Thursday, June 30, 2011

British Pound-sliding against the Singapore Dollar

wow. look at that. beautiful downtrend starting from Jan 2008, continuing till now, more than 3 1/2 years already.

As some of you might know, I am going to the UK to further studies. I've been doing the carnal sin of traders: Averaging down on the GBP. (at 2.06, 2.01 and 1.98)

Interesting conundrum I have here: Every time the pound drops, I theoretically lose money but am happier, because the cost of my education is dropping.

A friend of mine has said he'll visit the UK when the pound exchange rate reaches 1.8. I hope it goes there too :)

Saturday, June 25, 2011

Stocks and Durians-yummy!

I like Durians. Love eating them, though I do so moderately, not because of any health aspects but more because they're pretty expensive.

I see quite a parallel between durians and the stock market.

In trying to bottom pick, we pick durians from the ground. Just don't stand under the durian tree too often; we might get knocked by the thorny durians on the way down...

In value investing, people scrutinize the business, it's financials, and it's valuations. Same for durians. If one wants to buy durians, he will scrutinize it, shake it, look at the color, look at the stem, check if the thorns are sharp and fresh. Lastly, having concluded that the durian is acceptable, we look at the price. Sometimes, durians are in large supply and we can get top grade durians at $10/kg. Sometimes, they are in short supply and cost $22/kg. So, we make a decision based on the current valuation whether to buy. If one deems it to be a value buy, we buy it at whatever Mr. Durian Seller/Mr. Market offers to us. If not, we just walk away, our banknotes safe and sound in our pockets.

We also can shop around. Stall A might be famous for it's Mao Shan Wang, but what if one wants to eat D24? Do we blindly go to Stall A? Sometimes, Stall B, which might not be famous for any cultivar, might offer D24 at cheaper prices. Same thing, we must also shop around for whoever lowers our cost. Sometimes, Stall A customers look down on Stall B customers because Stall B doesn't have a reputation. But, what matters is just the quality of the durians, no? Whether Stall A gives you aircon, more friendly staff, does it matter? I detect alot of snobbery and people turning their noses up at Standard Chartered Bank's offer of 0.20% commission with no minimum. Even though SCB might carry a bigger advantage for small players, people actually will save more when they trade more. If I want to buy $40,000 worth of ST Engineering, my commission for a traditional broker is at 0.275% which is $110+ gst. For SCB, that will be 0.20% which is $80+ gst. Of course, there are many other factors to look into; but I feel that the vibe of disdain and ridicule of SCB customers I get is unwarranted.

For durians, we must also know which cultivars are in season at the time we want to buy, which will offer us the best value for money. Say, in April, D24 from pahang is in season. We will get better value for money for D24 from Pahang in April, than say Mao Shan Wang from Perak. Sometimes, a flood/drought/whatever affects the whole South East Asia region and all durian trees, no matter how good, churn out poor quality durians. Same thing, we should look at the macro events and not just the business fundamentals of a stock. No matter how good a business is, a rising tide lifts all ships, and vice versa, a sinking tide grounds all ships. Even if a company is getting exceptional economic moat, ROE, ROI etc etc, a global economic downturn will sink it's stock price, will it not?

After all is said and done, when we bring the durian back, no matter how good it looked before we opened it, after opening, if there are worms inside, do we hold on to the durian hoping the worm will magically disappear, or do we take decisive action to throw the durian away before the worm replicates and goes into our other durians, or start to affect us?

That's my parallel of durian eating and stock picking. Enjoy both eating durians and picking stocks. Cheers!

Sunday, June 19, 2011

$20 approx per block of 1,000 KrisFlyer Miles via HSBC Credit Cards

HSBC Credit Cards have a promotion whereby:

The new HSBC rewards programme allows cardholders to purchase Rewards Points in blocks of 1,000. Every 2,500 Rewards Points = 1,000 KrisFlyer Miles.

HSBC allow cardholders to purchase 1,000 Rewards Points for S$8.

2,500 Rewards Points= 1,000 KF Miles= $20.

There is also a S$42.80 annual mileage transfer fee.

Essentially, you get to travel at discounts over SIA's published rates.
Award Tickets are also more flexible. You are able to change dates, flights, so long as the flight change is a same tier city (e.g. 29,750 KF Miles gets you one way to London, Manchester, Paris, Milan-Malpensa etc)

Take for example,

Flexi Ticket: $1,710 + $683 taxes/surcharges = S$2393.40
Award Ticket: 60,000 KF Miles (after 15% online discount) = $1,200 + $683= $1,883

Flexi Ticket: $1,900 + $827 taxes/surcharges= S$2727
Award Ticket: 60,000 KF Miles (after 15% online discount) = $1,200 + $827= $2027

A great deal, in my opinion!

