Here are a couple of statistics from the US:-
CAGR LARGE CAPS REITS INTERNATIONAL COMMODITIES
1972-1979 5.1% 11.1% 10.5% 22.1%
1980-1989 17.5% 15.6% 22.8% 10.7%
1990-1999 18.2% 9.1% 7.3% 3.9%
2000-2007 1.7% 16.3% 5.5% 13.3%
We all know what happen in the US from 2008-2010, real estate crashed. The conclusion is that what is hot in the last decade may not be hot in this decade. No point chasing for the latest hot stuff based on past performance. Just periodly rebalanced your invested portfolio instead of moving in and out in huge quantites from one sector to another in search of higher profits.
Friday, September 10, 2010
Thursday, September 9, 2010
Your First Stock
In 2007 Berkshire Hathaway annual reports, Buffet wrote about the traits he looks for in any acquisition. They are:-
1) At least $75M in pre-tax earnings
2) Consistent earnings growth
3) Good return on equity
4) Manageable or no debt
5) Quality Management that is committed to the company
6) A simple business model
If you are purchasing your first stock to build up your investment portfolio, maybe you can use it as a reference. You may need to relax condition (1) a bit if you are investing in the local market as the companies are smaller.
I used to infrequently buy, hold and then sell some stocks in the past. But when I started to build my current portfolio from an all-cash position in 2008, my first stock was SPH.
1) At least $75M in pre-tax earnings
2) Consistent earnings growth
3) Good return on equity
4) Manageable or no debt
5) Quality Management that is committed to the company
6) A simple business model
If you are purchasing your first stock to build up your investment portfolio, maybe you can use it as a reference. You may need to relax condition (1) a bit if you are investing in the local market as the companies are smaller.
I used to infrequently buy, hold and then sell some stocks in the past. But when I started to build my current portfolio from an all-cash position in 2008, my first stock was SPH.
Wednesday, September 8, 2010
Bond Bubble?
I purchased some quantities of SGS Bonds in early Feb this year. The YTD maturity is about 17 years and coupon rate 3.5%. My bid price is at 102.4
I check recently and the bid price is now at 111.93. I am pretty surprise at the run up of such a supposedly stable instrument in such a short time. The indicated yield now is only 2.6% for such a long term bond. Including the dividends, my gain from this is close to 10% this year, better than quite a couple of my stocks YTD performance in 2010.
Understand the yields of long term US Treasury Bill are also at quite depressed levels.
Do we have a bond bubble here where demand have suppressed yields to record low? Or is it a long term trend where investors prefer the security of fixed-income instruments to higher risk instruments after going through so much volatility in the last few years.
I check recently and the bid price is now at 111.93. I am pretty surprise at the run up of such a supposedly stable instrument in such a short time. The indicated yield now is only 2.6% for such a long term bond. Including the dividends, my gain from this is close to 10% this year, better than quite a couple of my stocks YTD performance in 2010.
Understand the yields of long term US Treasury Bill are also at quite depressed levels.
Do we have a bond bubble here where demand have suppressed yields to record low? Or is it a long term trend where investors prefer the security of fixed-income instruments to higher risk instruments after going through so much volatility in the last few years.
Tuesday, September 7, 2010
September/October
Historically, September and October are the two worst months for stocks in the US.
Some of the biggest declines occurred around this time of the year. They include the crashes of 1929,1966,1973,1987 and 2008 (vividly etched on our minds).
Hold on to your seats!
Some of the biggest declines occurred around this time of the year. They include the crashes of 1929,1966,1973,1987 and 2008 (vividly etched on our minds).
Hold on to your seats!
Taiwan Depository Receipt
I watch with amusement that Oceanus, Yangzijiang and now China Taisan has
joined the chorus of companies listed on the local bourse to get a TDR listing in Taiwan. They do this by issuing additional shares or allow the redemption of existing shares into TDR. Typically these are companies with significant business exposure in China and reckon that their value will be greater appreciated by the Taiwanese market. In fact, TDR for Oceanus is trading at a premium over the value of the local share.
Could this lead to the floodgates being open that allows the S-Chips to head for what they think may be greener pastures. For some companies, maybe yes.
In spite of the growing importance of the Chinese economy and the higher possibility that you can find 10, 20 or even 50 baggers among these thousands of mainland companies, I think it will be wise to be extremely careful. Remember, even excellent companies in promising market niches can be screwed up by a fraudulent management. The recent commercial case against the founder of Gome (the largest electronic retailer in China) is just one of the many cases happening daily over there.
As a general rule, I tend to avoid S-chips with some rare exception. Even in doing so, I am mentally prepare to lose my investment sum, if I make the exception.
If you are investing with your retirement sum or your child education, I suggest you skip the S-chips completely.
