As from April 2013 my Journey in Investing is to create Retirement Income for Life till 80 years old for two over market cycles of Bull and Bear.

Welcome to Ministry of Wealth!

This blog is authored by an old multi-bagger blue chips stock picker uncle from HDB heartland!

"The market is not your mother. It consists of tough men and women who look for ways to take money away from you instead of pouring milk into your mouth." - Dr. Alexander Elder

"For the things we have to learn before we can do them, we learn by doing them." - Aristotle

It is here where I share with you how I did it! FREE Education in stock market wisdom.

Think Investing as Tug of War - Read more? Click and scroll down



Important Notice and Attention: If you are looking for such ideas; here is the wrong blog to visit.

Value Investing
Dividend/Income Investing
Technical Analysis and Charting
Stock Tips

Friday, 31 December 2010

Singapore's stock market closed the year 10.1 percent higher than where it ended in 2009.

SINGAPORE: Singapore's stock market closed the year 10.1 percent higher than where it ended in 2009.


Although the last day was lacklustre, with the index falling 0.7 percent on last-minute profit-taking on a shortened trading day, analysts are saying 2011 could bring investors similar gains.

On average, each of the 30 component stocks in the Straits Times Index gave investors returns of just over 23 percent this year, including dividends.

The oil and gas sector outperformed, with total returns of 46.7 percent, while industrials gave investors 44.2 percent.

The laggards were consumer goods which returned just 5.7 percent. This sector was dragged down by food producers such as Wilmar, which lost 11.3 percent.

Overall, analysts predict industrials such as Fraser & Neave and Jardine Strategic to continue to stand out next year.

They also say oil rig plays like Sembcorp and Keppel Corp will continue to see strong demand as energy explorers replace their aging fleet globally.

Anthony Hoe, head and senior fund manager at Phillip Securities, said: "If you look at the market as a whole, there are many big-cap stocks out there which are still trading nowhere near the pre-2008 highs; the companies are still doing well, growth is not exactly much slower than pre-2008 levels. In fact many companies out there continue to grow very well, paying good dividends, so there is no reason for me not to be optimistic that STI can go higher."

Valuations are undemanding. The price-to-earnings ratios of STI is 14, versus the historical average of 15.

Relative to stocks in Asia ex-Japan, the Singapore market is trading at a 10 percent premium versus 20 percent historically.

A pullback in prices will make it even more compelling for investors to buy Singapore equities.

Kelvin Tay, chief Investment strategist (Singapore) at UBS Wealth Management Research, said: "I think any sort of mid-cycle correction would probably see the market going down between 5-8 percent and that would be a good opportunity in our opinion for investors to start picking up some of the stocks, in light of the fact that we think that the STI next year is likely to post gains of 10-15%."

Thanks to a strengthening Sing dollar, the rise in the Singapore index this year was almost 21 percent in US dollar terms, beating the 17 percent gain in the MSCI Asia Ex-Japan index.

- CNA/ir

FY 2010 Full Year Performance Report : Up +18.2% YoY

Read? 9M FY 10 Quarterly Performance Report

Year Goal Hit Rate

(In 2003, I set some bullish progressive year goals from 2003 to 2011 and 2010 Year Goal is 74.9% of 2009 Total Salary including all CPF contributions. Quite a big goal to achieve!)

Year Goal Hit Rate improved by +18.2% from 47.8% in FY2009 to 66.0% in FY2010.

Active Investing Performance

Since Nov 08 after I have given up active contra trading and revised my active investing/trading strategies.

Performance indicators are as follows:



Historical ROC per Trade Distribution



Going forward, I think the days of high double digit ROC are likely to be over so I must be happy to get high single digit ROC.


Major STI Data Points since 1990



Finding Back The Stolen Wealth From The 2008 Greater Bear.

I am close to finding back all the stolen wealth and it is just -2.9% away from the Oct 2007 Bull Portfolio all time high peak value.




My Investment Marathon Race (2003 - 2011)

I have planned for this marathon race in the stock market in 2003.

That painful fall during the marathon race was due to to active contra losses and cut losses in S-chips in 2008 and such foolishness is unlikely to happen again.
 


With just only one year more to end the race in 2011, I don't think I will be able to complete the full marathon race as targetted.

Thursday, 30 December 2010

CapitaLand to develop 2nd Raffles City project in Shanghai

SINGAPORE: CapitaLand said that it is set to develop its second Raffles City integrated development in Shanghai.


It is the seventh Raffles City project in China.

Raffles City Changning, as the development has been named, will be located in Shanghai's Changning District, near the Hongqiao Transportation Hub, according to the announcement.

The integrated development will consist of a Grade A office tower and a shopping mall. In addition, CapitaLand will also develop commercial apartments and small-office-home-office (SOHO) units for sale, the firm said.

The entire project will cost around RMB8.1 billion (S$1.6 billion) and is scheduled to be completed in phases from 2014.

"The Changning area is centrally located and enjoys high pedestrian traffic. Our Raffles City brand is well-positioned to benefit from China's continued strong economic growth which is projected to be about 10 per cent in 2011," said Mr Liew Mun Leong, president and CEO of CapitaLand Group.

CapitaLand has partnered with strategic investors including an established institutional investor, a pension fund and CapitaMalls Asia Limited to develop the 60,845-square-metre site.

Its subsidiary CapitaLand China will partially divest 73 per cent of its interest in Senning Property to the three partners for S$759 million, which takes into consideration the site's value of RMB5.34 billion (S$1.06 billion). The transaction will give CapitaLand a net gain of around S$132 million, the company said.

The institutional investor and pension fund will hold a 55 per cent stake in Senning while CapitaMalls Asia and CapitaLand China will have an 18 per cent and 27 per cent stake, respectively.

"Divesting a partial stake in Raffles City Changning is part of CapitaLand China's ongoing strategy to further enhance its capital productivity," said Mr Jason Leow, CEO of CapitaLand China Holdings.

"We continue to retain a significant stake in the project and will be the lead development manager for Raffles City Changning," he added.

Raffles City Changning in Shanghai will be the ninth property under CapitaLand's "Raffles City" brand. The other two are located in Singapore and Bahrain.

-CNA/ac

Better markets give CPF investors a lift

CPF members returns on CPF investment as follows:

14% : > 2.5% OA interest
37%: < 2.5% OA interest
49%: realised losses

The above statistics is telling us that it is not easy to beat CPF OA 2.5 interest rate.

-------------------------------------------
14% of CPFIS-OA investors realise net profit above OA interest rate, compared with last year's 13%


By EMILYN YAP

(SINGAPORE) More investors under the Central Provident Fund Investment Scheme (CPFIS) came out ahead for the year ended Sept 30 as markets performed well, compared with a year ago. But the number of investors that realised losses was also significant.

Gold and property funds were some of the new darlings as investors poured more money into them. In contrast, certain assets such as shares and insurance products lost their lustre.

Gold and property funds were some of the new darlings as investors poured more money into them. In contrast, certain assets such as shares and insurance products lost their lustre.

According to a report from CPF Board yesterday, some 124,800 members who sold their Ordinary Account (OA) investments in the year became better off than if they had left their savings in the OA. Their net realised profits exceeded the 2.5 per cent OA interest they would have earned.

This group made up 14 per cent of all CPFIS-OA investors in the year, and is larger than last year's 13 per cent or 112,600 members.

Another 332,400 members, representing 37 per cent of all CPFIS-OA investors, realised profits which were equal to or less than the OA rate. Again, this is an improvement from last year's 314,900 members, or 35 per cent.

Some 437,100 members (49 per cent of all CPFIS-OA investors) realised losses. The group is smaller than a year ago, when 465,700 members (52 per cent) were in the red.

'During the year, markets have been oscillating between optimism arising from improving economic data and concerns on the fiscal crisis in the eurozone,' CPF Board said.

'Nevertheless, the markets ended on a high note for FY ended 30 September 2010, recovering some of the losses in the earlier part of the year.'

As at Sept 30, members invested $25.4 billion of their OA funds under CPFIS. This is $1 billion or 3.8 per cent less than a year ago. Around $7.3 billion of Special Account (SA) savings also went into CPFIS, down $0.2 billion or 2.7 per cent.

Property funds (also known as real estate investment trusts), gold, annuities and Singapore government bonds were the only products which attracted more monies in the year.

The amount of OA savings invested in property funds went up by 3.6 per cent or $4.9 million from a year ago. As for gold, the increase was 12.9 per cent or $1.8 million.

There was an outflow of funds from other types of investment, such as endowment policies, investment-linked insurance products (ILPs), shares and unit trusts.

