Morning everyone.
Today I'm about to share a topic which may be something rather new to some of you and probably often underlooked but one that is very important when it comes to investing in general.
You may ask, what is so important for anyone who wishes to invest? This important but often ignored aspect is what I term: Investment Due Diligence.
Honestly speaking, how many of us undertake a serious and comprehensive due diligence before we invest? We might do so when we invest in say something like property as a large amount is involved, but for stock investing, do we usually apply the same level of scrutiny (which we should) as well?
Well, probably some of us do probe and analyse but do we actually ask the 'real' diligence questions? Questions that raise a possible concern about the company that we are about to invest in.
These could range from questions like does the company utilise share buybacks more often than is reansonable to distribute cash back to investors vs declaring dividends? Does the company have certain items on the balance sheet which poses more risks than what meets the eye? Are there structural issues within the company's landscape which pose inevitable challenges for the business over the longer run?
These are important questions to ask but are also questions that tend to be left out because they seem to be either too complex or cumbersome to ask and/or understand. Nevertheless, other than using the usual approaches to understanding a stock, proper due diligence should always be part and parcel of the investment process as well.
I use a local water treatment company as an example that I encountered a few years ago. I bought into the stock at a high price in Q2 2011. I sold off the stock at a relatively large loss just last year. There were many factors which I initially felt were great for the stock:
1. Constant demand for clean water
2. Good media coverage
3. Large business moat
4. High barrier of entry, amongst others.
However, what I failed to appreciate and realise was how highly capital intensive the business was and the effects of a constant need to generate high levels of capital to run a business. The business is highly capital intensive (which is required for the water desalination plants, R&D, etc) but the returns were much more moderate and spread out over a long period of time (via utility bills that both consumers and corporates pay over time). Of course this is not to state whether it was a good or bad investment, but a case study to share the important of practising proper due diligence before buying any stock.
So remember, one of the cornerstones of good investing is proper due diligence. Understand the business well and you will be better equipped to make better investment decisions!
Signing off
Transitioning Stock Investor
Saturday 30 May 2015
Friday 29 May 2015
Thoughts on the Market - 29th May 2015
Day's off for me today. As I settle down for the long weekend, I'm at my laptop thinking about what has happened in the market during the week. Yes, we may ask.....what happened???
As most of us may know, the Chinese Stock Market plunged more than 6% yesterday. As I'm watching CNBC, I'm also seeing a lower pre-opening price for most of the Chinese stocks. Pundits are gunning for a 3% rebound, so let's see where that heads.
What does the above Chinese market sell-off spell for the Singapore stock market? Inadvertently, there is a similar spooking of the market. Most of the stocks in my portfolio (barring Raffles Medical) are trading mostly downwards this morning.
In the past, whatever that we have witnessed would have similarly spooked me and I may have just closed my laptop and just avoided the market with a ten foot pole. However, as my investment maturity grew (that was of course due to witnessing the 2008 GFC, Fed taper tantrum, Oil shocks, etc) I begin to look at this period as a great opportunity to invest in the stocks that I like.
This brings me back to my previous post whereby I wrote at length about Singtel. The current price of $4.09 does look extremely attractive and I would probably add another lot if the price hovers around those levels for the next couple of weeks. We'll see.
OCBC Bank does look interesting as well at its current price of $10.14. It has fallen quite substantially below my average cost of $10.34 for my existing holdings so probably this is an area that I may be seeking to increase my holdings. You may refer to my current portfolio (in my previous post) for a guidance on what stocks that I'm 'focussing' on.
To reiterate my thoughts for the market today. What goes up, does have to come down. The Chinese market has been red-hot and the pull-back was as inevitable as ice melting on a hot bonnet of a black car in a 33 degrees day in Singapore. However, what this does is also present us opportunities to invest in the Singaporean market with bargain opportunities galore.
I hope you can find your set of bargain opportunities as well.
Signing Off
Transitioning Stock Investor
As most of us may know, the Chinese Stock Market plunged more than 6% yesterday. As I'm watching CNBC, I'm also seeing a lower pre-opening price for most of the Chinese stocks. Pundits are gunning for a 3% rebound, so let's see where that heads.
What does the above Chinese market sell-off spell for the Singapore stock market? Inadvertently, there is a similar spooking of the market. Most of the stocks in my portfolio (barring Raffles Medical) are trading mostly downwards this morning.
In the past, whatever that we have witnessed would have similarly spooked me and I may have just closed my laptop and just avoided the market with a ten foot pole. However, as my investment maturity grew (that was of course due to witnessing the 2008 GFC, Fed taper tantrum, Oil shocks, etc) I begin to look at this period as a great opportunity to invest in the stocks that I like.