Thursday, June 16, 2011

Cut Loss on CapitaLand and CapMallsAsia: Reflections and what's next

I cut loss on Capitaland and CapMallsAsia this week. Capitaland at 2.82, CMA at 1.53.

I am not disappointed with myself for losing money; what really irked me was my lack of a cut loss plan.

Trading with limited capital; you have to take losses quickly and enter trades only when risk reward ratio is good. (i.e., buying at support, cutting immediately when it's breached, having a reasonable profit target).

I learnt two important lessons from these two trades.

Start off with CMA.

CMA was a short term trade. I bought it,  hoping to make a quick profit in the short run.
Bought close to support, 1.71, and support was at 1.68 at that time. Didn't cut until all the way till CMA breached it's 52-week low.

My earlier (losing) trades on Wilmar and NOL this yr, I cut loss 10c off and 2c off my purchase price respectively. Why? Bought close to support, when it was breached, quickly take losses.

This trade, I didnt have a cut loss plan and just blindly held on, thinking "it'll go'll go up". Eventually, cut loss when the pain was too painful to bear.

For Capitaland, I bought it for 2 reasons: I thought it was fundamentally okay, I thought valuation was cheap. Fair enough.
I also bought it close to support of 3.08-3.11 at that time. (I bought at 3.15)

I didn't have a cut loss target for this- I made a fatal error in telling myself that Capitaland was for the long term, and I didn't have to have a stop loss.

The slew of bad news coming from MND and the Chinese Government is also bound to depress stock price across the board for property; I should have seen this.

Price is what we pay and Value is what we get. Cheap became cheaper. One advice I took to heart: "You can buy if it's cheap and reversing. You ALSO can buy if it's not cheap but going up. What you CANNOT do is to buy if it's cheap BUT not reversing."

Looking at the charts, I might have cut loss RIGHT at the bottom. CPL is at channel support and is likely to bounce off. Oh well, what's done is done.

That's my reflection. So what's next for me?

I've been on quite the losing streak; I think I've cut loss in my last 4 or 5 trades. All losses have been inconsequential except the CMA loss, and to a smaller extent, CPL. That was because I kept strictly to my cut loss rules. (Interestingly enough, all the stocks which I cut loss are trading at lower levels than where I cut them.) I will take a step backwards now, if there's a trade with high risk reward ratio (e.g. buying right at support and being able to cut within 2-3c, with price target of 10c), I will consider; if not, it'll be a time to cool off, observe the market and see where I went wrong.

I've had people advising me that with small capital, it's just not worth it to chase the 3-10% appreciation you typically get on your average trade. After all, 10% of $10,000 is just $1,000.
What people have been advising me to do, and which I think makes sense, is to wait for a huge correction, and then start buying slowly. (And sell slowly)

I'll take this period of time to think. A correction is underway, maybe there will be good bargains soon.

Wednesday, June 15, 2011

STI Components: Diving Contest?

I had an interesting discussion this afternoon on the cbox today about all stocks diving in SGX. One of the worst performers today was Neptune Orient Lines. As we like to say on the cbox, NOL has diversified into building submarines. :P

I think this song is pretty apt for what is happening now:

Being bored at work, I took the liberty to see the worst performing STI components over the past 52-weeks, these are the results for the STI diving contest:

Winner: CapMallsAsia. 52-week high: 2.33 Close: 1.46
Representing a dive of 37.33%

1st Runner Up: Neptune Orient Lines. 52-week high: 2.40 Close: 1.53
Representing a dive of 36.25%

2nd Runner Up: Capitaland. 52-week high: 4.23 Close: 2.87
Representing a dive of 32.15%

Consolation Prizes:

Singapore Exchange. 52-week high: 10.26 Close: 7.28
Representing a dive of 29.05%

City Developments. 52-week high: 13.62 Close: 10.42
Representing a dive of 23.50%

Wilmar. 52-week high: 6.93 Close: 5.42
Representing a dive of 21.8%

Ouch! This isn't a contest anyone wants to win.

Empathize with all who are stuck with these stocks. Am waiting to get rid of Capitaland; already got rid of CapitaMallsAsia at 1.50+. OUCH!

Thursday, June 9, 2011

Dapai International- YET ANOTHER fund raising exercise.

Dapai International, a counter which I used to have and divested at a loss, has had an SGX annoucement here stating the 1 for 4 rights issue.

Dapai will be issuing new shares at $0.080 apiece, and the reason for it is
"the entire amount of the Net Proceeds of S$19.3 million for financing in part the potential
acquisition of a suitable target in the backpack and luggage business segment which the
Company is currently negotiating, or if the potential acquisition being unsuccessful, the entire amount of the Net Proceeds of
S$19.3 million will be used for the Group’s future expansion of sales and distribution
networks and channels as well as general working capital purposes

I have to thank Heavens that I divested immediately after I felt something not right with this company. My reasons at that time here.