Most notably, the amount invested in insurance products fell by some $593.7 million and $180.2 million under CPFIS-OA and CPFIS-SA respectively. There was also a net decrease of around 15,100 members and 12,300 members invested in those products under CPFIS-OA and CPFIS-SA respectively.

Asked why the number of investors in insurance products fell, CPF Board said: 'The drop may be due to the maturity of some of the policies.'

Prudential Assurance Company Singapore CEO Philip Seah suggested that market conditions and new regulations could have affected participation in insurance products under CPFIS.

'However, contrary to the market, over 2009-10, Prudential Singapore has maintained a healthy and consistent trend of ILP investments from CPF funds,' he said.

Tuesday, 28 December 2010

Hyflux launches online store

SINGAPORE: Mainboard-listed water treatment firm, Hyflux, has launched Asia's first online store dedicated to the water industry.


The HyfluxShop will provide engineering and industrial products for equipment manufacturers in Southeast Asia, such as ultrafiltration membranes to pumps, test kits and other accessories.

Replying to queries from MediaCorp, Hyflux said the online shop primarily caters to businesses and will serve industrial clients that are mainly small- and medium-sized manufacturers.

Its vice-president Robert Lim said that HyfluxShop is able to offer competitive prices which manufacturers might not be able to enjoy previously due to the lack of scale.

He added that through bulk purchasing, Hyflux will be able to extend volume discounts to its online shop members.

Looking ahead, Hyflux says it expects demand of engineering components in the water industry to grow. It hopes to ride on this upward trend.

- CNA/ir

The positive side of being Employee

You will not realize the full benefits of staying employed as employee until you encountered a prolong illness and your company will cover most of your medical expenses under co-payment scheme and letting you using up to 30 days of MC and up to 90 days of full-pay hospitalization leaves.

CapitaLand continues to achieve strong sales for Beijing condominium

About 60% of Beaufort’s phase two units sold over Christmas weekend


Singapore, 28 December 2010 – CapitaLand China Holdings, a wholly-owned subsidiary of CapitaLand, achieved strong sales at its high-end residential project in Beijing over the Christmas weekend. The Beaufort condominium is located within walking distance to Beijing Chaoyang Park, one of China’s largest city parks.

For Beaufort’s phase two launch, a residential tower comprising 220 units was released for sale on 25 December 2010. To-date, about 60% of the units have been sold at an average price of around RMB38,500 (S$7,500) per square metre. Homebuyers had a choice of studio, one- and two-bedroom apartments priced between RMB2.3 million (S$450,000) and RMB4.1 million (S$802,000) each.

The strong phase two sales at Beaufort follows a successful phase one launch earlier this year. In phase one, CapitaLand China released 467 units at an average price of RMB27,000 (S$5,600) per square metre. These units have been fully sold. To-date, the total sales value achieved for the two phases amount to RMB1.29 billion (S$252.3 million).

Mr Jason Leow, CEO of CapitaLand China Holdings, said: “The Chinese government has ensured a vibrant property market through a series of measures to curb excessive speculation and ensure market sustainability. CapitaLand’s balanced portfolio of properties in the different sectors have benefited from this. In the residential sector, the market demand remains strong, supported by genuine homebuyers and robust economic fundamentals. The strong sales at

Beaufort is testament that homebuyers are drawn to homes that are well-located near the heart of the business district, and in close proximity to amenities and transportation networks. We target to launch the remaining two residential towers in Beaufort in the second half of 2011. For 2010, CapitaLand China sold a total of about 2,800 units, located across 11 projects. We target to launch about 4,000 homes for sale next year.”

The same One Financial Goal since 2003

Same Financial Goal in 2011: Made no mistakes about it. Money must come from somewhere. You can either use MORE of your human asset to generate it or use MORE of your financial assets to productively generate more.

So when my money works harder for me; I work less!



Read? Work for money? Forget it. - Revisit

Monday, 27 December 2010

Keppel secures S$240 million worth of conversion and specialised shipbuilding

Singapore, 27 December 2010 – Keppel Offshore & Marine Ltd (Keppel O&M), through wholly-owned subsidiaries Keppel Shipyard Limited and Keppel Singmarine Pte Ltd, has clinched new contracts totalling S$240 million.

These comprise the upgrading of a Floating Production Storage and Offloading (FPSO) vessel, the conversion of a livestock carrier, as well as the building of a diving support vessel.

With these latest projects, the total value of new contracts secured by Keppel O&M in 2010 has edged up to S$3.2 billion.

Mr Nelson Yeo, Managing Director (Marine) of Keppel O&M, said, “I would like to thank our customers for their confidence in the capabilities of the Keppel O&M group of companies. These latest contracts strengthen the mutual trust and partnership we have established. As a partner for solutions, we constantly strive to provide safe and high quality services to our customers.”

For one of these contracts, Keppel Shipyard has been engaged by long-time customer Single Buoy Moorings Inc (SBM) for the fast track modification and upgrading of FPSO Espadarte, which was previously converted by the yard in 2000.

The FPSO is expected to arrive in Keppel Shipyard in the second quarter of 2011. Keppel Shipyard’s work scope includes upgrading the accommodation facilities, modifying the existing topside modules and internal turret mooring system, as well as installing and integrating new topside process modules.

FPSO Espadarte is expected to return to Brazil in the first quarter of 2012 where it will be deployed by Petrobras in the Baleia Azul field in Campos Basin.

Mr Tony Mace, CEO of SBM Offshore said, “Keppel has long been a preferred partner of SBM, having collaborated on numerous FPSO projects since 2000. Throughout our strong working relationship, the Keppel team has consistently lived up to their schedule commitments, promises of reliability, and quality service. We are confident this project will be of the same high standards.”

Keppel Shipyard’s current projects with SBM include the conversions of FPSO Okha, FPSO Aseng and FPSO Cidade de Paraty.

Additionally, Keppel Shipyard has secured its third livestock carrier conversion project from the Hijazi & Ghosheh Group, a world-leading owner and operator of such vessels.

This contract involves converting the Reestborg container ship into a livestock carrier for Hijazi & Ghosheh’s affiliate company, Reestborg Compania Naviera S.A.

Keppel Shipyard’s work scope includes providing design engineering services, equipment procurement, as well as modifying the ship’s structural, piping and electrical systems.

When completed in the second quarter of 2011, the livestock carrier will ply the route between Australia and the Middle East.

Fortifying its track record for customised ship solutions, Keppel Singmarine has also won a contract from a Malaysian customer to build a diving support vessel.

The 80-metre ship will be based on a new design specially developed by Keppel’s Marine Technology Development unit for the customer. When completed in the second quarter of 2012, this diving support vessel will be able to perform multiple functions including rescue and subsea operations.

The above contracts are not expected to have material impact on the net tangible assets and earnings per share of Keppel Corporation for the financial years ending 2010 and 2011.

Keppel O&M, a wholly-owned subsidiary of Keppel Corporation Limited, is the global leader in offshore rigs, ship repair and conversion and specialised shipbuilding. Keppel O&M's near market, near customer strategy is bolstered by a global network of 20 yards and offices in the Asia Pacific, Gulf of Mexico, Brazil, the Caspian Sea, Middle East and the North Sea regions.

Integrating the experience and expertise of its yards worldwide, the group aims to be the provider of choice and partner for solutions for the offshore and marine industry.

China's Surprise Rate Hike May Roil Commodity Markets

By: Reuters


The surprise timing of the People's Bank of China (PBOC) increase in benchmark lending and deposit interest rates is likely to weigh on commodity markets when trading starts on Monday.

On Christmas Day, the PBOC raised rates by 25 basis points, the second rate rise in just over two months, part of a series of measures designed to combat inflation which hit a 28-month high of 5.1 percent in November.

The opportunity to cash in on prices at or near their highest in years before the year end could mean the correction this time may be greater than the losses following the last interest rate hike in October.

While the market expected China to raise rates, some investors had thought it was too late to move in 2010, and for that reason China's commodity markets may test their downside limits on Monday.

"This certainly doesn't spell the end of the commodities boom or the strong China story. It's a smart move that may have caught the market off guard," Mark Pervan, senior commodities analyst at ANZ said.

"This may give some impetus for some profit taking before the end of the year, and an opportunity to buy on dips." U.S. oil [CLG1 91.12 0.64 (+0.71%) ] ended last week around a two-year high, above $91 per barrel while soybeans surged to a 27-month high, and copper flirted with record peaks.

Some analysts said after a lower open, markets could rebound and even hit new highs.

Because the rate hike was modest and overall the real deposit rates are still in the negative territory. Money supply was not tightened strictly enough, Gu Jianjun at Jinyuan Futures said.