This brings me back to my previous post whereby I wrote at length about Singtel. The current price of $4.09 does look extremely attractive and I would probably add another lot if the price hovers around those levels for the next couple of weeks. We'll see.
OCBC Bank does look interesting as well at its current price of $10.14. It has fallen quite substantially below my average cost of $10.34 for my existing holdings so probably this is an area that I may be seeking to increase my holdings. You may refer to my current portfolio (in my previous post) for a guidance on what stocks that I'm 'focussing' on.
To reiterate my thoughts for the market today. What goes up, does have to come down. The Chinese market has been red-hot and the pull-back was as inevitable as ice melting on a hot bonnet of a black car in a 33 degrees day in Singapore. However, what this does is also present us opportunities to invest in the Singaporean market with bargain opportunities galore.
I hope you can find your set of bargain opportunities as well.
Signing Off
Transitioning Stock Investor
Monday 25 May 2015
Stock Radar: Singtel
Recently, I have been looking to add unto my portfolio. I could do this in two ways:
1. Increase holdings in existing stock positions OR
2. Add a new stock position
I have contemplated adding on these following new positions
1. Silverlake Axis (Banking IT systems)
2. Kingsmen creative (Exhibition events planner)
3. Eu Yan Sang (TCM)
4. Dairy Farm (Supermarkets, etc)
After giving the above some thought, I held back adding to those positions as I did not find compelling reasons to add them at the current moment.
Singtel
Therefore, I looked at boosting my current portfolio. And Singtel re-appeared on my thoughts. The price has come down slightly recently and even with the talks about a fourth telco abuzz, I still feel that this counter is a solid one to hold, for the long term.
As I was typing this, I witnessed another person glued unto their smartphone again, surfing away.The latest results presentation by Singtel, reiterated that mobile data is projected to be one of their largest sources of revenue, with around close to a quarter of users exceeding their mobile data plan. This, with the fact that it is indeed a hassle to switch telecom contracts, presents Singtel a rather large business moat.
Having stable and good levels of dividends over time does help add to the investment cause as well.
These simple yet compelling reasons made perfect sense for an adding unto my Singtel position. I should be making the decision within the month or next, depending on how the market moves.
What do you guys think? Comments and discussion points are most welcome!
Signing off
Transitioning Stock Investor
1. Increase holdings in existing stock positions OR
2. Add a new stock position
I have contemplated adding on these following new positions
1. Silverlake Axis (Banking IT systems)
2. Kingsmen creative (Exhibition events planner)
3. Eu Yan Sang (TCM)
4. Dairy Farm (Supermarkets, etc)
After giving the above some thought, I held back adding to those positions as I did not find compelling reasons to add them at the current moment.
Singtel
Therefore, I looked at boosting my current portfolio. And Singtel re-appeared on my thoughts. The price has come down slightly recently and even with the talks about a fourth telco abuzz, I still feel that this counter is a solid one to hold, for the long term.
 |
| Source: Bloomberg |
Having stable and good levels of dividends over time does help add to the investment cause as well.
These simple yet compelling reasons made perfect sense for an adding unto my Singtel position. I should be making the decision within the month or next, depending on how the market moves.
What do you guys think? Comments and discussion points are most welcome!
Signing off
Transitioning Stock Investor
Sunday 24 May 2015
May 2015 - Dividends
As with most investors, May has been a pretty bountiful month for me in terms of dividends. I have received dividend payouts for my following stocks:
Furthermore, I have just received in the mail scrip dividend choices for both my OCBC and Raffles Medical shares. I have chosen to participate in the scrip reinvestment scheme for both these counters. I will share more on the details next month, when the dividend units have been reinvested.
If you refer to the following chart, the dividend payouts for both May and June are reflected in the highlighted red box.
As part of my goal in transitioning to being a full-time investor, one of the important pillars in meeting this goal is of course having a strong and reliable source of dividend income. This must of course not come at the expense of either overpaying for a stock or looking purely for dividend yield and ignoring the fundamentals of the company.
3. Sembcorp Industries - $220
Furthermore, I have just received in the mail scrip dividend choices for both my OCBC and Raffles Medical shares. I have chosen to participate in the scrip reinvestment scheme for both these counters. I will share more on the details next month, when the dividend units have been reinvested.
If you refer to the following chart, the dividend payouts for both May and June are reflected in the highlighted red box.
 |
| Dividends for 2015 |
I strongly believe that fundamentals, business viability, strong moats, good dividend flow, stable and strong cashflow are all part of the overall package in determining a good business to invest in.
