2015 - Top 10 Predictions

Post Merry Christmas greetings and happy new year in couple of days, this is probably my last post for 2014 and it will be a short one. I was browsing on lazy weekend and came across this article by 'Dr. Richard Coghlan', which he mentioned his Top 10 predictions for 2015. Here is the link to the article, 'http://www.chinatimes.com/realtimenews/20141105003652-260410'.

Below is the highlight of his predictions:

From the chart, what would be your strategy for 2015?

Where are the opportunity in oil price slide

In the past weeks, there have been numerous articles about oil and how the drop in oil price is going to have huge negative impact on some of the asset classes and even some of the major oil export countries. During my usual weekend browsing, I came across an interesting bloomberg video just last week on interview with Mark Mobius. His thinking about this oil 'crisis' is really different from the rest of the other professionals out there, he looks for opportunities that is going to surface from this temporary pessimism situation.
http://www.bloomberg.com/video/oil-could-return-to-90-soon-as-next-year-mobius-says-rJ2~NhAZToGZYdCyyrO~0g.html

In summary of the video;

1. Oil prices will recover to about $80-$90 next year
2. Countries such as Indonesia, India, China had made use of this low oil price situation to embark on reform measures to remove petrol subsidies.
3. Some of the middle east countries have huge oil reserve to tide over this period of low price
4. Most Asia countries to benefit from this low oil price
5. If there are no sanctions, he will be in Russia as it is really cheap. Other countries he is interested are China, Malaysia, Thailand and Indonesia.
6. Biggest concern is volatility, but it also present good opportunity to invest.

On last note, Warren Buffet bought a large stake into Exxon at the average price of $90, based on the below from Forbes. Did he know that just after 1 year, the share price now is even lower than what he paid for before. Again, it goes to show that no one can predict where the market is going, but it is the value that one should be after when opportunity arises. 

Russia Unloved

A couple of months ago, I had taken a tiny position in RSX ETF, an ETF which invest into the Russia stock market. Today, the position is down 35%, what will I be doing? Let look at the chart below.

Source: Yahoo.com

The chart does not look great, over long term it is trending down, with price remain to be below the 200d MA. On the chart, each of the high is a lower high, and each of the low is a lower low. Russia remains to be an attractive market with one of the lowest PE ratio (about 6), the closet one to this is the China market. Russia is my favourite counter, as I like to invest in things that the crowd is avoiding. 

http://www.tradingeconomics.com/russia/gdp

Russia GDP has been growing healthily post the great financial crisis. No one can predict anything with certainty, people are avoiding Russia because they are attracted and chasing rising markets. Over time, investors who invested in unloved counters will be rewarded with excellent profits. After all, we were always told to buy low and sell high, isnt it.

Singapore REITs still cheap ?

For those who had been thinking of investing into REITs, you would probably have noticed most of the REITs counters have started trending up since middle of the year. REITs are one of my favourite sector which I like to invest, as one is able to see and visit the property portfolio that they hold, and it is simple to understand. Just last week, I have the same question asked by 2 different friends, if it is a good time to invest into REITs, they were looking at Suntec and Lippomall.

Time to relook at Chinese market?

This has been one market which many investors have lost lots of money since it crashed from high of 6000 points to low of 2000 points, and many have avoided or stay away from investing in this market. The market which I was referring to is the Shanghai composite index. 

Learn from expert what to do in today's market

Investors dreaded the month of October, as most of the major corrections happened in the month of October, thus it got investors and traders nervous in this month every year. After my last post about VIX fear index, it surged to a high of 25 before receding back to a closing of 22. Before my post about VIX index, I did not see any post about using the fear index as a guide. At 22, it is still above the norm of 18-20, so many experts have advised to expect more volatility to come in the market. Apart from the VIX index, there is also another chart one can make reference to, which I found it interesting.

A correction, long overdue ...

