Warren Buffett has seen shares of his Berkshire Hathaway fall more than 11 percent this year. Even worse, Berkshire shares have underperformed the S&P 500 by more than 10 percent.
What makes this highly unusual is that
Berkshire famously tends to underperform when the S&P skyrockets and
outperform when the stocks as a whole do less well, which makes sense
given Buffett's long-term time frame. Indeed, Buffett is well known for
instructing investors: "Be fearful when others are greedy and be greedy
when others are fearful."
This year, however, the S&P is
slightly lower, with a 0.4 percent decline. And while there is still a
month and a half left in 2015, it is notable that this would mark the
first year that Berkshire A shares have underperformed in a down year
for the S&P 500 since 1990. (Readers might note that this excludes
2011, when the S&P fell by less than 0.05 percent.)
NEW YORK - Billionaire hedge fund manager William Ackman's
Pershing Square Holdings portfolio has lost 24.5 percent this year,
extending its fall this week as its biggest holding, Valeant
Pharmaceuticals, declined further, the company said on its website.
Valeant's stock price
has tumbled 72 percent from its high this summer with the losses
accelerating in recent weeks amid questions about the company's
accounting and business practices and criticisms for price gouging. It
has lost 11 percent in the last five days.
Ackman's $14.5 billion Pershing Square Capital Management
paid roughly $186 per share for its 21.4 million shares of Valeant. The
stock closed at $72.58 on Wednesday. Last year, the hedge fund was one
of the industry's best performers with a 40 percent gain.
Square has several portfolios with Pershing Square Holdings being the
most aggressive, so the losses are modestly less at its other
portfolios, a person familiar with the numbers.
Counting interests is low but steady steady! Counting more dividends through re-investing or investing more saving. It may be shiok during rising market but not exactly that shiok when our portfolio value is falling lower and lower.
Okay. Never mind! We can self-deceive and don't think too much.
Don't measure. Don't track. Thing will be alright soon. Right?
This is World of Difference! Even some investment and financial bloggers also confused with compound interests and investment return.
Almost 1 in 30 residents will be ultra-wealthy in five years.
Millionaires, or high net worth individuals (HNWIs), will grow at a
faster rate in Singapore than in Hong Kong, according to a study by
Singapore currently has 154,000
HNWIs that collectively hold US$806.3b in net wealth, reflecting a
population growth of 17% from the 130,000 millionaires in the country in
2010. By 2020, Singapore HNWIs are expected to number 188,000- roughly 1
millionaire in 30 people. This reflects an 18.3% hike in the next
half-decade, versus the expected 15.6% HNWI growth in Hong Kong.
"She decided to work three half-day part-time per week and recently upgrade to four half-day part-time per week."
The difference between working for a living and working to pass time is that we may have reached the level that we don't really want to monetize our time and effort. :-)
Auntie8888 is doing it on own time and initiative just to make the children happy when they have completed one level to receive as prize/reward. These are hand-made and the shape of stickers representing the First Letter of their name.
Children are allowed to choose from a few designs available.
On the next trip to Taipei, we have to look out for bookshops to replenish the stickers.
"We have bought insurances coverage on
good faiths but don't ever expect the insurance companies to pay our
claims on good faith as they are not our father or mother who helps to
pour milk into our mouth as they exist to make money for their
Management and their shareholders." - Createwealth8888
CW8888: For past medical treatment for his family and himself, it is all done by government hospitals and polyclinics; so far so good. Waiting is part and parcel of life. What so wrong with it?
We may heard a few cases of horror of seeking medical treatment; but many more cases of satisfactory medical treatment at public hospitals were not told or mentioned. We can't sell these stories to attract attention!
For those who haven't taste the real waiting, go overseas traveling.
Once we missed that train or bus schedule, the next one can be few hours later or even the next day. This is patience!
What next after reaching the edge of financial independence?
Everything well done?
How about SUSTAINABLE retirement income for life planning?
When we read about retirement planning in the public sources, social media and cyber world, many of them will mention about having an investment portfolio that provide passive income from dividends or/and rental income, adequate or comprehensive insurance coverage, some emergency fund, and other sources of fund e.g. CPF OA, SA, MR, CPF Life, annuities, etc.
BUT, when retirees or financial independence folks live long enough, will they have the necessary financial resources or strength to overcome many future years or decades of inflation?
So it is beyond financial independence or plain retirement planning; after reaching the edge of financial independence, Uncle8888 begins to realize that there are still some works to be done i.e. create SUSTAINABLE retirement income for life. The evil of future inflation is going to affect him badly. Future bad market cycles are going to hit him even harder. Since he cannot possibly escape so it is better for him to prepare and get ready to mitigate for these bad things that are going to happen. After years of drowning in the vast domain of financial and investment, Uncle8888 has finally managed to simplify his idea or concept on wealth into one slide, one image and less than 10 minutes to explain the ideas and concept behind his Wealth Formula to help ourselves to reach the EDGE of Financial Independence. Read? The most important chart in CW8888's blog to remember on Wealth Formula!!!
