I started serious Investing Journey in Jan 2000 to create wealth through long-term investing and short-term trading; but as from April 2013 my Journey in Investing has changed to create Retirement Income for Life till 85 years old in 2041 for two persons over market cycles of Bull and Bear.

Since 2017 after retiring from full-time job as employee; I am moving towards Investing Nirvana - Freehold Investment Income for Life investing strategy where 100% of investment income from portfolio investment is cashed out to support household expenses i.e. not a single cent of re-investing!

It is 57% (2017 to Aug 2022) to the Land of Investing Nirvana - Freehold Income for Life!

Click to email CW8888 or Email ID : jacobng1@gmail.com

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

Sunday 28 February 2010

Daring to dream big - Sometime we may need a pinch or two


The two biggest wild cards that will threaten our dream saving plan. It is unwise to under-estimate future expenses and over-estimate future saving power.

Parents Care


If parents don't have enough retirement fund or financial resources to see themselves through, they will sooner or later become a liability that may throw your dream saving plan and early retirement plan out of the window.

My late father-in-law spent his last 18 months in a government subsidized nursing home at monthly cost of $2,300 (just the cost of nursing home and exclude other medical, ambulance transportation and hospitalization expenses). Luckily, there were three sons to share the costs.

Kids Care And Expenses

Once they were born, their expenses will run like a 25-year Bull market with no major corrections and hitting bull peak when they enter University and spent like adults.

Dare To Dream Bigger

Don't just dream big. If you really must dream, dare to dream even bigger! Double your estimation of expenses and half your saving power. May your Bigger Dream come true!

Dangers of High Debts and Low Margin

Beware of dangers of high debts and low margin - the Deadly Duo?

Marry The Guy Who Has 60% Sales Commission.

One day, I came to the Deadly Duo Road; which is well known that many people have been killed while trying to cross the deadly road. The death toll was worse during extreme bad weathers, many more were killed without knowing why?

While I was thinking how could I ever cross the road safely; then I saw a young man dash across the deadly road and followed by two old men crossing over it carefully.

I stopped the two old men and asked how long have they been crossing the deadly road?
The old men replied at the same time: "Since I was a young man."
The Deadly Dou Road is so famous for killing many who dare to try to cross it; and yet these two old men have been crossing it so many times and are still living well.
They must have master the Dark Art Of Crossing and I trust that they should be able cross it for a few more years.

Do you know who are the two old men crossing the Deadly Duo Road?

Saturday 27 February 2010

Low Net Profit Margin - Avoid Them? - Part 3

Low Net Profit Margin - Avoid Them? - Part 2

Most of the stalls in hawker centers sell fried fishcake at $1 per piece, but this stall at ChinaTown Hawker Center 2nd floor near the center's public toilet is selling fried fishcake at $0.50 per piece. Minimum order is 2 pieces.

I am pretty sure the margin per piece has been squeezed but they make it back by selling more. Last Friday, while I was there I bought 20 pieces.

Value for money and good taste. Uncle8888's Recommended one! $1 for 2. Shiok leh!

They have two stalls side by side. If you are only buying fishcakes, you don't join the long queue for yong tau foo; but go to the stall on the left.

Feeling Rich?

"The pursuit of Happiness" by David G. Myers

"... two ways to be rich: One is to have great wealth. The other is to have few wants."

Great Wealth
You have plenty of money to satisfy many wants. But, it is never easy to find great wealth.
Fewer Wants
Isn't this good news. You can feel rich by having fewer wants and live within your means.
Want and Need
You may need to drink a cup of coffee in the morning to fresh up.
 $70 - $1.30

or want to drink the world's most expensive coffee.

Called Kopi Luwak, it's an Indonesian coffee made from the faeces of a Luwak, a small cat-like creature native to the island nation's coffee-growing regions.


See the difference between need and want? LOL

Passive Income From REIT? - Part 2

Passive Income From REIT?

How can REIT share be evaluated?

REIT share valuation is based on a number of relatively transparent factors:

Net Asset Value Calculation

REITs as well as REIT analysts perform regular (annual, and often quarterly) valuations of their company property holdings.

The value of a REIT’s total assets, minus liabilities, divided by the number of its shares outstanding results in what is called the Net Asset Value (NAV) per share of the company.

Thus, the value of a REIT’s shares is to a significant degree based on the value of its tangible real estate holdings.

Property Portfolio Enhancements

The value of a REIT’s property portfolio can frequently be either maintained or enhanced through consistent capital expenditures. This is significant because strategic property portfolio enhancements help to maintain or
increase NAVs and provide the basis for price appreciation of a REIT’s shares.

Why some REITs have low or zero gearing?

Either they are still in their infancy stage of growth or has slow down their growth or has reduced their debts exposure by disposing assets or raise equities.


Leverages are double-edge sword - can boomz and can also doomz so there is no clear cut right or wrong.

Passive Income From REIT?

Heard some active discussions on REIT at Bullythebear's cbox and my mouth also becomes itchy and need to :cookie:

From Wikipedia

What is REIT? 

A Real Estate Investment Trust or REIT is a tax designation for a corporation investing in real estate that reduces or eliminates corporate income taxes.

In Singapore, it is commonly referred to as S-REITs. There are currently 20 REITs listed on the SGX, starting with CapitaMall Trust [6] in July 2002. They represent a range of property sectors including retail, office, industrial, hospitality and residential. S-REITs hold a variety of properties in countries including Japan, China, Indonesia and Hong Kong, in addition to local properties.[citation needed]

S-REITs are regulated as Collective Investment Schemes under the Monetary Authority of Singapore's Code on Collective Investment Schemes or alternatively as Business Trusts.

S-REITs benefit from tax advantaged status

Is using high dividend yield REIT as passive income sounds very good?

Do you hate borrowing, right issues or private placement?

If yes, then avoid REIT, it is not for you. Why?

REIT simply distributes all or almost all of its profits and gets to skip the taxation and seldom attempts to pay off its debts and depends on borrowing, refinancing and even raise funds to survive.

How does REIT survive in bad times?

It depends on its ability to refinance or raise fund from the capital market. Ability to raise fund that counts.

How does REIT grow?