Both Dow Jones and S&P500 had not been able to maintain at the previously high level and had started to trend downwards in the past weeks.The past weeks, if you have watched some of the reasons that some of the analysts have given, they are quite interesting, some blamed the europe and Germany potentially going into recessions, China lousy numbers, and Ebola virus (most amusing). Whether these reasons are the cause of the recent correction, one may not know, but in the video clip here video.cnbc.com, a good sharing by Mr. Lim Say Boon, Chief Investment Officer from DBS. He mentioned that the correction is long overdue and that Asia is still cheaper compared to other regions.

One of the indicator which i always like to look at is the VIX index, this is also known as the fear indicator as explained below.

http://www.investopedia.com/terms/v/vix.asp

Relationship of VIX and STI

yahoo.com

Before I go into this, one need to note that the VIX index has risen by about 40% since mid-Sept, is this a concern to you? 

When one google, one is able to find articles on VIX against S&P500 but I was not able to find one for STI. As such, looking at the major data points and major events, I found and as shown above, STI corrects when VIX is above 18. 

The first data point is the Asia financial crisis, VIX index was above 18 before STI crashed from 2415 to 857.

The 2nd data point is the dot com bubble, VIX index was above 20 before STI crashed from 2479 to 1267.

The third one is the most recent one where VIX index was above 20 before STI crashed from 3805 to 1595.

And last week VIX index surged to above 21 points, guess it's time to be careful, what do you think?

I bought stocks during last week's big selloff

For those who had read the CNBC news, this was the statement made by Warren Buffet last week. He did not reveal which were the companies that he had added holdings to. As per his statement below in CNBC, in his usual style, he never like to time the market and he would buy more when the stock price becomes cheaper.

Source: CNBC

In this part of Asia, we had our own problem too, just last week, huge number of protester started the 'occupy central' campaign in Hong Kong due to a reason that we are know and I shall not repeat here.

Source: CNN

Let' look at how the 2 markets, Hang Seng and STI, reacted to the events above. 

Source: Yahoo.com

 

In the month of Sept, Hang Seng has corrected of about 9%, while the STI has a minor correction of about 3.5%. Based on any of the valuation indicators, these 2 countries are consider cheap as per the report by The Telegraph. In this report, it has an interested graph which shows where the countries stand. If you have been buying STI ETF as part of your permanent portfolio, does this present an opportunity?

Telegraph

Do you have the courage to be like Warren Buffet and buy into Hang Seng and STI?

A savvy saver in his thirties

I was having lunch with a friend last week and we were talking about how difficult it is now to find value stock when STI is near to all time high and US market has been breaking new high. Both of us agree that this is probably not the good time to be aggressive. He shared that recently he has become more conservative, and increasing his cash holding so that he will be able to tap on in the near future when better opportunities present themselves. 

Source: UOB

Just recently, he went to UOB, a local Singapore bank, and placed $100K of fixed deposit(FD) with them. The conversation stopped here and I also stopped eating literally, He is in his late-thirties and he has managed to save more than $100K, I think this is a commendable achievement. He noticed the surprised look on my face, and I then asked how did he manage to do it. 

Maximum Pessimism - GOLD

People has a love and hate relationship with this piece of metal, and yes, I am talking about Gold. Just not too long ago, many people love IT and were chasing to high of above $1800. Now, if you asked these people again, they have all shunned the metal as it has corrected much since 2013. But then again, most of the old folks prefer to keep this precious metal, my grandma was one of them. When she was alive, she always said that Gold is very good to use during war.

What are you doing with your OCBC rights

In the past few weeks, the news about OCBC rights issue has been most discussed in social media. By now, whether or not you are existing shareholder, you would have heard about the bank giving the shareholders to own rights share at $7.65 each.

If you have been following my blog, you know that in May I have written about this bank. You can still read it from here. I was at the bank this morning as I was having problem with my ATM access. The bank was particularly crowded as it was weekend and also maybe lots of people were there for the rights issue. While waiting for the staff to help me, I overheard people enquiring about the rights shares. I dont mean to eavesdrop but you can just hear people talking in the closed environment. One nice thing about this bank is that they always have few of their staffs walking around in the waiting area offering help. Interestingly over the span of 15mins, this is what some of these people asked the staffs who were there in many to help. 

