This week has been a hectic week. School work is starting to pile up with lots of materials to read. There have been some problems in school, which I feel is insignificant and not worth mentioning.
I have been monitoring the markets more and reading economic data extensively to get a general feel of the market, this has caused me to have insufficient sleep for the past 1 month. Made a few good buys and sells which I will not reveal now. Wait for end of the year to see my new portfolio allocation. :)
I have realised that there are so many things to do in life and I need to refocus. All these experiences costs money and the 2.5K salary that I'm going to bring home in the future is not going to get me anywhere. Anyway, I'm not in this profession for the money. I need to find ways to earn more, so that I can afford to spend more. I reiterate the word "afford" again, a prudent investor needs to spend within his means.
The compounding effect of money is simply too powerful to ignore. Having a capital of 100k and compounding it at 20% per year can be easily an average person's annual salary. If I can compound it 20% consistently for 5 years, I would have easily 248K. To the average person, it is a significant amount. To the one who has made it, it is just merely numbers.
I have stopped trading forex on paper months ago because there is not enough time to monitor while I'm in school. However I still believe that over time, I will be profitable. If anyone wants to pick up trading, forex is the way to go. Tough, brutal, challenging and it takes lots of discipline to control emotions. I don't like the idea of having rollover fees if I were to keep my trade the next day. Pitting your skills against the market is tough enough and yet as a retail trader, one has to pit their skills against the brokerage too. There are many wide swings and false breakouts to lookout for.
I need to refocus on what is important to me. Over the years, I've narrowed down and filtered out those that are not and kept those that are very important to me. I'm glad that time has made me realise this.
My focus now would be school work, trading/investments and the occasional drinks with my best pals. Life just keeps getting better. :D
Showing posts with label Random thoughts. Show all posts
Showing posts with label Random thoughts. Show all posts
Saturday, May 16, 2009
Sunday, January 4, 2009
2009 Resolutions
New year and new beginning, I would like to be a little bit more serious and stop fooling around haha...
1) Achieve at least a B or B+ for all my modules. (Would be great to get all As, that would be my goal in mind, but I'm happy with a B.)
2) At least 3 hrs of quality reading a day. 2 hrs allocated to school work and 1 hr to finance books. (Definitely would want to spend more hrs reading. Warren Buffett reads at least 5-8 hrs a day. Not that I dont read, I'm a binge reader of everything online like politics, business news, world affairs etc. I hope to spend more time on books and less on other distractions.)
3) Finish reading Security Analysis. (Finally that 1 hr came to good use.)
4) Exercise at least 2 times a week. (I want abs!)
5) Sleep early and wake up early. (Sleep before 12am if there is school tmr. 1am if there is no school. Wake up at 9am. This rule wont apply if there are special occasions like partying. :P)
6) Plan out a daily timetable. (I'm a carefree lazy person, this is to help me organise and be discipline.)
7) Would like to meet more friends. (Half my life revolves around them haha...)
8) Investment goals. (Needless to say, read my previous postings for more info.)
9) Get a gf? (Everyone keeps telling me this. How do you actually "get" 1? Can buy with cash? Need lots of love right? Haha...*joking*.)
10) Last and most important, I wish everyone around me to be happy. (I am happy if you are, it means a lot to me. One of my reasons for living a happier life.)
Hope that I can meet all those targets. God bless and good health people! :D
Thursday, January 1, 2009
Year End Portfolio 2008
2008 is a tough year for all investors. Experts have mentioned that this financial crisis is more severe than the great depression of 1927. I don't know how long the bear will last, but I'm sure the market will rise again. Nothing is new in market cycles, the boom and bust, top and bottom. History repeats itself because greed, fear, hope and ignorance will always be there in the emotions of the market.
It's a fruitful year for me and a great learning experience to ride this bear market. I've grown wiser and hopefully my capital allocation skills have improved. Made many investor friends this year. They are all very successful in their own ways and I wish them well and a prosperous new year in the years ahead. They have taught me a lot and have given me great insights in personal finance and how to enjoy life. I would like to thank them personally. (pappy, dream, san jie, uncle88, kk, superfriends I've met this year and online friends...etc etc the list can go on and on :P) You can chat with us at pappy's blog, it's getting crowded haha...
