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

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

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.

Cashflow
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

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

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

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

Mapletree Commercial Trust - Added REIT Exposure

Hi All,

It's been a week since I last posted. Along the course of the week I add 1,500 shares of Mapletree Commercial Trust. The current dividend yield of this stock is slightly above 6% and this addition brings my total holdings of Mapletree Commercial Trust (MCT) to 3,583 with an average weighted cost of S$1.38. The odd shares in my holdings is due to me participating in the Dividend Reinvestment Plan (DRIP) and this part of the portfolio is used to to enhance the overall yield and allow the compounding effect of reinvested dividends to be fully exploited.

The balance sheet of MCT remains strong and their liability management remains solid as well, with LT liabilities being managed very efficiently. Their crown jewel asset Vivocity has also just completed its enhancement works and has continued to attract large crowds on a daily basis. Although there are some concerns of potential rising interest rates, the current high yield and efficient capital management of the company help to mitigate those concerns. The share price which is trading at almost its 52 week low does help make the addition more attractive as well.

Moving forward I will be continually looking to enhance the yield component of my overall portfolio and probably focussing on slightly more defensive sectors. Stay tuned!

Signing Off
Transitioning Stock Investor

Thoughts on the Market, Fed has Spoken, Portfolio Positioning

And the Fed has spoken. As what I suspected (and I believe most of us did too) the Fed held unto raising rates. They cited a recovering US economy but also raised concerns on the broader economy especially China and other Emerging Markets. Was there something in the data that the Fed picked up on in which many of us may not have realised? The answer is still unclear but it was spooky enough to have sent the Dow Jones Industrial Average down 200 plus points yesterday evening.

So now we ask, where do we go from here to the end of the year and to 2016? I feel that the Fed most probably should raise rates a little towards the end of the year, and at 25 basis points for a start. Interest rates need to be normalised to around 2-3% and they cannot stay at zero infinitely.

What does the current scenario look like for stocks then? It does look like a pretty tricky course ahead for equities moving ahead as we approach the end of easy money. The US which was the biggest contributor to easy money is headed to pull money out of the market. China has also still been slowing down. Thus, we increasingly need to be extremely selective about our investments so as to mitigate all the risks that we face in the next couple of years.
Thus, I think it may be useful for some of us to think through our portfolios via the following factors:

1. Quality Portfolio
- Firstly, it is important and I cannot emphasise this enough that we MUST have companies that are of quality in our portfolio. This will give us simple confidence to add unto positions when prices drop due to temporary market movements. It is simply not the time to dabble with companies with a questionable background or potential concerns surrounding them in terms of management or integrity. I have recently seen some companies in the news being involved in concerns regarding their accounting practices, background and now is simply not the time to muck around with such businesses and hoping for a turnaround of some sorts.
- One good example of a company with a solid management team is Singtel. They have continued to demonstrate a willingness to change with the times, diversify their businesses regionally and most importantly having a robust financial management team.

2. Economic Environment
- With interest rates potentially increasing, economies slowing down, oil prices at their current prices, aging populations, it is really important to position your portfolio broadly in line with those themes. For eg. I have REITs in the portfolio but am not looking to add much positions due to potential rising rates and the impact it would have on REITs (due to them needing to refinance their debt heavily and potentially at higher interest costs).
- On the other hand I have added my holdings to OCBC Bank as they would benefit from higher NIMs (Net Interest Margins) with higher interest rates. In the local context we have started to see both SOR and SIBOR rates shoot up recently.

3. Earnings and Cashflow
- Lastly, the companies we own need to be having strong and hopefully growing top-line and bottom-line earnings that then churn out good cashflows over time. The current market price does not really matter that much. What matters more to me is the historical revenue and margin numbers of the business and also what I project them to be like in future. As can be seen, alot of the 'assumptions' rely heavily on both Points 1 & 2 above.
- I don't have a crystal ball and I won't say that I can predict the future. However, businesses like ComfortDelGro and Raffles Medical are two great examples of companies that have grown their numbers well over time. Well, whether their current prices are worth investing from a valuation perspective I can't really comment. In my previous post I did comment though that I am on the sidelines for both companies due to their relatively high valuations and that viewpoint I feel still remains intact. We shall see, but again glad to have build positions in both companies over time.

I would really love to hear from you how your portfolio is currently constructed? Has it stood up to the recent tests? And are you looking to build on it moving forward? Looking forward to your comments!

Signing Off
Transitioning Stock Investor

Portfolio Update - Increased holdings in: OCBC Bank

Ok after monitoring the markets pretty closely, yesterday 400 shares of OCBC Bank were added at a price of $8.95. This brings my overall holdings of OCBC at 3,438 with an average cost of $9.94. This was from my previous position of 3,038 with an average cost of $10.07. Looking forward to the future dividend bounty from this position as my annual expected dividends for next year based on current yields should be around S$1,200.

I may be adding another small position later in the month so do watch this space. Markets have rallied slightly today due to the Fed talks over these 2 days. Let's watch closely on the rhetoric from the Fed on where rates are headed and all hands on deck.

Shall take a couple of days break as I have fallen ill due to the haze surrounding Singapore...catch you guys during this weekend. Stay safe and keep your masks on!

Signing Off
Transitioning Stock Investor

Building Passive Income - Layer by Layer

Almost all of us who are in our working years are working in a full-time job or generating income from other sources be it from a business or investment. 

One of the key to financial freedom is to allocate as much as possible your monthly income from an 'active' source whereby work is required to generate the income to a 'passive' source whereby income streams in regardless of whether work has been put in or not. I remember reading a book many years ago at Starbucks in Central Mall. I can't remember the title of the book but what I do remember is that it stated that there effectively are just 3 main passive sources one can derive their income from.

The first is via a business or royalties, the second is through property via rental income and the third is from dividends/coupon payments from investments. I decided some time back that I probably would not be venturing into a business anytime soon. As for property, I have neither the knowhow or appetite for leverage to partake aggresively in that. Investments particular into stocks was a natural choice for me.

Therefore I made up my mind around 1.5 years ago to allocate around 50% of my monthly income to stocks and to consistently build the portfolio over time. Through a slow and steady process, the percentage of 'passive income' versus 'active income' would grow. Using my current progress as a check, I currently have only 2% of my annual income made up of passive sources. There is a long way to go but it is indeed an extremely exciting journey, one which makes me excited to head to work everyday to generate the salary to build further amounts of passive income in future. I'll be 35 next year and I hope to be able to have a better scorecard by the end of next year, let's see!

How has your progress to build passive income been coming along? Do share with me!

Signing off

Transitioning Stock Investor

Post General Elections 2015 + Portfolio Update. Do have a read!

And so, the people of Singapore have spoken. In what was a rather surprising result, the tailwind shifted to the sails of the PAP party's ship. The electoral results were pretty conclusive which resulted in a much better performance of the governing party. The picture below shows the soon-to-be party coverage of Singapore. I won't state too much comments with regards to the electoral result as this would not be the appropriate forum. However what I will say is that I do hope to see a more balanced parliamentary coverage in future elections. This should only benefit a first-world country like Singapore truly is, or is trying to become.

As shared previously, I would be sharing a brief update of my portfolio progress. As can be seen in the Bloomberg screenshot shared below, the portfolio is still deep in red territory. However, what is positive is that we have shifted somewhat from the steepest declines seen in mid-August when overall losses were in the double digit % terms.

Stock Portfolio as of 12 Sept 2015

Moving ahead, I will be holding unto the direction of my portfolio steadily. The course has not changed and in the months ahead, I most probably will be adding unto select positions. It is highly probable that I will be adding positions in either Jardine Matheson (JMH) or Singtel. The main emphasis for me is to identify companies that either have large existing moats (JMH) that are trading at temporary lower prices or those that are able to use technological innovations to improve both the efficiency and diversity of their businesses (Singtel). In other words, businesses that are able to grow and sustain either their top-line growth or profit margins.