1. One lady was asking the staff, how many rights shares she can apply. This is amazing, didnt she received the letter.
2. Another lady was asking how many excess of the rights shares can she apply. And when she tried to apply, she realised she does not have enough cash in her bank account.
3. On seeing the long queue, an old lady asked when is the closing date for the application.

Although this is just observation at one of the branch, I believed this is the same phenomena across all other branches, as many shareholders are interested and will be applying the rights shares. As such, the probability of getting the excess shares will be low. 

Have you applied for yours? 

Property prices will keep going up?

This is my first post about property, but it is not really about property as I am using this in relation to stocks. I am sure many of us heard about this statement many times, either from eager property sales person or in the showroom that you have visited. Many times, we were told that cant go wrong buying property in Singapore, it will keep going up in long term. Yes, the catch is in long term. Being someone who likes to play with data, I search the HDB portal for past resale transactions and guess what I found.

What can you learn from free invest workshop

A friend of mine spoke to me about a course that he had previously attended and was checking if the few of us are interested to attend a free workshop. He attended the course a couple of years ago when he just started his investment journey and this has helped him to set his foundation. I thought why not, on one hand, I can catch up with my friends and on the other, maybe can learn something from the workshop. In the end, I've gotten free dinner and beer too. :)

Market Watch: STI 9Aug

Happy National Day and happy 49th birthday Singapore. Even though our achievements have surpassed many countries, we are still a young nation. At this juncture, coming to the end of the quarter, let's do a review of how STI has performed over the past 8 months compared to some of its closest partners and as well as competitors.

In the table below, I have tabulated the gain in the index of these countries over the last 8 months.

It is interesting to find:

1. Taiwan is top among these countries
2. Top 3 countries are all chinese related market
3. has the flow of funds move away from Singapore into these other market

With the improvement in the PMI and investors confidence in the Chinese market, are we going to see further uptrend? And would Taiwan and Hong Kong continue to benefit and ride on the uptrend of the Chinese market. 

Achieving 20% upside in this market

This was the statement made recently by Mr. Mark Mobius, the executive chairman of Templeton Emerging Markets. You can read more about this piece of news from here. In fact, he also predicted that there will be 20% upside in the Chinese market in the same piece of news. It is not easy to find such an attractive upside in today's bullish market. When one mentioned the Chinese market, you will hear many stories about investors who had previously lost their money. Let's take a look at some of these data and numbers and make some intelligent analysis so that we protect our capital this time.

Maximum Pessimism - Where & What

This is a short follow up post from my previous one on 'An investment strategy from the greatest', basically to identify and share with the readers on which country, industry or even sector that is now facing the maximum pessimism in sentiment.

With the Dow Jones hitting all time high, it is hard to convince people to invest in areas where there is maximum pessimism. However, Sir John Templeton has shown to us that this has given him maximum profit, one just have to be patient enough.

Commodities - I am sure most of us are familiar with this, and many people associate this to gold and silver. There is actually others such as sugar, cotton, iron, ore, food, coal, etc. Commodities have been hit pretty bad and the sentiment is very bearish. Just yesterday, Credit Suisse has announced that it is exiting the commodities trading business. You can read the news here.

BRICS - Yes, BRICS again. I had written a post about Indonesia(which is one of the BRICS) some time ago. This time, I want to talk about Brazil, China and in particular Russia. Just not too long ago, there have many news article on the bearish economy sentiment in Brazil and China, due to the reduce in demand from commodities and possibly of real-estate bubble in the Chinese economy. Then now there is Russia, She has been in the news of late for the wrong reason. There has been allegations that Russia has a part to play in the crash of MH17. Due to this unfortunate incident, there has been call for further sanctions against Russia and it's stock market has reacted negatively.

So there you go, these are the gloomy spots in the bright all time high Dow Jones. Question is what, how and when to invest in these?