Western markets, such as corn and soy futures on the Chicago Board of Trade, may be particularly choppy, as the kneejerk reaction to the rate move is accentuated by holiday-thinned volume.

When China last raised interest rates in mid-October, it sent the dollar higher, dragged gold down by more than 2 percent, oil fell 4 percent, copper lost almost 2.5 percent, and losses of 2.7 percent in wheat and 2 percent in corn.

But that, and other policy tightening choppy did little to slow commodities' march higher.

China is the world's top consumer of a host of commodity products, including copper, iron ore, coal, cotton and soy and is the second largest consumer of corn, gold and crude oil.

The Reuters-Jefferies CRB index, which tracks 19 commodities, fell almost 2 percent.

Assessing the effect on some markets will be complicated by the Christmas holidays which see British-based markets such as the London Metal Exchange and London-based agricultural contracts, including softs, on NYSE Liffe closed on Monday and Tuesday, while markets in China and the United States reopen on Monday.

"It is a little bit of a surprise, but the move should be welcomed by the market. The central bank has increased the interest rates before the end of 2010, which means the possibility of increasing interest rates in the beginning of 2011 will be smaller," said He Yifeng, analyst at Hongyuan Securities in Beijing. "I don't think the central bank will increase interest rates before March."

After the initial reaction, analysts said the move may prove to be positive, reaffirming November's message that China's leaders are acting to stem inflation and control prices if needed.

That along with China's plans to go to the world to stock up on commodities, especially grains, makes for a bullish outlook for 2011, analysts said.

"It will be bearish for agricultural prices, which have rebounded recently. But we believe the impact will be short-lived and not hit the bullish trend, especially of the soy market, which will be supported by the drought in the South America. Right now its also the peak consuming season in China," said Wang Ping, analyst with Dongwu Futures.

China has run down many of its agricultural stockpiles this year to stop strong demand driving up prices.

Many markets, especially corn, sugar and cotton surged to record highs.

Given limited farmland and rising consumption, analysts believe the government's goal of self-sufficiency in grains—rice, wheat and corn—may force China to import other farm products which compete for acreage, such as soy, cotton and sugar.

Sunday, 26 December 2010

How much is a Reit worth?

We look at the determining factors and valuation measures for a Reit, but bear in mind that valuing a Reit is far more art than science. By Bobby Jayaraman

DONALD Trump started off in real estate developing residences in Manhattan in the 1970s when New York was on the brink of bankruptcy. Li Ka Shing scooped up property dirt cheap during the 1967 riots in Hong Kong. The late Ng Teng Fong of Far East Organization was the king of Orchard Road in the 1980s.

All these tycoons made fortunes when the value of their investments grew multiple times. However, it is unlikely they invested on the basis of a valuation from a property consultancy! So what is it that drives growth in asset values? And is it possible to value assets accurately?

The noted economist John Maynard Keynes was thought to have observed that it is better to be vaguely right than precisely wrong. Investors would do well to keep this in mind when reading reports by analysts and valuers. Their neat Excel spreadsheets make it appear that valuing a Reit (or real estate investment trust) is a perfect science. In reality, it is far more art than science.

Following are the common measures of valuing a Reit:

Discounted cash flow: A discounted cash flow (DCF) analysis assumes a certain rate of growth in cash flows over a certain period. This is then discounted back to their present value at an appropriate interest rate that reflects the weighted average cost of capital (WACC) of the Reit.

Book value: This method attributes a certain discount or premium to a Reit's book value (book value or revised net asset value is the latest valuation of all the properties owned by the Reit minus its liabilities).

Cap rate or yield: The annual net property income (NPI) is capitalised at a certain yield thought to be appropriate for the Reit.

While all the above methods are intellectually correct, they are not of much use to an investor if the fundamentals behind the assumptions are not clearly understood. I believe it is far more important to understand the factors that drive valuations rather than obsessing about precise values churned out by financial models. The long-term value of a Reit is driven by the following fundamental factors:

  • Potential for capital value growth
  • Sustainability and growth of rental income from the properties
  • Capital structure of the Reit and the calibre of its managers
Let's delve into each of these factors in greater detail.

Capital values

Let's say you bought some units in CapitaMall Trust (CMT) and are wondering whether the asset values will keep appreciating the way they have mostly done since the Reit was listed in 2002.

If the Reit's assets appreciate in value, that would increase CMT's book value and thus its unit price. The question then is what factors would make CMT's portfolio of suburban malls worth more in the next 10 years.

There are several factors that need to be in place for the malls to appreciate in value. A key factor is whether the trend of suburban shopping will continue since this is what has driven strong demand from retailers for mall space. It was the high occupancies and rentals at suburban malls that drove up capital values in the past decade.

Is it likely that this trend would diminish in the years to come? No one can answer this with certainty, so the investor needs to form his own opinion.

On the supply side, the investor would need to form a view on the potential for new supply and the government policy regarding releasing land for malls in the suburbs.

This question can be answered with a good degree of conviction if an investor does his homework, ie, studying the potential land marked for commercial development in the suburbs, and history and pattern of commercial land released in the past. Were there cases of over-supply in the suburbs in the past? If so, what led to it? Was the catchment area not large enough? Can this happen in the future?

Another factor is replacement cost. Can a new mall be built in the future at a cheaper rate? Unlike the high-tech industry where new technology has historically led to lower costs for components and gadgets, real estate is a fairly staid industry where construction costs usually trend upwards, driven by the increasing cost of labour and materials. So the cost element is unlikely to lead to big surprises in the future.

This is not an exhaustive list and there might be several other factors depending on the specific Reit. However, the general principle is the same: Understand the factors that lead to capital appreciation and you will gain good insight into the valuation of a Reit.

It also makes sense for an investor to keep tabs on transacted values of properties not only in Singapore but globally at different stages of the economic cycle. When comparing valuations keep in mind that the specific nature of the transaction - whether a competitive bid or a forced sale, etc - will have a major impact on the transacted values.

Rental income

Many investors own property for its ability to generate steady income whatever the economic cycle. The ability of the property to attract tenants is directly linked to its valuation.

The capitalisation rate (or cap rate) is the annual net operating income divided by the capital cost. The cap rate denotes the income-generating ability of the property. It depends on: a) the risk-free rate which, for Singapore, is the 10-year SGD bond; b) the risk premium investors assign to real estate, which is heavily influenced by macro conditions and the prevailing market sentiment; and c) the income growth that investors hope to achieve through real estate.

The cap rate can thus be depicted as (a+b)-c. The trouble with this formula, as you might have already guessed, is that both risk premium for real estate and income growth potential are highly subjective and can change by the day.

In the early 1980s, when the US was suffering from high inflation, the cap rate of 8-8.5 per cent was even lower than the 10-year US government bond rate of 10-12 per cent as investors anticipated strong capital gains due to continued inflation.

In contrast, cap rates in 2009 had moved up to about 10 per cent even in a sub-one per cent interest rate environment reflecting the high risk premium that investors were placing on real estate. This illustrates the highly cyclical nature of cap rates.

The average cap rate in the US historically has been around 7.5 per cent and the average spread over the 10-year bond has been around 250 basis points. In Singapore, the 10-year bond yield over the past decade has been about 3 per cent and cap rates have been in the 5-6 per cent range.

These benchmarks are important to keep in mind. If you are buying a high- quality asset at cap rates of 5-6 per cent it is a fair bet that you are not paying too much. What if you are buying at a 3 per cent yield? In this case, you are banking on income growth which is much riskier.

Calculating cap rates using next year's NPI only works if the rentals are sustainable, so an investor needs to understand the factors that drive the sustainability of rentals. This assessment requires a good sense of supply and demand for the type of property that a Reit owns as well as an understanding of global benchmarks and trends in the particular sector.

For example, office rentals of around $6 per sq ft per month (psf pm) in 2009 made Singapore the 24th most expensive office location globally (as per Colliers second-half 2009 survey of 154 cities globally) while Hong Kong was the most expensive.

Given that Singapore is a major Asian financial centre, this certainly made the city very competitive and one could have made a reasonable assumption that office rentals of $6 psf are sustainable (if not close to bottoming out).

In the case of retail Reits, occupancy costs (rental costs divided by sales turnover) are also a good indicator of sustainability. A good level is around 12-15 per cent, and the lower it is the better.

Similarly in the hotel sector, Singapore's current deluxe hotel rates of US$150-US$170 a night compare well with those in other global cities and a healthy increase from current levels looks to be quite sustainable.

One mistake investors should avoid is to blindly extrapolate current rentals into the future. For example, rentals for Orchard Road malls peaked in 1990 at $60 psf pm. Twenty years on, despite strong GDP growth, rentals today are around the $30-$35 psf level!

