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Tuesday 15 December 2015

Random Thoughts...

Recently and as per every such break, I have been giving extra thought to my life. I am turning 35 next year and am pondering on how my life will or rather should turn out in the near and distant future. Amongst the things that I have been thinking about are of cause lifestyle and cost related. I asked myself, do I really need alot of money to lead a decent and simple lifestyle? Are there things in life that I can give up in order to lead a more stress free and happy life? Too many questions, increasingly more answers. One thing is for sure though, I'm thoroughly glad I started my investment portfolio even though markets have been erratic. Once you have a long term horizon, things like this don't really matter anymore. What matters is peace of mind and letting nature take its course - You really don't need alot to be contented.

As always, stay calm and invest on & look for the pot of happiness at the end of the rainbow.

God Bless
Transitioning Stock Investor

Stock Market and Portfolio Updates

Dear Readers

It's been a couple of months since I last posted. I have been really busy with my CFA exam preparations and just came back from a business trip to Tokyo.

How the stock markets have reacted since Oct. It has been a volatile couple of months but at the same time I see a myriad of opportunities opening up. My position in Sembcorp Industries has fallen a fair bit ever since Sembcorp Marine announced a profit warning a week or so ago. That being said, there are indeed chances to re-enter the market selectively to average down some of my positions. I do not forsee adding any different position at this juncture.

Will provide updates shortly. And rock on folks!

Signing Off
Transitioning Stock Investor

Saturday 31 October 2015

Captive Businesses

Today I had a pretty awful experience with parking that I would like to share. I parked at a carpark overnight and the carpark fee was $26. However, there was an issue with the gantry and I had to insert my cashcard manually. Lo and behold my cashcard got deducted again when I exited the gantry and as a result I got deducted twice. I was naturally not very amused.

I then called Wilson parking which told me to call Nets instead as the deduction of the cashcard was their issue. I then proceeded to call Nets and they told me to print the transactions of the cashcard and to email them the statement and they will investigate. No prizes for guessing that I was already fuming mad at this point in time. Nonetheless and however angry I was, I still had to use Nets and their services whether I like it or not. They appear in our everyday lives. I went on to check which entities own Nets and I was surprised that Nets is actually co-owned by DBS, OCBC and UOB.

This little anecdote taught me a lesson and it was something that ironically was shared with me by a fund manager during a recent meeting we had. It is really good to invest in businesses whereby customers have to stick with them whether they like it or not. This may be due to a near monopolization of the market or having big moats that surround the business. My anger was somewhat placated as I remembered that I have a fair share of OCBC shares. Oh well, the best way to convert this energy is to be invested in the companies that own these captive businesses. Same goes whenever I pay my Singtel bill, have a medical checkup at Raffles Medical or have to rush to a meeting on a Comfort cab. I have no choice but to use these services whether I like it or not. And that makes a pretty good investment proposition.

Signing Off
Transitioning Stock Investor

Sunday 11 October 2015

A Useful Way To Think About Investing

I was at a party last evening with some of my army mates. We have mostly finished our reservist duties and yesterday's gathering was really nice to see some old faces. Amongst the topics we talked about, was about investing, equity investing to be exact. I had a friend who asked me "so you are into stock trading ya". I replied: "no, I'm investing for the long term". Somehow or rather he did not quite get what I meant and I think it was due to an often held mindset that stocks are for the short term, trading in and out is important and when markets tank, the natural response is to panic.

Long Term Mindset
As we all would know, succesful investing entails a long term mindset. It should also entail having your stock portfolio as a part of your overall long term investment and retirement portfolio. I have split my portfolio between what I would term 'Cash' and this includes my stock and cash holdings. I then have another portfolio which I term 'Retirement', in which my SRS, Insurance, CPF monies would be included. Doing this helps me organise my assets more efficiently and more importantly it makes investing much more enjoyable and fruitful at the same time as targets become more tangible and realistic.