Since REIT already pays out most of its earning as dividends; it is very hard to grow from retained earning or internal funding.

It has to borrow or raise funds from the capital market to grow.

Is Low Gearing REIT safer?

Not really sure leh?

Less borrowing or low gearing just means that the REIT has currently slowed down its growth potential and become more concerns over survival. It doesn't necessary means that it is safer than a higher gearing REIT.

It is the ability to refinance short-term maturing debts or raise funds from the capital market that determines its level of safety in the market.

Lower debts don't mean that creditors are not going after their blood if things get nasty.
When the REIT has less confidence in its ability to refinance short-term maturing debts or raise funds; it is more likely to reduce its gearing to increase its chance for survival.

All investments by nature are risky and just don't get too excited over its high dividend yield and become over-exposed to this sector.

Friday 26 February 2010

Harder For Investors To Be Open Minded

I realize that whose with "investor-mindset" may find it harder to be open minded when investing and they intend fall in love with  fewer stocks instead of diversifying into sectors rotation. They just love too much of the same stuff.

Can you really re-invest all your dividends into the same stocks all over again and again without impacting subsequent returns? Think about it!

Thursday 25 February 2010

Work is play and play is work?

Sometimes we hear this - Work is play and play is work?

Really ah?

The day when doctor brings bad news that he only have three months left to live, will he still rush back to office to continue to work or will he regret working long hours and putting off things that he wanted to do?

My 2010 Passive Income From Stock Dividends

Finding Both Dividend & Growth Stock?

Can Blue Chips Be Dividend Yield Play Stocks?

1. Kep Corp (2001): 8.1% ROC. Full Year is likely to be 13.4% (exclude free KGT at 8.1% ROC)

2. Semb Corp (2002) : Full Year is likely to be 10.5%

3. DBS (2003) : Quarterly 1.8% ROC. Full Year is likely to be 7.2%

4. CIT -Cambridge (2008) : Quarterly 2.6% ROC. Full Year is likely to be 10.4%

5. Noble (2008) :  Full Year is around 5.5%

My plan is hold these five stocks for long term passive income.

Wednesday 24 February 2010

Bonus Shares - Good News?

What actually happen when company declares bonus shares?

When bonus shares are issued share capital also change as amount from retained earnings or reserves is utilized to issue bonus shares and it increase the share capital while decrease the reserves or retained earnings.

Good news to existing shareholders?

Let see what happen for 1 for 2 bonus share issue?

Fundamentally, there is no changes if you buy and hold.

It only becomes exciting if you want to trade.

The bonus issue makes it more exciting as now we win or lose by additional 50% for stock price movement due to more shares.

Market Think. Not You Think. Boss Think. Not You Think.

In your employed job, you can think that you are doing a great job. You can also think that your other colleagues are bums at works and need to be sacked for lousy works. Does it really matter what you think?

What your boss think that matters. If your boss thinks that you are a bum and your colleagues are super, then you don't expect good bonuses.

Same as the market. Market think. Not you think.

Tuesday 23 February 2010

Marry The Guy Who Has 60% Sales Commission.

One day, the daughter came running to her mum ...

Daughter: "Mum, I am not sure who should I marry?"
Daughter: "The Property agent guy or Insurance agent guy, and both guys are earning from Sales commission."

Mum: "What are their Sales commission rate like?"

Daughter: "Oh, the Property guy earns 1% while the Insurance guy earns 60%"

Mum: "Don't be silly, marry the guy with 60% sales commission"

Daughter: "Why?"

Mum: "Why you so stupid?"

     "The insurance guy's commission is 60 times the commission of the property guy"

     "60 is so much bigger than 1"

     "You don't know how to count meh?"

Daughter: "Hmm... but the property guy made 1% out of $1M property transaction while the insurance guy made 60% out of $5K premium"

Mum: "ooch"

Do you think like the Mother?

Dividend Stocks Can Pay Off For Recent Retirees

By: Jennifer Woods,

Having an allocation to dividend-yielding stocks can be a good move for most investors, but for those who are in or nearing retirement, it’s a must.

Christopher Davis, senior mutual fund analyst with Morningstar, says many newly-minted or soon-to-be retirees are primarily in fixed income investment, and, as a result, risk prematurely running out of money.

“A lot of times people associate retirement with fixed-income investing," says Davis. "They need to be safer since they’re living on that money and need the income which fixed income provides. If you are just starting retirement, you have potentially 20 or 30 more years of life left and you need to be able to continue to grow your nest egg and protect it against inflation.”

Dividend-paying stocks, he says, offer components essential to anyone in this demographic, including a solid income stream, growth potential (for offsetting inflation) and less-than-average volatility for a stock.

Dexter, president, chief investment and chief executive officer of RNC Genter Capital Management, says a substantial allocation to stocks is key and the lion’s share of should be in dividend paying stocks.

“It is necessary just to provide enough income,” he says, adding that bond yields are so low right now—ten-year Treasurys are yielding less than 4 percent—you need to make it up on the equity side, which means having that position in high dividend-yielding stocks.”

"They still feel that bonds are for income and stocks are for growth," explains Genter. "While that may have had some merit in the past when stocks were growing at 20-25 percent. In the current environment, many people would be happy having 10 percent total return and a 4-5 percent.

Tom Huber, manager of T. Rowe Price Dividend Growth Fund, says it’s important that a stock have a good current yield and the the opportunity for good dividend growth over time.

“I look for companies that may not be yielding 4-5 percent or even 6 percent, but have good dividend growth opportunities going forward,” says Huber.

Huber says consumer staples are a good example because the group “is a traditional area for healthy dividends and good dividend growth ... a lot has to do with the stability of those business and their ability to turn out healthy profits in good and bad environments."

One thing Huber cautions investors to be aware of when selecting companies for their dividend allocation is whether the company will be able to maintain the dividend.

“Often when you see a very high yield, you may want to question the sustainability of the dividend,” says Huber. “Take another step in addition to looking at the yield. Look under the covers."

Another Debate On Property Or Stocks Investing - Part 4

More Talking Point on property investing last night at Bullythebear's cbox ...

Another Debate On Property Or Stocks Investing - Part 3

Investing in stocks is like ...