I'm happy with the past performance as I've met my target of beating the STI ETF benchmark by 10% for 2 consecutive years. However past performance is not a good indicator of future performance. I feel that I'm quite lucky and would like to be lucky again. Only time will tell, after 5 years if I've not met my target, would be better off investing in the STI ETF itself.
Cheers and Happy New Year to all readers! :D
It's a fruitful year for me and a great learning experience to ride this bear market. I've grown wiser and hopefully my capital allocation skills have improved. Made many investor friends this year. They are all very successful in their own ways and I wish them well and a prosperous new year in the years ahead. They have taught me a lot and have given me great insights in personal finance and how to enjoy life. I would like to thank them personally. (pappy, dream, san jie, uncle88, kk, superfriends I've met this year and online friends...etc etc the list can go on and on :P) You can chat with us at pappy's blog, it's getting crowded haha...
I'm happy with the past performance as I've met my target of beating the STI ETF benchmark by 10% for 2 consecutive years. However past performance is not a good indicator of future performance. I feel that I'm quite lucky and would like to be lucky again. Only time will tell, after 5 years if I've not met my target, would be better off investing in the STI ETF itself.Cheers and Happy New Year to all readers! :D
Wednesday, September 10, 2008
Unlocking Value Investing
When someone tells you that they are value investors, what first comes to mind? "Buy and Hold" strategy, invest for the long term, it is futile to time the market, buy on value at a margin of safety and invest in your circle of competence. Is that all? So easy? That is what I thought at first. OK, besides those difficult to understand FA analysis and valuation of companies, I shall touch on the general concepts of value investing that most value investors have not noticed.
"Buy and Hold"
Warren Buffett popularised this strategy and practices it more than often because he had an eye for scouting what I called "super companies" like Wal-Mart, Coca Cola, GEICO. They had superior earnings growth year after year for many years in the past(or now? I haven't looked at their income statement). They had ROE>20%, EPS growth per year and quarterly of >25%. Superb growth companies. Looks like C=current quarterly EPS and A=annual earnings increases, from the "CAN SLIM" method popularised by William O'Neil. They always look for companies with exceptional growth.
What most value investors did not notice is that Warren Buffett do not buy-and-hold forever for every company he bought. He sells off companies that he thinks is over-valued like PetroChina or mistakes like Dexter Shoe and US Air. Although there were no losses but very little gains as capital was not properly allocated. He did not allow his portfolio to tank 50% in value and more or even average down on them. Warren Buffett soon realises his mistake and did not chase good money after bad companies. In fact, he averaged up on Wal-Mart when prices kept soaring over the years with earnings.
If you had read his letters to partners, the Buffett Partnership performed better in a bear market than in a bull market using the Dow as yardstick. In fact, his portfolio has never recorded losses in a bear market. I believe he took some profits when signs of the bear is clear.
On investing long term
Benjamin Graham said "In the short run, the market is a voting machine but in the long run it is a weighing machine."
Value investors never realise that in the short run the market is always correct. Never try to beat the market because the market is bigger than you. It is like trying to out debate with millions of people and you will lose badly. If you think Citi was cheap when it is trading at $30 and 2 months before it was $50, you are so wrong. The market does not think this way and prices continue to tank until $20. At $30, I believe most investors know that prices will definitely go down further and why would someone buy at $30 knowing that it would fall further?
I used to think that it is futile to "time" the market. However by saying that, I am telling myself that I do not understand market psychology which is a very important characteristic in investing. By timing the market I do not mean by the exact buy and sell point of the stock. It is more of demand and supply. Take Koda for instance, I know it has very good management, stock selling at below NAV. However I would not buy it now because demand for their products are decreasing due to the slow down in global economies. Most value investors fail to revalue their companies realising that the bear is coming and sell them when they think it is overvalued.
By failing to do so the value investor did not realise that earnings would slow down or turn negative in a bear market, hurting overall performance of the company in the long term. If in the next 10 years the company can collect 100M of free cashflow, adding 3 years of bear market, they might have 60M at the end of 10 years. That is why prices go down from the high valuation in the previous bull market. Things would have been so different if we are in a bull market now right? It is not very difficult to tell from a bull and bear. Nevertheless nobody can predict the extact top of the bull or the bottom of the bear. We just have to be patient and analyse the market and companies carefully. Warren Buffett also did not rush to buy companies immediately few weeks after the sub-prime crisis. He knows the market very well.
