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

Monday, 31 October 2011

Why become Master Trainer in forex, trading or investing?

Read? Is it too easy to be a forex trainer?

Read? Can trader keep on winning?

Jesse Lauriston Livermore and Richard Dennis were two great traders and true to themselves. They were real life-long trader who lived by the sword and at the end the market was too smart and they finally were slaughtered by their sword.

Livermore and Dennis could have made tons and tons of money by conducting trading courses round the world; but they didn't.

Guess who become Master Trainer and shouting to you that you can trade for a living or trade or invest into financial freedom. Wake up, my friend. Real life-long traders don't teach for a fee!















NOL sinks into red with Q3 loss of US$90.22m, warns of FY2011 loss

By CARINE LEE


Neptune Orient Lines (NOL) Limited on Monday reported a net loss of US$90.22 million dollars for the third quarter ended Sept 30, 2011, compared to a net profit of US$282.63 million a year ago.

The group said that the net loss is mainly due to higher costs associated with higher volumes and higher bunker costs.

Revenue for the quarter fell 9 per cent year-on-year to US$2.21 billion from US$2.43 billion on the back of lower liner revenue from lower freight rates across most major trade lanes.

Consequently, earnings per share (EPS) for the quarer was negative 3.53 US cents. A year ago, EPS was 10.95 US cents.

For the nine months ended Sept 30, NOL posted a net loss of US$157.76 million from a net profit of US$283.46 million previously.

However, year-to-date revenue crept up 2 per cent to US$6.81 billion from US$6.65 billion a year ago, due to increase in logistics revenue from higher volumes across the various logistics businesses.

Year-to-date EPS for FY2011 is negative 6.12 US cents. A year ago, EPS was 11 US cents.

'With continued low freight rates in container shipping and slowing trade demand, NOL Group expects to report a loss for the full year in 2011,' said the global container shipping and logistics services provider.



Master the Art of Formless Form - The Greatest of All Kung Fu in Investing

Read? Fundamental or Technical Analysis? (4)

Read? Investing vs Trading (4) - Two great attributes of long-term investors

Read? master the act of "formless form"

"Too much TA and FA will confuse your mind. Master the Act of the Formless From, you be there sooner than later." - Createwealth8888

"Less Analyzing. More Investing." - Createwealth8888

Master the Art of Formless Form

From Wixiapedia

倚天屠龙记


Zhang Sanfeng asks:” son, do you clear?" Zhang Wuji says:” I’m Clear." Zhang Sanfeng asks:” Do you totally remember it?" Zhang Wuji says: “Already forgotten some." Zhang Sanfeng says:” That’s ok, think it over"

Zhang Wuji low his head and fall in pondering. A while latter, Zhang Sanfeng asks:” How about it now?" Zhang Wuji says:” I forget most of it" Zhang Sanfeng smiles and says:” Very well. Let me show it to you again" He raises his sword and plays the exercise series again.

But to everyone's surprise, every pose of this time is different to last time's. When he finished, he asks again:” Son, how about it then"? Zhang Wuji says:” I have only three actions unforgotten". Zhang Sanfeng nods, puts his sword down and returns to his seat.

Zhang Wuji walks slowly in the hall and ponders. Then, he raise his head and cries joyfully:” I forget it, forget it totally!" Zhang Sanfeng says:” Not bad, Not bad, you do pretty well to forget it so quickly. Now, you can fighting it against this skillful master"

The moral of the story

When rules of the stock market are not set and defined, there is no way to know what it is so we have to master the Art of  Formless Form. When we cling to the form, there will be attachment of the mind to this form. You will not be able to see your true self..


So the Art of Formless Form is not based on specific techniques of TA or FA or both. It is just as who you are. You and you alone can master it! Like Zhang Wuji, you need to forget first!








Sunday, 30 October 2011

Investing Made Simple by Uncle8888 (29)

Read? Investing Made Simple by Uncle8888 (28)

Read? Me, No multi-baggers :-( Revisit

How to find multi-bagger stocks?

You will never find multi-bagger stocks if you don't believe that multi-bagger stocks exist in your own mind. To find multi-bagger stocks, you must first conceive them in your own mind and make no mistake about it!

If you can't conceive them in your own mind. Forget it and STOP READING!

Be a multi-bagger stock Hunter

There are two ways to become multi-bagger stocks Hunter.

1. The New King method















In this method, you must have the necessary skill sets and knowledge to find the New King (new multi-bagger stocks in the stock market).

Uncle8888 thinks that this method is too difficult for him. He doesn't have such kung fu to become New King Hunter. But, he knows someone who can. You can learn from him.

Read? Penny stocks and doing nothing for the time being


2. Return of The King method









I believe many of us have watched the movie - The Lord of Ring: Return of The King. Right?

Uncle8888 prefers this method: The Return of The King and quite confident with it. It is relatively simple to implement. He first conceived the Return of The King in his own mind. He then patiently and faithfully wait for his King to return in glory. When the King comes back in glory; the King will reward him for his patience and loyalty.

What did the King rewarded him?

TSR = Total Shareholder Return = Capital Appreciation at last Friday market closing price + Total dividends received over the years.

CAGR for year-on-year compound annual growth rate is as follows:



Uncle8888 realized that to be a successful multi-bagger stocks Hunter using the Return of The King method will require two personal attributes: Gut and Patience. Without them, you can forget about hunting for multi-bagger stocks as the future market cycles of Bull and Bear will scare the shit out of you.

Find your fallen King and start conceiving the Return of The King in your own mind and be the next multi-bagger stocks Hunter like Uncle8888.


Gut and Patience????

No gut. How?

Wear tight under-wear!

No patience. How?

Go fishing!

Saturday, 29 October 2011

Bull or Bull trap in Nov/Dec 2011?

Read? Re-making Portfolio to ride the Craziness of Market Cycles

Read? Bull, Bear and The Pyramid

"Bulls climb up a wall of worry, bears slide down in a slope of hope ."

Why worry? I am prepared for both Bull and Bear. I believe I have invested enough in stocks to run with the Bull and reserve cash to slide with the Bear.



Biosensors Weekly

Do you believe in  Darvas Box Theory?


What Does Darvas Box Theory Mean?


A trading strategy that was developed in 1956 by former ballroom dancer Nicolas Darvas. Darvas' trading technique involved buying into stocks that were trading at new 52-week highs with correspondingly high volumes.

A Darvas box is created when the price of a stock rises above the previous 52-week high, but then falls back to a price not far from that high. If the price falls too much, it can be a signal of a false breakout, otherwise the lower price is used as the bottom of the box and the high as the top.



Friday, 28 October 2011

Sembawang Shipyard consortium wins US$300m conversion job

By ANGELA TAN


Sembcorp Marine's subsidiary Sembawang Shipyard, in a consortium arrangement with PT Scorpa Pranedya, has secured a US$300 million Floating Storage Offloading (FSO) tanker conversion contract from Mobil Cepu Ltd.

Mobil Cepu is a subsidiary of Exxon Mobil Corporation, a contractor for the Indonesian Oil and Gas Regulatory Body (BPMIGAS) for Cepu Block. PT Scorpa Pranedya is an Indonesian shipowning and ship-management company.