The main reasons for this were the emergence of suburban malls and slow growth in tourist spending. This underscores my point: Focus on the fundamentals and trends and not on predicting precise numbers.

Reit capital structure and management

Asset values and rental growth can be quantified and directly impact a Reit's valuation. However, that does not mean one should ignore qualitative factors just because they cannot be put in a financial model.

Keep in mind that a Reit is not just a collection of physical assets but is operated by managers. It is precisely the ability of management to add value to the assets that makes the Reit model attractive.

Three qualitative factors in particular are important in valuing a Reit:

Leverage and interest coverage: We discussed this in an earlier article, so all I will say here is that one should tread carefully if a Reit has low interest coverage as it can easily run into trouble if rentals drop. An investor should be convinced that rents are sustainable before committing to such a Reit.

Ability to raise financing: Reits that can raise financing from a variety of sources deserve a premium, as you can sleep peacefully knowing that banks and investors believe in the Reit.

Management calibre: If the management is able to consistently increase values through asset enhancement, prudently acquire assets, and consistently deliver growth in distribution per unit (DPU) without taking undue risks, then it also deserves a premium.

What about acquisition-led growth? Doesn't that also deserve a premium? Yes, a truly yield-accretive acquisition is a big positive, but my advice to investors is not to pay for this beforehand.

Don't buy a Reit which has already priced in acquisition-driven growth. This is one of the most frequent causes of disappointment as growth through acquisitions is the most risky route and only works during depressed times.

A particularly risky time for acquisitions is the current period where interest rates are abnormally low. This tempts many Reit managers to borrow cheaply to acquire. However, the 'yield accretion' in such cases comes from low interest rates rather than attractively priced assets. As such, the accretion will likely disappear with the next refinancing.

To conclude, there is no single formula or model where you can plug in all the variables and get a precise valuation. One needs to understand a variety of factors to get a sense of a Reit's valuation.

Reaching 55 - Your CPF Investment Account?

Upon reaching 55, you will have to decide what to do with your CPF Investment Account as you have the option to continue with your CPF Investment Account or close it.

So it is for you to decide for yourself based on Cost-wise and Interest-wise.

Cost-wise

To close CPF Investment Account and transfer share counters to CDP:
  • One time cost per share counter
    • Central Depository (Pte) Ltd (“CDP”) imposes a transfer fee of $10.70 (inclusive of GST) for every share counter transferred from your CPF Investment Account to your CDP Account.
To maintain CPF Investment Account:
  • Running costs
    • Service Charge: S$2 per counter/unit trust per quarter
    • Transaction Charge: S$2 per 1,000 shares/units or part thereof per transaction, subject to a maximum of S$20
So it is better to consolidate, enlarge and to retain only higher value share counters for the quarterly service charges to be cost-effective.

Interest-wise

This is the most tricky part as money returned to CPF OA after sales of your share counters will continue to earn compound INTEREST at current rate of 2.5% and under current low bank interest rate of less than 1%; this option may look attractive depending on your size of your investment per share counter despite incuring quarterly service charge of $2. So you may have to do your own maths and decide for yourself - to close or not?

Read? Temperament wrote...

Are you worried about losing money in the stock market? Me too!

Read? As newbies, did you come thinking of becoming Rich in the Stock Market is easy?



Read? Safety Net in the Market?


"For the things we have to learn before we can do them, we learn by doing them." - Aristotle


(Aristotle is a towering figure in ancient Greek philosophy, making contributions to logic, metaphysics, mathematics, physics, biology, botany, ethics, politics, agriculture, medicine, dance and theatre.)

Likewise, stock investing is a life-time skill to be learned. You have to learn it by exactly doing it; and by doing it ONLY if you are fully aware that if you should fall at least there is a safety net to break your fall. It may not be so scary and dangerous as you have thought. May be you can start small e.g. 10-30% of your total saving and keep to that limit until you graduated from the Stock Market with a BSM.

 

Portfolio Management - Too much cash may become a problem (2)

Read? Portfolio Management - Too much cash may become a problem (1)

Read? Temperament wrote

Like me, turning 55 next year (2011) and an sudden significant increase in Cash level may become a problem. hee hee.

When a man suddenly has plenty of cash and not being able to sit quietly in a room alone, he may start to do foolish things including investment mistakes.

So beware ... "All man's miseries derive from not being able to sit quietly in a room alone." - Blaise Pascal

Saturday, 25 December 2010

Technical Indicators? (3)

Read? Technical Indicators? - Part 2

1) Have you ever wonder why there are so many technical indicators?

2) Have you ever wonder why Microsoft is developing Windows 7.0 instead of Technical Analysis software e.g. TA 7.0?

Any ideas why?

Portfolio Management - Too much cash may become a problem

Read? Portfolio Management - Returns and Risks of losing it back!

If the Bull market continues its rally into 2011, then too much Cash on hand may become our big enemy as this boat (Cash) doesn't RISE with the tide of a rising bull market.

So how?

"All man's miseries derive from not being able to sit quietly in a room alone." - Blaise Pascal

So can we afford to do NOTHING? or the time should be used to identify more potential stocks for our watch list.

Hey! Did you lose money in the stock market?

Just for Laugh ...

Hey! Did you lose money in the stock market trading XXXX?

A: No lah, I lost little bit nia but quit liao!

B: Damn jialiat man, chop fingers liao!

C: (I or) My student has made $X,XXX in 3 days hor in trading XXXX!

Who do you believe? A, B or C? Who is likely to tell the truth?

Your answer will be the moral of the question. So what is the moral? hee hee!

Hey! Are you good at stocks? (4)

Just for Laugh ...

Read? Hey! Are you good at stocks? (3)

qinzheng said: "The problem is most ppl do not learn from their mistake?"

May be for stock investing/trading, the bigger problem is that some people tend to think they didn't make mistakes. The market is the one that makes mistakes. The collective wisdom of the market is wrong but they are right.

But I believe that the collective wisdom of the market may be wrong in days (e.g. sell first, analyse or thinking deeply later); but it seldom remains wrong in weeks or months. Get it?

Friday, 24 December 2010

Oil hits new 26-month peak

LONDON : Oil prices hit another 26-month peak on Friday, lifted by freezing weather and upbeat US data, before pulling lower on profit-taking before the Christmas and New Year break.


At about 0430 GMT, London Brent North Sea crude for February delivery soared to 94.74 US dollars per barrel - the highest point since October 2008.

The contract later stood at 93.86 US dollars, down 39 cents from Thursday's closing level.

New York's main contract, light sweet crude for delivery in February, had rallied 1.03 US dollars to 91.51 US dollars on Thursday, when it struck a similar 2008 peak at 91.63 US dollars. The New York Mercantile Exchange was closed on Friday.
------------------------------------------------------------------------
Createwealth8888:

Historically, Crude oil is the leading indicator of the direction of stocks so what it means that stocks may still have legs to run.

Noble wants to be sole owner of its Brazil cane ops

SAO PAULO - Noble's purchase of two cane mills in Brazil this week, the latest addition to its fast-rising cane processing capacity, reflects its go-it-alone approach that sets it apart from competitors that are partnering with local companies, the group's CEO said on Thursday.

Asia's biggest commodities trader has agreed to pay US$950 million for two sugar and ethanol facilities owned by Brazilian group Cerradinho.

'Cane operations are extremely important. Brazil has the world's lowest costs, and demand for energy, sugar is rising in emerging markets as well as for ethanol in the Brazilian market,' Noble's Chief Executive Ricardo Leiman told Reuters.

Brazil is the world's top sugar producer and exporter. Cane is also the feedstock for its huge ethanol biofuel production, that it has pioneered as a mainstream fuel that most new cars on its roads can burn.

Several companies that entered the cane sector over the last few years such as Royal Dutch Shell and state-run oil company Petrobras have opted to team up with local partners rather than go it alone.

Before closing the deal with Noble, Cerradinho spent four months negotiating with BP, which aimed for a 50-per cent share in the Brazilian group.

Experts say that some of Brazil's cane sector's unique characteristics, which require both agricultural and industrial know-how, is behind companies' decision to look for local associations.

But Hong Kong-based Noble, defined by Leiman as 'a global supply chain manager,' has adopted a bolder approach.

'We already have around four years of experience (in cane). We're over the learning curve. We prefer to learn (on our own) and be the big operators even if it takes longer,' Mr Leiman said.

Noble has operations in sectors ranging from coffee and cotton origination to ship management and from coal and iron ore mining to soy processing in several countries. In many cases, its operations are in tandem with partners.

Brazilian cane

With the addition of two more crushing units near its existing assets, all in Sao Paulo state, the firm expects its larger operations will begin to generate economies of scale.