Investing in property is like ...

"All investments by nature are risky; if not it will be called saving instead of investing." - CreateWealth8888

"People who make money often make mistakes, and even have major setbacks, but they believe they will eventually prosper, and they see every setback as a lesson to be applied in their move towards success." - Jerry Gillies

Can you afford the risks of losing a few chicken and not getting any eggs from the chicken? Most of us can reasonably take such risks without causing serious financial damages to our family if we fail badly. Most of us will also have little difficulty to start it all over again if we regain our confidence in investing.

But, how many of us can afford to take one huge risk of losing a cow and not getting enough milk? Do you have Bank PaPa or Bank Mama to bail you out should you fail badly? If not, you are going to labour many hours of hard works for free.

If you really love milking cows, hear what

said: "Do or do not. There is no try."
I love ...


Monday 22 February 2010

Low Net Profit Margin - Avoid Them? - Part 2

Low Net Profit Margin - Avoid Them?

Bummy's comment

hum chim peng

Many years ago at the former Maxwell market, there was a hawker stall selling "hum chim peng" at 10 cents per piece (small version) while other stalls elsewhere were selling at 20 or 30 cents per piece (larger version).

It was quite obvious that the profit margin from selling "hum chim peng" at 10 cents per piece was much thinner.

Guess what happened to the customers' buying pattern of "hum chim peng" at this stall?

When the price of "hum chim peng" was only 10 cents per piece, customers didn't buy a few pieces; but they bought in units of 10, 15 and 20 pieces.

I usually bought 10 pieces and ate a few pieces myself and the rest passed around to colleagues as treat. May be psychologically I didn't want to be seen as cheapskate so I bought more.

If the "hum chim peng" was 30 cents per piece, I would just buy enough for myself.

This hawker was able to move massive volume of his product to make up for the razor thin margin. The only difference was that he got to work harder.

Home for Living and not for profit taking - Part 4

Read? Home for Living and not for profit taking - Part 3

"Don't sell your homes prematurely for a quick buck": PM Lee

Well said. It is timely that PM Lee reminded people that home is for living and not for profit taking. Get a second property for investment if you really love property as investment vehicle.

Some animal build up their home and live there till they die or forced to leave by circumstances not within their control.

Do you live in your dream home or you are just staying at a place waiting to sell your dream home and counting your dollars and then search for another a place to stay?

There is good reason why the standard method of counting a person's Net Worth is to exclude the value of the residential home and it is not treated as part of a person's wealth.

Sunday 21 February 2010

Another Debate On Property Or Stocks Investing - Part 3

Another Debate On Property Or Stocks Investing - Part 2

Do you love multi-baggers?

It is much harder to find multi-baggers in properties as the Government is always watching closely and likely to introduce cooling measures to clam down the property price from rising too fast.

Do you think Government will clamp down a fast rising stock? At most, SGX will issue a query to the company concerned and usually standard responses from the company is expected.

Art of Survival: Protecting one against Black Swan event - Part 2

Lake Monger is one of the opportunities closest to town to watch and photograph black swans. Take the train to Fremantle and exit at the second station from Perth, "West Leederville".

But, I didn't go to Lake Monger; but saw a few Black Swans at Perth Zoo.

Art of Survival

Not many people are aware or fully understood the risk of a Black Swan event happening in their life.


One of my relatives who invested a significant portion of his saving into his company IPO. His father and mother also bought into this stock. He and his parents have never thought of Black Swan event happening.

What if a major crisis hits his company and threatens the survival of the company; its stock price will plunge. He may be retrenched and lose his job. The value of family portfolio will plunge due to over weight in this stock. The whole family may be financially hit by just one single event.

It is never so wise that whole family invest in the same stock for better risk management. For couple and family, try to overcome the attitude of "your money" and "my money" when come to investment, and think in terms of our risks.

My thinking is simple.  I am just an ordinary employee of the company. My job, bonus and pay are already tied to the fate of the company which I have no control over its survival so there is no further need to tie my investment to the fate of the company. I don't invest in my company shares.

But, the thinking will definitely be different if I am the business owner.

Another Debate On Property Or Stocks Investing - Part 2

Another Debate On Property Or Stocks Investing

Rules meant to avoid bubble

Govt considered other factors besides prices in acting to prevent bubble, says Grace Fu
By Jamie Ee Wen Wei
  • From yesterday, any property sold within a year of its purchase will attract stamp duty of around 3 per cent. This is on top of the stamp duty the prospective seller had earlier paid on the purchase.
  • Lending institutions will now be allowed to lend only up to 80% of the value of the property, instead of 90%.

The latest rules announced by the government is another blow to low funded retail investors who are speculating or investing in properties. May be more will eventually come back to speculate in the stock market.

Warren Buffett's Worst Mistakes

by Eric Fontinelle
Monday, February 22, 2010

Warren Buffett is widely regarded as one of the most successful investors of all time. Yet, as Buffett is willing to admit, even the best investors make mistakes. Buffett's legendary annual letters to his Berkshire Hathaway (BRK-A) shareholders tell the tales of his biggest investing mistakes.

There is much to be learned from Buffett's decades of investing experience, so I have selected three of Buffett's biggest mistakes to analyze.

Conoco Phillips
Mistake: Buying at the wrong price

In 2008, Buffett bought a large stake in the stock of Conoco Phillips (COP) as a play on future energy prices. I think many might agree that an increase in oil prices is likely over the long term and that Conoco Phillips will likely benefit. However, this turned out to be a bad investment, because Buffett bought in at too high of a price, resulting in a multibillion-dollar loss to Berkshire. The difference between a great company and a great investment is the price at which you buy stock, and this time around Buffett was "dead wrong." Since crude oil prices were well over $100 a barrel at the time, oil company stocks were way up.

Lesson Learned

It's easy to get swept up in the excitement of big rallies and buy in at a prices that you should not have -- in retrospect. Investors who control their emotions can perform a more objective analysis. A more detached investor might have recognized that the price of crude oil has always exhibited tremendous volatility and that oil companies have long been subject to boom and bust cycles.

Buffett says: "When investing, pessimism is your friend, euphoria the enemy."

