staying away from these, one should be fine at 35 and after.
So what are the things we should avoid?

Big Items - One's graduation is a joyous occasion, when one enters the workforce and the ability to make money and finally not dependent on allowance from parents. Some chose to celebrate this occasion with expensive Europe or Japan tour. Some of my classmates did that when we graduated, the idea being that it will be difficult to take 1 month of leave next time when one started working. I mean as long as the cost of the tour does not get you into too much of debt, why not, after all, one had studied all his life and it's not too reasonable to want to take a break. However, by not having a budget and discipline, one will find that he/she will get into huge debt even before he/she starts work. What if you cant find a job after the trip.

Small Items - Yes, everything adds up end of the day. If you stand in the middle of the Raffles place, do you noticed that every other people holds a cup of expensive coffee as they walk to their office.  By not having that $3 cup of coffee every morning, one would save about $60 a month and $720 a year. Another one  would be taking taxi going to work or home, especially after a tiring day. Most of us think that it's ok, it's just 4 or 5 taxi trips a week, does not matter much. Again, the  cost from the 4 or 5 taxi trips add up to quite an amount end of the day. If your objectives is too save very hard for the first 10 years of your working life, this is something that you can cut back on. 

Getting married - Most Singaporeans will get a house before they get married, and with 2 big items, most of our savings will be depleted badly. For the first time in your life, you never feel so empty before, I mean your bank account. Do you really need that expensive condominium or can you start with a simple HDB and then upgrade later when you build up your finances again. Most of my friends did just that and most are doing well financially. Do you really need that lavish wedding dinner or we can have a simple and yet presentable one. By making the right choice based on one's financial status, your financial standing should still be in Green even after getting married and your home.

Investments - Do not make stupid mistakes by getting into unregulated investments schemes which promises returns of 20% or even 30%, remember the gold scam, etc. Come on, even Warren Buffet's return is not that fantastic, and being an educated person, we should be able to question how this is achievable.

Related posts : Broke at 35 years old

Friday, 21 March 2014

Broke at 35 years old

My friend sent me this article from asiaone, 35 and flat broke, and we had this conversation over lunch today. He was shocked that couple earning $17,000 a month, can be highly in debt and eventually broke. Someone once said, it is not how much you make that matters, it is how much more you can save that is important. As we are going to have a new batch of graduates joining the workforce in a few months time, I thought I will share my 2 cents on this. One's financial journey starts the moment you join the workforce and if you don't make silly financial mistake along the way, you will be much better off than those characters mentioned in the article.

With the social media and internet, there are too many temptations trying to make you spent your dollar. Whenever there is an urge to buy something, have a cooling period, delay the purchase for 2 weeks and you might realized that you don't really need it after all.

Credit card is another culprit, as most of them who is in debt actually lose control over the use of credit card. It is the convenience and without realizing it, the limit has been blown. One of my colleague only has 1 credit card, and that is probably a good way to curb the urge of over spending.

If you are really in debt, you have to recognize that you have this problem and try and get back your financial to a healthy state again. Unfortunately, there is no easy way to this, and importantly to live below your means. Go read 'the millionaire next door', and you will know what I mean.

Sunday, 16 March 2014

Stock Watch: Lum Chang

Lum Chang was started in the 1940s, a leading construction company listed in SGX. I am writing about them today because I read (in Sunday Times) of a good deed that they have done, helping a family to repair their HDB which was burnt badly. In view of slow down in the property market and tight labour, it says alot of a company to step out during this time and return something back to the society. Here is the news from Sunday Times.

The first time I noticed this company is when they announced that they had invested in a London property - Old Court House along Kensington High Street for 40.19 million pound. And the management said this is to prepare for a possible slowdown in construction and that this investment will provide them a constant income. I thought this management is forward looking and prepare for themselves. During this time, most of the property counters have corrected due to the cooling measures by the government, Lum Chang was affected as well.
So why did I invest in this counter then:
  1. Most financial experts told us to avoid property stocks (isn't it a good time to buy when no one is looking and wait - Patience is the key)
  2. Good discount to the NAV
  3. About 6% dividend (better than most of Reits and definitely bank's interest)
  4. Tapping on their expertise and get exposure to UK property market :) 
And I noticed that in the recent months despite all the bad news that had been floating up every now and then, this counter had not reacted negatively.
Am I right about this one? No one knows, but if I am badly wrong I will just cut loss and move on. But for now, it is comforting to know that the company which you have invested, is one with a good heart.

Disclosure - I am long.

Saturday, 15 March 2014

10% gain in today's market ...

After I wrote about 'Where to invest in Asia' last month, I happened to have a conversation with a few of my friends on stock investment and they commented that it is difficult to invest in the local market as they felt that Dow Jones and S&P500 is relatively high now. Any major corrections in the US market will also affect the local market, that was the thinking. I agreed with them and that set me doing a quick check back then and I wrote another post about "Is now the right time to invest".

Now, getting back to the topic on 10% gain. Last month, I asked my friends if there are interested in getting a 10% return, of course, they do (who wouldn't in current low bank interest and yield from Reits) and they asked how. I then shared with them about my post above and that historically in the election year (2004 and 2009) in Indonesia, it has shown that the Jakarta Composite Index (JKSE) performs well. 

I like visual, it is much easier to put the message across. In the 2 charts below, I have screen captured how the JKSE had performed before and after the election. In 2004, JKSE performed tremendously well, went from about 700 to 1100 in about a year. In fact, looking at the chart, it had even performed pretty well before the election year. In 2009, due to the US financial crisis, JKSE only started to perform positively after the election that year, and went from 1400 to 2500 in a year. 

How then does one invest in Indonesia? We are fortunate to be able to do this easily through ETF, one of such ETF is IDX ETF. Why this one, you may ask, well, there is no particular reason. And the only reason why I chose to invest in Indonesia through EFT is because I dont know much about the stocks listed in Indonesia, let alone being able to find one intelligently to invest.

As of the writing, IDX ETF has gained 10% if you had invested last month, and it is still trending above the weekly 20MA which is positive uptrend in the mid-term. 

Disclosure - As a responsible blogger, I need to highlight to my readers that I am long in IDX ETF.

Saturday, 8 March 2014

Is now the right time to invest?

In the recent months, with US indexes hitting new highs and strong rebound after each correction, many people have been asking this question, whether is now the time to invest. All of us knows that and have heard many times from financial experts/advisor who will tell you that, any time is a good time to invest, for long term. Yes, they always tell you long term, but you will be back to square one and I will explain later using a chart below.

Looking at the S&P500 chart below, if history is of any (good) guide, assuming at the advice of the financial experts you bought the index in 2000 because he/she advised you to ride the strong uptrend market, dont try to time the market and hold for long term. Unfortunately, this is immediately followed by a correction of about 40%, and only 7 years later, in 2007, then you probably break even. This is also assuming that you had not bought after the market has corrected after 2000 (some call it dollar cost averaging), and this will be true to majority of retail investors(you and me), who will stay out of the market especially when what you had bought has corrected 40%.

Fast forward to today (2014), looking at the chart below, it seems that we are back in the similar situation like in 2000 and 2007. So is it the right time to invest now?