Under the contract, the Shipyard is responsible for the engineering, procurement, construction, commissioning and hook-up work of a very large crude carrier (VLCC)-sized floating storage and offloading vessel for the Banyu Urip project in Indonesia.

The vessel is expected to be deployed in offshore Tuban for the Banyu Urip Project, located in East Java, Indonesia.

The engineering, procurement, and construction of the project is to be completed 27 months after contract award.











How are you measuring up with your investment return? (4)

Read? How are you measuring up with your investment return? (3)


Read? OCBC BANK AND LION GLOBAL INVESTORS LAUNCH NEW

  1. five-year investment timeframe
  2. cumulative net total return of 17.5% ( or annualized return = 3.5% over 5 yrs, 5.8% over 3 yrs )
Use these figures as your benchmark from Nov 2011 - Oct 2016 for your own performance. Can you beat Lion Global fund manger?

Biosensors - Set a new 52WH @ $1.47. So bullish!


Atlantis Capital Holdings Limited 

27-10-2011  Open Market Purchase  From 6.84 % To 7.07 %


All time high is $1.51
Will it set a new all high time next week?

Biosensors looked ripe to be my latest multi-bagger pillow holding it since Jan 2008 (poor entry level but I have never given up on her)





MAS lifts DBS's additional capital requirement

SINGAPORE - Singapore's central bank said on Friday it has lifted an additional capital requirement imposed on DBS Group Holdings following the breakdown of DBS's online and branch banking systems last year.

'The Monetary Authority of Singapore (MAS) announced today that we have lifted the operational risk multiplier imposed on DBS Bank Ltd following the service outage of its online and branch banking systems on July 5, 2010,' the central bank said in a statement.

MAS said it has reviewed the measures taken by DBS to address the gaps highlighted by the central bank and said it had 'met all the key deliverables'.

DBS, Southeast Asia's biggest bank by assets, had to set aside about S$230 million (US$184 million) in extra regulatory capital after it was punished by MAS last year. -- REUTERS



Thursday, 27 October 2011

Do you think stock market always recover within a few years?

Just For Thniking ....

Investors in Japanese stocks have required almost legendary patience. The Nikkei 225 (which is the equivalent of our S&P 500 Index) reached an all time high of 38,957 on December 29, 1989. On October 14, 2011, the Nikkei 225 closed at 8,747. Japanese investors have been waiting for a full recovery for more than two decades. It is going to be a long haul.




Biosensors - So bullish! Incredible strength of the bulls

Wednesday, 26 October 2011

How are you measuring up with your investment return? (3)

Read? How are you measuring up with your investment return? (2)

Read? CAGR vs. Average Annual Return: Why Your Advisor Is Quoting the Wrong Number

I have been seriously recording my transactions; tracking and measuring my portfolio performance since Jan 2000.

My portfolio XIRR (CAGR) since Jan 2000 and Nov 2008

XIRR since Jan 2000 as on Tuesday (25 Oct 2011) market closing = 9.9%
Historical XIRR since Jan 2000: Lowest on 27 Oct 2008 at 3.0% and highest on 11 Oct 2007 at 23.5%

XIRR since Nov 2008 as on Tuesday (25 Oct 2011) market closing = 12.6%

Historical XIRR since Nov 2008: Lowest on 4 Oct 2011 at 10.6% and highest on 2 Feb 2011 at 22.7%

I learned two important points for sustaining XIRR:


  1. Don't lose too much money on losing stocks.
  2. Can't let cash rotting in the bank for too long.

Water Use Rising Faster Than World Population

Read? http://www.cnbc.com/id/45031532

Watch out for local home-grown but globally big hor


Sembcorp has been named the Water Company of the Year at Global Water Intelligence (GWI)'s 2011 Global Water Awards.

The top honour at the prestigious Global Water Awards, announced in Berlin last night, recognises the water company that has made “the most significant contribution to the development of the international water sector in 2010”. Sembcorp's wholly-owned energy and water arm, Sembcorp Utilities, beat other international water players to clinch the prestigious title

Sembcorp is a recognised international player in the global water industry, and owns and operates facilities in 32 locations across five continents. Its range of total water solutions includes wastewater treatment for both industrial and municipal clients, water reuse, desalination and water supply. Sembcorp’s water business marked a landmark year in 2010, with the growth of its global water capacity by almost 50% to over 6 million cubic metres per day of water with the acquisition of Cascal. With the acquisition, Sembcorp strengthened its standing as a provider of complete water and wastewater treatment solutions to both industrial and municipal customers, directly serving the water needs of over five million people worldwide.

Keppel Corporation's environmental business is consolidated under the Keppel Integrated Engineering (KIE) group. A member of this group, Keppel Seghers, is a leading provider of comprehensive environmental solutions ranging from consultancy, design and engineering, technology and construction to operations and maintenance of facilities. Its advanced technology solutions address a wide spectrum of environmental issues such as solid waste, wastewater, drinking & process water, biosolids & sludge.


Keppel Seghers water/wastewater treatment expertise covers the full water cycle (including systems for wastewater treatment, process water, drinking water, desalination and water reuse.) With more than 350 plants built worldwide, Keppel Seghers has established itself as a leading player in the industrial, municipal and purification water market.

KIE's investments in technology have begun to yield results. In water solutions, we succeeded in carrying out the pilot run of the promising new Memstill® desalination technology.







Tuesday, 25 October 2011

How are you measuring up with your investment return? (2)

Read? How are you measuring up with your investment return?

Will you be happy with CAGR or IXRR of 8% since 2008?

One woman doesn't seem to be happy with her CAGR of 8% since 2008.


Based on joint research by Pensions & Investments and Towers Watson on world's largest 500 Asset Managers at Year 2009

Their CAGR from 1999 to 2009 is as follows:

CAGR of 500 since 1999: 5.7%
CAGR of  top 20 since 1999: 7.2%





Monday, 24 October 2011

Kep Corp

Olam buys spice assets, businesses of VKL for US$18m

By YEO AIQI


Olam International Limited on Monday announced that it has acquired the spice assets and businesses of Vallabhdas Kanji Limited (VKL) for US$18 million.

The acquired business is one of Asia's leading processor and exporter of multiple spices in both bulk and private label form.

'We are acquiring midstream and downstream processing assets in two important spice origins namely India and Vietnam, from a leading producer and exporter of spice and spice ingredients. This offers us a unique opportunity to accelerate our entry into new, attractive product segments namely chilli and turmeric, as well as into the private label segment of the value chain,' said Olam's president and global head for spices and vegetable ingredients, Greg Estep.

'We also expect these operations to bring in additional revenue and cost synergies for Olam as we combine our sourcing, processing and distribution capabilities under one network for adjacent products and geographies,' he added.

Olam International is a leading global integrated supply chain manager and processor of agricultural products and food ingredients.



Hyflux JV secures exclusive rights to Yangzhou wastewater treatment plant

By CARINE LEE


Hyflux Ltd on Monday announced that its joint venture company, Hyflux Utility Ltd, has signed a memorandum of understanding (MOU) with Yangzhou Chemical Industrial Zone Administrative Authority.