U.S. Air
Mistake: Confusing revenue growth with a successful business

Buffett bought preferred stock in U.S. Air (LCC) in 1989 -- no doubt attracted by the high revenue growth it had achieved up until that point. The investment quickly turned sour on Buffett, as U.S. Air did not achieve enough revenues to pay the dividends due on his stock. With luck on his side, Buffett was later able to unload his shares at a profit. Despite this good fortune, Buffett realizes that this investment return was guided by lady luck and the burst of optimism for the industry.

Lesson Learned

As Buffett points out in his 2007 letter to Berkshire shareholders, sometimes businesses look good in terms of revenue growth but require large capital investments all along the way to enable this growth. This is the case with airlines, which generally require additional aircraft to significantly expand revenues. The trouble with these capital-intensive business models is that by the time they achieve a large base of earnings, they are heavily laden with debt. This can leave little left for shareholders and makes the company highly vulnerable to bankruptcy if business declines.

Buffett says: "Investors have poured money into a bottomless pit, attracted by growth when they should have been repelled by it."

Dexter Shoes
Mistake: Investing in a company without a sustainable competitive advantage

In 1993, Buffett bought a shoe company called Dexter Shoes. Buffett's investment in Dexter Shoes turned into a disaster because he saw a durable competitive advantage in Dexter that quickly disappeared. According to Buffett, "What I had assessed as durable competitive advantage vanished within a few years." Buffett claims that this investment was the worst he has ever made, resulting in a loss to shareholders of $3.5 billion.

Lesson Learned

Companies can only earn high profits when they have some sort of a sustainable competitive advantage over other firms in their business area. Wal-Mart (WMT) has incredibly low prices. Honda (HMC) has high-quality vehicles. As long as these companies can deliver on these things better than anyone else, they can maintain high profit margins. If not, the high profits attract many competitors that will slowly eat away at the business and take all the profits for themselves.

Buffett says: "A truly great business must have an enduring "moat" that protects excellent returns on invested capital."

The Bottom Line

While making mistakes with money is always painful, paying a few "school fees" now and then doesn't have to be a total loss. If you analyze your mistakes and learn from them, you might very well make the money back next time. All investors, even Warren Buffett, must acknowledge that mistakes will be made along the way.

Saturday 20 February 2010

Retire Early. Go Travelling And Likely To Be Happier After Vacations

How Vacations Affect Your Happiness?

How to be happy when there are tons of works waiting at office for you to slog even harder?

People who truly enjoy during and after vacations are those who don't need to slog at their office to catch up with their workloads: Back To Work After Your Vacations

Knowing Your Investment End Goal

One blogger mentioned: "Illusion of Winning" and "Fear of Black Swan". Yes, a black swan event can happen and take back all the past winning and even more." So we should really fear and prepare for it.

We all know our investing goals:

But do we know when to stop?

Since all non-capital guarantee investment by nature is risky; a black swan event can happen so do we need to set an investment end goal to stop and protect ourselves?

My Goal of the End Game

My goal of the End Game is to accumulate enough wealth for me and then I will stop putting my wealth at risk. I will stop the gambling and risk taking with active investing or any non-capital guarantee investments.I would finally have enough money and personal power to walk away from this investing game and spend the rest of my life doing something else!

When exactly do I know that I have reached the End Game?

When I have enough principal invested safely for my after tax-income to match or exceed your annual expenses on an ongoing basis. This would include over budgeting for the lifestyle that me and my wife truly need.

Budget Air Travel

I was quite surprise that taxes paid is more than the price of air ticket by 12.5% so the airline is really on budget or air travellers are over taxed?

Friday 19 February 2010

What is Long-Term Investing?

Long-Term Investing is about Value Investing - It is about multi-baggers and collecting stock dividends as passive income.

Or you call it long-term investing after the stock price has fallen so much and too painful to cut losses.

Wednesday 17 February 2010

Do You Ask A Fisherman Should You Eat Fish?

When you asked a fisherman should you eat fish or not?

What sort of answer do you expect from the fisherman?

Do you expect the fisherman to tell you not to eat fish?

When it comes to investment, we may be that silly to listen to financial advisers or writers who are in the businesses of selling financial instruments to us and believe their advice given are for our benefits.

Make a mistake on stock and it is like a cancer?

Someone commented: "Make a mistake on stock and it is like a cancer...it will suck you slowly."

If it is true that stock is somehow cancer-like, then diversification of stocks across sectors in your portfolio will help to reduce the cancer rate and prevent getting suck too often.

     One stock: Probability of getting a cancerous stock: 0 - 100%
   Two stocks: Probability of getting a cancerous stock: 25 - 50%
Three stocks: Probability of getting a cancerous stock: 11.1 - 33.3%

Tuesday 16 February 2010

3 Ms of Investing or Trading – Mind, Method and Money

To be a successful active investor or trader, you have to find your 3Ms of Investing or Trading - Mind, Method and Money.


You have to learn and discover your own emotion weakness in the volatile market and find ways to check your own emotions. This is the hardest to do but you must find your own ways to live with the daily price volatility of the market and learn to see the market in two views: half empty and half full.
For trading do you have your own trading system or following a commercially available trading system?

For active investing, do you have your own investing strategies or methodology?

Track your performance closely. Revise or discard if it is not working according to your expected goals. Sometime, it is just pure luck when you happen to get it right. Does 3 strikes make a good bowler?
What is the your money management and risk control so that you don't lose too much of your capital and then game over. It is very difficult to recover your losses if your remaining capital becomes too small to have any significant impact.

Low Net Profit Margin - Avoid Them?

Some retail investors hope to find good companies which are cash rich, high dividends payout, high net profit margin and high growth companies. Such thinking is no different from some young women dreaming of finding young husbands who are cash rich, no vices, high income earners, and have bright future.

What will be your advices to these women?

Is Your Company Hoarding Too Much Cash For You? - Part 4

Highly Leveraged Blue Chips - Avoiding Them Like Plague?

Should you also avoid companies with low net profit margin like shit?

You should look closely at the nature of business before advising people to totally avoid companies that operates on low margin as you may potentially miss your chances of taking some nice profit off the table.