Related post: 

Where to invest in Asia

An investment strategy from the greatest

As usual I was browsing the internet over the weekend looking for good readings and came across this old article about one of the greatest investor - John Templeton. As a value-contrarian investor, he was always on the constant look out for bargains to buy domestically in the US and as well globally in the emerging markets and Asia (which he was the first to invest in during his time). This legendary investor has left behind many of his investing values and philosophy, one of which is the '16 rules for investment success', which you can view from the Franklintempleton website.

A gem in Asia ??

The past few weeks have been pretty exciting, not from the stock market but from the world cup matches, especially the humiliating loss of the Brazilian team. A team that had been well respected to the extend feared by many teams, was defeated by such a huge score. This also send us a timely reminder that anything can happen, including a correction in the current market. Bearing all these uncertainty still, where else can still give us an attractive proposition?

You can save $400,000 before 40

Whenever I ask around, how much do you need to be able to be able to slow down in work pace and that you can choose how to live your life and not rushing to work everyday, the answer is always $1 million. I dont know why but it seems that $1 million is the magic number. I mean how many of us, the working class can accumulate $1 million through savings. 

The dilemma - SingPost

One of the news which has brought some life into the stock market this week was the purchase of a minority stake in SingPost by the Chinese e-commerce giant Alibaba. Everyone knows or should have heard about this highly successful company and it's founder, Jack Ma, so no need to spell further. A friend who has bought some shares prior to this announcement was in dilemma on whether should he take profit or keep it for it's dividend. I believe there are many like him, not sure what to do, and well, on a positive note, it is a good problem isnt it. I have shared with him my thoughts and here it is what i have told him.

The writing is on the wall - Degree and Jobs

By having a degree now, does it still guarantee you a good paying job and gainfully employed till you are retired. If this is your thinking, then you have not been in touch with the local news or you were overwhelmed by the news about Alibaba taking a stake in Singpost. This is very real, it had already happened since the Financial crisis.

Stock watch: Sin Heng Heavy Machinery

In the recent months, it has been tough to find value in the current stock market, especially the STI has climbed quite a fair bit and shy of the 2014 new high (as reported in the papers today). Recently, I found a pretty useful global stock screener portal (ft.com) which has the same and better feature than SGX or google screener. This website even allows you to compare with it's peer on the ratio that you are interested. Using this, I did not find anything attractive in the Singapore market, until I stumbled upon Sin Heng and Tiong Woon.

Singapore banks - The world's strongest banks

Yesterday was May Day holiday, and it was nice to have a break in the middle of a hectic week. A friend of mine brought my attention to a local bank and thus started doing some research on the bank counters. This week all the banks have reported their earnings and it has been a record Q1 for the local banks, DBS, UOB and OCBC. You can read the report here.

As mentioned, a friend asked me about OCBC which I have forgotten that it was in my radar many moons ago. I dug out my little book and continue validating on the FA and TA from where it was last reviewed.

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.

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 mystocksinvesting.com. 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.

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.

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

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

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.

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.

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.

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?

Where to invest in Asia ...

In 2001, we heard about the term 'BRIC', when it was first introduced by Jim O’Neill, an economist at Goldman Sachs. About last year, I am sure most of you must have read or heard, the other term, the Fragile Five. Someone from Morgan Stanley decided that due to the various economic changes(negatively), the economics of BRIC is going to be going downhill. So what does this mean to investors?

Let's first look at some of the data from the wordbank, in terms of the current account balance for these countries, in particular, Brazil, Indonesia and India. Why these 3 countries, well, because they are having election this year, and historically has shown that most stock market react positively during the election year.

worldbank data

Above is the chart from the wordbank, Indonesia has the least current deficit follow by Brazil and then India. In another graph below, it shows the comparison of the current account for Brazil and Indonesia. At least from the graph, it shows that Indonesia is trending up strongly.

tradingeconomics

Now, let's look at how the Indonesia stock market has performed, we used the Market Vectors Indonesia Index ETF (IDX). In the chart below, it has managed to close above the weekly 20MA and weekly 10MA is trending up which is a positive sign.

