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Monday, November 29, 2010

Emotions on the market

As per my previous post, I bought 2 lots of Cosco corp call warrants, which basically means im bullish on cosco. Today, however, cosco corp's share price dropped, at one point by 4 cents, which disproportionately affected the market maker's price of the warrant.

I set a stop loss target for myself at 38.5 cents. Reading alot of books, the authors all similarly and repeatedly hammer the point where you HAVE to bite the bullet and cut your losses. Today, i realised how difficult it is, the emotions that flow thru you when your own money is on the line.

Anyways, this can be construed as me paying tuition fees to Mr. Market for teaching me how to trade.

After all, you have to lose to win.

After a long day of trading, eventually cosco corp traded 1 tick down from Friday. (phew!)

Friday, November 26, 2010

Paper Losses and Warrants

In my fledgling investment hobby, I've made my first paper loss.

The loss is from Sabana REIT. This counter debuted on SGX at 1.00 and closed at 1.02, leaving me with a $30 paper loss (not including my brokerage fees). Oh well, there's still the 8% dividend to look forward to.

If Sabana rises to maybe $1.12-$1.13 (doubt it though), I will sell it off immediately. Reason being I'm not very sold on Sabana's parentage, which is Freight Links, and also the multiple restrictions on Shariah financial products, which is pretty cumbersome.

So for Sabana, my selling point will be $1.12 onwards.
I doubt REITS have a very low support level, since if it drops, the dividend yield is higher, hence the support level should be quite strong.

I also bought my first derivative product on POEMS today.
I bought 2 lots of "CoscoCorBNPeCW110530", KG6W, at $0.485, from the market maker. I was the only buyer of the stock today.
Reasons for buying:
1.) After reading Cosco's 3Q financial statement, it seems to be in a good position, with positive cash flows and increasing revenues and profits. They may also have a few big contracts which will hopefully increase their profit.
2.) 1 lot of Cosco cost $2060 today. Hence, by buying the warrant, issued by BNP Paribas Warrants, i gained exposure to 2 lots of Cosco for a mere $995 incl. brokage fees.


The warrants have an exercise price of $1.68, and is due to be redeemed on 30th May 2011. Warrant:Share ratio is 1:1, hence my break even price (after factoring in all costs including brokerage fees) is $0.51 per warrant. 


My short term view on Cosco is bullish, and hopefully I'll be able to gain some profits in the short term, hopefully before CNY.


The theoretical Delta for this warrant is 0.78, hence, for every 1c the counter moves, the warrant will move 0.78c. Hence, for my target profit taking level, Cosco Corp has to move roughly about 20.5 cents up.




If there's anyone reading, would you care to comment on my buying on this warrant?


Anyway,
Target Profit taking level: $0.65
Self Declared Stop Loss: $0.380 (21.8% away from my purchase price- at this price i will lose $260)

Sabana Reit, Amtek IPO

Have just logged on to posb i banking and realised I've received 1 lot of Sabana. Will sell it off if it reaches $1.15 tomorrow afternoon. Unlikely though.

Amtek has just opened applications for its' IPO at $1.30 a pop.
Seems like out of it's 200 million shares, a substantial amount are vendor shares, and will be used to pay off it's creditors. Doesn't sound appealing...

Thursday, November 25, 2010

Warrants and CFD, Sabana REIT, Mewah IPO

Warrants and CFD are very powerful financial instruments. They allow investors to use leverage to gain huge percentage gains (and losses) in the stock market.

As i only have roughly $10 k to play the stock market with, and since i can afford to lose this 10k, maybe it's worth looking into these 2 instruments.

For example, the broker recommended me Keppel Corp when it was at $9 flat. Unfortunately I couldn't commit all my monies to one counter, hence I couldn't catch that train. 1 month plus and many Keppel contracts later, it's currently around $10.60. Had I understood how to use warrants at that point, I could have invested maybe 2k and gained exposure to about 10k of Keppel Corp. Unfortunately for me, i didn't know about warrants at that time :(

On another matter altogether,I was reading thru the prospectus of Mewah and there was only 6.5 million shares up for subscription. Hence i decided not to waste my $2 on it. Little did I know, whilst reading the papers today, that small investors had a 56% chance of getting 1 lot! (balloting ratio for those who subscribed from 1-9 lots was 28:50) I was kicking myself until the market opened today, when Mewah opened BELOW it's offering price.

I was thinking had i got Mewah, i would be stagging the share. Luckily for me I didn't apply and get, since I would have lost money had I sold off the share today. The agri sector is very promising, however Mewah doesn't seem to be a good choice. Other oil processing firms, like Golden Agri and Wilmar are vertically integrated. Means they own the farm, the trees, the processing plant. Mewah only owns processing plants and hence if they fail to secure contracts, or if the price of raw materials skyrockets, it will face difficulties.

