I have been retrenched ...

In the recent months, there have been more news about corporate laying off staffs due to the worsening of the global economy. Most of us won't feel it unless it happens to you or someone you know. Few weeks ago, I received a phone call from 2 ex-colleagues, and both of them had been retrenched as the unit closed it's Singapore operation. However, they should be able to tide over this difficult period as they have been prudent and without major debts, apart from daily family expenses.(which the payout should be able to last for sometime). Nevertheless, I feel for them as few years back, I was layoff due to organisation restructuring.  In the new year, there will be more job lost coming as Singapore has many MNCs, and once the revenue target is not met, the axe will come. Not a good way to start the new year, but this is fact of life.

In this post, I would like to penned down few thoughts to prepare us for the coming New Year 2017, which will be filled with lots of uncertainties.

Savings and Investment

Basic principle of savings still apply, one should always save a percentage of your salary, in preparation for raining days. And one day, the rain will come, it is always good to be prepared. Once you have a reasonable amount of savings, one should look at how to grow the money. There are reasonable number of blogs out there on investment, which I shan't discuss here.

Debts

Economic cycle is getting shorter, and since the GFC, many organisations have been looking at ways to improve their operating margins, and laying off staffs is always the first tool to use. It is a fact of life now, nothing is constant, thus we need to prepare ourselves. It will be a stressful situation where he/she is jobless, and still servicing huge amount of debts. These debts come in the form of housing and car loans, which is the major debt for most of us.

Health

When one is still healthy and employed, and if you are the breadwinner, you should have enough insurance coverage. This is to ensure that if your health takes a turn during your jobless period, at least, you have some coverage to tide over.

Networking

Networking during your career is important, and is like point 1 above, you build trusts, and this is like savings account, it builds up over time. When I lost my job, I was lucky to know few close folks whom I have known for many years, and manage to get 2 jobs offer within 3 months period. I am really thankful for those friends whom have lend me a hand, and also lady luck, who has been very kind to me all these years. Last week I have to tap into this saving account and referred one of my friend to another who has a position open in his company. Hope this turns out well.

It is not all that gloomy if you are prepared, let's have a enjoyable 2017!!!

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Recent buy for these blue chips

In the last 2 months, the global stock market suddenly became lively. Last week, even the STI was closing in towards the 3000 mark. Many of the experts have predicted a market correction if Mr Trump won the election, and of course, we know by now that it didnt happen. In fact, Dow Jones has been hitting new high. Market always has it's surprises, thus time in the market is important.
Over the 2 months, I have been loading up DBS, OCBC and YZJ. There are many good articles on the fundamentals of these stocks(i shall not repeat those in the post here), and that was one of the consideration for my purchase. Below are some the links which I find useful:

1. why have oversea-chinese-banking-corp limiteds shares gained 25% in value over the last 5years
2. are singapores three banks headed for trouble
3. why are bank stocks in singapore cheap now

Using TA, if one look at the longer term, timing the market is also important. I am not talking about short term trading but long term trending. If you look at these charts below, you will understand what I am talking about. By buying at the price (indicators highlighted), I am timing the market, but no one can guaranteed that the price will not go lower. I am prepared to hold for few years, thus I am looking at the mega trend and not worried about the daily or the weekly fluctuation in the share price. A friend had cautioned me that the price is quite high, he was comparing with the correction after the GFC. Thus I could be wrong, but I am still holding on to my purchase :). 

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These high yield blue chips performed well during the US Presidential Election week

We have forgotten - Asian Financial Crisis

I guess most of us only remembered the last Great Financial Crisis, starting with the housing toxic securities which the bubble finally burst in 2008/2009. How many of us still remembered the Asian Financial Crisis and how it started. This site here has documented the entire timeline and events if you are interested. Why am I writing this out of the blue.

In the past weeks, after Trump won the US Presidential Election, the USD has strengthened and the regional currencies weakened. Some Asean countries' currencies (Malaysia, Philippines) have dropped in a terrifying speed. Looking back, in 1997, as we all know by now, the AFC was started from Thailand due to the crashed in it's currency by as much as 20%, and situation were further aggravated by the huge infrastructure spending. 