There are certain components of the portfolio that I have a keen eye on in terms of looking out for potential headwinds. This would be the REITs segment (with rising rates and increased penetration of online shopping) and Sembcorp Ind. (weak oil prices). I do not expect to be adding unto those positions at the moment given the uncertain macro risks they still face.

Lastly, there are the quality stocks which I own but with still lofty valuations. These would be the likes of Raffles Medical and ComfortDelgro. They remain great businesses but I remain hesitant to build those positions until the prices make more sense from a valuation perspective.

Dividends for the portfolio remain strong and by the end of 2015, a total of $2,500 worth of dividends will have been paid (based on the current positionings). I'm really glad as this presents a small step in my journey to investing full time and building a solid and sustainable passive income stream.

Will look to write some detailed analyses on both Jardine and Singtel in days to come. In the meanwhile have a wonderful Sat. and a good post election day ahead! As usual, back to my books and more reading on financial statement analysis :)

Signing Off

Transitioning Stock Investor

Jardine Matheson - Missed the boat

As I was monitoring the share prices of the stocks in my portfolio, I was cognizant of the fact that the price of Jardine kept on falling. 

I was monitoring this very closely and was calculating the cost I had to pay in SGD. As we know USD has strengthened a fair bit against SGD and in USD terms it had went up 3.7% since I bought my first lot a few months ago at USD 57.10.

I decided to bite the bullet and placed a queue order at USD 46.50 when the market price was around USD 46.70. The price went back up and closed at around USD 48 today. Oh well, missed the boat on averaging down on this counter but let's see how it pans out next week.

Based on the data I have analysed from Bloomberg for this company and relying heavily on one metric which is purely the relative price of the company vs its historical mean, the price should be around the range of USD 58 instead. I shall not bore you with my further analysis of the other ratios and analysis of the market ecosystem of its related companies (which span across Indonesia, China, HK, SG etc) but I am fairly confident of the future potential of this company to revert to its mean 'value'. Shall therefore keep a close eye next week when markets reopen.

Signing off

Transitioning Stock Investor

Closer look at Singtel

As I hold unto my breath and small cache of investable funds, I am busily planning the next strategic move for my portfolio.

Singtel was not on my immediate radar as the price did not initially drop as much as it did in recent weeks. However, the price has fallen to around S$3.69 which makes it a pretty good level below my average cost of $3.97 for this counter. Additionally, the dividend yield has now picked up to a decent yield of around 3.7%p.a.

I still favour its major share of the Singapore telco market and the fact that most of its financial ratios (especially solvency related ones) remain one of the more robust vs its telco peers in the Singapore market. What I also find encouraging is its diverse spread of businesses and not being over reliant in individual countries like China or India. Most of us still are heavily reliant on their services and I see increased value in adding on positions in this company given the overall challenging environment ahead whereby telcos should still remain relatively unscathed.

Again, nothing overly fanciful. Just adding unto quality positions as and when opportunities arise.

Singtel Holdings Update:
# Current Holdings: 3,000 shares. Looking to add 1,000 more in Sept. To be updated.

What do you feel about Singtel at its current price? Glad to hear more from you!

Signing Off
Transitioning Stock Investor

Interesting Dilemma: Sharing my Thoughts

Good Saturday morning folks!

It's election fever here in Singapore as we are in the midst of our elections to vote for the next party to be in parliament. My vote is still undecided as a myriad of topics emerge for both deliberations and considerations. Usually in the past, there is an 'election effect' that we would see for Singapore stocks. However, with the current overall market volatility this effect has been completely dilluted.

Nonetheless, I remain steadfast in having strong belief in our local companies. More so of the ones that I have invested in. In recent weeks I have been faced with a dilemma.

- Do I average down only on some of my heavily beaten down positions?: OCBC Bank (11% down), Jardine Matheson (11% down) & Sembcorp (17% down).

- Or do I maintain allocation discipline and add evenly across all names?: Currently I have 8 names in the portfolio which has not changed for the last 6 months: OCBC Bank, Sembcorp Industries, Jardine Matheson Holdings, CapitalandMall Trust, Mapletree Commercial Trust, Singtel, ComfortDelgro and Raffles Medical.

- Or do I add positions to the ones that have continued to hold up well?: Comfortdelgro and Raffles Medical, both positions are the top performers in my portfolio.

As I type this and with limited resources at any one point, I'm still pondering on the next step to take. However and I say this with immense pride, I am glad that I rejected the urge to panic sell or to re-consolidate certain positions indiscrimately. With proper planning and selective stock picking, it became apparently clear and more so during the recent market madness that the companies which I have chosen are solid names that I would want to add even more when markets rotate.
So I'm glad my decision moving forward is skewed towards where to ADD rather than where to SELL as there is no impairment I see at all to any of the 8 businesses that I have stakes in. Nonetheless and on the flip-side, in a bullish market if any of the positions have risen to levels that I feel are prime for trimming, the appropriate rebalancing will be done. This was done a couple of times on both the Comfortdelgro and Raffles Medical positions earlier this year (for those of you who have been following my blog you may have read those earlier posts).

So remember, to empower your portfolio you need to have faith in the companies you put your hard earned money in. Not blind faith I have to reiterate, but faith stemming from hard work and research in the companies you own.

If you are new to investing and would like to construct a portfolio for a start, you may wish to follow my selections and get updated via this blog. However, please do not take this as buy-sell recommendations but they are suggestions on how to construct a proper stock portfolio. This will hopefully set you on the course to a better financial future and less reliance on your active work income.

Ending off with sharing some of my dividend updates for Sept below:

*Dividend Update for Sept
- Scrip reinvestment elected: OCBC Bank $360
- Scrip reinvestment elected: Jardine Matheson US$38

Signing Off and Have a Great Weekend
Transitioning Stock Investor

Milestone - 10,000 pageviews. Thank You

Dear Readers

I woke up this morning and had a pleasant surprise. The pageviews for this blog has crossed the 10,000 mark. I thank you very much for the support and constructive comments and feedback which you have provided.

I continue to want to keep this page ad-free as my sole purpose is to help the cause of improving investing education and sharing also my journey to full-time investing and hoping that it may inspire others to do the same. 

The recent market gyrations has not been an easy one to navigate. However, I strong believe that as long as our paradigm is right, our focus is strong and conviction is thorough, we will be able to emerge even stronger and more robust from not only this market environment but any crisis that we may encounter. This also presents an opportune time to revaluate our portfolios and think deep and hard about whether they are as robust as we would like them to be. It also digs deeper into our investing gut and gives us a chance to enhance our investing maturity.

With this I sign off for today. Thank you once again and do keep those comments coming in, I also hope that you continue to find my future blogposts useful, helpful and most importantly a mindful call to action! Take care my friends.

Signing Off,

Transitioning Stock Investor

Core and Satellite Portfolios - Have you truly figured out your portfolios?

I'm sure many of you would have heard of having a core portfolio whereby you utilise that portfolio for your investments. And probably a satellite portfolio for alpha generation and the like. Having various portfolios help both manage risks and also set priorities.