Similarly, he has taken the same approach on retirement planning. He has been changing and refining his artwork to simplify his idea on retirement life planninginto
one slide, one image and less than 10 minutes to explain the ideas and
concept behind his SUSTAINABLE retirement income for life beyond the EDGE of
We should always remember bad things across future market cycles will eventually hit us directly at our investment portfolio. Our future passive income will NOT be sustainable after that many years or decades of inflation, we will need more than just our investment portfolio to maintain sustainable retirement income for life. We may need to take our retirement planning one step above or higher to include sustainability.
What is the best way can we make it sustainable for life?
One slide, one image and less than 10 minutes to explain it.
CW8888's Three Taps Solution to Sustainable Retirement Income For Life ....
TAP 1: Interests from non-market volatile assets as cash flow and additional cash flow to offset future years or decades of inflation for household living expenses when it becomes absolutely necessary will be from asset draw-down till 2038 (Age 81+).
TAP 2: Self-insured medical and health care funding from CPF SA, RA, MA, and $XXk emergency cash on top of Medi-Shield Life. TAP 3: Investment Portfolio of local stocks from SGX to generate cash flow from dividends and trading gains.
Last Resort: Where everything else failed, the value of his home will be the asset of last resort!
This fellow after five months came back again to Uncle8888 to discuss on his investment strategy and want some advice on how to move forward. Walau! Super patience or dumb?
Now, he has $40K spare cash as war chest for investing and $20K cash as emergency fund. He has no debts.
BTW, he is FT colleague.
After spending sometime talking and talking about stock investing strategy; he then asked Uncle8888 how about property investment in his hometown. He said that his father-in-law has a few properties in his hometown and surviving on his rental income. No need to work.
He said that with his $40K he can also invest in one property with four rooms and each with its own door for rental.
Becoming Landlord with $40K in his hometown or Ikan Bilis stock investor in Singapore with his tiny war chest of $40K?
The answer is clear!
To confirm that Uncle8888 didn't hear it wrongly so he what-apps him in the evening:
Our wealth will be measured at all times in both absolute and relative term. It is extremely difficult to escape from this measurement. In fact, no way to escape. How about becoming a sage living in high mountain?
When in doubt on how to look at our wealth; how about Uncle8888's Wealth Formula:
Wealth = Asset Value + Cash Flow
Our cash flow will be measured in absolute, receive in absolute and real, spend in absolute and real; and save in absolute and real.
But, our Asset Value will be measured at all times in both relative and absolute, and both in imaginary and real!
What we can control is how we periodically re-balance between absolute and relative value; and between imaginary and real!
We cannot possibly escape from both absolute and relative. Right?
Someone quoted to Uncle8888 last night that she saw one blogger was doing well by taking concentration risks. She is thinking of taking that approach to average down on one stock - potentially good prospect. What your favorite bloggers may not have say it loudly?
The highest weight-age in their current portfolio stock may look like having concentration risk at recent snap shot view.
Do you think that Uncle8888's Kep Corp is about 18% of his current total stock investment cost is a concentration risk?
Auntie8888 has retired from full-time employee to stay-at-home-mum since 1995 to look after three kids after she decided to terminate domestic helper who was helping less than expected.
Once children have grown up and not messing up the house to create more household chores and no more taking care of children's pets. Previously; home was a mini Zoo with rabbits, tortoise, birds, and marine fishes. All these pets were passed. None of the children wanted to keep pets anymore. Now only left with Auntie8888's gardening.
With so less household chores and limited gardening activities to occupy so much spare time, it is not easy to become full-time retiree.
She decided to work three half-day part-time per week and recently upgrade to four half-day part-time per week.
The Moral of Story
Do we really need more free time to do those activities that cannot be achieved during full-time day job?
If no, should it be better to delay our voluntarily retirement till more "enforced" retirement later.
Too much free time is not easy to manage.
Don't be mislead. Some retirees are close to full-time activities in the stock market, basically it is another form of casual day job.
So are you willing to become near full-time investors or traders to manage more time and engage in high risk activities?
Now, Uncle8888 has his Bucket List ready and more free time is needed. Bo pian! He has to retire from his full-time employment to have excess of 21 days annual leave and 9 public holidays.
It is when we have lots of money and lots of free time; but we don't have energy and health to do those activities anymore then we wake up and realize it. But it is already too late! May be we should start preparing our Bucket List early since we YOLO.
Whenever, Uncle8888 came across reading something like this; it really funny!
The same folks who are saying it are the same folks who will put up detailed analysis of their investment prospects and why the investment prospect is that good. Surely they know to measure company performance with those financial numbers and ratio; but no eyes to see their own investment portfolio performance using not-that-complicated CAGR or XIRR.
We may have to work harder to reduce our Asymmetrical Thinking over long run to produce better portfolio performance result.
1. Unable to control their emotions over P/L. They are so worry that their paper profit will soon disappear when market shows some sign of turning against them so they are fast to take quick profit but when they are on paper losses; they are so slow and patient. Their patience can withstand decades of sitting on paper losses without worrying too much. Do we know that when we are very good and discipline at money management and position sizing (No deadly average down). We can only lose 100% of that position when we are deadly wrong; but when we are right and continue to be right for long time; we will make more than enough to recover that few deadly wrong. Uncle8888 is not preaching theory and concepts here!