'We created a cane cluster that should benefit from synergies in logistics and costs,' Mr Leiman said. All of them produce sugar, ethanol and electric energy from the burning of cane bagasse that is sold to the Brazilian grid.

Noble entered the sector in 2007 when it bought the Noroeste Paulista mill, in Sao Paulo state. It invested to expand its crushing capacity to 5 million tonnes from 1.3 million tonnes per year.

The group also built Meridiano mill, 60 km away from the existing one. This unit, whose construction has just finished, has a capacity of 4.5 million tonnes per season.

The two plants bought from Cerradinho have a combined capacity to process 8 million tonnes of cane per year, and are located about 100 km from the two others.

With the acquisition, the group has become one of the country's top 10 cane groups, with a crushing capacity of 17.5 million tonnes per season.

Sugar production capacity will jump to 1.34 million tonnes from 740,000 tonnes in its first two mills. Ethanol capacity will double to 600 million litres, and energy generation will grow to 750 megawatts per hour, from 450 mwh previously.

In Brazil, the group also operates a fuel terminal and warehouses. It also originates coffee and cotton, and is building a soy processing plant and a biodiesel factory. In October, it inaugurated new terminal in the port of Santos. -- REUTERS

Hey! Are you good at stocks? (3)

Read? Hey! Are you good at stocks? (2)

Proportion of Primary One cohort admitted into the local subsidized universities

While most parents would think or dream that their kids may make it to admission into local subsidized universities; but cold fact is not. It is less than 15% of primary one cohort made it. Why? It is natural process or mechanism of the "system" or "market" to allow only those perform well to reach the highest height or level and the rest have to drop out.

It is never easy for kids to reach that highest level without consistently putting their best effort to learn well and they must outperform many others to get there.

Likewise, how many % of the newbies (cohort at Primary 1) to the stock market will be awarded BSM?

"The market is not your mother. It consists of tough men and women who look for ways to take money away from you instead of pouring milk into your mouth." - Dr. Alexander Elder


"For the things we have to learn before we can do them, we learn by doing them." - Aristotle

Are you still repeating PSLE? May be it is time to engage a Stock Tutor?

Thursday, 23 December 2010

S'pore Nov CPI up 3.8%

By BERNICE BONG


SINGAPORE - Singapore's inflation climbed to a 22-month high of 3.8 per cent in November, driven by rising costs of transport, housing and food.

Excluding accommodation costs, the consumer price index was 3.7 per cent higher.

The previous year-on-year high was in January 2009 when consumer prices rose 4.3 per cent from a year earlier.

The consumer price index was also 0.3 per cent higher in November over October, latest data from the Department of Statistics showed on Thursday.

Year-on-year changes

Transport rose 9.4 per cent, mainly from higher prices of cars and petrol. Housing cost rose by 4.0 per cent owing to higher accommodation costs and electricity tariffs.

With dearer prepared meals, vegetables, fresh seafood, dairy products and eggs as well as rice & other cereals, food items cost 1.8 per cent more.

The Last $100K to Millionaire Club

Christmas Eve tomorrow. Let me tell you a story of Santa Claus ...

Some ideas from "Ten Tenets of Millionaire Paradigm."

The Parable: Millionaire Club

There was once an odd-job labourer who lived happily with his family. He did not earn much but had enough to get by. Life was happy.

While walking along the streets during Christmas day, he received a present from Santa Claus. He received a cheque of $900,000. His heart leapt with joy, and he gave a victorious punch in the air. He struck rich finally!

He can now fulfill his dreams and live a good life. The problem was that he was short of $100,000 to become a millionaire.

With the new goal, he was more resolved than ever. The odd-job labourer took up two jobs a day to reach his target. As he worked hard and long hours, he neglected his loved ones in the process. Instead of becoming a richer and happier man, he was now a dejected man. everyone sees him as money hungry person whose life centred on that earning last $100,000.

The moral of parable

If chasing the last $100,000 to become a millionaire requires so much sacrifice, don't you think it is better not to be one?

Money did not make this odd-job labourer happier or even happy. Sometime, it will require great wisdom to realize enough is enough. There is little point in chasing the last $100,000 with so much sacrifice. We should work towards achieving our dreams, but never at the expenses of our happiness and relationships with our loved ones. Money means something to someone, but it is not everything to everybody.

Hey! Are you good at stocks? (2)

Just for Laugh ....

Read? Hey! Are you good at stocks?

Getting an education in University of Stock Market is like this:

  • Successfully completed one cycle of a) bull-bear-bull or b) bear-bull-bear
    • Awarded BSM (Bachelor in Stock Market)
      • Made tons of money - 1st Class Hons with Distinctions
  • Successfully completed two cycles of a) bull-bear-bull or b) bear-bull-bear
    • Awarded MSM (Masters in Stock Market)
  • Successfully completed three cycles of a) bull-bear-bull or b) bear-bull-bear
    • Awarded Ph.DSM (Ph.D in Stock Market)
Have you graduated from the University of Stock Market?

Hey! Are you good at stocks?

Just for Laugh ...

The minimum period required for you to judge your own personal performance in the stock market should look like this:

a) Bull - Bear - Bull (Made money)
or
b) Bear - Bull - Bear (Still made money)

Anything less than a) or b) when you made money from stocks don't boast; and when you lose money don't lose confidence.

That is the truth coming from a Horse's mouth.

Wednesday, 22 December 2010

Keppel, Sembcorp secure rig orders

SINGAPORE: Singapore offshore rig builders Keppel Corporation and Sembcorp Marine have won fresh orders to build jack-up rigs.


Sembcorp Marine said its Jurong Shipyard has secured contracts worth US$400 million to build two jack-up rigs for US drilling contractor Noble Corporation, with deliveries scheduled in the fourth quarter of 2012 and the second quarter of 2013.

The contracts with Noble have options to build four additional jack-up rigs, which could potentially bring the value of all six rig orders to US$1.2 billion, Sembcorp said in a statement.

Sembcorp Marine has won orders worth a total of S$2.7 billion so far this year.

Meanwhile, Keppel Corp said its shipyard Keppel FELS has secured an order worth about US$180 million to build a jack-up rig for mainboard-listed Jasper Investments Ltd, for delivery in the second half of 2012.

It said the contract has the option for another similar rig. If exercised, the option for the additional rig will more than double the total contract value to about US$365 million.

Keppel Corp, the world's top builder of offshore oil drilling rigs, said the new contract would take the total value of orders secured in 2010 to S$3 billion.



Both the rig-builders said that the new contracts would not impact their earnings for the current financial year.

SEMBCORP MARINE'S JURONG SHIPYARD SECURES US$400 MILLION CONTRACT TO BUILD TWO PREMIUM JACKUP RIGS WITH OPTIONS FOR ANOTHER FOUR JACKUP RIGS FROM NOBLE CORPORATION

US contract driller Noble Corporation is set to splash out $440 million on two new high-specification heavy-duty, harsh-environment jack-up drilling rigs.


Upstream staff 21 December 2010 14:24 GMT

The jack-ups, which will be built at Sembcorp Marine's Jurong Shipyard in Singapore, will be delivered in the fourth quarter of 2012 and the second quarter of 2013, respectively.

Each unit will cost $220 million, which includes project management, spares, and start-up costs. Capitalised interest is not included in this sum.

The contract also has options for up to four further units.

Noble said the options must be exercised by 1 January 2012.

Under the option, the four extra jack-ups will be priced based on the original unit price, plus a potential escalation factor, with future deliveries scheduled in six month increments beginning in late 2013.

The rigs will be built to the Friede & Goldman JU3000N design.

The jack-ups will be able to operate in water depths up to 400 feet and drill to depths of 30,000 feet.

The rigs will each have a 75 foot cantilever, 2.5 million pounds of hook load capacity, a high capacity mud circulating system, and a 15,000 psi blow out preventer system.

Tuesday, 21 December 2010

Success and Failure in the stock market

Just for Laugh ...

Stock picking is part science, part art, part luck, part intuition, and always uncertain - "not precisely knowing." - (Who say it? Forgotten)

So the formula is like this:

Success/Failure = FA + TA + Luck + Intuition = ???

Sometime your lucky star is shinnng so brightly; and you may have mistaken that you have become expert in TA or FA.

Do you have a better formula to share? hee hee

Monday, 20 December 2010

As newbies, did you come thinking of becoming Rich in the Stock Market is easy?


Fortunately, unlike some newbies to the stock market, I came to the stock market with fears and doubts and also as a secret activity similar to keeping a mistress and not letting my wife knowing it; otherwise the hell will break loose.