How I have structured my assets is a little different yet similar all-in-one. I have 3 main asset portfolios: 1. Retirement, 2. Housing and 3. Cash

1. Retirement Portfolio
- This is my bare minimum portfolio and is something that will enable me to lead a fuss-free lifestyle when I retire. You can call it the survival portfolio. I can afford to probably lose my pants off from most of my investments and yet lead a frugal yet viable retirement. This portfolio obviously consists of lower risk investments and it includes both the CPF OA (portion that has been kept aside and not used for housing) & SA, SRS contributions (which are all invested in a IG bond fund) and potential cash values of all my insurance policies.
- The current overall value of this portfolio stands at a healthy five figure amount and I project to have at least $300,000 in this 'pot' when I hit my target retirement age. Of course the fact that CPF monies can only be withdrawn at certain ages, etc have been taken into account.
- So basically this is a portfolio that can't be messed around and all investments per se have to be of quality and of lower risk. It is a survival portfolio and is used both as a hedge and for pure retirement purposes.

2. Housing
- This portion is self-explanatory. However, I will be upgrading my place at the end of the year but buying a property that doesn't stretch my mortgage obligations. I believe in spreading my eggs and I'm not as versed or excited in property as perhaps I should be. So this is purely having a roof over my head and I aim to clear all obligations way before I embark on my full time investing journey.

3. Cash
- This is where I allow myself all the fun and freedom to pursue my true passion and expertise; which is investing in companies. What gives me added assurance and flexibility to invest is due to the fact that both of the above portfolios have been well taken care of. I then am not bound by fears of inadequate retirement planning or not having a roof over my head.
- The above being said, my focus is still mainly on being invested in quality businesses and having growing dividends that are compounded over time. Just staying the course and being disciplined and mature. Thus, I remain fervent fans of Singtel, Jardine, Raffles, Comfortdelgro, Sembcorp, OCBC, companies which to me present excellent opportunities to participate in their ongoing growth and businesses.
- The finishing line is really clear and it is when I have both retirement and housing portfolios pretty secured and the cash portfolio is generating an income that meets my monthly expenditures. This would also mean to me, truly transitioning to being a full-time investor. However, what probably separates the successful and the rest is planning, the stomach to tolerate volatility, lots and lots of discipline and perhaps most important just enjoying the process. I have indeed been enjoying absolutely every minute of it and I obtain loads of joy and satisfaction when writing my blogs and discussing with fellow investors over time.

Hope the small snippets of sharing above has helped paint a picture of how you might want to construct your overall portfolio. Remember; if you fail to plan, you plan to fail. Have a great work week ahead! *and back to my books.

Signing Off
Transitioning Stock Investor

Keeping the Focus - Good to Read

With the markets having gone through major gyrations over the last couple of weeks, it is easy to panic and lose the initial focus that we had for our portfolios.

Stepping back from all the noise in the market, I asked myself again what was my initial rationale both for starting this blog and for that matter, having a stock portfolio? The answer came surprisingly easily.

I wanted to transit to being a full-time investor with a high quality and good yielding investment portfolio that could generate income and returns and gradually replace my active income from work. This would mean that my portfolio should only consist of quality and slightly larger cap biased companies that show an ability to be able to generate solid earnings over time and are well governed. It IS as simple as that, really.

I was tempted at certain points to cut some of the positions in my portfolio and especially at the heights of the crisis whereby the loss on my portfolio escalated. And I have to share that the recent rebounds seen may be signs of a bear trap, something that I am increasingly hearing from many fellow industry professionals.

However, something inside of me has changed. Somehow or rather my gut keeps on telling me this: If your investment aint broken, why sell it? I also remember the wise words of Warren Buffet when asked when is a good time to sell a stock and he replied: "Never".

I am now instead increasing my focus on higher dividend yield stocks within my portfolio to add on, in order to increase the yield stability + further solidify my new found investment maturity. Where I used to flight easily, everything feels much more controlled now and I now recall again why I started my portfolio in the first place: To be a full-time investor. And to be that, it takes both a strong mind and solid paradigm, traits which I am determined to reinforce.

And I sincerely hope that this recent market turmoil has similarly helped unveil something positive for you too.

Sharing some of my stock ideas at the moment:

Stock ideas within my portfolio:
Buy: Singtel, Jardine Matheson Hlgs, Sembcorp Ind.
Sell: None.

Nothing too fanciful, but I'm starting to have an increased focus on slightly overall higher dividend yields on the portfolio. The recent rise in oil prices which is something that I have been projecting for quite some time will also help influence some of my stock picking decisions: cue Sembcorp.

Signing Off
Transitioning Stock Investor

How Has Your Portfolio fared in this market?

I just had this interesting thought that crossed my mind. How much have your portfolios fallen during this current market downturn? 5%? 10%? 20%? Or more?

I just checked and mine has fallen 12% since today. Honestly speaking although that kinda sucks I'm pretty glad that my portfolio has held up rather well thus far.

So share with me, how much has your portfolio been hit so far? And are you happy or concerned on how it has stood up so far? I really would like to know.

Brace, Brace and be Brave

Now as the markets tank and I forsee more turmoil to come, it raises many serious questions for all of us investors.

- Is my portfolio as well diversified as it should have been? (Albeit everything is getting hit hard now)
- Does my portfolio contain solid and quality companies that will weather the storm well?
- Have I learnt enough lessons from previous market downturns and applied it well today?
- Does my investment philosophy stand well even in the current market environment? Do I look to buy more when quality positions in my portfolio become more cheap OR do I panic and flee?
- Do I have enough cash reserves right now to take advantage of market opportunities?

You see, when everything goes up and smoothly, everything is hunky dory. Investing is easy. However, it is during times like this that expose those with vulnerable portfolios that may have also been pumped up with margin. It also unveils those investors who are fundamentally strong and have a clear focus on what to do with their portfolio. And the best thing to do now I feel is to:

BRACE, BRACE BUT ALSO STAY BRAVE.

If enough of the right principles have been applied, there is no need to panic nor avoid looking at your portfolio. This is because investing is a long term journey and as long as you have set the fundamentals right, your portfolio should withstand shocks to the system be it big or small. Don't believe me? Then have a read of many other stock blog writers and see how many are either panicking or whining and the few that stand brave. Also, how many supposed smart alecs with fanciful trading strategies or flowery investment themes, were proven wrong again by the market.

As I shared previously, keep calm and invest on. Only difference for now is, you gotta BRACE BRACE and BE BRAVE too.

Signing Off
Transitioning Stock Investor

Earnings Season - Portfolio Update

Hi all, it's been a week since I last blogged as I was away on holiday in HK and what a hot holiday it was as the temperatures there just were sky high.

Nonetheless, as I was in HK I still kept a close watch on the markets in general. It was earnings reporting season for a host of companies in Singapore, which included names like Comfortdelgro, Singtel, Sembcorp Industries, Jardine Matheson Holdings. Of these names all reported solid earnings except Jardine which saw a firm-wide knock on the profits of its businesses.

I would be expecting a bumper crop of dividends for Sept of around $500 plus in which they will be entirely reinvested in their existing holdings.

What we also saw recently was a massive sell-down of many stocks mainly due to flowover concerns from China's recent devaluation of its RMB, not once but twice. This leaves many of the prices of the companies within my portfolio at rather attractive levels. I may consider either adding unto my REIT positions (ie. Capitaland Mall Trust and Mapletree Commercial Trust) or adding unto a postion to Comfortdelgro, Singtel or Sembcorp Industries. I am still undecided at the moment but will commit the funds later this month.

Meanwhile, it's more studies on my CFA Level 2 and just monitoring the market dynamics in general. Will update again when I further consolidate my portfolio with new additions to my existing holdings + reinvestment of the incoming dividends.

Signing Off
Transitioning Stock Investor

Recent Market Volatility - Fight or Flight?

We have been seeing pretty extreme market volatility in recent weeks. I am sure many of us were adversely impacted, regardless of the size or quality of the portfolio. This recent volatility was made worse by China's recent decision to devalue the yuan, which caused further weakness in the financial markets.