Ps: Have been reading on "Can Slim" and TA stuffs. Some of the concepts makes sense to me and might have influenced my thoughts on value investing. I find that I understand value investing a lot better now. =D On 2nd thoughts, buying SBSTransit might be a mistake.
"Buy and Hold"
Warren Buffett popularised this strategy and practices it more than often because he had an eye for scouting what I called "super companies" like Wal-Mart, Coca Cola, GEICO. They had superior earnings growth year after year for many years in the past(or now? I haven't looked at their income statement). They had ROE>20%, EPS growth per year and quarterly of >25%. Superb growth companies. Looks like C=current quarterly EPS and A=annual earnings increases, from the "CAN SLIM" method popularised by William O'Neil. They always look for companies with exceptional growth.
What most value investors did not notice is that Warren Buffett do not buy-and-hold forever for every company he bought. He sells off companies that he thinks is over-valued like PetroChina or mistakes like Dexter Shoe and US Air. Although there were no losses but very little gains as capital was not properly allocated. He did not allow his portfolio to tank 50% in value and more or even average down on them. Warren Buffett soon realises his mistake and did not chase good money after bad companies. In fact, he averaged up on Wal-Mart when prices kept soaring over the years with earnings.
If you had read his letters to partners, the Buffett Partnership performed better in a bear market than in a bull market using the Dow as yardstick. In fact, his portfolio has never recorded losses in a bear market. I believe he took some profits when signs of the bear is clear.
On investing long term
Benjamin Graham said "In the short run, the market is a voting machine but in the long run it is a weighing machine."
Value investors never realise that in the short run the market is always correct. Never try to beat the market because the market is bigger than you. It is like trying to out debate with millions of people and you will lose badly. If you think Citi was cheap when it is trading at $30 and 2 months before it was $50, you are so wrong. The market does not think this way and prices continue to tank until $20. At $30, I believe most investors know that prices will definitely go down further and why would someone buy at $30 knowing that it would fall further?
I used to think that it is futile to "time" the market. However by saying that, I am telling myself that I do not understand market psychology which is a very important characteristic in investing. By timing the market I do not mean by the exact buy and sell point of the stock. It is more of demand and supply. Take Koda for instance, I know it has very good management, stock selling at below NAV. However I would not buy it now because demand for their products are decreasing due to the slow down in global economies. Most value investors fail to revalue their companies realising that the bear is coming and sell them when they think it is overvalued.
By failing to do so the value investor did not realise that earnings would slow down or turn negative in a bear market, hurting overall performance of the company in the long term. If in the next 10 years the company can collect 100M of free cashflow, adding 3 years of bear market, they might have 60M at the end of 10 years. That is why prices go down from the high valuation in the previous bull market. Things would have been so different if we are in a bull market now right? It is not very difficult to tell from a bull and bear. Nevertheless nobody can predict the extact top of the bull or the bottom of the bear. We just have to be patient and analyse the market and companies carefully. Warren Buffett also did not rush to buy companies immediately few weeks after the sub-prime crisis. He knows the market very well.
Ps: Have been reading on "Can Slim" and TA stuffs. Some of the concepts makes sense to me and might have influenced my thoughts on value investing. I find that I understand value investing a lot better now. =D On 2nd thoughts, buying SBSTransit might be a mistake.
Sunday, May 18, 2008
An update of myself
I have to apologise for the lack of updates to dear readers who have benefited from reading this blog (although it is not much, these are just the basic foundations of value investing). Busy with school work was the primary reason and laziness being the secondary reason. I've actually cut down on a lot of activities and allocate more time to school. Most of my brain cells are now directed towards Anatomy and Physiology. I'm studying Physiotherapy at NYP if you are wondering. It is a 3yrs Diploma and 1yr Degree overseas course. Currently Universities in Singapore don't have this course. Yep! I'm climbing towards the plan that I set up for myself. Graduate with a degree and set up a healthcare business. With the accumulated profits, I can further invest in businesses.
Recent portfolio changes and updates
I will be doing a mid-year review of my portfolio at the end of June. My mom has decided to invest her savings with me and it will be officially called The Chan Partnership. I've sold off my losses in ChinaACorp. A loss of ~$1400, about 10% of my previous portfolio not including injected funds from Mom. This will be my last and final attempt on speculation and deeply regreted it. With the extra funds, I bought SBSTransit giving close to 7% annual dividends at 13X PER. Although crude oil prices will continue to rise but I foresee that the public transport pie will get bigger in Singapore. Margins will be offset by growing commuters as more people realise the high cost of maintaining a car in Singapore. It is not a fantastic investment but it is a safe one with an adequate margin of safety. Mom, your son will be extra careful with your hard earned money! d:D
Kingsmen continues to do well and I'm positive about their business prospect with more IR projects coming in. Much more emphasis is also placed on the designs of retail outlets to attract more customers. I think Warren Buffett said this before 'a business that helps other businesses make more money is a great business'.