Last week, we witnessed the Malaysian Ringgit devalued about 33% from a norm range of RM3.3 against the USD, and Philippines Peso devalued about 14% from a norm range of PHP43.6 against the USD. Similarly to 1997, these 2 countries were also spending lots of money on their infrastructure. 

Historical events can be an important learning lessons for all of us(that's if you learned something from it), however it does not mean that the same event will happen again(hopefully). But if it does, we should be more prepared this time to capitalise on it. In a lighter note, it's time for more shopping in our neighbourhood country☺.

These high yield blue chips performed well during the US Presidential Election week

It has been an interesting week, but for some, it has been a roller-coaster feeling, the market was behaving erratically during the Presidential Election day and the day after. I was hopping that the market will react drastically downwards so that I can capitalised on it, similar to my purchase of HSBC during the week of BRexit. But as we all know by now, the market crawled back and cover what was lost earlier.

One of the STI component stock I noticed moved against the tide and market. On 9Nov, when the entire market was corrected, the price of this blue chip was resilient and moved upwards. This stock is Yangzijiang.

This stock moved up with huge volumes on the few days of the US presidential election when most of the market is correcting downwards. Is this going to be a reversal of the downward trend for YZJ? Do note the gap between the 50MA and 200MA is still huge, but what's the harm in collecting the about 5.5% dividend while waiting.

The other stock is one of our local bank, DBS. 

We have read many times that if the interest rates is raised, one of the sector to benefit from it, will be the banking sector. This could be one of the reason why investors are making the plunged now to buy the stock. From the chart, can DBS pierce through the $16.2 resistance and continue in a upward trend?

Let me know your analysis of these 2 stocks.

Disclaimer

I am long on both stocks.

Magic formula screen for Singapore stocks

Magic formula investing was derived by Joel Greenblatt, he used it to buy a basket of stocks that has high earning yields and a high return on capital. 

Wikipedia has documented the approach and the formula, you can find the link here. Below is the extraction of the para from the link.

The Formula

1. Establish a minimum market capitalization (usually greater than $50 million).
2. Exclude utility and financial stocks.
3. Exclude foreign companies (American Depositary Receipts).
4. Determine company's earnings yield = EBIT / enterprise value.
5. Determine company's return on capital = EBIT / (net fixed assets + working capital).
6. Rank all companies above chosen market capitalization by highest earnings yield and highest return on capital (ranked as percentages).
7. Invest in 20–30 highest ranked companies, accumulating 2–3 positions per month over a 12-month period.
8. Re-balance portfolio once per year, selling losers one week before the year-mark and winners one week after the year mark.
9. Continue over a long-term (5–10+ year) period.

The Results

Applying the formula on the Singapore stocks, this is what we have. Some of these will definitely be in my watchlist, and let's visit again to see how they perform.

Do you have any of these in your portfolio?

	EY	Rank	ROC	Rank	Score
Rotary Engg	367	1	16	12	13
chew group	26	6	20	8	14
challenger	17	13	31	3	16
UMS	13	17	28	4	21
Ellipsiz	29	4	13	17	21
CSE global	19	11	17	11	22
TaiSin	17	14	20	9	23
Nam Lee	29	5	13	18	23
800 super	13	18	24	7	25
Hai Leck	49	2	11	25	27
straco	11	23	27	5	28
keong hong	17	15	16	13	28
new toyo	22	9	13	19	28
isdn	25	7	12	21	28
Starhub	7	29	239	1	30
singpost	8	28	73	2	30
sinwa	20	10	13	20	30
yangzijiang	23	8	12	22	30
Chemical Industry	32	3	10	28	31
QAF	11	24	19	10	34
Vicplas	13	19	14	16	35
hourglass	12	22	16	14	36
SATS	5	31	27	6	37
Venture	8	26	16	15	41
Wee Hur	19	12	8	30	42
Kingsmencreative	13	20	11	26	46
Cortina	9	25	12	23	48
Lum Chang	13	21	11	27	48
Hock Lian Seng	15	16	3	32	48
uol	4	32	12	24	56
gl	8	27	8	31	58
GP Industries	6	30	10	29	59

My friends bought iphone7 but I bought stocks this week

Apple has just recently launched iphone7, and few of my colleagues were very excited about it. They started monitoring the launched date from their respective Telcos, and finally they managed to book their gadget, and collected yesterday.