Under the MOU, Hyflux will have the exclusive rights to commence due diligence on the feasibility of implementing phrase 3 of the Yangzhou Qing Shan wastewater treatment plant with a designed capacity of 20,000 tons per day.



Personal savings put the frowns on S'poreans

SINGAPORE: Singaporeans rate their personal savings as the area they are most unhappy with - according to a study called "The Happiness Report".


Conducted by global communications firm, Grey Group, the study found that nearly half of the respondents reported a lack of sufficient savings in the last six months.

The second area that respondents said they were least happy with, was personal expenditure over the last half year, garnering 40.5 per cent of responses. The next three areas that made Singaporeans unhappy were their confidence in the economy (27 per cent), job satisfaction (23 per cent), and work-life balance (21 per cent).

The study was conducted in June this year with 200 respondents, from the ages of 18 to over 60 years old.

The study also revealed the top five things that Singaporeans were most happy about. Area of residence topped the happiness index, with about 78 per cent ranking Singapore as the best place to stay in the world.

Close family ties ranked second (74 per cent), spirituality came in third , with social support networks taking fourth and personal time rounding off the top five on the happiness index.

The study also discovered that baby boomers (45-49 years old) were the happiest people with an overall net happiness score of 11.4 per cent, 4.6 percentage points higher than the young adult segment (18-29 years old).

It also found that men were happier than women at the workplace, with 46.08 per cent of men found to be happy at their jobs as compared to 37.75 per cent for women.-

-CNA/ac

Singapore's CPI cools to 5.5% in September

SINGAPORE: Singapore's consumer price inflation cooled to 5.5 per cent on-year in September, down from 5.7 per cent in August.


The September measure of inflation is below the median of 5.7 per cent forecast by many economists.

Lower private transport costs contributed to the slower inflation, due mainly to a decline in premiums for Certificate of Entitlement for vehicles.

Clothing and footwear costs also eased.

The Department of Statistics said higher costs of accommodation, transport and food were the key drivers for the CPI increasing over the year.

Excluding accommodation costs, the CPI was 4.2 per cent higher compared to the same period last year.

The Statistics Department said the MAS core inflation rate eased to 2.1 percent on-year in September, down from 2.2 percent the previous month.

- CNA/al

Sembcorp Signs Agreements To Explore Expanding Its Water And Industrial Parks Businesses In China’s Jiangsu Province

Sembcorp is pleased to announce that its wholly-owned subsidiaries, Sembcorp China Holding and Sembcorp Industrial Parks, will be signing agreements with the Qidong LVSI Coastal Economic Development Zone (Qidong EDZ) Administration Committee and the New District Administrative Committee of Wuxi Municipal People's Government respectively, to explore further business opportunities in Jiangsu province, China. The agreements will be signed during the Singapore-Jiangsu Cooperation Council meeting later this morning.

Sembcorp China Holding will be signing a Letter of Intent (LOI) to explore the formation of a joint venture to build, own and operate an industrial wastewater treatment plant with a total capacity of 40,000 cubic metres per day, to be developed in phases. The facility is capable of treating high concentration industrial wastewater from multiple sources, and will be located in the Qidong EDZ, a new petrochemical industrial park in Jiangsu province. Located near Sembcorp’s award-winning wastewater treatment plant in Zhangjiagang, this new facility is expected to complement the Group’s existing water operations in Jiangsu province. Sembcorp is expected to hold at least 80% stake in the proposed joint venture, while Qidong EDZ Administration Committee’s wholly owned investment company will hold the remaining stake.

The LOI will be signed by Alan Yau, Chief Executive Officer of Sembcorp China and Hua Wei, Director of Qidong EDZ Administration Committee.

Additionally, Sembcorp Industrial Parks and the New District Administrative Committee of Wuxi Municipal People's Government (WND) will be signing a Memorandum of Understanding (MOU) to deepen and expand cooperation in Jiangsu province as well as internationally.

Sembcorp and WND seek to explore collaboration in the following areas:

1. Opportunities for Sembcorp to expand its presence in Jiangsu by developing new water and environmental solutions in Wuxi

2. Business opportunities for build-to-suit industrial lease in science and high-tech business parks in Jiangsu province

3. Co-investment in industrial and real estate developments overseas

4. Promotion of the Wuxi Solar City photovoltaic park with WND-supported investment incentives

Sembcorp is a shareholder of the Wuxi Solar City photovoltaic park through the Wuxi-Singapore Industrial Park (WSIP). The WSIP is a model integrated township and industrial park that caters to the semiconductor and photovoltaic industries. It has attracted 77 companies which have brought in US$3 billion in investment capital and generate annual exports valued at US$4 billion. The WSIP has also created more than 40,000 jobs since it began operations in 1993.

The MOU will be signed by Kelvin Teo, President & Chief Operating Officer of Sembcorp Industrial Parks, and Ji Ke Jian, Director of Wuxi New District Administration Committee.



Saturday, 22 October 2011

I know what I don’t know!


Read? I don’t know what I don’t know

In investing or trading, some people know what they don't know; but believe some people know what they don't know.

For example, I heard someone saying that his broker is good as he sent him some TA charts with some views.

Actually, when you go around visiting investment, finance and trading blogs you will see lots of charts with convincing views presented in these blogs. They know what you don't know??? Don't be foolish to believe it. They are probably like you; they don't know what they don't know and act like they know.

BTW, you don't need to have high IQ to do TA charting and present views or give 5 pointers. Anyone after seriously read a few TA books should to be able produce decent TA chart and present their views. It is not rocket science!

I believe the most honest answer came from one Head of Research from XXX Securities at investment seminar after been scolded by an old man for causing him to lose money following her calls for years. She replied something like this: "If I really know; I won't be standing here giving stock view."

Yes. That is absolutely true. She knows what she knows. She doesn't know what she doesn't know. But, some people like to believe what they hear and read and foolishly think that they know what we don't know.

You don't know what I am saying??? hee hee!



Kep Corp - Down trend has been reversed!


Pull back. Down trend has been reversed.
Should be no problem in clearing resistance at $9.02

I don’t know what I don’t know

Read? Gambling - investment - speculation

Read? Known and Unknown?

In the stock market, instead of admitting that "I don’t know what I don’t know ", we turn it into "I think I know something that others don't know." That is speculation!

Investors or traders are all speculating at different levels using different method. Traders use charts to speculate. Investors use corporate and financial data to speculate. Basically, both traders and investors ultimately speculate on just two things: future earning and/or future cash back to shareholders.

Future Earning

There is no absolute certainty in knowing future corporate earning as there are just too many moving parts in them. We are just speculating on their future earning whether it is sustainable, growing or weakening.

Future cash back to shareholders

Investors and traders also speculate on future cash back to shareholders in form of stock dividends, special dividends, share buy-back, privatisation at premium. Just start a big rumor on any of these, the traders will jump in a big way.

In the stock market, all of us speculate!