Many of the companies in my portfolio saw steep declines in their prices. Although this is naturally quite unnerving, this also presents a chance to re-enter some of the positions, especially those in which I feel that they were oversold. This includes OCBC, Singtel, Sembcorp Ind and the REITs in the portfolio, whereby some of the current prices have fallen even below my average cost price. This is where the importance of a warchest is obvious, as it allows us to take advantage of such occasional opportunities.

I choose to continue to fight and not flight, so have you made your choice as well? I shall end off with this quote: Keep calm and invest on, my friends.

Signing Off
Transitioning Stock Investor

Passive Income Stream - A Way of Life

This is I'm sure one of the main objectives of being a full time investor, to have a passive income stream to support your lifestyle.

Most of us folks have a day-job and I find it really important to have a focus when we are generating this income. As I grow older and more mature, it has become more apparent that one of the main reasons why I'm working other than enjoying what I am doing is to ensure that the income that I'm generating from work is re-channelled into passive income sources. These sources can be either one of these 3 or a combination of them: Business, Property, Investments. I'm currently pretty happy with my career in fund research so I plan to carry on with my day job. How I plan to enhance the goose (my job) is to further my studies. I have taken a pretty long hiatus with my CFA studies and I recently decided to resume the level 2 exam after a pretty long interval.

In terms of property, I currently am both not extremely versed nor excited by property investments. I probably will just stick to upgrading to a bigger place at the end of the year and that should be it. The smaller the mortgage, the more comfortable I will be.

This leaves me with my passion, my drive, which are stock investments. Nothing beats the thrill of seeing your portfolio doing well and growing over time. The feeling of anticipation as I reinvest the dividends declared by the companies and the constant deployment and redeployment of resources really brings me an extreme sense of satisfaction that is really hard to describe. This is more than increasing monetary resources, this is increasingly becoming a way of life for me. Remember, it is never too later or too small to start building your portfolio. It took me around a year to build my portfolio from nill to where it is today at c. S$72,000. My next aim is to hit $100,000 portfolio value and when that happens, some portfolio rebalancing might occur. But at the moment, am loving the way it looks and am looking forward to the dividend windfall of around $500 plus for the month of Aug.

Will do a short writeup and update on the dividends that will be received this month in due course. For the moment I sincerely hope this has inspired you to start or to carry on your great job of building passive income! Remember, enjoy what you do and the results will always surprise you

Signing Off for this weekend
Transitioning Stock Investor

Thoughts on Sembcorp Industries - 2 Aug 2015

It's been a pretty interesting week hasn't it. I hope many of you have solid portfolios, that in spite of the recent volatility has held up well.

I recently have been receiving a few queries on Sembcorp Industries and my views on the company. As you may know I am currently holding unto 3,000 shares of this company with an average cost price of $4.26. To be very honest, although I do feel uncomfortable seeing the recent stock price plummet, I still am very convicted in this position. Now do let me make some points on why I say this, with some caveats obviously.

1. Correlation of Sembcorp Industries and Oil Prices
- Now, we know that Sembcorp Industries owns a large share of Sembcorp Marine and we have seen the recent poor numbers from the latter company. I did a correlation study of Sembcorp Industries with the price of oil, over time. What can be seen pretty obviously is the high correlation of oil price to the price of Sembcorp Industries. What I also noticed is the convergence of the stock price to oil and based on current values, the stock price still has some way down to go if it does converge.

2. Oil Market in General
- Now, in relation to the point above we need to understand the oil market and its dynamics. I could go on and on but in summary what I can describe the market is there are two main factors: Supply and Demand.
-Supply of Oil: This is closely controlled by OPEC in which there are key parties like Saudi Arabia, Russia, Kuwait, etc. The current dynamics is this, the Saudis refuse to cut production to prop up oil prices because they want to maintain market share. They also want to force out the shale oil drillers in the US because when oil prices are low, they go below the production costs of shale oil and as a result if these shale oil drillers are unable to sustain low prices and margins, they need to shut down. And the Saudis have large pockets to wait this out. However, you also have countries like Russia which need oil prices to recover to prop back up their economy.
-Demand of Oil: China has been slowing down and as such the demand for oil. Some countries are also exploring alternative energy sources which may affect oil demand albeit not in the forseeable future.
Summary of Oil: There are a myriad of other things about oil that I can nag about, however in summary what I can say is this. I expect oil to stay low, but probably come back up by next year. It is anybody's guess but I really dont see this scenario panning out for too long. And when oil does shoot back up, which it has done many times before, this stock is well-positioned to capitalise on that.

3. Sembcorp Industries's valuation and businesses
- Similarly, we can scrutinise all of their businesses to a fault and come to a premature conclusion. But I won't. However, what I can observe is that the current valuations of Sembcorp to me are very fair. I say this being fully aware of their relatively high debt levels, declining margins, etc.
- However, let us not forget these factors:
a. Sembcorp Marine is still one of the world's best offshore rig builders with superior management and a rather long history.
b. Secondly, utilities is still a necessary business model and in spite of domestic pressures, the company has expanded overseas like India to build their businesses there.
c. Most importantly I still do not see any impairment to their business models. Yes, they have lower orderbooks and declining margins, but it is obvious that these are highly correlated to the concerns on oil prices. Do I see this as a long term impairment? Clearly not.
d. The businesses that Sembcorp is in require high levels of capital investment and are large moats with high barries of entry. I love that for any business.

In summary, what I can comment about Sembcorp Industries is that even though I see declining profits currently, I don't have much concerns on it going forward. In times of uncertainty, we really need to dig deep and ask ourselves our initial reasons for investing in a current company and whether those reasons remain intact. They clearly do for me in this company as I wait out patiently for oil prices to rebound and as a result recover the margins for this well-managed, world class company that    will soon prove its detractors wrong. There is no signs of impairment of the business and more importantly its management and any near term price concerns will be shrugged off and/or good reasons for adding more positions in which I am planning to do so probably.

Comments are most welcome!

Signing Off
Transitioning Stock Investor

Daily Encounters with Companies within my Portfolio

Interestingly, I had first hand experience to deal with many of the companies that I have in my portfolio. You see, this is exactly what makes these companies great in my eye. They are not some stock ticker or symbol that I play around with. These to me are actual quality and solid businesses that make profits and contribute to the overall growth of the economy. They are doing stuff that are very familiar to me and I hope stuff that will continue to be as relevant if not more, in the future.

That's why I ignore what most pundits say and I proudly say that I am in love with my portfolio and I shall always stay invested in the same holdings and probably add more if it's relevant. The only reason a company leaves my portfolio is if a significant or long term impairment of its business model occurs or there is some permanent underlying reason that makes the holding in my portfolio unviable.

Raffles Medical - I visited Raffles Hospital yesterday for a medical appointment and saw first hand the demand for healthcare needs in Singapore. Let me say that I was pretty impressed with the crowds I saw and at the efficiency and service standards of the hospital. The crowds that I witnessed were again clear signs that healthcare is a paramount need in Singapore not only for locals but for foreigners as well. This is a small holding to me but I would be keen to add exposure when the price becomes more viable as it has risen quite substantially recently.

Singtel - Most of us nowadays have a mobile phone. And with that phone i'm sure, a data plan. I just paid my monthly mobile bill recently and what a hefty bill it was. The great thing about such companies is how sticky customers tend to be and also slight price increases over time is mostly tolerated by users as mobile usage has become second nature to us. This is a core holding to me.

Capitamall Trust and Mapletree Commercial Trust -  I have been shopping at Vivocity and many of the malls under Capitamall Trust and glady I still enjoy those shopping experiences plus the convenience of many of the malls. It's true that online shopping nowadays is catching on but there are many times whereby you need a brick and mortar shopping experience to get the stuff you need. That is the modus operandi of Capmall as alot of their malls serve necessity requirements. Nevertheless, REITs remain a semi-peripheral holding in my portfolio. 

