How much will SCI drop after XE?
Read? Classes of retirees - Revisit
Beer drinking retirees to pass time?
This Uncle came and sat at the other side of the round table while I was taking lunch at Tiong Bahru coffee shop.
Then ... Wah!
One person and one mug!
So steady!
Read? Time in the Market > Timing the Market??? (2)
Read? Timing the market is mission impossible
Uncle8888 has probably read hundreds of such articles debating on Timing the Market vs Time in the Market and up to this morning reading another article to add 1 to this topic.
He still doesn't quite understand the merit of the debate and should we follow diligently the winning side - Time in the Market or Timing the Market or practicing both by following our own emotional greed and fear indicator.
More Panadols to ease heartache or more Cash is Handsome King?
Interestingly, after 21 yrs since Jan 2000 he started seriously DIY creating wealth from the stock market through short-term trading and long-term investing after reading this book -.Rich Dad Poor Dad in Dec 1999 and believing that investing in stock market is the only way to go and knowing well that he didn't have that entrepreneurship blood flowing through his brain!
Jan 2000 vs Sep 2020
1. Market
STI : 2,583 vs 2,509
2. Capital
100% of own capital taken back as Cash is King and 15% more as Cash is Handsome King.
3. Wealth
0% vs 39% richer through illusion of wealth in the stock market
4. "Passive" Income
0% vs 21%
Conclusion as this morning
Passed : Invest to grow money; but Failed : Invest to become Rich!
It is hard to get rich even when the US market hits record highs
Tan Ooi Boon Invest Editor
The news seems unreal to even the most experienced investors.
Even as many countries suffer huge economic damage as they grapple with the outbreak of Covid-19 cases, the stock market in the United States, the country with the highest number of cases and deaths, has rallied to record highs.
A key reason for this phenomenon is the meteoric performance of technology companies.
While the pandemic is bad news for most businesses, those that provide services related to online transactions and entertainment thrive even more when people are forced to stay at and work from home.
Indeed, a substantial amount of the firepower that is boosting the stock market rally in the US comes from the so-called "Faang" stocks - Facebook, Amazon, Apple, Netflix and Google - the five tech titans that make up more than 20 per cent of the S&P 500's market cap.
As investor sentiment and stock market performances worldwide are often influenced by the US bourse, is it time for Singaporeans to act on their Fomo (fear of missing out) and jump in now?
After all, the stock market here has yet to see similar rallies although volatility is high.
Of course, the billion-dollar question hinges on whether the US rally will continue, even as more people are losing jobs and incomes worldwide.
There is no easy answer, because even high-profile experts and rich investors seem to give mixed signals on what will happen next.
Asia stocks drop after Wall Street's tech rally stumbles; STI down 1.5%
US tech stocks' plunge is victory lap for stable of naysayers
For instance, finance professor Jeremy Siegel from the Wharton School of the University of Pennsylvania recently gave a bullish market outlook that was buoyed by the race to create Covid-19 vaccines as well as the continual financial stimulus from the US government.
"Even if it takes another six months more than we hope to get an effective vaccine, when you come back with the liquidity that's provided by the Fed, that's a really powerful force," he told CNBC.
If you choose to spend money today that is meant for your future, you face a bigger risk of having to work through old age when your funds dry up. The good news is that financial planning is a long-term affair, and you do well if you squirrel away bit by bit now, even as you battle through this storm.
Considering stocks are largely driven by sentiment, he explained that the market should hold up in the coming months even as the world grapples with economic slowdown and a lingering pandemic.
On the other hand, billionaire investor Mark Mobius warns that the stock rally will not last, and this appears to be the widespread sentiment of many investors globally as they have collectively caused a modern-day gold rush that has pushed the price of the precious metal to a record high. Gold is often seen as the best investment when things are not going well.
While the jury is still out, here are some things you should still carry on doing during the pandemic.
DON'T STOP SAVING FOR YOUR FUTURE
Some people have the wrong idea that as times are bad, you can stop saving for retirement and spend the money now.
Indeed, you can see an increase in the number of younger people who have called for the relaxation of Central Provident Fund (CPF) rules so they can use the funds to tide them over.