Friday, 21 October 2011

The next Big Thing by Apple after Steve Jobs

Just For Laugh ....

iPhone

then we have

iPad



coming next in Apple after Steve Jobs

iDiot

Nuclear concerns boost Keppel projections

In a statement, company chief executive Choo Chiau Beng said concerns over nuclear energy in Japan and Germany would help push up global demand for oil and gas.


The company also expected to get a "fair share" of an order from Brazilian state oil company Petrobras, which recently announced a tender for 21 drilling rigs.

"Drilling in the North Sea has been revitalised by new major oil finds, and the Gulf of Mexico is returning gradually to normalcy with the issue of permits," Choo said.



CapitaLand net profit down 82.6% to S$80.22m

By CARINE LEE


CapitaLand Limited on Friday reported a 82.6 per cent year-on-year drop in net profit to $80.22 million from $460.92 million for the third quarter ended Sept 30, 2011.

Earnings per share for the quarter was 1.9 cents, down from 10.7 a year ago. For the nine months ended, earnings per share was 13.6, down from 19.5 cents for the nine months ended Sept 30, 2010.

Revenue was down 58 per cent to $608.57 million from $1.45 billion.

The decrease in 3Q 2011's group revenue was primarily due to the exceptionally strong revenue in 3Q 2010 as the revenue of units sold under the deferred payment scheme from two projects, which accounted for $818.6 million, were recognised in the same quarter.

For the nine months ended Sept 30, 2011, net profit was down 30 per cent to $580.72 million from $829.64 billion, on the back of a 21 per cent dip in revenues to $1.96 billion from $2.48 billion a year ago.

How Pornographic Analysis can lead to good SEX!

Read? Uncle, Why your Chart so dumb leh? (3) - I will know it when I see it

You may heard all those debates and arguments on Fundamental Analysis (FA) vs Technical Analysis; but still unable to decide which is superior. I am going to introduce you a new concept called as Pornographic Analysis (PA) to make you more blur.

How do you describe pornography?

It is quite difficult to describe and explain it in words; but when you see it you know it. Similarly, in Pornographic Analysis, it is that simple. No lengthy words are required. When you see it you know it and once you have mastered it well it can lead to good SEX. You will find great pleasure in doing it.

Blue

In pornography, Blue is to indicate obscene. We have blue films, blue movies, blue VCD and now DVD. All are obscene!

SEX

In Pornographic Analysis, we are focus on having good SEX (Stock Entry eXit) to get great pleasure from doing it well.

Stock

We will pick Mates like Blue chips and do it. Why???

Blue chips are obscene. Their market cap are obscene. Their corporate earning are obscene. Their CEOs' income of few millions dollar are even more obscene as compared to the median income in Singapore of less than $30K per year.

Entry

To have good SEX with less chance of consequences we will have to determine the safe Period and enter it at the right time with our best position to achieve the maximum pleasure when we get it right. But, somehow some people after entering will become very nervous and PREMATURELY pull it out. They then regret when they see other people still happily holding it well for more pleasure. They lose the fun too early.

I heard Uncle8888 is old but solid strong; and still holding it well. He has been seeking more pleasure in holding it and twice a year he will have climax - smaller one in Aug and bigger one in May.


eXit

The greatest pleasure comes from holding it for a long, long time and don't prematurely pull it out. It is really sickening when you find your buddies are holding them well climax after climax. Remember, premature is never fun!









Thursday, 20 October 2011

Keppel Corp Q3 net profit up 33.3%

1. Net profit improved 15% to S$1,102 million, compared to 9M 2010's S$955 million (restated).


2. Earnings Per Share of 62.0 cents, up 14% from 9M 2010's 54.3 cents (restated).

3. Annualised ROE of 20.8%.

4. Economic Value Added increased from S$737 million to S$770 million.

5. Cash outflow of S$1,162 million.

6. Net gearing of 0.18x.

















By CARINE LEE


Keppel Corporation Limited on Thursday reported a 33.3 per cent year-on-year increase in net profit for the third quarter ended Sept 30, 2011.

Net profit rose to $406.13 million from $304.64 million a year ago.

Earnings per share for the third quarter was up 31.8 per cent to 22.8 cents from 17.3 cents previously.

Third quarter revenue rose 18.1 per cent to $2.7 billion from $2.28 billion a year ago.

For the nine months ended Sept 30, 2011, net profit was up 15.4 per cent to $1.1 billion from $955.29 million during the same period last year. Earnings per share rose 14.2 per cent for the same period to 62 cents from 54.3 cents last year.

Revenue for the nine month ended Sept 30 was up 4 per cent year-on-year to $7.28 billion from $7 billion.



Wednesday, 19 October 2011

tio ToTo

Just for Laugh ....

After donkey years of buying ToTo Quick Pick, this is very first time that I bought two tickets and strike two tickets. Score: Win 2 - 0

Sabana REIT reports on-forecast Net Property Income and Distributable Income for 3Q2011

Distribution Per Unit (“DPU”) of 2.14 cents and annualised DPU of 8.49 cents for 3Q2011.


On track to deliver annualised DPU of 8.63 cents for FY2011

• Achieved S$50.1 million gain in annual revaluation of its IPO portfolio

• Obtained investment grade credit rating from Standard & Poor’s

• Announced acquisitions of four yield-accretive properties worth S$132.3 million - portfolio size to cross S$1.0 billion mark upon legal completion


By ANGELA TAN


Sabana Real Estate Investment Management Pte Ltd, the manager of Sabana Shari'ah Compliant Industrial Real Estate Investment Trust, reported on Wednesday a distribution per unit (DPU) of 2.14 cents for the third quarter ended September 30, 2011.

The DPU of 2.14 cents is in line with its forecast.

Distributable income was at S$13.6 million.

'With our 3Q2011 DPU in line with our forecast, our cumulative DPU performance is on track to achieve our Forecast3 DPU of 8.63 Singapore cents for the financial year ending 31 December 2011,' Kevin Xayaraj, CEO and executive director of the manager said.

On September 30, 2011, the value of Sabana Reit's portfolio had appreciated by S$50.1 million from S$851.2 million a year ago. This equates to 5.9 per cent increase in property values in the one-year period.



Tuesday, 18 October 2011

Uncle, Why your Chart so dumb leh? (3) - I will know it when I see it

Read? Uncle, Why your Chart so dumb leh? (2)

Not dumb, not dumb, not dumb at all.
It is same as pornography. I will know it when I see it.


It is just too complex to describe its actions in words; but it is so easy to recognize it to make a decison. It is pornograhic!

Pornography - You'll Know It When You See It


In 1964, Supreme Court Justice Potter Stewart, issued the following opinion in Jacobellis v. Ohio, one of the early challenges of pornography to the First Amendment of the Constitution:

"I shall not today attempt further to define the kinds of material I understand to be embraced within that shorthand description; and perhaps I could never succeed in intelligibly doing so. But I know it when I see it, and the motion picture involved in this case is not that."





Monday, 17 October 2011

Olam

Kep Corp

Noble shuts London coal trading desk: sources

MADRID - Noble Group, one of the biggest physical coal traders, shut its London coal trading desk and will focus on growing its coal business out of Asia, sources close to the company said.