Sembcorp Industries - The only service that I get to experience with this company is their waste disposal service and I see those trucks pretty often. In fact it's this part of the business that got me initially intrigued to the overall company. We all need waste to be disposed one way or another don't we. This holding has been the biggest detractor thus far for me, I adopt a wait-and-see attitude on whether I will still continue to add on dips.

Jardine Matheson - I shop pretty frequently at Cold Storage and Giant, which are all under this huge conglomerate via Dairy Farm. I also work at MBFC and part of it is is owned by HK land, which is under this conglomerate. It seems that is is hard to escape the reach of this massive company and this is exactly what I like about it. Although the stock has been pretty weak recently and earnings are forecasted to be slow I still am very positive on the LT prospects of this iconic conglomerate. I look to increase exposure in this holding for sure in future.

OCBC Bank - As a consumer I dont have much access to OCBC's services and perhaps I should have more. Nevertheless, I like the business and how it serves alot of the rest of us and that is suffice reason for me to stay invested. I shall probably look at DBS in the near future too as I use alot more of its services. But for now, OCBC remains a key anchor of my portfolio.

Comfortdelgro - MRT (certain lines), taxis, bus, vehicle inspection, etc. Come on, I deal with this company extremely closely. Be it taking taxis, buses, sending my car for inspection this is another great example of business you can't really escape. And I'm glad so far it does not seem to have much of the maintenance issues witnessed by SMRT. I really like this company and it has become a core holding in my portfolio.

In summary, as shown above many of the companies I own, I use their goods and services alot. That gives me a great advantage as I am able to experience first hand, the quality and necessity of their offerings over time. It allows me a strategic vantage point as a first hand user, to determine if the businesses they run are still as relevant today and in the near future. And that honestly, helps me sleep better at night. Remember, invest only in businesses YOU understand and not necessarily something that a stock analyst has recommended in which the business is something you have not even heard of. Thanks for reading and have a blessed week!

Signing Off

Transitioning Stock Investor

Special Writeup - Especially for Aspiring or Beginner Investors

I recently have been asked by a few close friends on why to invest, what to invest and how to invest. Alot of times we may take our easy access to financial markets for granted as probably investing is second nature to us. However, I realised that for many folks out there who are either not working in the financial industry or are not versed yet in all things investing, they may find it difficult to understand how to start investing and for that matter doing it right. Thus, I'm writing this for their benefit.

To keep it simple, I will categorise markets into 3 broad forms. There is the equity or stock market, fixed income or bond market and alternatives such as FX, real estate, gold, etc.
I shall elaborate with the commonest, which is the stock market (but if there are requests to understand the other markets do post your comments and I shall blog about them). 

In Singapore, we are blessed with the SGX stock market. What is even more cool is that we are able to buy smaller lot sizes (100 shares) which makes accessing the market even easier. Basically, to access the stock market there are 2 main ways: Actively or Passively. Both have their pros and cons and I shall elaborate a little further below.

1. Active Participation in Stock Market
- This is the most traditional way to be involved in the stock market. Just buy the shares of the company. To do this, you would need to open a brokerage account with any of the local brokerage houses. This is where alot of beginner investors stump and get alittle lazy. If you wish to invest, you need to get moving!
- Honestly, buying stocks directly is not as daunting as it seems, as long as you understand what you invest in. My suggestion is to start off with blue chips, look at the 30 stocks listed on the STI Index and figure out which companies and their respective businesses that you like. And just buy into them and hold them for the long term. It is that simple for a start.
Of course as you get more experienced you will study alot more information like fundamentals, valuation metrics, etc. However, for a start just buy a few lots of businesses that you are familiar with. I use Mapletree Commercial Trust (REIT) as an example. They own Vivocity and I love shopping there and am impressed with the locality of the mall. So I bought the shares of the REIT. It really is as simple as that!

2. Passive Participation in Stock Market
- There is another way to begin your stock journey albeit in a more passive manner. You may not yet have the confidence to choose the stocks that you like but you would still want to participate in the stock market. This is where an Exchange Traded Fund (ETF) is most useful. This is a passive investment vehicle whereby it purchases and replicates the stocks on the Stock Index. What you need to do is just to purchase units of this ETF to get a broad based exposure of the overall stock market. As this is not meant to be a sponsored post I shall not mention which ETF or product is most suitable. Nevertheless, a quick google on "Singapore Equity ETF" will definitely help provide you more information.

- Another passive option is through Unit Trusts that invest in the equity markets. Tip would be to identify funds that are able to consistently provide superior alpha returns (ie returns above what is expected of the market). This is not an easy task but one that can potentially reap superior rewards if done well. Do note the slightly higher costs and fees that are involved with unit trusts that are in exchange for professional investment management and stock picking.

Sincerely hope that the above sharing has helped. As can be seen, accessing the stock market is not as daunting as it seems. It's all about starting somewhere and increasing your exposure and understanding of the financial markets that will eventually empower you to be a better and wiser investor.

Signing Off
Transitioning Stock Investor

Market and My Portfolio

This week has broadly been a good week with a little bitter sweet taste in my mouth. Most of the positions in my portfolio have been resilient and have recovered some of its drops seen in June. I sold off 1000 shares of Raffles Medical to fund a recent watch purchase last week and lo and behold this counter shot up into the hemisphere yesterday and finished at a crazy price of $4.90. I'm glad I still have 1,022 shares of this counter but lament the fact that I probably should have let go of some of my loss making Sembcorp Ind. holdings instead. Oh well, we all don't have a crystal ball do we but lessons learnt. Nevertheless my portfolio should always be looked at as a Long Term proposition and no more of such monkey business (although I have a nicely added watch to my collection lol).

I'm gonna post some comments of some of my holdings.

1. Raffles Medical - I seriously don't know what happened to this stock. It shot up c.4% yesterday and now I'm sitting on a nice 24% profit on this position. I definitely will look to add on in further but does anyone know what caused the sudden uptick in this counter's price movement? I O/W this company provided at more sensible prices.

2. Comfortdelgro - I added on 300 shares at $3.06 yesterday to this counter. This is after I took some money off the table 2000 shares at $3.21 before the Greek crisis unravelled. This turned out to be a pretty good move and I'll be looking to add on more shares to this company which I still favour alot (stable and strong ROE, strong cashflows and balance sheet, solid and diversified business model). I look to continually O/W this company.

3. Capitamall Trust - It was in the news recently regarding two sets of updates. Firstly it announced that it would be buying over Bedok Mall from its parent company Capitaland. Most of this will be funded by debt and some by issuance of additional units to its parent. Now, I'm not too excited about this move and whether the purchase adds significant value to CMT's portfolio. My parents still stay in Bedok and I frequent the mall occasionally. Let's just say that I have doubts that this is a superior mall and that the crowds that I witness are fantastic. The projected yield of c. 5% from this mall also is similar to the current yield of CMT's portfolio so again I don't see much of a quantum leap. Anyways, we wait with abated breath on how this develoment takes shape.
The second development is CMT's announcement of either refurnishing or divestinf Funan Digitamall. This to me is a good move as I have never been a fan of Funan and struggle to understand what is the added value of this IT centric mall. It has also seemed to be positioned awkwardly as people still somewhat flock to Sim Lim for IT related stuff. Get rid of this holding I say and so be it.
The above two developments just set me thinking on CMT's positionings and the retail landscape in Singapore. I currently U/W this sector and will not be looking to add unto my REITs positionings except probably for Mapletree Comm. whereby I see positive developments for Vivocity.