At the current PE ratio, is it still cheap?

Gold correction over ...

After a major correction, gold has lost it's shine and people have not been talking much about them recently. Most of the people were worried about the tapering, stocks and interest rates, this might be a good opportunity to relook at gold again.

In the recent Barron's Roundtable, gold and gold mining stocks were highlighted by few gurus, and in particular George Soros had added gold mining stock into his portfolio. One of which is Gold Miners ETF (GDX).

Let's take a look at the daily chart then follow by the weekly chart.

In the daily chart above, the last closing price is above the 200d MA, this is quite positive, and the 10d and 20d MA has also trended up. When will the 50d MA cross 200d MA, which is the technical divider between the Bull and Bear.

In the weekly chart above, the closing price is above the weekly 20 MA, and 10 MA has trend up as well.

So who's been buying for the past few weeks, when not many people are looking and can this upward trend continue?

Stock Watch: Suntec Reit

Yes, this post is about Suntec Reit again. The last 2 weeks we have seen how the Reits have corrected due to the start of the QE tapering and the possibilities of increase in interest rates(nobody knows when), although from one of the FOMC meeting it was understood that the low interest rate should last till 2015. Reits are not the only sector that is affected, across the market, all the counters have reacted negatively too.

As I was doing my lazy surfing, I came across a few interesting posts by fellow blogger about reits and suntec reits. One of the post is from mystocksinvesting.com; he has been tabulating the reits data for a while and it helps one to do analysis easily. In another post, he also included charts from most of the Reits, and if you looked at them, most of them are either in downward trend or in consolidation.

And you may ask, why Suntec Reit. Comparing to the other reits, it is one of the highest debt gearing, which is a concern. And apart from trading below it's NAV, yield about close to 5.8%, these are also not too compelling to be in one's shortlist.

However, looking at the daily and weekly chart below, do you noticed that it is different from the other reits counter. Would this trend continue ...

Daily Chart

Weekly Chart

Market watch: STI 8Feb

Is the selling over or is the rebound sustainable, that's the question that most of us wants to know. Although, STI has recovered a little, the 50d MA is still below the 200d MA. The weekly chart below is also showing weakness, with 10 MA trending downwards. Pivot is at 3105.

On the bright side, the party still continues with VIX below 20. If it goes above 20, one should start leaving before the party ends. :)

Counter debrief: SMRT & Suntec Reit

Happy Lunar New Year to all, in this post, I will be sharing 2 of my favourite counters.

The first one is one which most of us would have and owned at some point of time. I owned this stock since IPO and along the way, I add some as well. Most of us owned the stock for these reasons previously:

1. defensive stock with good dividend yield
2. well run company previously with exposure and revenue from rental shops and advertisements
3. part of the growing story to cater for the 6 million population

In Jan 2013, I sold the stock after news of the CEO Saw had left(about a year, ok, I gave chance to new management) and problems start to surface. In fact, if you looked at the chart below, based on TA, I should have sold even before the first blue bubble and not later. I was like most of you, hesitating and convincing myself(ignoring the TA indicators), that I am in for long term and even if the stock price is down, I am still getting dividends. Fortunately, I sold eventually, and now looking back, it was a right decision because now I have the capital from the sale and the choice of buying at even at a lower price if I want.

This post again to remind myself dont gave yourself reasons against what the chart is telling you.

The next one was Suntec Reit which again, gotten from IPO and then added some along the way. Way before Lehmen crisis, it hit all time high(i think was $2), at that time, the HK boys(major shareholder) were selling the stocks too. Being a long term investor(i thought), i hold on for the dividends, but the share corrected and went to below $1. And in 2013, it managed to repeat the same cycle again, and this time, I followed what the chart told me and took profit as shown in the blue bubble. 

This tells us that there is cycle to any business and investment including shares, if I had make use of the cycle, I would have made not once but twice.

Singapore 50 - Still land of opportunities ...