Read? Harsh lessons from 1997/98 and 2007/08 stock crisis

Noble Group to purchase 2 sugar mills from Cerradinho

SINGAPORE : Noble Group, Asia's largest commodities trader, said on Monday it has signed a US$950 million deal to purchase two sugar mills from Brazilian and ethanol group Cerradinho Holding.


In a statement to the Singapore Exchange, it said the two mills will increase Noble's total annual sugarcane crushing capacity to 17.5 million tonnes.

This acquisition will propel the Singapore-listed firm into the top tier of sugar cane milling companies globally.

The two mills being acquired, Catanduva and Potirendaba, are fully operational in Sao Paulo state and are 50 kilometres from each other.

Both the facilities being acquired have good access to domestic and foreign markets and are located close to competitive rail infrastructure.

The mills have a strong operational track record and are active in both domestic and export markets.

Noble said the funding of the acquisition would come from existing resources.

Cerradinho, based in central Brazil, is one of the top 15 ethanol and sugar makers in Brazil, the world's largest producer of sugar.

Insurance - Human Asset and Liability - Part 4

Read? Insurance - Human Asset and Liability - Part 3

Life Insurance after retirement

I feel that it is just too costly to hedge an old and non-income producing asset after retirement so I have long ago planned for the last whole life endowment policy to mature at 59 and the whole proceed will be reserved for my youngest kid for his university education and living expenses.

After 59 onwards, I will only be covered by company's Group Insurance if I continue to work as an income producing old asset but at much higher monthly premium once cross 60.

Looking back, did I make a good decision then?

Sunday, 19 December 2010

3 Ms of Trading – Mind, Method and Money - Part 4

Read? 3 Ms of Trading – Mind, Method and Money - Part 3

Bad news!

There is NO SHORT CUT in Active Investing or Trading if you want to rise above an average investor/trader.

You have to develop your own personal investing or trading system yourself or pay some "Gurus" some money to teach you to develop one or subscribe to their trading system; then adjust and adapt some parameters to fix them into your own personality and trading style. (I have also interacted with quite a number of friends/colleagues who have attended such courses. Some have even attended advanced courses with trading templates provided; but sometime I am wondering why are they still not doing very well? What really went wrong?)

At the end of the day, to be successfully we must be able to explain clearly to anyone who asked us what is in our trading system? We must be able to cover the "What" and "How" in all three aspects of Mind, Method, and Money; otherwise, I believe it may be quite difficult to succeed over multiple cycles of bulls and bears using a RE-INVESTING strategy for compounded returns. Any bad move in the next one or two big bear markets may wipe off much of our investing capital and the past gains.

Staying invested in the stock market can be unpredictably dangerous thing to do. So from times to times, I must always remind myself on my Investment End Goal :  Knowing Your Investment End Goal

My War Room (5)

Read? My War Room (4)

"Sometime we may learn from other people's experiences but at times we may have to re-look at our own experiences and learn from them as well." - Createwealth8888.


Looking back I was overly bullish in 2007 and badly prepared for the next coming Bear. But, this time, I believe that I have learnt to be wiser and are in better shape to climb the wall of worry with the bulls and to slide the slope of hope with the bears. Cheers!

Saturday, 18 December 2010

Invest with CPF investment fund or Cash in the stock market?

Your CPF investment fund is earning compounding interests rate at 2.5% while your cash is only earning at 0.X% - 1.X%. Why would you use up your higher rate first while holding on to lower rate to wait for better investing opportunities?

I believe the biggest obstacle is that most investors see their CPF money as "stuck" money that needed to be "unlocked" first for investing while forgetting that their free-flow cash for investing purpose are actually sitting idle at a lower rate.

Somehow, I manage to overcome it by adopting Interests-wise thinking. My CPF investment fund is used as last line of defence or for holding pillow stocks which have dividend yield of more than 2.5%. The dividends received will be automatically "lock up" by CPF for compounding interests at 2.5% and they are fully protected from the future bear raids.

Be interests-wise!


Even Buffett Has Investment Lessons to Learn

ByJoe Mont


BOSTON (TheStreet) -- Even the Oracle of Omaha has those investments he might do over if given the chance.

In a recent annual letter to Berkshire Hathaway shareholders, an eagerly awaited piece of investing insight, Buffett cops to several mistakes. Among them: authorizing the purchase of a large amount of ConocoPhillips stock when oil and gas prices were near their peak. A dramatic fall in energy prices soon followed.

"The terrible timing of my purchase has cost Berkshire several billion dollars," Buffett wrote, segueing into regret over a $244 million parlay in two Irish banks "that appeared cheap" but soon incurred an 89% loss on the initial investment.

There is hardly an investor, pro or amateur, who doesn't have some woeful tale of a sure thing that wasn't or can't-miss advice that did.

"The tennis crowd would call my mistakes 'unforced errors,'" Buffett said.

When a Buffett, Bill Gross or Larry Fink publicly discusses bad decisions, it makes headlines. But there is hardly an investor, pro or amateur, who doesn't have some woeful tale of a sure thing that wasn't or can't-miss advice that did. The key is learning from mistakes and moving on.

Take profits when you have them and don't get greedy -- a lesson learned the hard way by Jonathan Polson, a financial adviser for Wells Fargo Advisors in South Carolina.

(Read? Be Far Better At Selling Than At Buying? (Re-visit))

"When I was in college, I traded options on the side," he says. "One trade was with Services Acquisition when it was buying Jamba Juice. I had some massive gains on calls, up 45%, then 60%. Well, I became greedy, thought the rise would continue and I would just double my money. What ended up happening was that I let my gains become losses."

Later on, in 2007, he recalled having held on too long when, as a working professional, his "clients were up big and didn't want to sell."

"I simply told them it's time to take the gains before someone else takes them from you," he says. "I have made it a discipline ever since to take profits once I hit the 20%-plus mark. Even if it still goes up some, it's a disciplined approach that can keep my clients from some pain."

Joseph Montanaro, a certified financial planner for USAA, says that, as a younger man, he made the mistake of not preserving savings as an emergency fund, instead taking on an unhealthy dose of risk.

"In the late '90s, everything was grow, grow, grow," he says. "I decided, 'Why leave money sitting on the sideline in cash when I could make big money?'"

He followed that seemingly ideal plan, putting money he had saved for a rainy day directly into the stock market.

"Flash forward to 2002, I'm getting ready to take a new job in San Antonio and ended up having to cash out the investments, which had been hammered, in order to cover moving expenses," he says. "Not heeding the lesson of keeping an emergency fund in place ended up costing me a whole lot. My assets were down 60% to 70% of what they would have been had I just left them in savings."

He often tells clients of that error in judgment to keep them from doing the something similar.

"It is hard to get excited about savings, but there is certainly a purpose, a place and, as my example indicates, a reason."

Sometimes even well-meaning advice can cause more harm than good.

Montanaro still less than fondly recalls the first stock he ever bought, a purchase made while attending the United States Military Academy at West Point.

"It was a bull market environment," he says. "You could throw a dart at the wall and you were going to be a winner. I had a personal finance class and the professor, a captain in the Army, was sharing his stock picks with us, one of which was Crazy Eddie."

Crazy Eddie was a chain of consumer electronics stores, perhaps best known for commercials featuring screaming co-founder Eddie Antar and the pronouncement that prices were so low they were "insaaaaaaaaaaaaane."

"He gave us this idea," Montanaro says. "So we decided we were going to pool our money and buy that stock."

Buying shares in August 1987, they saw it go up a bit. Then came a nosedive following the stock market crash of Black Monday.

Things only got worse when fraudulent business practices led to a grand jury investigation, an SEC inquiry and jail time for Antar (who, for a time, tried to hide out in Israel after cashing out millions of dollars of stock). The company went bankrupt, its shares rendered worthless.

"That was the first stock I picked, but it wasn't the last one by any means," Montanaro says. "Even after having experienced that I still had a little bit of that gunslinger in me, the confidence that I could pick the right stocks."

These days, he preaches a compromise between that risky instinct and not getting burned.

"I've got the core part of my portfolio that is going be broad-based indexes and things like mutual funds," he says. "I may still tinker a bit on the periphery of the market, but not to the level that if I lose that money it is going to put my financial situation at risk. I share that with people all the time. Hey, if you've got that desire I understand it. But limit it to such a level that whatever happens, good or bad, doesn't put you at risk."

As far as bad advice goes, Daniel Shaffer thinks the media doles out its fair share.

"People need to see the bigger picture and not the day-to-day hype we hear from the media," says Shaffer, president and CEO of Harrison, N.Y.-based Shaffer Asset Management. "There are people I have spoken to who are literally glued to the media and make decisions based on what they hear."