Understanding the Business
As Benjamin Graham once quoted, approach buying stocks like how you would buy groceries and not perfume. As I am reading the section on Porter's Five Forces in my CFA Level 2 preparations, I somehow categorically agree again with this mindset. It is important to be discerning when adding a stock position to your portfolio, understanding the various dynamics surrounding the business you are investing in.

The growth and sustainability of Cashflow becomes increasingly important as well as cashflow generation is frequently used as a value of a company. I have increased my focus on companies that are not only able to generate strong cashflow but are also able to deploy their resources in the most efficient manner possible. As we head into an increasingly competitive economy, this trait is becoming increasingly critical to any successful business.

Care to share how you frame your investment mindset? Do drop some comments and I'm keen to hear from you as well!

Signing Off
Transitioning Stock Investor

Friday 9 October 2015

Follow up on my previous post - Has the bear been smothered?

As shared in my previous post, I posted a question on whether Oct would be a bear killing month. Wow just a week after that post, the equities markets have rallied pretty strongly.

Holding unto the portfolio and selectively adding into positions over the recent market volatility did help sustain and improve overall performance. Am almost back to the black for the overall portfolio.

That being said, I have slight doubts on how long this rally will last for. Nonetheless, having a long term view does help as I go along for the ride. Will write a more detailed post in due course, but for now the bear does look to be in a bit of a slumber and the bull has awaken abit.

Signing Off
Transitioning Stock Investor

Friday 2 October 2015

October - A Bear Killer? Taking Stock of My Portfolio

I often times do not like to take a short term view to markets. My investment horizon as I'm sure would be the same for many of you is for years to come, even to the point of the retirement age. Nonetheless, it would be interesting to see what Oct has in store for us as traditionally Oct has been a pretty strong calendar month - so called "bear killer" month.

This being the beginning of the month for October I'm taking stock of my portfolio returns, sorted from best performer to the worst:

As can be seen above, both Raffles Medical and ComfortDelgro which are growth oriented stocks still performed in recent months, even returning a decent profit. The REITs portion of the portfolio also held up well, registering moderate drops. Singtel has seen some recent volatility but overall is still holding up quite strongly. OCBC has seem some pressures especially from short sellers, terming this as a service counter and putting heavy selling pressure on it. However, in the LT I expect the price to revert upwards to its longer term mean. Jardine has disappointed and continued to do so. Its exit from the STI Index certainly did not help as well. Sembcorp Industries took a severe beating due to the plunge of oil prices, although I feel that the stock should recover strongly once oil prices head back upwards, a scenario I am more inclined towards especially over the next two years.

Back to the markets!

Signing Off
Transitioning Stock Investor

Saturday 26 September 2015

Magic of Compounding

The power of compounding is an often talked about topic and has been a frequently cited element to investing. This to the extent of it being touted as the 8th Wonder of the World by Albert Einstein.

Although I have heard and known about this 'power' for quite some time and have always applied it religiously to how I dealt with my portfolio, the importance of it did resurface strongly again recently. I recently did a review and asked myself how much I was looking to have at certain ages and at retirement. As I grow older and hopefully more mature, materialistic pleasures start to take more of a backseat and financial freedom is becoming more and more of a priority. This of course is aligned to my main dream which is to be able to transit to a Full Time Investor some day and have passive income support my necessities.

I recently also re-visited the Rule of 72, whereby you are able to calculate approximately when your investment will double by dividing 72 by the rate of return. So for eg. if the rate of return is 6%, 72/6=12, you will take around 12 years to double your investment. This is a very real and powerful effect of compounding, which in all honesty is pure mathematics (a sum grows to a larger sum, which grows to an even larger sum when compounded). Thus, reinvesting your stock dividends is an integral part of adding 'fuel' to the compounding effect.

Therefore, the importance of any succesful investing strategy is to invest in quality companies, stay invested over the long term, dollar cost average when markets are panicky and most importantly reinvest dividends over time. It is a long journey, but one that is full of rewards when applied with discipline and a long term perspective.

*As we speak, the dividends for my OCBC Bank holdings will be reinvested at the end of the month, woohoo! It simply can't get any more enjoyable than this.

Signing Off
Transitioning Stock Investor