Friday, 25 April 2014

Can money buy happiness?

I believed many of us have heard this before, no matter how much money you have, it can't buy you happiness. There was an article from Stanford which discussed about this topic and a book was also published on the study. In the article, it also mentioned about Warren Buffet feeling awesome after he has decided to pledge most of his wealth to charity.
I had the similar feeling last week. 
A pleasant surprise last week when Noble Group started a run, and a strong one. As I had bought this counter with no idea about it's FA, I decided to take profit and thus it came to me as a pleasant surprise with this extra income. I had not expected the counter to gain 15% within a couple of months. This is definitely one of my good win for this year.
With the extra cash, I decided to buy my family a good seafood dinner over the last weekend and everyone was asking if I had strike TOTO. Everyone was happy and I was happy too. With the remaining cash, I was subtly happy that I can use it to pay for a small portion of the Tissot watch which I have been eyeing for a few months now. My friends have stopped asking when I am buying it .....haha...... alright, I will pay for supper the next time we meet :)

I guess money can buy happiness after all and it all depends on how it was being spend on.

Thursday, 10 April 2014

How to pick the leader in Reits

For the past 12 months, Singapore Reits have fared poorly, and according to a BTinvest article, most had corrected up to 20% from the high. In the recent weeks, some of the Reits counters, had shown sign of reversal from this down trend. 

How do we then choose the leader of the pack?
There are many parameters that one can use to select Reits for investment. You may view these parameters from the table generously prepared by another blogger All of us know that it is just a matter of time the interest rate will increased, by how much, no one knows. In view of this, the first parameter that I used is the debt gearing ratio, and follow by more than 10% discount(more the better) to it's NAV. From the table, these were the ones identified:

  1. CapitaComm (5.3% yield)
  2. Starhill Global (6.25% yield)

The last parameter to consider will be the yield, and the higher the better. Does that mean that Starhill Global is the chosen one?

Up to now, we have only selected the strongest ones, in terms of lower debt and good margin of safety . Next we need to review the TA of these 2 counters, can you tell which one has broken the resistance and trended upwards.

Saturday, 5 April 2014

Focus on risk, not profit

STI has been trending up for the past few weeks, and reading from some of the stock forums, I know many people have gone into the market with the hope of making a quick profit, as they can't resist that other people are making money. Before all of us(including me) get carried away, I thought I just share my 2 cents on risk and reward. Many of us when we invest, we always look at the rewards or profit first, how much we are going to make from this counter, share price is going up or in local term 'cheonging', how much higher can it go. We have forgotten one very important thing which most people neglect, it is the risk.
Some of these risks that we want to be aware of are :
  1. Are you having your portfolio skewed towards certain sector - Remember a time when Reits were very popular, if one is not careful, you might end up with more than half if not all of your portfolio with Reits counters. They should be some form of diversification in the portfolio as not all sectors go up and down together in the same cycle.
  2. What is the downside at your entry price - when you decided to buy the equity, are you buying at the 52 wks high. If you are, don't you think that your risk is higher as compared to one who bought at its low and once the sector turns around, it can be very rewarding.
  3. At the macro level, where is the standing of the major indexes now? At this level now, would there be higher risk or reward if one chose to invest now?
  4. What price should you cut loss if you were wrong - Once you bought the equity, you should also know at what price you need to cut loss, should your decision to buy is a wrong one. No one knows how the market will turn out next week, next month or next year. If market tells us that we are wrong,we should not go against it. Importantly we must preserve our capital.
  5. One of the difficult decision is when to sell one's equity, I am still learning on this one. Many a times, when the counter goes in the right direction of your purchase, when would be the right time to take profit. Most of us would said hang on and wait for a while, it should go even higher, sounds familiar :) One has to ask what is the risk if you do not take profit now, and has it already met your original target profit.
There had not been huge swing in the market after the last speech by Federal Reserve Chair Janet Yellen, but that does not mean it will not in the coming months. Let's hope the party still continue but do watch the downside risks.