The focus now is not really on the sub-prime issue but on inflation which affects everyone globally. It is increasingly challenging for value investors to deal with inflation as we need to adjust our calculations on the value of businesses accordingly. Time may actually be our foe if the price of the business remains stagnant for years even though we know the value of the business should be worth a lot more. Inflation eats into our profits as buying power of money decreases.
Recent portfolio changes and updates
I will be doing a mid-year review of my portfolio at the end of June. My mom has decided to invest her savings with me and it will be officially called The Chan Partnership. I've sold off my losses in ChinaACorp. A loss of ~$1400, about 10% of my previous portfolio not including injected funds from Mom. This will be my last and final attempt on speculation and deeply regreted it. With the extra funds, I bought SBSTransit giving close to 7% annual dividends at 13X PER. Although crude oil prices will continue to rise but I foresee that the public transport pie will get bigger in Singapore. Margins will be offset by growing commuters as more people realise the high cost of maintaining a car in Singapore. It is not a fantastic investment but it is a safe one with an adequate margin of safety. Mom, your son will be extra careful with your hard earned money! d:D
Kingsmen continues to do well and I'm positive about their business prospect with more IR projects coming in. Much more emphasis is also placed on the designs of retail outlets to attract more customers. I think Warren Buffett said this before 'a business that helps other businesses make more money is a great business'.
The focus now is not really on the sub-prime issue but on inflation which affects everyone globally. It is increasingly challenging for value investors to deal with inflation as we need to adjust our calculations on the value of businesses accordingly. Time may actually be our foe if the price of the business remains stagnant for years even though we know the value of the business should be worth a lot more. Inflation eats into our profits as buying power of money decreases.
Tuesday, January 22, 2008
Time To Look For Companies Selling At 50% Below Valuation
Very massive panic selling this week. The Singapore stock market fell to a 52 week low. I think most companies now are selling close to valuation especially properties because sentiments were high last year.
I will be busy these few weeks applying for courses, ORD in 060208! Will also be looking out for companies selling at a huge discount. I have only one punch card this year and limited cash, cannot afford to make any mistakes. The stock must get me really excited, must be a leader in its own field and trading at 50% or more below my valuation. They must have very little debt and lots of cash in hand. Giving 4-5% dividends. Good future prospects not affected by US mortgage crisis. No losses in the previous 5 years of operation.
ChinaACorp taught me a valuable lesson. I still cannot control my emotions well. Greed climbed over my head. This is what I learnt, do not buy out of favor stocks when sentiments are high even though they are undervalued because when sentiments are low, the price will definitely drop even lower at an increasing rate. So far, I have lost 50% of my initial capital on ChinaACorp. Considering selling it at a loss, but not until I see their financial statements for 2007 first. All buy and sell decisions must be made according to valuation and not through gut feeling. Will sell it immediately if I find another stock that suits the above requirements.
Happy shorting!(sadistic remark haha)
I will be busy these few weeks applying for courses, ORD in 060208! Will also be looking out for companies selling at a huge discount. I have only one punch card this year and limited cash, cannot afford to make any mistakes. The stock must get me really excited, must be a leader in its own field and trading at 50% or more below my valuation. They must have very little debt and lots of cash in hand. Giving 4-5% dividends. Good future prospects not affected by US mortgage crisis. No losses in the previous 5 years of operation.
ChinaACorp taught me a valuable lesson. I still cannot control my emotions well. Greed climbed over my head. This is what I learnt, do not buy out of favor stocks when sentiments are high even though they are undervalued because when sentiments are low, the price will definitely drop even lower at an increasing rate. So far, I have lost 50% of my initial capital on ChinaACorp. Considering selling it at a loss, but not until I see their financial statements for 2007 first. All buy and sell decisions must be made according to valuation and not through gut feeling. Will sell it immediately if I find another stock that suits the above requirements.
Happy shorting!(sadistic remark haha)
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