Remember this saying: When we invest, we buy into a business. When we speculate, we buy into a stock.
Dividends are just one of the eventual outcomes when you have spent quality time and effort in determining a good business to invest in. Hope the above advice resonates with you.
Signing off,
Transitioning Stock Investor
Topic of the Day: Portfolio Allocation
Hi Folks
Decided to come up with ocassional topics of the day. The first topic I would like to elaborate on after sharing my portfolio is portfolio allocation.
Now, you might be wondering why I chose the stocks that I had and why are the industry positionings as such.
Well, the short answer to that was that the industrial allocation was a subsequent result of the stocks that I chose. Also, I was fully aware of the importance of diversification when I was constructing my portfolio (which took me around a year to build).
So remember, before we even go into individual stock selections and drilling into numbers and reports, the importance of having a well diversified and balanced portfolio cannot be underestimated.
Tips for Portfolio Allocation:
1. Choose industries that have lower correlation and neutral to market trends
- Eg. banks versus transport represent a low correlation
- it is important to have a mostly neutral allocation as in the event of market rotations from cyclicals to consumer staples, you will not be caught flat flooted.
2. Keep the number maneagable
- Eg. It is far easier to manage 4-5 industries that you are well informed about
3. Avoid Industry concentration
- Eg. Avoid putting all your stocks in only one industry. If you only buy bank stocks and if there is a financial crisis, your portfolio is severely impacted.
That's it. 3 easy steps to build a stock portfolio that is balanced, easy to manage and with risks managed.
Comments and sharing are most welcome!
Stock Portfolio
After my short introductory post, I would like to share my current stock portfolio as a baseline to work with.
Below, is the snap shot of my stock portfolio positions as of today, 24 May 2015.
This is how it looks like in a pie chart
I am a strong advocate of Benjamin Graham and his views on value investing and I try to apply his principles as much as I can in my stock investing.
Below, is the snap shot of my stock portfolio positions as of today, 24 May 2015.
| Stock Name | Percentage | Amount | Holdings |
| Singtel | 12% | $8,560 | 2 lots |
| ComfortDelgro | 17% | $11,960 | 4 lots |
| CapitaMall Trust | 10% | $6,600 | 3 lots |
| Mapletree Comm. Trust |
5% | $3,123 | 2 lots |
| Sembcorp Industries | 12% | $8,400 | 2 lots |
| OCBC Bank | 31% | $21,134 | 2 lots |
| Raffles Medical | 13% | $8,735 | 2 lots |
| Total | 100% | $68,512 |
This is how it looks like in a pie chart
Below, is the snap shot of the industry exposures of my stock positions as of today, 24 May 2015.
| Industry | |
| Telecommunication | 12% |
| Transport | 17% |
| REIT | 14% |
| Industrial | 12% |
| Finance | 31% |
| Healthcare | 13% |
| Total | 100% |
I am a strong advocate of Benjamin Graham and his views on value investing and I try to apply his principles as much as I can in my stock investing.
You may observe that my portfolio is rather focussed and does not have many different holdings. To me, 7 - 10 stocks represents the optimal number to hold as it allows me to study each company in detail and really understand each business that I'm investing in. This number might increase probably as my investable amount increases over time, but I'm most comfortable with the 7 stocks for now.
Also, for the 7 stocks that I hold, I have spent considerable amounts of time, research and analysis on each individual name and their respective business. It ranges from various valuation metrics (EV/EBITA, P/E, P/B, DDM, etc) to the usage of Porter's 5 forces to evaluate each individual company. So each stock which I hold and eventually choose to add, stems from hours and hours of prior research before. Of course, it cannot guarantee that a handsome profit will always be made, but it gives me confidence that my portfolio is something that I can hold for the long-term and the likelihood of me deriving good profits and dividends will grow over a sustainable period of time.
Remember, I choose to invest and not speculate. So I will tend to avoid speculating on trends or hold positions for too short a period, unless the stock has moved to a point whereby it is either not fundamentally good enough to hold or the priced has moved in a way that makes a partial liquidation sensible. I wish to be investing full time and I aim to stay the course for that.
So that's it, my very first post on my portfolio. Hope you like it and I look forward to share more moving forward. Comments and suggestions are most welcome!
Happy Sunday!
First Post :)
Hi Guys,
This is my very first post on my newly setup blog on stock investing in Singapore. I am truly excited to share this passion with you all.