Anyway, I subscribed to Sabana Shariah Compliant REIT today. The board promises 8.0% p.a. next year. Since the dividend will be pro rated from date of listing till end of FY10, it will be only about 40 bucks dividend. So if Sabana opens at $1.15, i will be selling the counter. (if i get it) Otherwise, Cache Logistics looks to be a better REIT, 9+ % pa.

I will be learning more about the stock market. Currently I'm reading "Who took my money?" by Robert Kiyosaki, where he says using leverage is one powerful way, not only in the stock market, to accelerate your wealth. Next on the list is "stock investing for dummies", and then Adam Khoo's Secrets of Millionaire Investors which I bought from JB at a steal. RM 45, which is less than 20 bucks. Selling for 28 here, so I saved quite abit :)

One book i recommend, which can be borrowed from the library, is Robbie Burns' "Naked Trader II". Tells us how to buy stock using simple strategies. He doesn't believe in candlestick charts and the like. Very interesting and humourous read.

Saturday, November 20, 2010

ETF Targets and the STI

Currently I'm looking at 2 shares that I will be putting down money in once the market stabilises.

1.) streetTRACKS STI ETF

Current Price: $3.27 (STI closed at 3197.37 today)
Level in which I will enter: When STI reaches 3150.

Reason for buying the share:
1.) Annualised 7-9% growth over the past few years
2.) Provides a steady, yet low risk (comparatively) investment in Singapore's economy.
3.) Gives capital gain + steady dividend
4.) Much cheaper (management fees wise) than buying into the comparable unit trust (Aberdeen Singapore equity trust), and gives better returns than that unit trust (and comparable ones)

Cons:
1.) As compared to Unit trust, where i have to pay only 0.75% sales charge, the brokerage fees (two ways) add up to $50, which is 1.5% of 1 lot- $3270.


2.) iShares S&P 500 USD10

Current Price: USD 120.460
Level in which i will enter: USD 118-119

Reason for buying the share:
1.) The US economy, despite being in the doldrums now, has historically always been a world leader. Hence, even though capital gains might not be as fantastic as the glamorous emerging economies, it provides a stable, and comparatively low risk investment with good capital gains and dividends.
2.) Diversification of my fledgling portfolio into a developed country first (stable)
3.) US Dollar is at an all time low with the SGD now, I feel the USD has very little downside potential(is that the correct term? What i mean is that it can't sink that much lower), just like the AUD has very little upside potential (Can't go much higher), and i might gain once USD appreciates vis a vis SGD.  (abit of forex gambling here, no?)

Cons:
1.) not liquid. difficult to sell off as a result.
2.) Not as much funds in this ETF as compared to SPDR S&P500. Hence tracking error higher

Why i'm buying this instead of the SPDR
1.) both iShares and SPRD are secondarily listed on SGX- however, SPDR is EXTREMELY illiquid on SGX. iShares still has daily trades with vol. from 2000 to 10000.
2.) I could buy SPDR on the NYSE Arca- BUT, i have to pay a higher brokerage fee AND a monthly custodian fee of 2.14 SGD. These extra fees come up to 14+ SGD and 14 USD extra brokage fee (SGX 15USD, NYSE 29USD) and this is more than 2% of my interest (i would like to invest 100-150 shares). Means that i will lugi 2% the first year. I'm willing to sacrifice some liquidity (SPDR is very liquid on NYSE) for the cost savings.

KIV:
Lyxor emerging markets ETF
Lyxor MSCI World ETF

My first foray into the market- Global Logistic Properties and Mapletree Industrial Trust

My first foray into the market was a good one.

Barely a fortnight after my brokerage account was set up, Global Logistic Properties and Mapletree Industrial Trust went up for IPO.
Knowing next to nothing about the stock market, I simply applied for a few lots for both the govt- linked companies and got both. Striked lucky on both.

GLP
Sold my GLP shares on the 2nd day of trading for $2.20.
Profit of 24cents per share before commissions.

MIT
The temasek backed REIT didn't start off as well, rising to merely $1.20 before settling down to it's current resistance of $1.11 and support at $1.09.
Deciding to keep this share for the long term as the board promises 7.6% p.a. pro rated from date of listing to 31 march 2011, and 8.0% pa for the financial year ending march 2012. Not a bad dividend, what with the poor interest rates in singapore now.

First Post- Intro, background

Hi to anyone who's reading my blog.

This blog is created for myself to be accountable for my trades, good or bad, and hopefully have people who give constructive comments or criticisms about my trading choices.

A little background on myself, I'm 20 this year, newly started out on investing. Most of my fledgling portfolio is still in cash. I'm waiting for the singapore bourse to correct itself out now.


I have a couple of brokerage accounts, one advisory and one internet.
the advisory was set up with my parents as my guarantors, the internet one without.

My net worth is currently about SGD 12k.11k in cash and 1 lot of Mapletree Industrial Trust. Nil liabilities.

Monthly income roughly about 1k+, from ns allowance and from teaching tuition.

Some social background:
Finished A levels in 2008, ORD in a few months time, going to university next year.


I hope this blog helps me keep track of my trading history.

Happy investing.