"There is a major divergence between financial advisers being bullish and their clients who are not," he adds. "They can't convince their clients to get into the market."

Shaffer, whose book Profiting in Economic Storms: A Historic Guide to Surviving Depression, Deflation, Hyperinflation and Market Bubbles was released last month by Wiley, says he relies "on a technical analysis of the market and a longer-term view." His bearish advice: "Short this market, wait for the next few years and slowly inch into real estate investment trusts or other types of real estate."

Shaffer says that many investors would do well to trust their own instincts and observations, and not be pushed into a given strategy by advice that doesn't feel right to them.

"In this day and age, with the click of a computer, you can get 10 different opinions," he says. "People need to realize what their risk level is and what their beliefs are. Sometimes they could be just as good, if not better than, what they are hearing or reading in the news. Some people have a gut feeling because they are in the business arena, not in the investment arena, and they have a good pulse on what is really happening with credit and their customers and cash flow. They are right in the heart of it."

Thursday, 16 December 2010

Noble holds 25% of relisted Blackwood

Coomodities trader, Noble Group, has become the single largest shareholder, with a direct interest of 25 per cent, in Blackwood Corporation Limited, previously known as Matilda Minerals Limited

Wednesday, 15 December 2010

DBS to take over RBS' businesses in 3 China cities

* RBS to transfer retail, commercial portfolios to DBS


* Deal covers only Beijing, Shanghai and Shenzhen

* Deal also involves transfer of RBS employees to DBS (Adds details on agreement)

SINGAPORE, Dec 15 (Reuters) - DBS Group , Southeast Asia's biggest lender, is taking over Royal Bank of Scotland's retail and commercial businesses in three Chinese cities, expanding its client-base in the world's second-biggest economy.

The agreement will give 25,000 customers of the British bank in Shanghai, Beijing and Shenzhen the option to transfer their existing accounts and deposits to DBS China, the Singapore bank said in a statement.

Some RBS employees will also move over to DBS as part of the deal.

The statement did not disclose any monetary value for the transaction. An RBS spokeswoman wasn't immediately able to comment on the deal.

RBS, 83 percent owned by the UK government, has sold most of its commercial banking units in Asia but still has an investment banking presence in the region. RBS also has banking operations in several other Chinese cities.

RBS Chief Executive Stephen Hester embarked on a wide-ranging asset sale programme after the bank was ordered last year by European regulators to sell a string of assets as a price for its state bailout.

DBS currently gets the bulk of its earnings from Singapore and Hong Kong, but aims to expand in China, Southeast Asia and India.

"This landmark agreement enables DBS China to rapidly expand its retail banking customer base, grow its deposit base and correspondingly, accelerate plans to grow its loan portfolio, in a market that is of critical importance to DBS," said Melvin Teo, CEO of DBS China. (Reporting by Saeed Azhar; Editing by Muralikumar Anantharaman)

Petrobras to name drillship winner

Petrobras is set to award just one of the contractual packages on offer for building seven drillships per Brazilian shipyard, a director with the company confirmed today.


Gareth Chetwynd 14 December 2010 16:20 GMT

“We will be ruling on some final disqualification appeals today, then negotiations should begin with the lowest bidder,” engineering director Renato Duque told reporters at Petrobras headquarters.

The lowest bid of $4.65 billion, was presented by Estaleiro Atlantico Sul, edging out second-placed Alusa Galvao, with $4.68 billion.

“In principle only one of these seven-rig contracts will be awarded,” Duque said.

If confirmed, this Petrobras stance will also leave Keppel Fels ($5.17 billion), Jurong Shipyard ($5.18 billion) and Odebrecht-OAS-UTC ($5.31 billion) out in the cold.

Petrobras is now close to concluding its tenders for up to 28 Brazilian-built ultra-deepwater rigs, but the first attempt seems certain to produce a more modest number

Duque added that possible awards in an additional category for up two more Petrobras-owned rigs - one per yard - were still under analysis. EAS was also the lowest bidder in this category, offering a drillship, while Keppel Fels was second, with a semi-submersible.

Duque also suggested that the Petrobras E&P division was still keeping its options open for contracting chartered rigs under a parallel tender, also specifiying that construction must be in Brazil.

Most Brazilian industry sources have predicted that the parallel tender for the chartered units will be cancelled after bidders offered dayrates averaging nearly $700,000

Petrobras intends to contract a total of 28 ultra-deepwater rigs for construction in Brazil, to be delivered between 2014 and 2017.

It has been suggested that a Dutch-registered arm of Petrobras is planning to open more flexible negotiations with shipyards that participated in the tender, possibly ordering fewer rigs per facility. A re-tender process may also be considered.

The rig tender, as originally formatted, was intended to offer the commercial foundations to encourage new shipyard projects.

The EAS consortium has built a major shipyard in the north-eastern state of Pernambuco, although some infrastructure investments are still pending.

Sembcorp affiliate to buy Australia waste firm for A$235 mln

SINGAPORE, Dec 15 (Reuters) - Sembcorp Industries , a Singapore conglomerate which has businesses in utilities and industrial parks, said on Wednesday its Australian associate has won a bid to acquire a waste management firm for A$235 million ($234.8 million).


SITA Environmental Solutions, which is 40 percent-owned by Sembcorp Industries, will acquire 100 percent of WSN Environmental Solutions, a firm owned by the New South Wales government in Australia.
The acquisition will be funded through a mix of debt and shareholder funds, and is expected to be completed at end-January next year, Sembcorp Industries said in a statement

Monday, 13 December 2010

My War Room (4)

Read? My War Room (3)

"Sometime we may learn from other people's experiences but at times we may have to re-look at our own experiences and learn from them as well." - Createwealth8888.


Does Buy-And-Hold strategy with a strong holding power help my portfolio to recover near its All Time High in the next bull?

Learning from my own experiences on my portfolio on those buy-and-hold counters, not really true. It is true that a strong holding power has prevented me from panic selling; but does it help my portfolio to recover to its All Time High in the next bull?

Let me take a look at the top three longest holding counters with significant weightage in the portfolio so they will have impact over portfolio value recovery:


In my case, Buy-And-Hold doesn't really help as these counters have yet to recover to its all time high;
but my portfolio value has already reached near to its all high time, it is just 4.9% away from it?

"We don't need to win back in the same manner that we have lost it " - Createwealth8888.


Sunday, 12 December 2010

Compound Interest is not the same as Compound Returns (2)

Read? Compound Interest is not the same as Compound Returns

Read? Will You Try To Pay Off Your Housing Loan ASAP If You Have One? (5)


Compound Returns of 2.6% by 100% re-investing may be far more difficult than you think

E.g. When you can afford to take a 20-year HDB Housing Loan at 2.6% but choose to take advantage of low interest rate and opt for 30-year loan and use that extra money saved for investment.

So what is the difference?

When you take a loan, you pay compound interest to the bank and the total interests payable is definite; but when you invest and re-invest for compound returns that is NEVER a sure thing that the compound returns over 10 years of market cycle of bulls and bears will definitely be more than 2.6%. Just one or two big bears over that 10-year market cycle may wipe off your part or all accumulated gain and resulted in negative or unfavourable returns.

Saturday, 11 December 2010

Compound Interest is not the same as Compound Returns

"Compound interest is the eighth wonder of the world. He who understands it, earns it ... he who doesn't ... pays it."  - Albert Einstein

Compound Interests and Compound Returns
 
The two terms are often mistaken as the same by investors. Savers earn compound interests e.g. 8% fixed deposits with auto-renewal. Compounding in financial instruments like fixed deposits means interest is not only earned on a principal sum but also on any accumulated interest. That concept of compounding effect in saving must not be applied to investing in stocks market.
 
The returns on your portfolio of stocks are subjected to the volatility of the stock market so your compound returns may not necessary be the "eight wonder of the world". You may be even wondering why you are getting negative returns after XX years?
 
I illustrate the examples in the table below:

Is Property Affordable?

Recently, quite a few blog posts on this topic - Is Property Affordable?

IMHO, having to take a housing loan of 25 or 30 years and stretching the loan payment way beyond into 50s and 60s is already a sign of that person struggling hard to afford that "choice" piece of property. The real problem of affordability lies with the "choices" e.g. a 4-rm HDB BTO in Punggol may cost $277-$300K and may need only 15-20 years housing loan and can be fully paid before 50s.

Good Part -Time Business To Own (5)

Read? Good Part -Time Business To Own (4)

I never like to be in Sales or doing activities/services that most of the time even you don't like that particular customers or important customers; but have little choice, pretend and suck up to them in order to make a living or profiting from them.