A Taiwanese Depository Receipt (TDR) is a certificate registered in the holder's name or as a bearer security giving title to a number of shares in a non-Taiwanese based company deposited in a bank based outside Taiwan. These certificates are traded in the TSE.
joined the chorus of companies listed on the local bourse to get a TDR listing in Taiwan. They do this by issuing additional shares or allow the redemption of existing shares into TDR. Typically these are companies with significant business exposure in China and reckon that their value will be greater appreciated by the Taiwanese market. In fact, TDR for Oceanus is trading at a premium over the value of the local share.
Could this lead to the floodgates being open that allows the S-Chips to head for what they think may be greener pastures. For some companies, maybe yes.
In spite of the growing importance of the Chinese economy and the higher possibility that you can find 10, 20 or even 50 baggers among these thousands of mainland companies, I think it will be wise to be extremely careful. Remember, even excellent companies in promising market niches can be screwed up by a fraudulent management. The recent commercial case against the founder of Gome (the largest electronic retailer in China) is just one of the many cases happening daily over there.
As a general rule, I tend to avoid S-chips with some rare exception. Even in doing so, I am mentally prepare to lose my investment sum, if I make the exception.
If you are investing with your retirement sum or your child education, I suggest you skip the S-chips completely.
A Taiwanese Depository Receipt (TDR) is a certificate registered in the holder's name or as a bearer security giving title to a number of shares in a non-Taiwanese based company deposited in a bank based outside Taiwan. These certificates are traded in the TSE.
My Portfolio
In descending of portfolio size:-
DBS
UOB 5.05%NCPS
OCBC CAP5.1%NCPS
SPH
Singtel
Cityspring
SP Ausnet
K-Green
StarHub
Suntec Reit
Wilmar
SMRT
First Reit
SATS
StarHill Global
LMIR
DBS Pref4.7%
Ascendas India Trust
SIA
Keppel Corp
China Merchant Pacific
Olam
MiiF
SingPost
SembCorp
DBS
UOB 5.05%NCPS
OCBC CAP5.1%NCPS
SPH
Singtel
Cityspring
SP Ausnet
K-Green
StarHub
Suntec Reit
Wilmar
SMRT
First Reit
SATS
StarHill Global
LMIR
DBS Pref4.7%
Ascendas India Trust
SIA
Keppel Corp
China Merchant Pacific
Olam
MiiF
SingPost
SembCorp
Monday, September 6, 2010
Keppel
With the recent BP spill in the Gulf and the subsequent Mariner Energy owned platform that erupted into flames (without any oil spill though), this may leads one to think about the possibility of the US enacting a temporary ban of all offshore oil exploration in the US. If this is so, it will surely affect Keppel Corp, who is the world leading builder of oil rigs. I ponder on the likelihood recently.
But, I read the following statistic. There are about 3400 platforms operating in the Gulf according to the American Petroleum Institute. Together, they pump about one-thirds of American domestic oil. Given the American addiction on oil to lubricate and run the economy, I do not think a ban is possible, albeit a temporary one. Just witness how fast the BP spill is fading away from the daily news radar.
It is extremely difficult for a Singaporean company to be the leading player in the world in their core business. Keppel Corp is one of the rare few.
With the recent government recent cool down actions on property demand which causes a knee-jerk downward pressure on Keppel Land, and ultimately Keppel Corp share price, I thought it was an opportune to vest in Keppel Corp.
I vested at 8.74 and intend to hold it for quite a while. I miss out investing in Keppel Corp in 2009 when the price was much lower due to my indecisiveness.
I did not do a detailed analysis on the B/S, Income Statement nor CashFlow Statement as I do have some implicit faith in how Keppel Corp run their business. I need to revisit it sometimes.
I do not always do analysis before I vest. Sometimes quality blue chip, I just monitor the price for a long period of time and take action based on gut feel.
But, I read the following statistic. There are about 3400 platforms operating in the Gulf according to the American Petroleum Institute. Together, they pump about one-thirds of American domestic oil. Given the American addiction on oil to lubricate and run the economy, I do not think a ban is possible, albeit a temporary one. Just witness how fast the BP spill is fading away from the daily news radar.
It is extremely difficult for a Singaporean company to be the leading player in the world in their core business. Keppel Corp is one of the rare few.
With the recent government recent cool down actions on property demand which causes a knee-jerk downward pressure on Keppel Land, and ultimately Keppel Corp share price, I thought it was an opportune to vest in Keppel Corp.
I vested at 8.74 and intend to hold it for quite a while. I miss out investing in Keppel Corp in 2009 when the price was much lower due to my indecisiveness.
I did not do a detailed analysis on the B/S, Income Statement nor CashFlow Statement as I do have some implicit faith in how Keppel Corp run their business. I need to revisit it sometimes.
I do not always do analysis before I vest. Sometimes quality blue chip, I just monitor the price for a long period of time and take action based on gut feel.
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