For example, in 2009, the top five best performing STI component stocks are as follows:

1) Noble Group, +218.6%
2) Genting Singapore, +201.9%
3) Jardine C&C, +184.2%
4) Golden Agri, + 145.7%
5) Olam Intl, +131.3%

Noble and Olam are both low net profit margin companies but if you are early investors you are laughing to the banks.

It is not necessary that a company must have a high net profit margin; in fact, in some industries it is better not to. For example like grocery stores, it is important to move a massive amount of volume. To do this, the grocery stores must reduce their profit margins to as low as possible.

Keep in mind that a high net profit margin does not correlate to large profits. If the company cannot move their product in large quantity, it does not matter what the net profit margin is, they are not going to make lots of money. Basically, the net profit margin is telling us how much markup, after all costs and expenses, there is in the companies business model.

It is perfectly acceptable to have a low profit margin with a very fast inventory turnover and massive amount of volume and that may translate to huge profits.

What is your advice again to those women who are still waiting for their dream men?

Monday 15 February 2010

Is Your Company Hoarding Too Much Cash For You? - Part 4

Is Your Company Hoarding Too Much Cash For You? - Part 3

Understanding cash flow

Cash flow is the amount of cash generated from all sources within a specific period of time. Cash can be generated by the following:
  • from operations
  • from owners’ equity
  • from loans
  • from investing
  • from one-time activity such as an asset sale
A cash rich company does not mean it is a highly profitable company or its future earning growth is secured.

Cash flow and Profit is not the same. Cash flow is the money that flows in and out of the firm from operations, financing activities, and investing activities. Profit, also called net income, is what remains from sales revenue after all the firm's expenses are subtracted. Companies can make a profit but still have a negative cash flow and not be able to pay its financial obligation and soon run into serious troubles when more of their creditors becoming worry and demand debts settlement and more suppliers demand cash settlement upon delievery.

Cash rich just means that in the short term the company has very strong ability to meet its financial obligations meet payroll, pay suppliers, meet debt payments and make future dividend distributions to shareholders.

Some companies are rich cash due to more owner's equity, loan, or asset sale instead of accumulation of good cash from operations.

A good company may not necessary has to be cash rich; but it must have good net income, good cash flow from operations, good visibility of future earning growth and has been consistently returning excess cash to shareholders as dividends or special dividends instead of hoarding so much cash to become a cash rich company.

Stocks And Derivatives

Someone asked me whether am I doing any option trading?

From Wikipedia, the free encyclopedia

What is derivative?

A derivative is a financial instrument that is derived from some other asset, index, event, value or condition (known as the underlying asset). Rather than trade or exchange the underlying asset itself, derivative traders enter into an agreement to exchange cash or assets over time based on the underlying asset. A simple example is a futures contract: an agreement to exchange the underlying asset at a future date.

Derivatives are often highly leveraged, such that a small movement in the underlying value can cause a large difference in the value of the derivative.

Derivatives can be used by investors to speculate and to make a profit if the value of the underlying asset moves the way they expect (e.g. moves in a given direction, stays in or out of a specified range, reaches a certain level). Alternatively, traders can use derivatives to hedge or mitigate risk in the underlying, by entering into a derivative contract whose value moves in the opposite direction to their underlying position and cancels part or all of it out.

Derivatives are usually broadly categorised by:
  • The relationship between the underlying and the derivative (e.g. forward, option, swap)
  • The type of underlying (e.g. freight derivatives based on Baltic Exchange shipping indices), equity derivatives, foreign exchange derivatives, interest rate derivative, and credit derivatives)
  • The market in which they trade (e.g., exchange traded or over-the-counter)

Derivative is a zero-sum game as there is no real assets involved. When one wins someone else has to lose it.

But, stocks are different as they are real soft assets that are created in the stock markets for the purpose for investing while derivatives are created by market makers for the purpose of speculating.

I don't think I am good enough to speculate and win money from others so I would rather avoid it.

Where Does The Money In The Stock Market Come From?

speculation vs investment

Most People Cannot Be Or Do Anything They Dream

This sounds like a great dampener. Yes, it is. You can keep on dreaming and have the most positive mindset and most people won't make it.

You can say 100 times a day and visualize another 100 times a day of you becoming CEO of a huge MNC. Most of us can never become one. Let be brave; stop dreaming and get real.

For most of us, the best way to lead a more fulfilling and happier life is to understand and learn what we really need, rather chasing desires or dreams that are not within our means even we try our very best. Why?

A Very Steep Price To Pay

Only few people in the world are willing to pay a very steep price to make their dreams come true. So are you one of these few people?

"Do not spoil what you have by desiring what you have not; remember that what you now have was once among the things you only hoped for." - Epicurus

From Wikipedia, the free encyclopedia
Epicurus was an ancient Greek philosopher and the founder of the school of philosophy called Epicureanism.

Sunday 14 February 2010

Another Debate On Property Or Stocks Investing

Property Investing – A Discussion on the Pros and Cons

Are You Successful In Your Investment?

The metrics of an investment success:

  • The Most Dollars In The Least Time
  • The Least Effort In The Least Time
  • The Most Comfortable Risk In The Least Sweat
  • The Least Nightmares In The Most Sleeps
Learn to focus your thoughts towards your returns and risks to achieve your investment end goals. If you can arrive safely to your investment destination in the shortest time; do you really need to care the type of investment vehicle you are traveling with?

Be bold but agile, just like the Tiger

Learn from the predator before going on the prowl for stocks

By Lorna Tan, Senior Correspondent

The Tiger year that starts today can be a double-edged sword for investors: For all the optimism, power and determination it symbolises, there is also a tinge of fear.
Investors have plenty to learn from both the animal's attributes and how they can enhance investment styles before embarking on the new year.

Financial experts note that tigers often live dangerously but are admired for their bravery and courage. Their patience, agility and ability to take advantage of tough situations are handy qualities as well.

Mr Vasu Menon, OCBC Bank's vice- president of wealth management Singapore, said: 'For investors with strong pockets and brave hearts, the Tiger year may prove to be a rewarding experience provided they have the courage to embrace risk and buy into markets gradually during sharp pullbacks and periods of turbulence.'

