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