Yes, times are hard, but do think for a moment - if a similar calamity strikes again when you are in your 60s or 70s, how are you going to get by if you do not even have the CPF as your last line of financial defence?
The whole purpose of planning for retirement is to allow you to enjoy a steady income when you are older, so that you do not have to continue working.
So if you choose to spend money today that is meant for your future, you face a bigger risk of having to work through old age when your funds dry up.
The good news is that financial planning is a long-term affair, and you do well if you squirrel away bit by bit now, even as you battle through this storm.
At the very least, you should keep an eye on your CPF balances and try to hit a decent amount of between $190,000 and $288,000 for your CPF Life by 55.
This will enable you to receive a steady monthly income of between $1,400 and $2,400 from age 65, which can help you pay for your living expenses.
Similarly, if you are invested in funds and shares, you should not be in a hurry to sell everything if these are intended as your long-term investments.
Instead, look for opportunities to make changes to your portfolio so that you can reap better returns when the market recovers.
Unless it is absolutely necessary to ease cash flow, you should also not surrender insurance policies that are meant for your retirement.
DON'T BE TEMPTED BY STORIES OF PEOPLE MAKING HUGE PROFITS
The stock market is akin to a battlefield because its very nature is that it must produce winners and losers at the same time.
If you have bought a winning stock, this means someone else has sold it prematurely.
If you sold a stock just before its value plunged, then the investor who bought it will suffer losses immediately.
If you are buying stocks by following the herd, you risk being lured to buy shares that others are eager to dump.
Be aware that it is hard to become rich in the stock market unless you are rich to begin with.
Assuming you are lucky to pick a stock whose value goes up 50 per cent, you will make only $50,000 even if you have put in $100,000.
Of course, if you put in $1 million, the return is sizeable, at $500,000.
Before this inspires you to go for broke to make a killing, ask yourself first: Can you stomach a loss of $500,000 if the stock goes the other way?
DON'T BORROW TO BUY SHARES
If you take out a loan to buy shares, you are now gambling and no longer investing.
After all, if you need a loan, it means you don't have excess cash and that you are willing to stake your family's well-being for a chance to make a quick buck.
At best, you stand to win a few months of "easy money" to splurge, but at worst, you end up in misery for years because a loan must be repaid.
The result of betting with money you do not own can be dire - a 20-year-old in the United States committed suicide recently after apparently chalking up a loss of close to $1 million on an online investing platform.
INVEST TO GROW MONEY, NOT TO BECOME RICH
Even if you know that the Apple stock has potential, it is hard to make a lot of money from it when it is already trading above US$130 a share, even after its four-to-one stock split last week.
Without the split, the stock would be worth over US$520 a share.
This is why many people like to punt on penny stocks - they can buy a lot more shares, so they stand to reap big profits when the price balloons.
But people often forget there is a reason why such stocks cost only pennies in the first place. It is because the businesses have yet to show outstanding performances or profits, and those who chase the price up are doing so on acts of faith that the companies will deliver results that justify their inflated share prices.
Very often, many investors end up being burnt when they find themselves still holding on to the shares when the party ends and the price tumbles.
So do yourself a favour and look at the most basic indicators before you buy into an unknown stock.
For instance, you should be convinced that the company is already operating a sound business that produces good profits, and that it is not dependent on future acts that may or may not happen.
Also, look at its average volume of trade before any hype that artificially inflates its demand. If its trade is low, it means that it will be hard to sell your shares even if you have made a big profit.
Finally, the very nature of investing means that you should pat yourself on the back if you succeed in making only modest gains. If you expect a lot more, it means you are no longer an investor but a gambler.
Read? Ministers respond in Parliament to NCMP Leong Mun Wai's comments on not having 'homegrown' DBS CEO
Most of us heard about Black Cat or White Cat quote ... Deng Xiaoping famously said "It doesn't matter whether a cat is black or white, as long as it catches mice."
Hmm .. give you new quote
Singaporean Cat or Homegrown cat?
What so great about having a homegrown cat?
Let compare DBS and Singtel Cat.