On a professional level, I have been in the banking industry over the last 9 years and have covered roles like financial product sales, financial product compliance and now mutual fund advisory where I am responsible for writing fund research reports in a private bank. During the course of this career I have learnt a lot of valuable investing information in which I have found useful even in my personal investing capacity. This information ranged from using the typical stock valuation metrics and how to value stocks to due diligence questions like what are the truly important things to look out for when first investing in anything?
In my personal capacity, I have come across many different blogs relating to stock investing and I have also truly benefitted from reading them.
So the question beckoned, how can I translate what I have learnt into something that I can share with others and also into something whereby I can let my passion manifest itself? The answer was simple and this blog was born. Setting up the blog was the easy part, thinking what to call it and what to write about was slightly more difficult. I asked myself many questions, why was I writing this and what was my eventual goal?
After thinking about it for quite a while I formulated these objectives:
1. Being a Full Time investor
- Currently, investing is just a part time affair and work is full time. My aim is to reverse this. So this means when I am able to be a full time stock investor and purse this passion on a full time basis & work can be part time ---> My goal would have been met.
- Through this blog, I will also be sharing my personal stock portfolio and the growth of it over time. I also will be sharing how I aim to rely on my portfolio to reach my lifestyle and retirement goals (both through asset allocation and dividend income).
2. Sharing and Learning
- In the course of meeting the first objective, there would be a lot of learning and sharing of knowledge and experience along the way. This would be from sharing useful information on this blog and learning from others as well. This is important as I strongly believe that learning is a life-long journey and should never stop.
3. Benefitting Society and the Community
- This has been one of things I have always wanted to do, but due to my current professional capacity I am not able to better influence. And it is to give back to society and to benefit others, especially those who would like to invest and invest well but are not sure how to start and what to look out for.
- As I was previously in a product due diligence role for 4 years, I am able to help articulate what the typical red flags to look out for when investing and effective risk management measures one should take even in a personal investing capacity. This knowledge, I will share intermittently as we blog along the way. So stay tuned.
So that's it. Abit lengthy, but it was great sharing the objectives of the blog.
Now I hope you understand why I named my blog as such. Transitioning from Part to Full time investing is my dream and aspiration. I hope this blog benefits you in some way or another in our upcoming journey.
Ok, lets start blogging!!! :)
This is my very first post on my newly setup blog on stock investing in Singapore. I am truly excited to share this passion with you all.
On a professional level, I have been in the banking industry over the last 9 years and have covered roles like financial product sales, financial product compliance and now mutual fund advisory where I am responsible for writing fund research reports in a private bank. During the course of this career I have learnt a lot of valuable investing information in which I have found useful even in my personal investing capacity. This information ranged from using the typical stock valuation metrics and how to value stocks to due diligence questions like what are the truly important things to look out for when first investing in anything?
In my personal capacity, I have come across many different blogs relating to stock investing and I have also truly benefitted from reading them.
So the question beckoned, how can I translate what I have learnt into something that I can share with others and also into something whereby I can let my passion manifest itself? The answer was simple and this blog was born. Setting up the blog was the easy part, thinking what to call it and what to write about was slightly more difficult. I asked myself many questions, why was I writing this and what was my eventual goal?
After thinking about it for quite a while I formulated these objectives:
1. Being a Full Time investor
- Currently, investing is just a part time affair and work is full time. My aim is to reverse this. So this means when I am able to be a full time stock investor and purse this passion on a full time basis & work can be part time ---> My goal would have been met.
- Through this blog, I will also be sharing my personal stock portfolio and the growth of it over time. I also will be sharing how I aim to rely on my portfolio to reach my lifestyle and retirement goals (both through asset allocation and dividend income).
2. Sharing and Learning
- In the course of meeting the first objective, there would be a lot of learning and sharing of knowledge and experience along the way. This would be from sharing useful information on this blog and learning from others as well. This is important as I strongly believe that learning is a life-long journey and should never stop.
3. Benefitting Society and the Community
- This has been one of things I have always wanted to do, but due to my current professional capacity I am not able to better influence. And it is to give back to society and to benefit others, especially those who would like to invest and invest well but are not sure how to start and what to look out for.
- As I was previously in a product due diligence role for 4 years, I am able to help articulate what the typical red flags to look out for when investing and effective risk management measures one should take even in a personal investing capacity. This knowledge, I will share intermittently as we blog along the way. So stay tuned.
So that's it. Abit lengthy, but it was great sharing the objectives of the blog.
Now I hope you understand why I named my blog as such. Transitioning from Part to Full time investing is my dream and aspiration. I hope this blog benefits you in some way or another in our upcoming journey.
Ok, lets start blogging!!! :)
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