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?