Several Noble physical and coal swaps traders have left the firm as a result.

'Noble is primarily an Asia-based business for coal so it makes sense to grow the business there, where all the future demand growth and a lot of new production is going to come from,' one former Noble trader said.

In May, Noble executive vice-president Neil Dhar forecast Chinese coal import demand will rise to 200 million tonnes by 2015.

Noble was one of the first traders to develop a sizeable Pacific region coal business alongside Glencore. -- REUTERS



K-GREEN TRUST 3Q 2011 REPORT CARD

1. The profit after tax achieved for the first nine months of 2011 was $11.7 million, 14.6% higher than projection.

2. Profit after tax for 3Q 2011 was $3.8 million.

3. Earnings per unit (EPU) for the 3Q 2011 was 0.60 cents.

4. Net asset value per unit as at 30 September 2011 was $1.10.

Punggol to retain its fishing village heritage

Read? Punggol Promenade is a 5-kilometre long public waterfront promenade

Createwealth8888: New route for extending your jogging or cycling in Punggol.


As Punggol is in the midst of being transformed into an eco-town, the Housing and Development Board (HDB) is looking at how to preserve its fishing village heritage for both the younger and older generations.


For instance, the 4.2-kilometre man-made Punggol Waterway, which will be open to visitors from Sunday, runs through the town to provide residents with a waterfront living space, while seeking to retain the seaside charm of the old Punggol.

Features such as a "kelong" bridge, heritage panels and a heartwave wall with motif panels will be built along the waterway for residents to learn about the history of the town as they go about their recreational activities.



Sunday, 16 October 2011

Why Pursue Financial Freedom?

Just For Thinking ....

You google for "Financial Freedom". You will have a long list of bloggers writing on Financial Freedom and a number of them are bloggers in Singapore.

Why pursue Financial Freedom?

So that we will have freedom to choose to work and freedom of worry from losing our job. When we have  reached financial freedom; working has become so nice. Freedom of firing our boss at our own time and at our own target is really fantastic. So shiok man!

Let me introduce the concept of Stock Freedom. When I google for Stock Freedom; it didn't return any search related to "Stock Freedom". May be, I am the first one to coin it - Stock Freedom.

Stock Freedom

Stock Freedom may be our baby steps towards Financial Freedom. It may be easier to achieve these baby steps and more visible as we can really see the fruits of our labour in investing.

When have achieved Stock Freedom, we will have freedom to hold our stocks in the volatile stock market across market cycles of Bull and Bear. We will have the freedom to sell our stocks anytime and at any target. We will have freedom of worry of not losing our capital. When we don't lose our capital, we are happy.

So what is Stock Freedom?

When we have a portfolio of Pillow Stocks in the stock market for generating cash flow. We keep taking these baby steps to build up more until we reach Financial Freedom.

Read? Pillow Stocks Strategy



Credit crunch in China hurts property developers

SHANGHAI: Property developer Zhang Xin made a fortune over the past decade on the back of a building boom fuelled by China's blistering economic growth and the privatisation of its housing market.


Now the co-founder of SOHO China, one of the nation's leading developers, is worried Beijing's efforts to cool the sector are hurting sales and threatening to send some debt-laden property developers to the wall.

"In my sixteen years as a developer this is by far the most challenging year I've ever had, in terms of what we could sell," Zhang, chief executive of Beijing-based SOHO, recently told reporters.

China has invested heavily in property -- about $750 billion in 2010 alone -- since it privatised the market in the late 1990s, ending decades of state allocated housing and enabling a growing middle class to own their own homes.

But with real estate investment now a key driver of the economy, there are fears a collapse in the market could trigger social unrest fuelled by millions of home-owners seeing the value of their properties plummet.

A massive stimulus package unveiled in late 2008 to combat the global financial crisis triggered a flood of credit into the world's second-largest economy, with a large portion funnelled into construction.

Since the beginning of this year Beijing, fearing a bubble, has been trying to bring down dizzying prices by hiking interest rates and restricting lending to developers, making it nearly impossible for many to get financing, Zhang said.

"We're now facing a very uncertain time," he said.

Authorities have also banned the purchase of second homes in some cities, increased minimum downpayments and introduced property taxes in Shanghai and Chongqing.

"That really has killed the market," Zhang added.

Industry officials and analysts are worried that the measures are now squeezing sales so much that property developers who have borrowed heavily to fund new projects could be tipped into bankruptcy.

"Near-term prospects for real estate developers are increasingly gloomy," said London-based research house Capital Economics, noting third-quarter sales fell 15 percent from a year ago.

"A wave of newly completed property is about to hit the market. Developers are likely to find themselves holding large volumes of unsold property."

In August, 46 out of China's 70 major cities reported residential housing prices fell or stayed the same compared with July, official figures showed.

In once-booming Shanghai, the volume of new home sales fell over 50 percent year-on-year in September, according to information provider SouFun. In the capital Beijing, home sales in the secondary market are at a three-year low.

"The hard times aren't over yet. Industry consolidation is likely to accelerate, weeding out weaker players," ratings agency Standard & Poor's said in a recent report.

Some developers struggling to get financing from banks are turning to trust companies -- firms set up by local governments to fund pet projects -- and other informal lenders which charge much higher interest rates than banks.

Standard & Poor's estimates some weaker developers have repayments due that exceed their expected sales next year, while Capital Economics forecast "many developers are likely to fail".

While Beijing has pledged to maintain tight credit controls for now, it may reconsider its position if property firms start to default or go bankrupt -- or if the global economic downturn severely impacts the country, analysts said.

The risk of popular anger was shown earlier this month when scores of home buyers protested to a Shanghai property developer after it slashed prices for an unfinished project in nearby Jiangsu province, which they had bought at higher cost.

But for the next six to 12 months restrictions on credit and weak property sales are likely to persist, according to Standard & Poor's.

"So far, the objectives of the government towards the sector are still not being met. It's still going to be on the tightening end," said Christopher Lee, director of S&P corporate ratings for the Asia-Pacific.

But in Shanghai -- where the average cost for one square metre of downtown housing was 48,000 yuan (about $7,500) last year, about 12 times the average monthly salary -- home buyers have little sympathy for cash-strapped developers.

"Considering the high housing prices in Shanghai, a new flat is just a dream," said Qian Xueqi, a manager at an international hotel.

- AFP/cc

Investing vs Trading (4) - Two great attributes of long-term investors


Read? Investing vs Trading (3) - Here the Hard Truth from me!

Two great attributes of long-term investor

What are they?

Super in FA? 

Super in both FA and TA?

One grand Master Guru from Hong Kong in the investment world has been holding some stocks (one of them is HSBC) for more than 20 years and collecting stock dividends from them. During the past and current market bears, he can still sleep well at nights. Why?

He uses simple strategy for buying, holding and selling for his favorite stocks (Createwealth8888: probably blue chips)

During market crisis, he would buy enough of his favorite stocks and stop buying more when he has enough of them and then wait for the bull market to come and sell enough of them to recover his capital. In this way, he keeps his "FREE" stocks in the market to receive stock dividends.