This Rights Issue is yet another reason to be wary of this company.

Dapai has a cash horde of over S$100,000,000, with negligible debt. Yet, it still begs shareholders for a mere S$19,300,000. In the words of Nick: " It is like a man who claims to have $100 in his pocket but need to beg for $19 to buy his favourite bag lol"" "

Look at the part of the SGX annoucement I bolded. Essentially, what Dapai is telling you is, should he fail to secure stock of his favorite bag, he will just keep the money in his wallet, thanks for your generosity :)

I emailed the IR in March 2011 to enquire why they did not pay a dividend. The IR replied they needed the cash for it's working capital. Yet, still need to beg shareholders for money again? Huh? Wu yiah bo?

Sunday, June 5, 2011

Standard Chartered Bank Singapore- NO MINIMUM BROKERAGE FEES!

SCB Singapore has a new i-banking cum brokerage system where you can enjoy NO MINIMUM brokerage fees. The catch is:

-No Contra. You have to have the cash in your Securities account before they allow you to key in your order. However, settlement for SGX is still done in T+3. Not a problem for those who are investing with money they have. Only a problem for those who contra beyond their means.
-Your shares will be kept in SCB Nominees. This subjects you to the counterparty risk of SCB failing; which I think is pretty remote. There are no custodian fees.
EDIT: I've been informed that even if SCB does fail; the legal and equitable titles are still ours; the shares will still belong to us should SCB Nominees fail.

-0.20% for SGX shares and 0.25% for NYSE, NASDAQ, Paris Bourse, Deutsche Boerse, London Stock Exchange, Swiss Stock Exchange, Tokyo Stock Exchange, Australian Stock Exchange, Amsterdam Stock Exchange etc. Notably absent is the Bursa Malaysia.

I am very excited with the prospect of being able to invest outside of Singapore at very cheap rates.
I am also very excited with the prospect of being able to do Dollar Cost Averaging on stocks which I think are at good prices, one lot by one lot, since I do not have a high capital. (e.g. Sabana REIT and PohTC)
Lastly I am excited with the prospect of being able to practice my TA with small lots. e.g. I can buy 1 lot of, say, Noble Group if I believe it's TA signals are good. This, I believe, is better than paper trading (which I think is useless, by the way) and better than risking a large portion of my capital, since I still am at the learning stage.

An example of brokerage fees:
1 lot of PohTC- 40c ($400)- commission: 80c
1 lot of Noble Group Ltd- $2.00 ($2000)- commission: $4

Obviously for the people who trade with minimum $10,000 each time, this is not a big breakthrough but for small fry like me, this is a very exciting prospect.

I will be going down to the Battery Road Branch tomorrow during lunchtime to apply.

The Old Boy's Cartel Club of local Brokers ain't gonna be happy.

Wednesday, June 1, 2011

May 2011 Portfolio Updates/Summary

May 2011 was yet another uneventful month for me, as I count the months left till university starts (3). Have been working as a temporary staff in one of the banks at CBD area.
Used my iPhone to buy a stock for the first time.

Also received many dividends this month, from ST Engg, First REIT, MIT and PohTC.

Stock Bought Buy Price Market Price P/L not incl. Dividend
MIT $0.930 $1.17 25.81%
Sabana $1.050 $0.94 -10.48%
First REIT $0.700 $0.79 12.86%
ST Engineering 2++ (Average) $2.97 Not Available
Poh Tiong Choon Log $0.48 $0.40 -16.67%
Capitaland $3.15 $3.11 -1.27%
CapMallsAsia $1.71 $1.63 -4.68%

Added two new counters to my portfolio: CapMallsAsia and Capitaland.
Capitaland is a value buy, with NTA and NAV both at $3.20-ish.
CapMallsAsia, however, is a trade. Unfortunately it has been very bearish recently, going down all the way to $1.58 until recovering to $1.63 today. Will divest at resistance of $1.68 if tested.

My other counters have been very weak after going XD. ST Engg especially, dropping from $3.30 to $2.97, though dividend was only 11.5cents. PohTC dropped from 45c to 40c despite a small dividend of 2c.

The best performer is First REIT, going from 75c to 79c. It has been included into the MSCI Singapore Index as of today (SiMSCI). Read more about it at AK's blog here.

Sabana REIT has also been added to MSCI Global Small Caps. Read more here.

Portfolio is still green, due to my dividends and capital gain over the past year from ST Engineering, and the good performace of First REIT.

YTD is red due to CMA, my multiple trades that went awry (NOL, Wilmar).