In the stock market, you don't need to know the buyers (customers) and still profit from them. You will never have to receive customer complaints and criticisms or listening to rubbish talks that you are not interested and never have to say the word "f... you or shit" when that bloody nasty person turns his/her back.

Buy low, Sell High!

Just for Laugh ....

It is damn hard to do it. Why?

It is like willing yourself to stop in the middle of an orgasm, only harder.

Friday, 10 December 2010

Time is Money. Money is Time.

Read? Money = happiness?

Time is Money

Most people make most of their money by "selling" their time. Some are able to "sell" their time at "obscene" super high price while sold theirs at dirty-cheap price. Their price difference can be amazing XXX times the lowest paid person in the same company.

Unless you have Bank of PaPa or Bank of MaMa behind you, the greatest financial asset generator is our time. We either "sell" it at higher price or "sell" more of it at lower price for the same absolute amount.

So this sense: Time is Money!

Money is Time

When we spend more of our time in making money, we will have more money. But, if we really think or correctly estimate/forecast that we may not need so much more money, then it follows that we will have more time, more time to pursue other things or activities, other than making money.

Money is LIMITLESS; but our time is LIMITED and FINITE. We only live ONCE.

Since we only have that much of our time so it is up to us and ourselves to argue that more money is needed to buy more of  the stuff to find pleasure in them is more precious than the time spent on other activities that may not actually require spending of more money? There are some inexpensive ways or you may change the ways to find that your own little pleasures. Seek and you may find them.

Thursday, 9 December 2010

Many "Gurus" in the stock market?

Just for Laugh ....

One guy commented in a cbox: "I see so many "gurus" hee hee...when comes to take action, i wonder do they really take?"

It is so SIMPLE to become Guru in the stock market. You can just read a few books on FA and/or TA and self-learned or attend some paid "GURU" taught courses and then after a few years in the stock market, you will talk like a "Guru."

If you still don't believe me, then go to any stock forums, cboxes and blogs, you will find them. Right?

Actually, there is nothing much to talk or shout, if you believe it, then prove it with your own MONEY and BUY it.

Wednesday, 8 December 2010

Tikam IPO and sell on Day One for kopi money. Good strategy?

Ya. You may have made $100-$200 on GLP and MIT but lose it all back to Sabana and may be holding the fallen baby for months or even years. Good strategy?

SCI - Breaking into the next higher box. Bullish!


Breaking into the next higher box with good volume. Smart money are buying up. Bullish!


Tuesday, 7 December 2010

Petrobras sinks two bids (not SMMs)

Produced by: The Royal Bank of Scotland Asia Securities (Singapore) Pte Limited

Upstream reports indicate Petrobras has disqualified two of the seven  commercial bids for its 28-rig tender, and that both Keppel and Sembcorp Marine  (SMM) have made the cut. This brings Keppel and SMM two steps closer to potential orders of Petrobras' seven drillships, in our view. Maintain Buy on both.

Petrobras disqualifies two bids on price

  • According to Upstream, Petrobras has disqualified the two highest-bidding shipyards in the running to supply the 28 drillships.

  •  Estaleiro EISA Alagoas and Andrade Gutierrez were disqualified, with respective bid prices of US$5.49bn and US$5.77bn rated "evidently excessive" in a Petrobras communique to all bidders.

  • Five contenders are left in the running, with Estaleiro Atlantico Sul (US$4.65bn) having the lowest bid, followed by Alusa-Galvao (US$4.68bn), Keppel Fels (US$5.17bn), SMM ((US$5.18bn) and Odebrecht-OAS-UTC (US$5.31bn).

Upstream says that the commercial qualification of five bids gave some observers the impression that Petrobras may accept more offers than was first thought.

The communique also states that Alusa-Galvao (the second-highest bidder) has been called into meetings with Petrobras to clarify the commercial aspects of its bid. This consortium is inexperienced in the offshore sector, leading to predictions that Petrobras may exclude it.

Positive for both Keppel and SMM

The news indicates that both Keppel and SMM are well on their way to win orders from Petrobras, in our view.

We believe the news may be construed as being more positive for SMM, which was initially reported to have lost its place in the race, after coming in with the fourth-lowest bid, according to some analysts.

Buy Keppel (TP S$13.00, 19% upside) and SMM (TP S$5.50, 11% upside)

We believe both Keppel and SMM’s shares will continue to re-rate as order flow increases.

Consensus still is in the process of factoring in the full extent of potential Petrobras orders (both rigs and production platforms, which are reported to be at least 40 by Upstream) or the increase in demand for high-end jack ups.

Keppel is trading at 2011F PE of 14.6x and PB of 2.3x for an ROE forecast of 16.6%, while Sembcorp is trading at 2011F PE of 18.7x and PB of 4.2x for an ROE of 24%. These levels should not hinder further re-rating, in our view.

Stock Picking is like Choosing your own durians?



After a few bad experiences with some durians vendors who will insist that the durians opened up are good enough to be eaten and you have to take them. Since then, I decided to learn to DIY (choosing my own durians and open them myself at home). Since it is DIY and I am no expert in choosing durians, I will have to buy  more (around 8-10 depending on the size) and bargain for 2-3 more FOC durians to compensate for bad durians. I will always expect to throw a few bad or not-so-good durains and it is EXPECTED!

Similarly, for stock picking for my DIY Portfolio I will always EXPECT to throw a few bad counters. So far I was hit by two counters that went to ZERO and by now probably I may have learned enough to avoid picking that next ZERO counter.


Monday, 6 December 2010

This man believes in equities. So do you?

Lee Su Shyan, Assistant Money Editor

Mon, Jul 16, 2007
The Straits Times

HE HAS been known as the remisier king for years, but given his new-found zest for solar energy, perhaps Sun King ought to be Peter Lim's new title.

But that might not work either, given the vast fortune he has squeezed out of palm oil.

There is one thing you can bank on: Mr Lim is not getting his head turned by come-hither looks from the hot property sector; stocks are still his thing.

'I'm an equity person,' he told The Straits Times. 'With equities, you don't know how the story will end. But when the market turns, you can sell your shares and get out in three days. You don't need to know the buyer.' (Createwealth8888: This is exactly what I like about stocks - ease of selling. When my sister migrated, she took more than a year to sell her property at her stated price and her property agent told she must be damn lucky to be able to sell at that price.)

Try that with bricks and mortar: 'With a house, you put it on the market, buyers come and criticise it, pay you a deposit, and three months later, don't even settle.'

While he counts some of the country's top property players among his friends, real estate development is just a matter of 'timing', he insists; the rest is up to architects and engineers.

Mr Lim, 54, is back in the spotlight following his bid to use Rowsley to swallow a huge China solar power firm, but he will always be remembered in financial circles as the guy who made as much as $100 million in just six years as a remisier.

His clients included then Indonesian president Suharto's son, Bambang, and then Malaysian prime minister Mahathir Mohamad's son, Mokhzani.

Mr Lim called it quits in 1996 at the height of the bull run and retired from Kay Hian James Capel amid a messy divorce from his wife.

He is still retired - sort of. Deals still hold an allure for him, like the one involving his mainboard-listed Rowsley, which has a market capitalisation of around $145 million.

The company announced in May that it was going to gobble up the business of a solar cell manufacturer, China-based Perfect Field, for $2.7 billion - a deal that would be Singapore's largest-ever reverse takeover and one that has left some investors sceptical.

He is enthusiastic about the solar energy sector. 'There is no doubt there is global warming. Our island is going to disappear.'

'China has been criticised as being the world's biggest polluter. This sector can grow very fast. Look at Nasdaq: Companies in that sector are trading at 40 or 50 times earnings. Whoever is the first mover will have the advantage.'

Whether the Rowsley deal will score remains to be seen, but Mr Lim will have few worries, given his stellar investments.

One, a stake in fashion retailer FJ Benjamin, has grown from about $13 million to $60 million over five years.

But that is small change compared with the stake he took in 1991 in a firm founded by sugar king Robert Kuok's nephew Kuok Khoon Hong that eventually grew into palm oil giant Wilmar International.

Wilmar, which listed here last year, has a market value of $22.1 billion, making Mr Lim's stake of just under 5 per cent worth about $1 billion.

He admits that his vast return on an investment that was only in the region of US$10 million (S$15.1 million) is like 'a fairytale'.

'I can't say I invested in the right company, because at that time, there was only a vision. The potential palm oil plantations were just swamplands,' he said.

'It was at the Equatorial Hotel. I spent a few hours with (the younger) Mr Kuok. This man made me feel very inadequate. He had a vision, and could explain, step by step, how to attain this vision.'

But that 'quality face time' is in a nutshell how Mr Lim decides on all his investments.

'I must see his face. The person should be master of his trade, and should be honest.'
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