Grand Master Guru called them "FREE" stocks and Createwealth8888 called them "Pillow Stocks".

What did Grand Master Guru tell us?

Patience and Gut

The two great attributes of long-term investors for cash flow.

Patience to wait for big bears to come and GUT to put in enough capital to buy enough of them so that they will have enough to do partial divestment to recover the initial investment cost and make the leftover stocks FREE. Simply, repeat the whole process again at each market bear and market bull to accumulate more of them to generate more cash flow.

Many of us may have Patience but Gut may be lacking in us so it is very hard for us to put in large capital relatively to our account size to buy enough during market crisis; and then hold enough winning stocks for cash flow over decades. 20 years? OMG!


Saturday, 15 October 2011

Kep Corp - Worst is over???

Friday, 14 October 2011

Investing vs Trading (3) - Here the Hard Truth from me!




Look at the photo above. I am telling you it has happened in Singapore before. I was there and saw it with my own eyes. Read? 1978 Singapore floods That was old Potong Pasir. That is the Hard Truth on flooding. Will it happen again?

Read? Investing vs Trading (2)

Read? Buy Gold/Silver as insurance or hedge against inflation? (3)

At one of the famous chat box in Singapore, some day, I will hear some fellows shouting Long Keppy and on some other day I will hear some people shouting Short Keppy. It looked like Keppy (Kep Corp) is one of their favourite trading stocks. Indeed, if you asked me it is a good trading stock.

Now, the Hard Truth on investing vs. trading.

It is all about Timing the Market and Time in the Market. Both are equally important . You must get both right in order to make real big money from the stock market. However, traders will just need to get their Timing the Market more right than wrong to make consistent money; but the job of investors can be harder than traders. As they have to get both Timing in the market and Time in the Market right to make real big money from the stock market.

Just like the flooding in old Potong Pasir, I was there. I saw it. I know the Hard Truth of Flooding to the roof top is real. It is damn scary and damaging. I hope it will never happen again in Singapore.

Same for investing and trading as I have done it all before. Here is the Hard Truth from me.

Keppy the favourite trading stock

It happened to be my favourite stock too so I will have a story to tell.

Kep Corp at today closing market price of  $8.70

YTD Iinvesting TSR (%) = Total dividends received + Capital appreciation @ today closing stock price of $8.70
                              =  748% for 10.1 yrs (18 Sep 2001 to 14 Oct 2011)
                              =  74% per year
                              =  6.2% per month

To get that simiilar YTD total return of 748% in 10.1 years, I will have to trade Long/Short at net profit of 6.2% per month for every month for past 10.1 year. That will also mean plenty of TA charts to read to time the market for such returns. So what is the moral of the story?

You just need one CLICK at the Right Time at the Right Stock for same fruit of labour

You just need one click at the right time at the right stock and for that one time effort you may enjoy effortless of the same fruit of labour; otherwise you will have to labour every month for many years or even decade to get it. This is the Hard Truth on investing. This is Timing the Market and Time in the Market that counts for the real big money game.

You can call it luck. You call it gut.  Yes, I was second time lucky with the 2nd click in 2002 for Semb Corp and 3rd time lucky for third click for DBS in 2003.

Will I be lucky again in 2012/2013 if the Big Bear come visiting again for 4th, 5th, and 6th click?

Wait ... may be I have already done the 4th click for Biosensors as I have strong feeling that it may turn out to be my next multi-bagger.

Are you ready for one CLICK at the Right Time at the Right Stock at the next Big Bear?   



Thursday, 13 October 2011

Investing vs Trading (2)

Read? Investing vs Trading

10 years wedding anniversary

It is 10 years of joys and pains of sticking it together in good times and in bad times. But, when times are bad I always think of divorcing you as it hurts me badly.








 Kep Corp (18 Sep 2001 - 14 Oct 2011)

I have been riding it up and down across market cycles by collecting stock dividends and at the same time trading it over 93 rounds (see Kep Corp trades)

Joy

The total realized profits and dividends collected over the past 10 years is more than enough to pay for my two older children's 4-year university education and their personal living expenses. And dividend yield is good. (See? Kep Corp )


Pain

But, everytime when the Bear market hits again , it will come back to my mind whether I should sell it to lock in the profit and avoid riding it down one more time? Should I?

Re-making Portfolio to ride the Craziness of Market Cycles

Read? Investing Made Simple by Uncle8888 (28)

Read? More articles related to performance

"Insanity: doing the same thing over and over again and expecting different results" - Albert Einstein.

               This is how Market Cycles exist?


































Market Value of our investment?









When the market value of our asset rises above our initial investment cost, we make an unrealized profit; but when the market value falls below our initial investment cost, we make an unrealized loss.

Does this unrealized profit/loss really matter to us if we are not selling yet and still happy with the cash flow generated by these assets?

Some stocks by nature can be very volatile and their market value can rise and fall quickly over days or even by hours. It is like taking a roller-coaster ride. If we focus too closely to their market value on daily basis, we may be taking an unnecessary and unwarranted emotional roller-coaster ride with the crazy stock market.

BTW, any unrealized gains in our stocks are just paper profits. It is just a number indicated in our monthly CDP statement. We can't buy food with these paper profits which are hiding somewhere in the databases of CDP's computer.

Similarly, any paper losses are just imaginary losses until the companies actually go bankrupt and then only no hope.

Learning from Property investors

Read? Property investors

Most property investors never formally evaluate the performance of their investments on daily basis and they are happy in receiving rentals and paying off mortgages.

For example,

If our neighbour A lost heavily in the casino and force to borrow a large sum of money from Ah Long. When he was unable to pay Ah Long; he was then forced to sell his flat to Ah Long at depressed price to pay up his debts. Do we bang our head against the wall when we heard that evaluation of a flat in our block was that low? No, right?

If our neighbour B sold his flat to a young couple who wanted to live near their parents and willing to pay high price and high COV of $40K. Do we jump up and put up our flat for sale too? No, right?

So what is market value of our investment?

We have a choice on how we perceive the value of our investment and especially for those volatile stocks:

  1. Mark to market value on daily basis and follow the craziness of the market up and down with the daily emotional swings.
  2. Mark to initial investment cost and ignore how the market perceive the value of our investment. But, we have to be very careful not to over-state the value of our investment and avoid self-denial of real losses.  So it is wiser to grossly under-state the value of our investment as capital protection strategy.
Re-making the current Portfolio since 2001

The stock market tends to be more volatile than the property market; but it doesn't mean I should be as crazy as the stock market and take the emotional roller-coaster ride by marking all my investment to the market value on daily basis. I realize that I don't need to do it?

I will split my current portfolio into two distinct portfolio - investment and speculative. Each portfolio will have its own purpose and will be tracked and measured differently and independently. In the past, when I look at my portfolio, I always feel that I am winning the investing game with big margin and tend to be complacent and lack of corrective actions.

Two distinct Investment and Speculative Portfolio















All stocks will be classified as speculative until they are proven to be capital protected and yield at least 6% in cash flow before transferring them to Investment Portfolio.