Singtel Cat has always being leaded by homegrown Cat. So what?
Singtel stock price has been down from historical peak since those initial days of Dotcom bubble at $5 but when you look at DBS stock price setting new historical records and the last peak is at $30. Cat can catch mice will make the great difference and NOT politically correct Cat who can't catch more mice.
Anyway; most people will say politics are dirty and politicians have to play this type of game to score points! Bo pian!
Uncle8888 is happy with DBS Singaporean Cat who can catch more mice and putting them in his pocket!
How not to be happy with DBS Singaporean Cat leading our homegrown, largest SE Asia Bank out Japan?
Look at the chart!
It is more important to track our own personal and household expenses to have on the ground true feeling of year-on-year inflationary impact as we don't spend based on nation's statistical inflation numbers. We all spend differently based on our lifestyle inflation!
19 years of data points for projecting future household expenses
It is unlikely to be travelling to overseas for vacation so the next four monthly household expenses should not change much.
Our practical concerns should be on health care inflation where it is difficult to find other cheaper alternatives.
Read? http://createwealth8888.blogspot.com/2020/08/time-in-market-timing-market.html
In shorter term; we may get lucky at the right timing to be Buy & Hold to suck good doses of Panadols and then finally ease heartache.
May be it is not so much about feeling more pain but sianz! Bang forehead instead banging heart! Many Alamak moments!
Over longer term; one has to be true Master in TA and FA skills to succeed in both market timing and time in the market! Uncle8888 is really suck at market timing over longer term where luck doesn't happen quite often in the market.
Investment portfolio building blocks
He knows what are the blocking blocks in his investment portfolio; but when will it collapse if he kept pumping out cash from his investment portfolio into his cash reservoir to fund household expenses.
When he looked at this chart; he really loves his dividends and interests as in his investment account book-keeping; they are always positive numbers! Shiok! LOL!
When his Top 2 positions Kep Corp and SCI are falling off from the sky.; hopeful becoming hopeless! Sibei sianz!
But, can old dog from those days of paperwork still learn new tricks in the new digital world?
Sigh!
Someone in BIGS World FB asked this :
"It's often said that time in the market > timing market. Are there concrete studies done on this & what were the returns assumption on the non-invested capital?"
But, received no response yet!
Read? Is Time in the Market and Timing the Market mutually Exclusive??? (2)
Hmm .. okay!
No concrete studies ! Just data points of two to check on curiosity of favorite quote at personal level.
Time in the market or Timing the market?
Uncle8888's two recently traded rounds for DBS and SGX
DBS
1. Time in Market i.e. Buy and Hold for Panadols/Golden Eggs
Hold for 17 years since SARS in 2003. TSR over 17 years is 355%
2 Timing the Market
After Round 3, TSR is 344%. Buy and hold win at the current moment!
SGX
1. Time in Market i.e. Buy and Hold for Panadols/Golden Eggs
If still holding SGX, TSR over 5 years is 45%
2 Timing the Market
The initial position in SGX sold at $7.46 was split into 2 Rounds for buying back as follows
TSR for Round 5 and 6 is not much different at 41% and 46% between Time in the market and Timing the market
Personal observation over this quote : Time in the Market or Timing the Market
It is never about the Method and which one is superior!
It will always be the person behind executing the 3Ms - Method, Mind and Money Management that matters most!
Read? Rolf’s Salary And Income Report Analysis – 2004 To C2020
Uncle8888 adds on one more data point to the above blog post!
Read? Beating Year on Year Inflation - Earned Income or Investment Income???
Seriously What Are You Going To Do??? (2)
Invest on our human asset or human capital to generate multibagger return!
Hmm .. Uncle8888 decided to voluntary early retire@60 at his highest annual income after tax ever. Alamak! What a waste!
SMOL: Quitting when we are ahead is not the same as quitting. LOL!
Which one is easier?
Focus on your earned income or investment income?
Uncle8888's earned income after tax from 1985 to 2015.
His earned income has beaten the sea of inflation.
His earned income after tax was the highest before quitting the Rat Race and that is 4x the lowest income in 1986.
