Great Global Stocks Sale Again!!!

How things have change over a year, it crashed from fairly optimism to now deep pessimism. Looking at the amount of funds that is seeking for cover in T-bills, SSB and Banks fixed deposits, people are parking their funds into safe haven.

However, many studies have shown that investing in stock is still the instrument to beat inflation in long term. The key here is long term.

As the market corrected and keep correcting every time Fed increase interest rates, deep discount value of some stocks have surfaced. 

Global indexes such as the S&P500, QQQ and world index has corrected to close to 20%. From the TA, S&P500 and World index is showing signs of reversal, and there is divergence on MACD on weekly candles. This show strength in the medium term.

Locally, there are also number of counters that have presented deep discounted value as well.

Will these stock price drop further, it may, nobody knows. Thus, as a investor, one should not expand all the bullets at one go. Always remember that market is always right. This is not an advise to Buy or Sell, do your own diligence.  

Blueprint to build your own STI index - Avg 10yr Annualised Return 12.6%

SGX website provides some good information for retail investors, and one of the few articles published in the website was the report on the 10 year annualised return of the local stocks. The 10yr annualised returns of any stock is a good indicator of how the stock had performed over the last 10 years. If you coupled this with the rule 72, this is a very powerful concept.

The S&P500 10 year annualised returns is around 13.6%. What does this mean? This mean that the amount invested in the S&P500 will double every 5.3 years.

I am writing this article so that my kids, in time to come when they are interested in investing, has something to guide them. 

Below is the table that shows the 10yrs annualised returns for each of the local stock,

Do note that the Capital mall is now CICT.

The last column (index composition) is the weightage of your total fund that you will be investing, the ones with the higher annualised returns will have bigger weightage. You can also choose not to have any weightage at all.

Should you be buying all these now. Of course NOT. You need to value each of the stocks, and buy only when their price drop into the discounted value zone. One of the quick test is using the 5 years avg dividend. At the current price, there are few stocks in the discounted territory.

The avg return from this DIY index is 12.6%. What does this mean?

This means that every 6 years, your invested amount becomes double. Apart from buy S&P500 ETF, here is another alternative to your investing journey.

Alibaba - Is it time to buy ??

 Happy National Day Singapore.

It is a long weekend here and I just want to share my thoughts on this counter BABA listed in NYSE and as well as HKSE (9988). There have been many sharing of is it time to buy in the social media when Alibaba crashed more than 40% due to the hard handed by the Chinese Government. I am not interested in any country's politics thus I shall not comment on this aspect. I am more interested in if there are coffee money to be made from this crash.

In stock investment, all of us know that there are risks involved as the equities returns are high. This principle applies to all market, including the chinese. Having understood this, then let's look from FA and TA perspective at how we can take advantage of this crash using our spare cash. By spare cash, I mean you dont lose sleep if you lose the entire stake.

Fundamental Analysis

Over the last 5 years, on average the EPS is about 5.5. This is about 30% discount to the last reported earnings. This is to ensure there is some margin of safety.  Using this; the estimated stock price at

PE 22 = USD 122

PE 34 = USD 188

PE 45 = USD 247

So at the current price, would you go in??

Technical Analysis

Looking at the TA, there are no indications that the correction has slowed or stopping. Do a comparison with Jan 2019 when the correction happened and it reversed up when MA and TA indicators moved up.

The above is to record my thought process for me to reference in future, not a recommendation of any sort.