For investment portfolio, I will focus on sustainable cash flow and indicate the stock value to their initial investment costs and disregard any market value. These investment stocks will be growth-dividend stock with high margin of safety to their initial investment cost so that they can withstand market crashes as capital protection.

For speculative portfolio, it will be fixed capital at risks for speculating future growth-dividend stocks and hopefully over time I will be able to find more growth-dividend stocks to generate more cash flow in the investment portfolio.


Conclusion

In this way, I will have a smaller speculative portfolio to ride with the craziness of market cycles while maintaining sanity with a bigger, stable and capital protected investment portfolio. Sleep well at night even when market is wild and mad.

Read? Pillow Stocks Strategy (2)

I am practising 3M's in Investing and Trading - Method, Mind and Money management.

Now, the speculating mind will be just tracking and measuring the performance of the speculative portfolio and not confused by the past winning multi-baggers that are deceiving the speculative mind over its real performance.

Wednesday, 12 October 2011

DBS upsizes MTN programme to US$15b from US$10b

By YEO AIQI


DBS Bank Ltd announced on Wednesday that it has updated its US$10 billion debt programme to a US$15 billion global medium term note programme.

The local bank had prviously set up the US$10 billion debt issuance programme in June.

DBS said the net proceeds from the notes issue will be used for the general business purposes of the bank and its consolidated subsidiaries.

DBS, Bank of America Merrill Lynch, and Goldman Sachs (Singapore) Pte are the joint arrangers for the programme.

Shortly after the upsize, credit rating agency Standard & Poor's Ratings Services assigned the debt issue its A+ rating.

Tuesday, 11 October 2011

SWIBER SCORES WITH TWO MORE ORDER WINS OF APPROXIMATELY US$102.0 MILLION

- Strong order book visibility despite current market condition


Singapore – October 11, 2011 – Swiber Holdings Limited (“Swiber” or together with its subsidiaries, the “Group”), a world class integrated construction and support services provider to the offshore industry, announced that it has secured yet two more order wins totaling approximately US$102.0 million for offshore construction projects involving pipeline an subsea installation works in Southeast Asia. Both projects are scheduled to commenc immediately, with one project to be completed by 4QFY2011 and the other to be completed by 2QFY2013.

One of the contracts is from a new customer and another is a repeat order from an existing customer, both of which are major oil companies in Southeast Asia. These contract wins bear testimony to the Group’s strong asset and resource capabilities to meet the stringent requirements of its customers, who are mainly oil majors.

Commented Mr. Francis Wong, Group Chief Executive Officer and President of Swiber, “We are deeply encouraged by yet two more order wins notwithstanding the current market condition. While we continue to receive repeat orders from existing clients, we are also securing contract wins from new customers, signaling an endorsement of our consistently excellent service and timely deliveries.

“Our order book, which is well-diversified geographically, allows us to capture the varying peak seasonal demand for each region. This helps us to maximise the utilisation of our vessels, and allows us to spread our costs over a wider base of contracts, thus enhancing our cos competitiveness.

“Southeast Asia offers exciting opportunities for more contract wins given that Q4 is traditionally a strong quarter for awards of contracts in this geographic area.

Swiber has secured to date, new contract wins amounting to US$758.0 million in 2011 from oil and gas majors for work in Asia and the Middle East.

Singaporeans earning higher income

By CARINE LEE


Singaporeans experienced growth in individual and household incomes in the last decade, according to statistics released on Tuesday by the Ministry of Manpower and Department of Statistics Singapore.

The median monthly income of Singapore citizens from 2001 to 2010 grew by 2.9 per cent per annum in nominal terms to $2,588 from $2,000, or 1.2 per cent per annum in real terms.

Incomes of citizen-headed households grew by 3.4 per cent per annum in nominal terms to $1,520 from $1,083, or 1.8 per cent in real terms from 2000 to 2010.

Giant jackups potentially in 2012; KEP/SMM may benefit

Deutsche Bank AG/Hong Kong,

According to a recent article from Upstream, Norwegian state oil company Statoil is in talks with rig owners about ordering some of the largest jackup drilling rigs ever built. These rigs have been labelled Category‐J rigs and are planned for work on subsea completions. Statoil has requested expressions of interest from jackup owners and are expecting initial responses back in October 2011. If they decide to proceed, tenders could go out by 2012 with potential delivery by 2015. The group indicated that they want to address the problem of the ageing rig fleet in Norway, which ties in with our view that the rapidly ageing global rig fleet will remain a key factor driving the replacement cycle in this sector.

The article highlighted that leading candidates for this program could include Maersk Drilling, Seadrill, and Rowan. Other drillers that may also be interested include Odfjell, Awilco, Noble Drilling, and Ensco. Upstream indicated that Maersk has recently been screening the market for a possible order of the new GustoMSC‐design jackup, the CJ80. Their most recent orders have been for CJ70 rigs, two of which were placed with Keppel in early 2011 at about US$600m each (approximately US$500m per rig for the yard work) and are the largest jackups built to date. The dollar value for each CJ80 rig should be more than US$600m as these CJ80 rigs have variable deck loads that are higher than the 8000 tonne load of the CJ70 units.

We believe KEP and/or SMM are well positioned for the Category‐J rigs, with both being clear market leaders for high specification jackups. Of the three leading candidates for the new rigs, Maersk over the past 12 months has ordered 2 jackups with KEP, while Seadrill has ordered 3 jackups withSMM and 1 semisubmersible drilling tender with KEP. In 2007, Rowan ordered 4 jackups with KEP.

Monday, 10 October 2011

Memory of Asian Financial Crisis is back!

Createwealth8888: One of my relatives almost went bankrupt due to heavily into this share loan financing by pledging existing shares as collateral in order to make borrowings to maximise the potential of investments during Asain Financial Crisis.

Hong Leong Finance offers 1.5% interest rate


By CARINE LEE

Hong Leong Finance on Monday announced that for a limited period, customers who take up Express Share Loan for a three-month tenure with a minimum of $10,000 loan will enjoy a special interest rate of 1.5 per cent.

Hong Leong Finance offers 1.5% interest rate to celebrate its golden jubilee

Express Share Loan is a short-term secured credit facility which allows customers to pledge existing shares as collateral in order to make borrowings to maximise the potential of investments.

This offer is extended in conjunction with the finance company's golden jubilee, where its customer service staff will don three-piece gold coloured jacket suits in place of grey uniforms.

Lian Beng’s 1QFY12 net profit grows 76% year-on-year to S$19.3 million

  • 1QFY12 revenue increased 21% year-on-year to S$135.8 million


  • Cash generative operations contributed to cash position of S$181.4 million as at 31 August 2011

  • Order book of S$761 million as at 31 August 2011 provides continuous flow of activities

SINGAPORE, 10 October 2011 – One of Singapore’s home-grown listed construction groups, Lian Beng Group (“Lian Beng” or “the Group”) (联明集团) reports a 76% increase year-on-year in net profit to S$19.3 million in 1QFY12 from S$11.0 million in 1QFY11 on the back of a 21% increase yearon- year in its 1QFY12 revenue to S$135.8 million from S$112.3 million.