On the other hand, I was not as excited as them, not sure if I am the only one. However, the past weeks, the market has been volatile due to the next Fed meeting. I was actually more excited about market behaving irrationally than iphone7. Instead of using the payout from Sim Lian to buy iphone7, I reinvested it back into the market.

What did I buy from Mr Market.

I initiated a small position in KingsmenCreative, giving me a 4% dividend yield, PE and PB is relatively low, This counter has corrected from a high since last May, it is consolidating now, and no one knows if it will correct further.

This counter has defied all the negative news about interest rate increase, surplus of office supply and dwindling demand, and yet continued to move up in price. I first noticed this in 2014, but I sold off too early that year. Last August, it presented another buying opportunity and I took a position on the counter, and again June this year. This week, I initiated another small position to average up. Yes, for individual stock, I average up, not down, cause I dont know how low it will go. It is better to ride on strength than drown on weakness. But this is just my style.

How about you, did you manage to find anything attractive now?

The post above is not a recommendation to trade, disclaimer applies.

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How did my HSBC performed after BRExit

Weeks before the BRExit polling day, there were many news on the probability of Britain leaving EU, and how this will have impact on it's economy if it happens(now we already know the polling results). There were many gloomy news, and sentiments were not good. After seeing how the large US banks are still around today and survived the Great Financial Crisis, I kind of like bank, and they are top of my list for any gloom and doom situation. I did a search looking for the largest bank in UK, and found that HSBC to be one of them.
Below is HSBC 10 year chart extracted using google, do you get excited when you see this kind of chart.

And comparing with the other large bank(Barclays) in Britain, below are their ratios, and they certainly don't look high.

Source : fool.co.uk

Before I initiated to buy, I asked around, and most of my friends/colleagues are familiar with HSBC than Barclays. Most of them at some point in their life were having credit cards issued by HSBC, and also they had seen before their banking branches around the island.
Last check, I am already up 18%(not forgetting the dividend that I will be getting), one of my star player for now.

How about you, were you brave enough?

What did we learnt from the last Fed Interest rate increase

On 16 Dec last year, Fed raised the interest rate, and lately, many of the financial news are also talking and speculating about when the next increase will be. Let's look at what happened to some of the counters when the interest rate was increase last year, hopefully, this can help us to navigate for the next one.

The first column is the counter price after the announcement of the hike, and the next column is the lowest point of the counter price the few months after. Despite what many analysts have said about banks are the ones to benefit from the rates increase, they have also corrected, just like the other counters.
How will the next one be different from this ... I wonder.

What to do with the conditional cash offer for my Sim Lian?

Sim Lian has offered at $1.08 to exit and will be delist from the exchange, and I have accepted the offer. What am I suppose to do, as a minority minority shareholder, it seems that we do not have much a choice. This is a stock with good dividend and discount to it's NAV, for most of the investors, it would be nice to keep it as a long term investment, enjoying it's dividend and as well as it's capital gains. Yes, on it's offer, this counter has given me a 25% capital gain from my initial buy price.

Why did I buy Sim Lian

1. I noticed that the major shareholders, including it's founders were buying their own shares. If the owners have confidence in their own company, we should pay attention.
2. Good dividend, my original intend was to buy and collect it's dividends.
3. A bonus came along the way, for some reason, the share price also appreciate slowly over time.

How should I use the cash offer

Below are few of the shares either new or existing (which I will top up), which are on my radar now.