4. OCBC Bank - It was reported in the news recently that our 3 local banks, DBS, UOB and OCBC will be expected to report stable and good earnings. Let's see but I strongly feel that the current price of OCBC at $10.33 is grossly undervalued and has a long way up to go. I am looking to O/W this holding.

What else do you guys think? Let me know :)

Signing Off
Transitioning Stock Investor

Market Catalysts and Quick Portfolio Update

Looking at the current market today, there will be some short term catalysts that will be of interest.

Firstly, it has just been confirmed that an agreement has just been reached on a Greek bailout plan. This deal when voted into the Greek government will hopefully keep Greece in the Euro and Grexit will not occur. In fact, it further shows the solidarity of the Euro and keeps the other countries that went through austerity (ie Spain, Portugal, etc) happy. I see this as a positive catalyst.

In the Chinese stock market, I see a longer term systematic issue. Nevertheless, the recent moves by the Chinese government to steady the ship and prop the market up has went some way to steady the market. To me, in the long term the Chinese investor needs to learn from past lessons, but at least for now things look better than a few weeks ago. I similarly see this as a positive situation.

In terms of the local stock market, a slew of companies are poised to announce earnings with the next month. All of the stocks in my current portfolio are slated to announce earnings during this time period. I attach a nice screenshot of the positive price action today:

Watchlist of My Current Stock Portfolio (Source: sgx.com)

I await better results especially from the less performing companies: Sembcorp Industries and Jardine Matheson. I hope that my trust in these companies will pay off in terms of better earnings numbers.
I continue to be fairly confident in the earnings of the core companies in my portfolio: Singtel, OCBC, ComfortDelgro and Raffles Medical. I similarly expect the REITS in my portfolio to continue their good performance: Capitamall Trust and Mapletree Commercial Trust.

I will be taking a break from adding to positions in the current month as I continue to build my warchest. I recently sold a holding of Raffles Medical (at a profit of c.S$700) to fund a watch purchase. Oh well, all work and no play makes Jack a dull boy, but I definitely look to lessen such activities moving forward.

The markets do look very interesting now and some of the positions in my portfolio looking prime for adding, especially Singtel, ComfortDelgro and Raffles Medical. Will closely monitor these positions and update accordingly when I make stock additions. As of now, I relaxingly sit back and let the portfolio recover and continue to churn out its dividends.

Signing Off
Transitioning Stock Investor

Lessons that need to be learnt from the Chinese Stock Market Crash

General foolhardy market euphoria, Utter disregard for fundamentals, Retail Investors jumping in based on total speculation.

The above sounds all too familiar ya. Yes, the above is what I would use to describe what happened to the Chinese stock market over the last 1 year or so. Almost everyone in China who could invest, went into the stock marker with wild abandon. Chasing stock prices as they went higher. Buying stocks like it was a roulette game in a casino (red or black). Interestingly, this phenomenon was warned about in the book which I shared about in my previous post. And ex-post everytime this phenomenon occurred it was bound to end up being pretty ugly, which is what we are currently seeing in the Chinese stock market as we speak. It certainly was also a reminder of what we saw in 2008, where markets crashed discriminately and spectacularly.  

Over the last one week, around half of the stocks in the market were halted for trading by their own companies. We have seen certain stocks drop by levels that would have rendered most people bankrupt if they had marginalised their positions, something in which many Chinese investors did. Mutual funds were not spared as many of the Chinese A shares they invested in were similarly suspended. I did a quick study of some of these suspended stocks and some of the names just bewildered me (as there was a good mix of unfamiliar and relatively well known names). 

All the above just goes to show a few important points, which are closely correlated with behavioural finance. If you would like to invest and to do it well, understand the business you are buying into. Also, do not allow greed or emotions to drive your decision making. Never follow a trend based on hearsay or following your inner herd instinct. In the stock market a stock that everyone is chasing up is not necessarily a good investment idea. In fact, often times the stock price does revert to mean somewhat and you end up with a bruised position and sometimes ego. Put real effort and analysis into your investments and you will reap the harvest in the long run. Learn to look through the mess and stay focussed in finding quality businesses selling at reduced prices in the days to come.

In other words, Stay Calm and Invest On my friends.

Signing Off

Transitioning Stock Investor

Two Simple Yet Powerful Investing Lessons Learnt Over Time

Now this is something I struggle with, right. Building a warchest to take advantage of opportunities. In such uncertain market environments, it makes alot of sense to have a sizeable warchest to buy on market dips. However what I struggle with is whenever I think I have a warchest, I end up vesting into another position. Guess it takes as much discipline to invest as not to invest.

In any case, I'll most probably be looking to enhance my warchest over the next few months as a way to build up capital to invest on market dips.

In the meanwhile I'll stay on the sidelines and wait out the current market volatility. One thing I really did realise versus my previous investment experiences is that when you have a solid quality portfolio, market volatility does not hit you as badly. Yes, your portfolio does take a hit but it sure is much more bearable compared to what I used to own when I was years younger (penny and speculative positions). I guess experience really does help build knowledge over time.

So in summary, just reiterating two simple yet important lessons I have gathered as I age and become more mellowed and wise in all things investing.

One, always have a sizeable warchest to capitalise on market weaknesses. Two, always invest in quality and solid businesses that you understand and are comfortable with. Both of these help to capitalise and ride out market volatility, values which are extremely important for any investor. It really is as simple as that.

Signing off
Transitioning Stock Investor

Thoughts on the Market - with an Iced Milo Dinosaur on hand

Arrr, sipping on my iced milo dinosaur, I've decided to write this post casually and share my thoughts on the market. As I'm enjoying the Sunday break of course.

What do we have this week? Firstly, is the Greek referendum. Let's see how markets react to the decision tonight but my guess is the impact shouldn't be too much as most of this news should have been priced in.

The China stock market continues to unravel itself and its still a black box on how the market will continue to behave this week. I expect more continued volatility.

In terms of the local stock market, it's been pretty quiet and I think with the lack of much catalysts like earnings announcements and such, probably a lacklustre market environment should remain for the near term.

What's important as I realised is probably to take a break from the stress and obsession from monitoring your portfolio and to just take a break and relax. Enjoy life abit, forget about dividends, earnings, profits for the time being. Just soak in life and enjoy life's simplest pleasures, like an iced Milo dinosaur over the weekend. A break well-deserved which is good for the long term, as remember investing is an enjoyable marathon and never a sprint.

Signing off 

Transitioning Stock Investor

Value Investing - Recommended Book - Must Read for Investing Enthusiasts

I love sharing a great book when I see one and this is it, 'The Intelligent Investor' by Benjamin Graham, who is widely known as Warren Buffett's mentor in investing. I'm sure some of you have heard of or have also read this book before. 

I read it around a year ago and it was what got me started in Real Value Investing. It was a fundamental breakthrough for me as it shifted me away from how I used to 'Invest': alot of emotion, timing, speculation, eagerness to make a quick buck, short term mindset, lack of awareness about the stocks I bought, the list goes on. This book basically addresses the paradigm and helps adjust your mindset towards investing. Alot of the time the problem really lies with us and how we view investments as a whole. Even till today, as I read alot of investment blogs, I only see a handful of fellow investors who truly appreciate and value what real value investing represents. 

I would strongly strongly recommend anyone who is serious about investing and doing it well and wisely to pickup this book. Be forewarned that some parts are very detailed and complicated to understand but I shall sum up the gist of the book in 3 main points that I have understood and apply regularly.