Here are some of the desirable attributes of the tiger:

Mentally and physically powerful. Tigers have a strong mindset and are physically powerful. Experts believe that investors who trade shares should also possess these attributes.

'This is true especially when the market is in a bear phase. You need mental strength to make the decision to go against the fear of investing in bear markets,' said Mr Ben Fok, chief executive of Grandtag Financial Consultancy.

It is also important to keep healthy through a disciplined lifestyle of balanced diet and exercise. Doing so will help investors maintain their composure in times of market stress, too.

Agility. Unlike last year when the stock markets rallied due to the concerted efforts of central banks, excess liquidity and low interest rates, this year will be marked by bouts of market volatility.

During such times, investors can learn from the tiger to 'prey at the right opportunity' and enter the market during a correction, said Mr Albert Lam, investment director of IPP Financial Advisers.

Just as the nimble-footed tiger has the ability and willingness to take advantage of any situation, volatile and uncertain times can also translate to good trading and investment opportunities, added Mr Menon.

Short-term investors may want to buy on weakness and sell on strength. So if you achieve a gain of 10 per cent to 20 per cent, you may want to sell and enter the market again during another pullback.

Boldness. A tiger will wait for the precise moment before pouncing on its prey. It knows it may get hurt in the attack but it takes the calculated risk.

In the same vein, if an investor has done his research and is making an informed investment decision, he should be bold enough to invest and not do so half-heartedly.

Investors often understand the product or strategy well but still hesitate to invest. 'We tell our clients if you don't understand then don't invest, but if you understand the product well then, you should invest,' said Mr Fok.

For example, when the markets were down early last year, investors knew it was the best time to invest more, but many were hesitant and did not commit to any investment. Worse still, some panicked and pulled out their investments.

'Some clients were investing on a monthly basis, and during the first half of last year they stopped investing completely,' recalled Mr Fok.

'Investors understand the concept of dollar-cost averaging, that the best time to buy is when markets are down, but they choose to stay on the sidelines perhaps because they couldn't overcome their fears.'

Independent. Tigers usually prowl individually and make decisions independently. Once they identify a target, they typically pursue it alone.

Likewise, Mr Lam encourages investors to make the effort to upgrade their knowledge by understanding the investments they are buying. This will complement the advice from financial advisers.

Mr Fok warned that investors who follow blindly the 'noises' in the market, without first doing their own research may make the wrong investments.

Courage. Tigers are brave animals even in situations, which are not to their advantage. And when they attack, they zoom in for the kill. Often, they flourish under power and attention and strive to take advantage of the circumstances they are in.

Courage is an important element when it comes to investing but it does not mean grabbing every opportunity that comes along.

Mr Lam suggests that investors hone their ability to take risk as well as their need to take it. That will allow them to invest in assets that are commensurate with the level of risk they can live with.

Graciousness. Even though tigers are portrayed as fierce animals, they can be capable of kindness, particularly when they take on the role of a protector.

Likewise, investors should not be thinking about how to make money all the time, said Mr Fok. 'They should also learn to cushion their losses and ensure they have emergency cash for use in times of need.'

Increasingly, individuals are finding it desirable to give back to society as a way to lead a more meaningful life. This is because the happiness generated from the continual pursuit of acquiring more material goods is often short-lived.

True contentment and meaning in life comes from being able to make a positive difference to issues that you feel passionately about. These can include the needs of a group of people or issues like global warming, poverty and ageing.

More people having reunion dinners at restaurants

I can't remember since when my family started to have reunion dinner at restaurant.

For reunion dinner, the restaurant will have two sessions: one at 5.30 PM and the other one at 8.00 PM. The first session will start at 5.30 PM and must end before 7.30 PM to give the restaurant enough time to clean up the table and prepare for the second session. So there is more than enough time for you and your family to enjoy a 2-hour good reunion dinner.

Don't be mislead by some people commenting about restaurant rushing out dishes. From my past experience, it is certainly not true as the restaurant will want repeated businesses from you and it is not wise to offend the customers at such occasion.

Why did I choose to go to restaurant for reunion dinner?

I think it is not so right for all "Cinderella" to continue to cook and wash up for the family till the very last day of the Chinese Lunar Year.

Give all "Cinderella" a break!

So do your "Lo Hei" during reunion dinner at the restaurant 
and let all "Cinderella" have a good time too!

Saturday 13 February 2010

Highly Leveraged Blue Chips - Avoiding Them Like Plague?

There are good reasons why these companies are classified as blue chips while many other companies can't even smell it or worse some become blue-black chips.

Do you really need to avoid these highly leveraged blue chips like plague?

In 2009, the top five best performing STI component stocks are as follows:

1) Noble Group, +218.6%
2) Genting Singapore, +201.9%
3) Jardine C&C, +184.2%
4) Golden Agri, + 145.7%
5) Olam Intl, +131.3%

Noble and Olam are highly leveraged companies but they have Giants supporting them. If you are avoiding them like plague, you are missing the opportunity in making the most dollars in the least time.
Yes, they are risky companies so don't get greedy and over-weight them in your portfolio and get killed if things go wrong.
You have to be extremely careful and under-weight them in your portfolio to be conservative and safe.
But, do you really need to avoid these highly leveraged blue chips with Giants supporting them like plague?

Does A Highly Leveraged Man Risky To Marry?

CPF Life Plan

Calculate your lifelong income and L-Bonus with the CPF LIFE Payout Estimator : CPF LIFE Payout Estimator

My result is tabulated as follows:

I can't really see how the difference of less than 100 bucks per month between each plan can help us to live different life style? Nut! Probably these plans are cleverly created to give us an impression of choice.

Friday 12 February 2010

What Will Benjamin Graham Say Today?

"I am no longer an advocate of elaborate techniques of security analysis in order to find superior value opportunities." - Benjamin Graham

A Conversation With Benjamin Graham

Even the legendary Benjamin Graham, heralded as the father of fundamental security analysis, reluctantly came to the conclusion that fundamental security analysis could no longer be counted on to produce superior investment returns. Shortly before he died in 1976, he was quoted in an interview in the Financial Analysts Journal as saying, "I am no longer an advocate of elaborate techniques of security analysis in order to find superior value opportunities. This was a rewarding activity, say, 40 years ago, when Graham and Dodd was first published; but the situation has changed… [Today] I doubt whether such extensive efforts will generate sufficiently superior selections to justify their cost… I’m on the side of the ‘efficient market’ school of thought."