Read? Why do we often make fair but not excellent investment decisions
9. "All you need for a lifetime of successful investing is a few big winners, and the pluses from those will overwhelm the minuses from the stocks that don't work out."
10. "If you're lucky enough to have been rewarded in life to the degree that I have, there comes a point at which you have to decide whether to become a slave to your net worth by devoting the rest of your life to increasing it or to let what you've accumulated begin to serve you."
Right! Cashing out to serve to me i.e. 100% cash payouts from stock operation to Cash Reservoir.
Read? From Growth To Income Stock Operator in SGX
Uncle8888 has transited from Growth to Income stock operator since 2017.
Growth Investment Portfolio
Cash from stock operation were all re-invested to try to grow the investment portfolio from 2000 to 2016 i.e. 0% Cash payout as "dividend"!
Income Investment Portfolio
100% cash payouts as "dividends". Investment portfolio will have to survive on its own across future market cycles and daily market volatility.
From 2017 to 2020; the total "dividends" he has received is equal to 35% Capital Reduction exercise in his Investment portfolio.
Read? Our Stock Dividends Are Either Panadols Or Eggs
Definitely it is NOT Panadols but no more Golden eggs!
Kill the old Golden geese?
or
Keep them as loving pets and let them die naturally. They deserved it after decades of laying Eggs.
Wrong?
Old Grandmother's Tale : We shouldn't eat old mother hens as their meat is very toxic! Now I know why old grandmother said this when she looked at old mother hen! Toxic???
Read? Tasteless For So Many Months .....
Survival rate is 70% at 5th year.
Cleared 10th year.
Now, cleared 15th year and add 1 to the number of cancer survivors statistics in Singapore.
Time on Earth is limited and can also pass faster before than we knew it! It is over!
End of H1 2020 Reporting season and harvesting for Raindrops into my Cash Reservoir should also be over too in 2020; unless there are thunder storms over the next few months. See how!
Looking forward how to harvest more Raindrops as dividends may be cut deeper in 2021. More pain ahead!
Read? Real Life Lessons Learnt During Market And Economics Crisis
Calibrated Cash Flow in 2020 is about 9% ROC after deploying 32% of War Chest to make up those lost dividends from 2019 due to cut!
Read? CPFIS after 55. To close or NOT to close?
The decision to close CPFIS after 55 can be based on dollar and cents in order to make financial sense.
Every counter held in your CPFIS account incurs $8.56 custodian fee per year so there is cost or saving involved to compute.
How to decide to close or not after 55?
Your size of CPFIS really matters!
Any money refund from your CPFIS will earn 2.5% interest p.a. Does annual interest earned far exceeded the total custodian fees?
Yes or no?
You need to do your own Maths! Bo pian!
What Uncle8888 has learnt from past crisis 1997/1998 AFC, Sep 11 WTC, SARS, GFC and COVID-19?
As full-time Employee; he feared the most i.e. losing his job especially when he was a single household income with five mouths to feed and three school going children.
How much expenses could he really cut during crisis?
To prepare and to survive over future crisis; he NOT only prepared emergency fund; but in fact he dare NOT injected any more cash into his investment portfolio as he always like to think that he has injected enough cash capital into his bank account dedicated for investing and his CPFIS as additional chest war.
Now, as retiree from full-time job without monthly salary and medical benefits; he knew the impact of cut in dividends in his investment portfolio facing Sequence risk during crisis time.
COVID-19 came in time to teach him good real life investing lesson learnt on the ground and to validate his investing strategies to move forward in that direction.
Sequence Risk
Sequence Risk is the danger that the timing of withdrawals from a retirement account will have a negative impact on the overall rate of return available to the investor. ... Sequence risk is also called sequence-of-returns risk.
For retirees, when Cash is King during crisis; then Cash Reservoir will be the Queen who is always there supporting the King.
War Chest as calibrating tool to sustain cash flow across market and economics cycles for retirees
Read? Cut In Dividends In 2020 - Painful Experience for retirees
It is time when Cash is King came to ease the pain of a retiree and no more kpkb Cash is rotting!
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