1. View Investments as Businesses not Stocks

- This is critical. When we buy a stock we usually treat it as a ticker or symbol, something that we just play around with. This mindset sets an obstacle to true investing. When we buy a stock, we need to think of it as buying shares in a BUSINESS. We need to think of the investment as a stake in the company, as a business. We need to be acutely aware of what the company actually does, does it have long term prospects, etc. Another important point shared in the book was to identify business with large moats (ie high barriers to entry, sticky businesses, hard to replace). Additionally, de-linking the thought of buying a stock and thinking of your investment as a part stake in a business will immediately set you thinking differently and more importantly, strategically. One great example I always think of is Singtel and how people are constantly glued to their mobile phones, evolution of apple watch, 4G to 5G, etc. There is so much potential to this company based on simple representations of everyday life and use. This gives me great confidence in investing in this business for the next 10, 20, even 30 years.

2. Always Have a Margin of Safety

- Now, this is easy to understand and say but extremely difficult to apply. Basically what this means is to find stocks that are trading at a price level that is at a deep DISCOUNT to its intrinsic value. So even if you purchase the stock and it does drop, the potential drop in price is minimised. Basically buying good stuff for cheap prices (being a stock cheapskate lol). Why I say its hard is because of two things.  Firstly, it's really hard (not impossible) to find cheaply value stocks. Usually you would find them when the market corrects, dips, or there is a temporary disjoint between what the market feels about the company versus its current price. Secondly, the other problem is what you define cheap as and this is intricately linked to the calculation of intrinsic value for the stock. There are some ways taught in the book on deriving intrinsic value and one simple formula that can be used is the following:

3. Invest Long Term, be Disciplined & Patient

- Last but not least, understand and accept that investing is a long term process. Stay the course, delay gratifications and be disciplined. Invest regularly into your portfolio, reinvest your dividends into your portfolio, basically doing all the 101 things and refusing to do stuff like contra trading, market trending, speculation stuff. Learn to stay the course over tine and reap the full benefits of your investments. Remember Warren Buffett only made his billions when he was in his 50s so alot of the businesses he bought years ago, he still owns today. PATIENCE in investing is a key virtue and a very important one at that.

There are plenty of other lessons to be taken away from the book but the above 3 have impacted my investment philosophy immensely and given me a new found paradigm and empowerment to investing. This to me is best reflected in my current portfolio and I am immensely glad with how it looks and will continue to be. And it also brings me great joy to share this knowledge with you. 

Sincerely hope the above sharing has positively helped you in some way.

Have a great weekend ahead!

Transitioning Stock Investor

Thoughts on Jardine Matheson Holdings

Good Thursday Folks

Since I have recently purchased some shares of Jardine Matheson, what better time to write about the company.

The Jardine group is indeed a complex web of companies with Jardin Matheson owning part of Jardine Strategic and vice versa. This structure was purposefully formed to prevent adverse takeovers something which the group was subject to previously. 

I shall not dwell too much about the company's long history or further corporate complexities as it is simply too long and complicated to elaborate here. I will just share 3 points that helped make my decision to take a tiny stake in the company.

1. Valuation

- The current valuations for the company all look within range and are values that I am comfortable with paying for. P/E is around 12x and P/B is around 1.1x, both of which are reasonable levels for me.

- The price has also dropped around 15% since the beginning of the year, which also makes this a relatively discounted price for me.

2. Business Model

- The group has a diverse range of businesses. Again I like the fact that when I buy this company I have access to Astra, Dairy Farm, HK Land, Jardine Lloyd Thompson, Cycle and Carriage, etc. These are all great businesses in which alot of us have a good deal of exposure to both on a regular and long term basis.

3. Cashflow US$

- The company has grown its dividends steadily over time and these will be in US$. With the eventual rise of interest rates in the US$, we should expect to see a nice headwind in terms of dollar strength. This gives me a nice potential FX kicker for future cash flows (dividend and capital gains) which will be in USD and translated into SGD at potential higher values.

There definitely were some concerns that I had with regards to the investment. The group is quite tightly held by the Keswick family so alot of its fortunes are tied to the ability of the family to grow the large and complex group of businesses. There is also the FX exposure in US$ which may go against me in future in the unlikely scenario that my hypothesis about future FX rates is incorrect.

Nevertheless, I like the company and its potential enough to take this initial position. I'm really glad to have bought into this stock and I hope I can add on more in future.

Also, I've decided to stick to just the 8 companies that I own at the monent and just continue to add unto those for the forseeable future.
Remember it's the quality and not quantity that counts!

Signing Off

Transitioning Stock Investor

Update: New Stock Holding added!

After a long deliberation and much thought, I have added 100 shares of Jardine Matheson Holdings today at a cost price of US$57.10. Translated into S$, the amount is around $7,750.

I'm really glad to have added this stock to my portfolio as I really like their portfolio of businesses. It ranges from automotive sales, supermarkets, hotels, insurance, property, financial services amongst others.

I really have not felt so excited in a while about buying a particular stock and I am also really happy with the look and structure of my portfolio now. I'm also glad to be a beneficiary of the smaller lot sizes as previously I was not able to take positions in this stock due to its high price. I may add more positions in this counter moving forward, we shall see.

Will update my portfolio structure in due course. What do you guys think about the Jardine group of companies? Do let me know!

Signing off
Transitioning Stock Investor

Stock Radar Alert...!

Stock radar alert! I have a stock that I might be adding to my portfolio.

And the stock is.....Jardine Matheson Holdings.

I generally like the idea of conglomerates as businesses and Jardine fits the bill well. I especially like their supermarket and insurance parts of the business. I have always been a fan but didnt have the capital to invest but thanks to the smaller lot sizes i can take a nibble. The price is also looking pretty attractive too now.

Only slight hurdle is that the stock is in USD so   I would need to sort out my multi-currency account. But shouldnt be a biggie.

Will update again when the stock is added, probably later in the week.

Signing off
Transitioning Stock Investor

How much is enough in order to be able to invest Full Time?

Was just wondering about this as we end off the weekend. This question has always been running through my mind.

How much is enough in order to be able to invest full-time and probably find a part-time job that we enjoy doing? 

What yield should this portfolio generate to be considered adequate and/or good?

How much? What do you guys think? I really wanna know. Do share with me folks what you guys think.

Portfolio Update - June 2015

Good Sunday Morning Folks!

Today's an interesting day as I sum up my portfolio for June and share the recent developments for the month.

In terms of portfolio additions, as shared earlier in the month I have added 1 lot of Singtel at $4.13. Subsequently in early last week, I added another lot of Sembcorp Industries at an attractive price of $3.91. Overall, I'm quite glad with the prices I paid for both companies as I thankfully managed to capture the downside of the price curve for both stocks. I also now see a nice recovery in the price of Sembcorp and hopefully the price recovers even further.

In terms of portfolio subtractions, I took profit on 2 lots of ComfortDelgro just last Friday before the market closed, locking in a 18% (36% annualised) profit. This leaves my current holdings of the counter at 2 lots. I pondered extremely long over this decision and as can be seen I seldom try to take profits as I do hold my holdings over the LT. However, I do have some concerns on the overall market with the bubble in the Chinese 'A' share market + Greek talks I found that it was a good opportunity to take some money off the table especially as I had made some good percentage profits already. I continue to overweight this company and will definitely accumulate more in future on price dips (this also means I am still overweight transport as an industry and I seek to maintain that).

Finally, in terms of dividends it was a really good month for me as other than May & August, June sees the most dividend payouts as I saw dividend inflows from Mapletree Comm. Trust, Raffles Medical and OCBC (both of which I elected to receive dividends by DRIP).

Here's a summarised look of my holdings and dividend records and trends at the end of June 2015:

Transitioning Stock Investor - Portfolio Holdings June 2015

Transitioning Stock Investor - Portfolio Dividend Trends June 2015
*Note that future dividend trends are projected based on historical dividend payouts

I still love the look of my portfolio and struggle to find good companies to add unto it. As such my near-term strategy over the next 6 months is to continue to find good opportunities to add unto my current holdings and to increase my dividend stream consequently. That's it from me this weekend and have a great week ahead!