That interview was conducted in 1976 and since then the world of investing and trading has totally changed with online brokerages and tons of news flowing at the rate measured in minutes if not in seconds. 

Nowadays, we even have  High-Frequency Trading

If Graham is still alive, what will he say today?

I Don't Want To Make My Brokers Rich By Churning?

You think you made your brokers rich by churning and refuse to take partial or full profits off the table. This is how Lizard's brain thinks.

Your total brokerage charges including SGX clearing fees and GST is about 0.6-0.7% of your invested capital. This is a small overhead when you can be making like more than net 5% of these overhead charges per share transaction and with little or no other fixed cost overheads charges.

Come on, say gong xi fa cai to your brokers.

Thursday 11 February 2010

Risks And Returns

I keep hearing savers lamenting on super low interests rate on saving and fixed deposits. When the banks see that the risks of investing your saving parked with them are getting higher; they are going to lower the interests rate on saving to maintain a healthy risk-return ratio for assuming your risks.

One has to be realistic. There is no such investing or saving instruments that have low risk and high return. If you ever being offer such investment opportunity by someone, you better turn and walk away quickly. It is likely to be a scam.

If you really want to have better returns on your money, you have to get real and learn how to take on higher risks.

You can't always pass your risks to someone else and still expect better returns.

Wednesday 10 February 2010

Ten Things You Cannot Do With Intention

By Dawn Mellowship

1. Bend the will of the Universe
2. Change the laws of the Universe
3. Change the course of the Universe
4. Bring about world peace
5. Heal the world
6. Prevent natural catastrophes
7. Win the lottery
8. Make someone love you
9. Make changes that require actual actions.
10. Prevent anyone's time to die

We all know the truth, if we would be brave enough to accept it. If you believe that life is just about making it what we want it to be, then go for your goals and see where it takes you, but always be prepared to accept the consequences of your actions.

Is ILP a time bomb?

Read? Insurance 'time-bomb' set to explode

One blogger said: "If you do not know what you are doing with an ILP, I guess it is a time-bomb."

Well said. But, if you really know how Single Premium ILP works? 

Do you still want to purchase Single Premium ILP from an insurance company?

Read? Shocking Discovery On My ILP

Are you really smart to let insurance company keeps selling away more units in your investment part of the Single Premium ILP to keep up with the monthly premium during the bear markets while you still have enough idle cash sitting in the bank?

DIY Your ILP If You like It So Much

You can easily DIY your ILP using decreasing Term Insurance and portfolio of unit trusts and you don't really need the insurance company to do it for you.

When you DIY, you will then have the option of using cash to pay for the monthly premium when the unit price is falling too sharply during the bear markets. In this way, you can maintain more units in your portfolio for recovery in the next bull.

Are You Successful In Your Investment?

One should be measuring and looking at the result of the investment strategy and not the investing method. Does it really matter whether one invest in stocks, properties, watches, fine wines, precious metals, etc.

The investing method is just an investment vehicle to achieve your investment goal. It is the result of one's investment strategy that counts.

For example:

If A told us that he has doubled his investing capital in 10 years. We may think that it is not bad as his annualized ROC is 10%.

If B told us that he has doubled his investing capital in 2 years. That is really good. His annualized ROC is 50%.

You see the difference. The person who can acheive the most dollar in the least time is the better investor. So we should be measuring the investment yield in terms of returns per unit time over the investment period.

Did we really care what investing method A or B use?

By Larry Williams

Your fortune will come from your focus - focus on one market or one technique.

Looks at the great athletes - they focus on one sport. Artists work on one primary business, musicians don't sing country western and Opera and become stars. The better your focus, in whatever you do, the greater your success will become.

See Some Top Investment Guru's Annualized Returns

Tuesday 9 February 2010

Who Sold You Those Insurance Products?

I bought mine mostly from ex-neighbour who lived directly opposite me, close relative, and ex-NS mate. I don't know why last time so hard to say: "No, Thank you!" May be when we are younger, we are "paiseh" to say no.

Insurance 'time-bomb' set to explode

Shocking Discovery On My ILP

Feb 12, 2005

Investment-linked policies incur rising costs which buyers may not be aware of

By Lorna Tan
Finance Correspondent

WHEN engineer Kelvin Yee bought an investment-linked policy (ILP) eight years ago, he thought he had done the right thing: it gave him life insurance, while at the same time his savings worked harder by being invested in unit trusts.

But Mr Yee, 37, now finds that the investment product he purchased has been described as a 'time-bomb' by one financial adviser - one which is set to explode as a new scandal on the insurance industry scene.

Mr Yee, along with potentially tens of thousands of others who bought the hugely popular policies over the years, has found out that, as he gets older, hidden increased insurance charges mean that the premiums that are meant for investment purposes are being eaten up just to keep the policy going.

Under most ILPs, premiums are invested in securities such as unit trusts and pay for life insurance coverage as well. But Mr Yee's annual insurance charges are set to escalate at such a rate they will one day outstrip the annual premium he pays.

When he turns 67, the charges work out to double that of the annual fixed premium of $3,600 for coverage of $100,000. At 73, the charges are expected to climb to $11,500 and when he turns 81, they will surge to $20,000.

Mr Yee said: 'This policy does not meet my needs. My impression was that it was a savings plan that gives decent annual returns of 2 to 3 per cent guaranteed, at least.'

He alleged that he was unaware of the existence of the increased charges until a financial adviser whom he consulted did the sums.

The higher charges result from the increased costs of insurance cover, as people age and the likelihood of illness increases.

In some cases, the costs could end up soaring so much that they eat into the 'investment' part of a person's policy, resulting in it lapsing altogether.

The problem is emerging now as people who bought such ILPs several years ago are seeing charges leap now that they are older.

Once a policyholder hits 40, an ILP's annual insurance charges typically rise 'exponentially', says Life Insurance Association (LIA) president Mr Raymond Kwok, who is calling for greater transparency on the issue.