It is real and has been done!
2. Seduced by high yield. Is high yield due to high dividend payout? When we are not aware or don't even bother about it. Just happy with the high yield. Shiok! Dividends are coming soon!
More and more new bloggers into the cyber world preaching financial independence and retiring Early or early. FIRE (in late 30s, 40s or early 50s) or FIRe (in late 50s or before official retirement age @ 62 or 65 soon)
Unless we have some goals and plans to do and the execution of these plans to meet our goals have been limited by the amount of our annual leaves and Singapore public holidays and we need to have more free time to meet these goals; otherwise, why should we retire Early or early?
Voluntarily early retiring can be boring unless our day job is so stressful or so boring then it is better to retire so that we don't waste our life and harm our health in the office.
There are two types of
investing, according to the departing partner of hugely successful and
secretive hedge fund Baupost Group: "needle in a haystack investing" and
"tide comes in and tide goes out investing."
One type takes rigorous work as you search for a small number of opportunities. The other, "chutzpah."
As a fisherman, Uncle8888 has the necessary patience for this type of investing - "tide comes in and tide goes out investing."
Less Analyzing. More Investing - CW8888
Many financial and investment bloggers love "needle in a haystack investing"
More analyzing. Less Investing (i.e. less turnovers will mean more right analysis)
Read? Biosensors - Sold @ $1.35 at ROC 30%CW8888: Ex-founder sold @ 88 cts to Autumn Eagle. Forced game over for Round 5. What is a waste in years of waiting for multi-bagger pillow stock that failed to happen! Super sianz! SINGAPORE
(Nov 4): Shares in stent maker Biosensors International Group surged
more than 20% on Wednesday following the news that a private-equity arm
of Citic Group Corp has agreed to buy the rest of the Singapore-listed
company for about $1.1 billion.
Biosensors was trading at 81 cents, up 13 cents or 19%, at 12.24pm,
after hitting 82 cents earlier. More than 17 million shares changed
Citic Private Equity Funds Management Co, which already controls
about 19.6% of Biosensors, ispaying 84 cents a share for the stock it
doesn't already own. The price is about 24% higher than Biosensors' last
closing price of 68 cents
SINGAPORE: DBS Group, Singapore's biggest bank,
on Monday (Nov 2) posted a 6 per cent rise in third-quarter net profit,
beating expectations as higher interest rate margins boosted net
interest income by 13 per cent.
DBS said net profit came
to S$1.07 billion for the July to September period, versus S$1.01
billion in the same period a year earlier and above an average forecast
of S$994 million from six analysts polled by Reuters.
also booked charges of S$50 million to its trading income due to what it
called "funding valuation adjustments" to the fair value of
Earnings are slowing for Singapore
banks as loan growth decelerates due to a sluggish economy, a weak
property market and the lacklustre trade finance business.
Feel like eating again! Just go to JB even though he knows very well that during weekends; it will be very crowded. Lots of time will be wasted in queuing and waiting. Ya! Enjoying the present since we have plenty of time to waste nowadays.
Even ta bao fishcakes from another shop; but eat them at the fish soup resturant. :-)
Uncle8888 knows too well that he can't replace his earned income with passive income. No way! But, it is still possible for him to adequately cover his expected household expenses and also to overcome future inflationary impact till 2038 (81 yrs old).
Based on Historical Annual Household Expenses of 5 Members since 2002 ...
The funding for sustainable retirement income for life ....
Getting to the desirable state with three taps solution ...
Uncle8888 still have one year to get it done. No hurry as 5.8% yield is not that difficult to achieve.
Tap 1 : Interests
Tap 2 (Safety) : Interests Tap 3: Dividend Income from Investment Portfolio of stocks from SGX. War Chest @ 54%
Following TGIF lunch break, Uncle8888 met his ex-colleague who went for "early" retirement in his late 40s due to poor health condition.
He is taking a break to see whether his irregular heartbeat is due to work-related stress or not. He then realized that not working is boring but working is stressful!
With his heart problem, he said he can't really do much with his lots of spare time.
To do or Not to do also die!
He repeated a few times during lunch. Health is Wealth!
BTW, he sold his investment property and 5 Rm HDB flat in Bishan and bought one condo for residential before deciding for an "early" retirement or taking a break.
Many financial and investment bloggers are talking about early retirement in their late 30s and 40s; but, not sure how many of them are truly prepared to take out the boredom of their unscheduled time?
I am 59 yrs old uncle living in HDB heartland doing long-term investing and short-term trading in Singapore stock market only.
Countdown to an early retirement @ 60 when official retirement age in Singapore is 62; but can be re-employed up to 65.
I have two sons and one daughter. Two working adult children and the youngest son is in NS.
My wife is a home CEO without income. There are two mouths counting on me for financial support, so I have to do well in this investing journey. There is little room for failure!
Last updated: 14 Sep 2015
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