Signing Off

Transitioning Stock Investor

Thoughts on the Market - 25 June 2015

Wow, what an eventful recent few weeks we have had. We saw the Fed being dovish on rates, the China 'A' share market taking a nosedive 'again' and most importantly the threat on a 'Grexit'

So I ask myself again what should I be doing in such a market environment whereby it is fraught with 'Ifs' and 'Hows'.

I found it important again to remember this. Stay invested, buy on dips and keep a warchest for eventual corrections. I also realised that I have repeated this process over time and it always works. The key to success in investing is this: Know what you are buying, keep emotion out of investing, have a plan and always think LONG TERM. Avoid trading the market and you already have half the battle won.

Remember this again, be the tortoise and beat the hare at the investing race!

Signing off
Transitioning Stock Investor

Sembcorp Industries - Updated Holdings

Hey Guys,

Quick update. I added 1 pop of Sembcorp Industries today at the price of $3.91. This brings my average cost of this counter down to $4.26 from $4.43. This position I'm fairly confident should pay off, especially when the following happens:

- Sembcorb's share price converges with the price of oil.
I did a simple comparison of the share price vs WTI oil and there is a obvious divergence seen. I expect some levels of convergence, something which when extrapolated over time has shown to recur  consistently.

- Market realises that Sembcorp is good value currently
All ratios, be they P/B, P/E etc all point to good value for the company

- Sembcorp's businesses pick up
I know we have all recently read their declining margins, businesses not doing well, falling revenue and asset turnover etc. However i like their overall business and strongly feel that they will revert to mean in the long run. Most of their businesses, marine included are fairly important and I expect again mean reversion in the LT.

Shall monitor the market closely for other developments but feeling glad on the addition today. Again one must take a long term view for this view to true play itself out positively.

Signing off
Transitioning Stock Investor

Portfolio Update #3 Sembcorp Industries

This is the 3rd instalment of my portfolio update and this is where it becomes interesting. I will be touching on Sembcorp Industries today, a stock in which I own 2 lots of. This stock represents the Industrials segment of the sector allocation within my portfolio.

Sembcorp Ind. 1 year share price (Source: Bloomberg）

Share Price
As can be seen above, the share price of the stock has been seeing a steady decline since Aug 2014 last year. This as we all know can be attributed mostly to the fall in oil price over the same period. The average cost of my holdings is $4.43, so this is around halfway of the peak to trough price.

Pros of Sembcorp
The reason why I commented that this post is interesting is because I truly do not know or have a good gauge where the share price of this company is heading to in the near future. On one hand I know that there is a solid business model in place for Sembcorp and I was not only focussed on their O&G businesses when I bought the stock. I also greatly favoured their utilities and waste management businesses, sectors which I found important and necessary in any market environment.
The dividend payout and yield of the company has been excellent as well and has been really consistent over the years.

Cons of Sembcorp
Neverthless, the company could not escape the eventual impact of a low oil price and its effect on its margins and marine segment of the business. I also re-studied their latest financial statements last evening and the numbers do paint a pale picture of their businesses. Overall, turnover and margins have been falling with also a drop in free cash flow generated. Debt levels are increasing for the company which is inevitable for a capital intensive company. Lessons previously learnt from a local water management company which can be read in my previous post on "Due Diligence" and the importance of throwing caution to capital intensive companies still ring fresh in my mind.

Valuation
Usually I have strong conviction in my portfolio holdings and when the price falls I usually average down due to that conviction. However,  using  the Graham's discount model (will not furnish the valuation here, as this is just used as an estimate) the fair value for the company that I have derived at is still at a level that is lower than its current share price. Do note that this is not a recommendation to you to buy or sell the stock but just a valuation guide that I have used to help determine my investment decision.

Summary
I may probably add holdings of this position if I see a turnaround in prospescts of the company moving forward. At the current moment, I'm adopting a wait and see approach as there are just too many potential headwinds and questions left to be answered.


Signing Off
Transitioning Stock Investor

Portfolio Update #2

Following on from my previous portfolio update, I'll be commenting on some of the other stocks in my portfolio. I'll be focussing on OCBC solely for today, due to the amount of information I have to write on it.

1. OCBC Bank
- I currently am holding 2 lots of this bank stock, with some additional odd shares due to dividend reinvestment.

- For me a good portfolio should have some exposure to financials, as they represent the heartbeat of a robust economy. Businesses generally need cashflow and loans to function and this also spreads down to the common consumer like us be it in credit, investments or deposits.

- The thing I really like about OCBC is its healthy dividend yield and that I'm able to participate in the 'DRIP' program. For those who are unfamiliar with 'DRIP' it stands for Dividend Reinvestment Program, whereby you can elect to receive dividends in the form of shares. Much like how an 'accumulation' share class of a unit trust works. This program is really quite brilliant as I leverage on it to compound my portfolio returns effectively.

- What I also like about OCBC is its standing as a solid and safe bank, with good capital adequacy ratios. Its current P/E of 9.7 and P/B of just 1.23 represent fantastic value to me too. Its expansion in HK due to the Wing Hang acquisition looks to have been fully integrated into the business. NIM margins also are expected to be healthy due to the potential increase in US rates, most probably end of the year.

- There are some potential headwinds as well, most notably the general health of the global economy (Greek debt, potential Chinese A share bubble, amongst others). Also a slowdown in certain businesses such as loan issuances, higher defaults, etc pose some concern too. However, I do not expect these headwinds to pose significant or immediate threats to the business.

- In summary, I strongly feel that OCBC is pretty attractively valued at the current price of $10.03. Any price below $10 looks like a viable entry point. Again to me short term pricings should not matter as much but at the current price it does look prime for picking.

Alrighty, I've share my views on OCBC Bank which is one of the key holdings in my portfolio. What do you guys think?

Signing Off
Transitioning Stock Investor

Portfolio Update

A quick update on my portfolio. As shared previously 1 lot of Singtel shares was added earlier this week. And the market subsequently recovered strongly after that, so that was a rather good call in terms of timing.

Nevertheless, at this mid-point stage in the year, my overall portfolio is looking in rather good shape. There was some recent volatility but with a long term view, volatile markets always represent opportunities rather than risks. 

Quick commentary on some of my holdings and what transpired over the last week months:

1. Raffles Medical - Obviously, a strong catalyst for the recent share price strength was the news of its expansion in Shanghai and the collaboration on a hospital there. None withstanding this piece of news, I continue to expect strong organic growth from the business, especially in Singapore. I visited the sites that are being developed at both Bugis and HV recently and I was very impressed with the locality and scale of the projects. I also was impressed at the potential synergies that will be provided by these two developments in the healthcare industry moving forward. I will continue to add positions when there are price dips.

2. Singtel - As shared, a lot was recently added at $4.13. That was a very good price point as the share price has rallied towards the end of the week. Again, the scale that Singtel has, coupled with the heavy reliance on telecoms gives me strong conviction in owning this quality holding.

3. Mapletree Commercial Trust - Now, this is a stock that I currently have only 2 lots in. I will most probably add a couple more lots soon. Just go visit Vivocity over the weekend and you will immediately see why I have a strong conviction on this stock. The other holdings in the REIT are also quality ones, that span nicely across the south-central part of Singapore. That being said, Vivocity is the obvious jewel in the crown and I continue to love this mall and that is the main reason why I would be adding positions soon. (Not forgetting that this is a 'DRIP' applicable stock).

I will be writing more about the other positions I have in my portfolio in due course. I would love to hear from you as well and what other stocks interest you at the current moment. Keep those posts coming in!

Signing Off

Transitioning Stock Investor