The problem lies in the small print. Most people's eyes would have gone to the policy's 'benefits' table, illustrating how much their investments would increase each year based on growth rate projections of 5 and 9 per cent.

No doubt they would have been tantalised by the big figures their lump sums grew to at those rates - even though many financial advisers nowadays say such high percentages are unrealistic.

What people probably glossed over were figures in a column generally labelled 'effect of deductions'. With no breakdown given of the 'deductions', few, if any, policyholders would have realised these contained the costs of coverage for death, disability and critical illness, say financial advisers.

The older you get, the more of a risk you are to the insurer, so it costs more to cover you. In industry jargon, these costs are 'non-guaranteed', which means they don't stay fixed, unlike your premiums. In fact, they rise - astronomically in the case of ILPs that have regular premiums with high protection elements.

People may have assumed the costs were included in the fixed premiums. But in reality, they needed to break down the costs from the effect of deductions column to get a complete picture.

Billions of dollars worth of ILPs have been bought here, many with Central Provident Fund savings.

In echoes of the 'critical-year' controversy which rocked insurers in 2003, at least a few reckoned they were mis-sold the product. In that scandal, policyholders were shocked to find that, due to the fall in value of an insurer's investments, they had to keep paying premiums longer than expected.

That controversy largely involved one big-name insurer. This time, all except UOB Life offer the so-called regular premium ILPs.

Prudential Assurance was the first insurer to launch the first regular ILP here in 1992.

As for Mr Yee, his financial adviser from Cornerstone Planners, Ms Evelyn Seah, who did not sell him the original policy, noted that there may come a time when the pool of units in the investment part of the policy will be depleted.

This is because 'units will be deducted from this pool to pay for the increasing non-guaranteed insurance and administrative charges when the annual premium is not sufficient to cover these charges.

'When it happens, the policy lapses. That's the time when you may need the cover most.'

Hidden charges may eat into investments

THE higher charges result from the increased costs of insurance cover as people age and the likelihood of illness increases.

The costs could end up soaring so much that they eat into the 'investment' part of a person's policy, resulting in it lapsing altogether. 'That's the time when you may need the cover most,' says financial adviser Evelyn Seah.

Why I Don't Average Down?

I only do Average In but not Average Down to control risks.

Average In means I can buy more of the same counter and different counters in the same sector up to X% of the Total Capital (invested + available cash).

Average Down means buying more when it gets cheaper to lower down the average investment holding cost.

This is a huge difference in term of risk management since I don't have stop-loss strategy: http://createwealth8888.blogspot.com/2009/10/portfolio-management-stop-losses.html

Always think of risks and losses before dreaming of your handsome profits as losses can kill.

Monday 8 February 2010

Shocking Discovery On My ILP

Previously, I bought XXX,XXX units of Global Balance Fund under single Premium ILP using CPF OA for protection and global exposure.

One day, I was shocked to discover how ILP works.

ILP is actually consists of two parts:
  • Protection part
  • Investment part
For the protection part, every month the insurance company will sell XX units with sale charge in the Investment part to pay for the monthly premium. The monthly premium is a fixed amount and increases slightly every year with age so when the unit price is higher; lesser units are sold. When the unit price is lower; more units are sold. At the end of each month, ILP's Investment part will hold less remaining units than before after payment of monthly premium.

This has very serious implication in the bear market. During the bear market, more and more units in the Investment part are sold to pay for the monthly premium for protection; but when the bull market returns, too bad you will have lesser remaining units in the Investment part to profit from the rising unit price.

I finally woke up and realized how the protection part was rapidly eating into the remaining units of the Investment part and can seriously deplete the investment value over multiple bear markets. So I bite the bullet and terminated the ILP at loss.

So my advice ...

1. If you do not have any ILP, do you really want to buy?

2. If you already own such policy, you may want to review it.

Aus Group: where is the Support?

Sunday 7 February 2010

The Real World

"Reality isn't the way you wish things to be, nor the way they appear to be, but the way they actually are." - Robert J Ringer

Do you have an ideal job? I believe many don't; but the job still provide a steady stream of income and help you to make a living and pay bills.

Do you think that CEO is an ideal job?

My ex-boss was a very ambitious man and worked his way up the corporate ladder and one day was head-hunted to become CEO of another company.

At one Chinese New Year gathering of old colleagues, he said that how he wish he could retire early and doesn't have to face the stupid board?

Anyone care for CEO job?

The real world in job, single or married life, children and family, and other relationships may not be the way we like them to be.

Hardly Anyone Lose Money In Property?

I came across investors who said that they have lost big money in the stock market; chopped their fingers and promised not to touch the stock market anymore; but I have yet to meet or remember reading articles on investors telling their life stories of how they have lost money in property investing.

Losing your fortune in the stock market is not something uncommon; but don't tell me that investors never lose money in property investing?

I always remembered what my Finance Professor taught me: "For property investment, if you got it at the wrong Property market cycle, you are going to work many, many hours of labour for free".
Don't tell me the professor was wrong.

Protecting Our Portfolio From The Next Bear - Revisit

Market Truism: Every Bear market is followed by a Bull Market, and every Bull market is followed by the Next Bear market.

Protecting Our Portfolio From The Next Bear

Portfolio Management - Diversification Is Your Friend.


"However beautiful the strategy, you should occasionally look at the results." - Winston Churchill

Let look at the results:
As on last Friday closing @ 2684, STI has lost -8.5% of its value from its recent high @ 2934 while my portfolio value has lost -4.1%.
What really help?
Diversification Is Your Friend

It is true again. It helps in my own portfolio management. Not all of them are down at the same speed with the market.


Periodic collection of stock dividends is another important factor to provide cushion against falling portfolio value in a bear market. Where Does The Money In The Stock Market Come From?
Real wealth is generated from stock dividends so don't forget to collect them when you can.
Realized Profits
Portfolio Management - The Importance Of Realized Profit
Re-investing Dividends and Realized Profit
It will be easier to accumulate sufficient fund using both dividends and realized profit to diversify into other counters and sectors.
Three Musketeers
Together dividends, realized profit and diversification are The Three Musketeers to fight the Bear.

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