1. OCBC bank - I have mentioned this counter in one of my earlier post, most of the reasons there are still valid.
2. GL - this counter is largely unloved due to property sentiment
3. CSE Global - this counter is also largely unloved due to the current state of oil and gas industry.
4. UOL - this counter is largely unloved due to the current property sentiment. 

I might post my opinion on the above counters in the next posts, above is not recommendations, please do your own homework.

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Singapore banks - The world's strongest banks
My strategy and lesson learnt

STI - Are we near bottom

STI did not manage to stay above the Jan high of 2897 despite the small rally, and in fact it has been trending below the 10 year moving average since Aug last year.

As I do not have enough data points before 2006, the 10 year moving average starts from 2006 in the graph above. The last time the STI index went below the 10yr MA was during the GFC in 2008. Apart from 2008 crisis, most of the time the STI index has been trending above the 10yr MA. In other words, only when there is "special" drastic event, then it will go below the 10yr MA.
Since investors are suppose to buy low and sell high, looking at the chart, do you think this present an opportunity?

My strategy and lesson learnt

The past few months have been a roller coaster to many investors and traders, the market corrected like no tomorrow and there were many gloom and doom news from the media. At one point, STI went to below 2600. However, the last few weeks, most of the index and counters have recovered with a vengeance.  Looking back, what have I learn from this episode so that I can be a better investor and prepare for the next correction.

Patience
Most of us know to buy low and sell high, but how many of us have the patience to wait before committing to buy. Most of us like to chase when stock price has gone higher, we feel "safe" when many other people are also buying. And we know that most of the time, the result turns out to be disastrous. February was the worst month for most of the stocks, but it turn out to be one of my best buy, as at the point of writing this blog, all my counters are in positive. Due to the price correction, it gives me opportunity to invest in some of the stocks which I have put it in my radar for sometime, e.g. DBS, UOL Capitalcomm and Sembcorp.

 Noise & GUTS
Nobody knows whether it will go even lower in Feb., thus when the opportunity presents, I chicken out initially. It didnt help also when there were so many negative news about the market then. All this turns out to be noise, trying to distract you from keeping to your own investment course and strategy. I relooked at the FA metrics e.g. PB, and all these counters were trading at near low in Feb. With this as base (and for DBS, it gives great confidence that the CEO bought lots and lots of DBS shares), I bought all those counters in Feb., it was not easy, as this has been my biggest purchase in a single month.

Money Management and CUT loss
As mentioned earlier, no one knows if the stock price will go even lower, thus it is important that we do not expand all our bullets or some bloggers call it warchest. I have also keep reminding myself to cut loss, if it has gone down 15%, but a few times, I did not adhere to this rule and learned a painful lesson.

Entry and Timing
Most of the people might disagree with me, but I feel that the timing of entry is important. It is not a 100% sure win if you use TA to time your entry, but it gives you another perspective of entering the counter. In Feb. when I bought DBS after looking at the chart, the stock price actually went down a little, thus TA is just a guide, that's all. If you are interested in TA, you can read my post on Capitalcomm.

Conclusion
One of the very insightful article from Ms Teh Ooi Ling in Feb., the GDP forms the base for the market, and currently this base is 2510. This was also one of the reason for my purchase in Feb.. In the coming months, I am sure there will be more noise and opportunities will also present itself, will you have the guts to press the buy button.

Source: Straits Times, Aggregate Asset Management

A quick look at CapitaCommercial Trust Reits

STI has corrected by more than 20% and most stocks are also beaten down. Although there were many not so positive news about over supply of office space in the CBD area, this stock has been pretty resilient.  

Pulling the data from the stockfact from sgx.com, the PB and div looks pretty decent.

Using the same portal, if you sort the Reits by div yield, you get the below. In a rising interest rate environment, you would want to make sure that the debts are not high, and CCT meet this criteria.

Take a look at TA, would the trend change if it is able to break and stay above $1.35? Please use your own judgement as I am not a certified professional.