Singapore has started preparation and getting ideas from it's people for its 50th year independence celebration in 2015. 50 years is deemed long by some people, but comparing with other developed nation, we are still a young one. In the recent years, there were many issues raised such as high hdb price, runaway condo price, high car price, food prices have also increased, everything has gone up except for salary which has not kept in pace. The young (aged 20 to 25) started asking about their future and if there is still opportunities in the land where they were born. More than 1000 students attended the Ministerial forum 2014 with PM Lee recently to understand his thoughts on these.

As I gathered with a couple of friends during our usual CNY gathering, I looked at them and they are pretty successful in their own ways. Though not very rich, all of us have a roof over our head, all drive car because of needs, kids in neighborhood school and all doing well in their career. We are the Generation X and our 2 generations before us had contributed to growth of Singapore and now in my generation we are still contributing.

Every generation had its challenge, the earlier generation had theirs. In our generation, We witnessed the fast transformation of this country, from a ticketed non-aircon bus to now using card. There is now also more competition in school and in jobs, given our open economy. In job, we had to compete with the FT, some got displaced of their job. I was fortunate to have my previous 3 very professional FT hiring manager. We also experienced firsthand dot com crisis, 911, SARS and Lehmen collapse. These had taught us to understand that if one is able to use the cycle to your advantage, the rewards will follow. This is not the first time COE is so high, it had happened before. And if it's high, then don't buy now cause knowing that it will normalized some time in future again, though no one knows when. Same goes to property price as well, it reached all time high before it crashed during the Asian Financial crisis.

To the young, importantly, spend less than what you are earning and don't make common sense financial mistake because just one mistake it can set you back many years. If you abide by these rules, you should be comfortable as these were the rules that my friends and I followed as well. With the amass cash, your opportunity will come in the next cycle.

World Economics Forum at Davos sets investment tones for 2014

At the annual World Economics Forum at Davos 2014, attended by head of states, economists and CEO of large MNC, this is where lots of information and data about economics were exchanged. And some of these discussions might just gave clue to the investment tone for this year.

Just to highlight some of the good reading and information complied as reference;

1. theguardian.com-five key data sets
2. www.onenewspage.co.uk - Shiller Warns of Global Bubbles
3. www.huffingtonpost.com
4. in.reuters.com-india tapering
5. www.bloomberg.com -Brazil
6. uk.reuters.com - emerging
7. forumblog.org- europes top 10 competitive economies
8. www.bloomberg.com - investors most upbeat in 5 years
9. www.cnbc.com - shiller

What is your investment strategy for 2014?

While I was surfing(usual routine) for information to reinforce my financial knowledge, I came across a video about this value investor, Joel Greenblatt. Apart from being an investor, he is  also an adjunct professor at the Columbia University Graduate School of Business. He devised a system which he had faithfully used and as a result, a book that he has also written - 'The Little Book that Beats the Market'. To most of the people, his system was known as the 'magic formula'. So what is this 'magic formula'.

The 'magic formula' is a simple set of system, which I like, as most of the readers know that I like to keep it simple.  To most of the folks who read or watch about him, most would have known of the 2 criteria, which helps one to select good companies at bargain price. However, there is also the 3rd most important criteria which he mentioned repeatedly in the video above, Patience. And, yes, most of the retail investors wanted to make a quick profit from the market and most of the time, they are more excited with counters where lots of other people are talking about.

If you want to know more about him, there are lots of information and videos in the internet, so I will not share more here. What I want to share is now I have another selection strategy which is simple to execute and a proven track record. 

Below is what I will be using in 2014 and longer if it make sense. In the funnel, you have the selection criteria from Walter Schloss and Joel Greenblatt. The funnel basically provides the guide to what to buy, and the TA tells you when to buy and cut loss.

Greenblatt's formula; source: oldschoolvalue.com

Remember a lot of the experts tell us these;
1. Buy and keep long term
2. Buy low and sell high
3. Dont time the market, always be in the market

But these people never share the how, and this strategy, though boring, addresses the above and keep your risk lower than most people around you.