Following a record set of results for FY2011 ended 31 May 2011, the Group achieved steady revenue contribution from its core construction segment, property development as well as ready-mixed concrete segments in 1QFY12.

The improvement in the Group’s net profit margin was also due to a one-time gain of S$7.9 million from the sale of its New Industrial Road investment property. Correspondingly, the Group’s net profit margin improved by 4.4 percentage points to 14.2% in 1QFY12 from 9.8% in 1QFY11.

Net cash generated from operating activities amounted to S$32.6 million during the quarter under review. On an operationally efficient and cash generative structure, the Group cash and cash equivalents stood at S$181.4 million as at 31 August 2011.

Sunday, 9 October 2011

Invest in stocks listed in overseas stock exchanges is investing globally?

Just For Thinking ....

Read? Investing Made Simple by Uncle8888 (10)

Read? Major STI market cycles - Horrible Bears and Beautiful Bulls!

Why do we as local investors in Singapore have developed such thinking that if we don't buy some stocks that are listed in some overseas stock exchanges we are not investing globally.

Are there any strong reasons to justify our local big blue chips listed in  SGX e.g. Keppel Corp, Semb Corp, ST Eng, SingTel, DBS, etc have not diversified their businesses across globally or regionally enough to qualify as MNC in those countries where they have set up their global or regional presence to do businesses there.

Frankly speaking, I know a few fellow investors who have bought some stocks listed in some overseas stock exchanges. Are they currently doing better than me in term of real monetary gains after currency conversion and tax? I don't think so. Their absolute real returns with these global stocks will speak for themselves. So is Overseas moon still rounder, is it?

Saturday, 8 October 2011

Insights into successful investing

A look at empirical studies done by academics can help enhance an investor's performance



By TEH HOOI LING
SENIOR CORRESPONDENT

LAST week, Singapore Management University's (SMU) Sim Kee Boon Institute of Financial Economics organised a half-day seminar on 'The Opportunities and Challenges Facing the Asset Management Industry in Asia'.

One of the presentations was by Melvyn Teo, associate dean (research) of Lee Kong Chian School of Business at SMU. His topic was 'Insights for Investors from Empirical Research'.

I went through his presentation materials and found them interesting, and thought I'd share them with readers here.

Prof Teo highlighted four insights gleaned from empirical studies done by academics which could help enhance an investor's performance.

First is investor pyschology. There is a big field of study called behavioural finance which tries to shed light on the numerous human biases and irrationalities when it comes to investing, particularly in stocks and shares.

Overconfidence

Prof Teo picked one: overconfidence. Overconfidence leads to overtrading, and overtrading results in higher transaction costs. High transaction costs in turn eat into returns.

(Createwealth8888: Overconfidence is not limited to overtading. In investing, overconfidence can lead to investors building up very large position in a single stock e.g. more than 40 or 50% of their capital. They are so confident that their single stock will not turn out to be a mini or micro Black Swan in their portfolio)
A study by Barber and Odean, published in 2000, divided a cluster of investors into five groups, ranking them from those who traded the least to the most. The gross returns of all the five groups were quite similar. However, when it comes to net return, there is a clear relationship between the frequency of trading and net return. The higher the monthly trading volume or turnover, the lower the net return.

The average investor's net return, after accounting for transaction costs, is worse than simply putting money in the S&P 500 Index fund.

My take is that the study was published in the year 2000, probably based on data before 2000. Since then, the world has changed rather drastically. For one thing, stock markets have become a lot more volatile. Increasingly, there are more believers that investors have to actively manage their portfolios, ie trade, in order to preserve their wealth, and also to capitalise on the opportunities to buy assets on the cheap. Getting the timing right, of course, is the proverbial holy grail in investing.

While both men and women share the overconfidence trait, men are more overconfident in their ability to make financial decisions. As such, they tend to trade more. Barber and Odean, in a paper published in 2001, said that men traded 45 per cent more than women, and the trading reduced their net returns by 2.65 per cent a year as opposed to 1.72 per cent for women.

The difference between single men and women is even more pronounced. Single men traded 67 per cent more than single women, thereby reducing their returns by 1.44 per cent per year more than single women.

The second insight presented by Prof Teo related to market inefficiencies. The theory is that the market is efficient, and that the stock price should incorporate all the information that is publicly available about that particular security. 'However, investors suffer from limited attention. They are apt to purchase attention-grabbing stocks that have extreme returns, high volume and significant events,' said Prof Teo, quoting Barber and Odean.

One market inefficiency noted by Prof Teo is the customer/supplier links between firms. Sometimes, the market does not react immediately to the bad news announced by a stock's major supplier, or perhaps even its major customer. 'Investors may ignore these economic links in the short term, resulting in a lagged response of supplier prices to customer prices, and hence predictability,' said Prof Teo.

And when it comes to picking hedge funds, Prof Teo's own study has found that the closer a manager is to his or her investment region, the higher the outperformance.

Meanwhile, his analysis of Japan-focused hedge funds showed that hedge funds managed by native Japanese speakers outperformed those managed by non-native speakers by more than four percentage points a year. And among the non-native speakers, those who are closer to the market outperformed those further away by 2.5 percentage points a year.

Hedge fund managers' incentive structures also matter. According to Prof Teo, portfolios of hedge funds with performance fees and high water mark significantly outperform those with no high water mark and low performance fees.

In another study, Chevalier and Ellison tried to find out if certain types of managers generate better returns. They looked at 2,029 fund-years for growth, and income mutual funds between 1988 and 1994. They found that a manager who graduated from one of the best schools would be expected to achieve an annual return which was more than one percentage point per year higher than that of a manager who attended a school of median quality. Older managers performed worse than younger ones, while managers with MBAs earned about 60 basis points per year more than managers who did not.

Glamour stocks

Further analysis found that young and high-SAT test score managers tended to work for funds which charged lower expense ratios, that high-SAT managers and managers with MBAs tended to hold higher beta portfolios, that MBAs held more 'glamour' stocks, and that younger managers were more likely to be replaced after a bad year.

However, the superior performance of MBAs was fully accounted for when one adjusted for differences in the riskiness of the individual stock holdings. Meanwhile, a large portion of the superior performance of younger managers was attributable to their working for funds which charged lower expenses and to survivorship biases in that the poor performing managers were replaced by their firms, leaving only the better ones in the study sample.

The researchers however did find that there remained substantial performance differences between funds managed by managers from high-SAT schools and funds managed by managers from low-SAT schools which were not explained by observable differences in behaviour or by survivorship biases.

Indeed, a separate study done by Grinblatt, Keloharju and Linnainmaa based on data from Finland showed that Finns with higher IQs tended to have a greater participation rate in the stock market; and the higher the IQ, the better their performance.

Prof Teo's conclusions to the audience are:

Beware of behavioural biases such as overconfidence and their effects on your tendency to over trade;

Take advantage of mistakes that others make in the market;

Invest in securities that you possess an informational advantage in; and

Make sure that your manager is smart and well-incentivised to invest on your behalf so as to minimise agency problems.
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