SPH: REIT?

There's been a lot of talk about possible SPH REIT this week. I must say, my friend who works in SPH told me a couple of months ago, and i just brushed it aside. 

It's all about the money isnt it? Should SPH should stick to their core business of providing news to the public?  or go beyond media?

Is SPH being too aggressive with their latest acquisition of SGcarmart and now listing a retail REIT for the public. I think its a bold move and shareholders of SPH will benefit the most. The rationale behind the proposed listing is simple to understand and very clear. The establishment of SPH REIT will allow SPH to get back some of their locked up capital in properties and fund its growth and also give out special dividends to its long term shareholders.
 
No i wish i had bought SPH back in 2010. No matter...with all these news, SPH is becoming more and more volatile. Will it still be one of the steady blue chip stocks in STIndex? I think so. Plenty of opportunities will come around next "FALL" to pick it up, but for the time being, too hot for me.

Importance of Taking Profit

Always remember to take profit when realistic targets are reached. In my experience, someone who fails to take profit at their predictive target price usually ends up never finding the right time to sell. Putting aside my greed and other emotions, decided to followthrough with proper execution. I was in this business to make my money grow, not to fall in love with a company and hold it till i die. Remember folks, you own a piece of the company but in actual fact, never really run the business, so its a risk to invest in uncertainly. Give yourself some relief by taking profit. 

SO...i took profits on XMH holdings which i bought during their IPO launch a couple of years ago. Still remember the times when they went down under and left me with a huge loss of 80% of my invested capital. I told myself to hang in there, remember rule number 1: "Never lose money". Surely enough, the time has come for me to sell it off at almost 66% profit (including dividend). 

Today i am happy.

Did you pick the right REIT?

As we all know by now, REITs have outperformed the general index. High yielding REITs were plenty back in 2010, slowly they are becoming overpriced. If you have positions in it, you are probably holding onto them till the last minute to see how much further they can go. I know i am. I decided to highlight some winning REITs who are still offering above average dividend returns. 

 Of course, this is not an invitation to buy into these selected REITs because most of them are already quite expensive. Did you pick these REITs back in 2010?
I held 4 out of 5 of these top yielding REITs in the past. Recently sold Suntec REIT and First REIT at a very good profit making me happy. While i still hold onto Ascott REIT and Sabanna REIT, i do ask myself how much longer do i have to hold them? The average current yield in each sub-group is already close to 5. Will we see a drop in popularity when this average drops below 4? That is definitely a yes. 

For the time being though, let me be greedy and hope for bigger returns. We should be worried when average yield goes below 4%. But i suppose Ascott REIT is something i will have a hard time deciding to sell.

TEPCO finally making a comeback after 2 years?

Perhaps the biggest blunder in the few years of investment has been with TEPCO, Tokyo Electric Company (JP:9501). It was stupid times when i was too aggressive and relied on speculation. Right after the devastating tsunami in Japan where everything in Sendai was wiped clean, Tepco nuclear plant faced daily risk of meltdown, their stock price plunged to the ground. And I foolishly invested a small amount of money in the hopes of making a quick buck.  Soon after, rumours started flying around that the company might be delisted and taken over by the japanese government.

Lesson learned, never invest in a company directly involved in the tragedy. Same goes for BP after the Gulf of Mexico oil spill, where is BP now? still lagging behind major players, lost their credibility, their TNK-BP partnership in Russia broke down somewhat.

Getting back to TEPCO, there were times when i was down nearly 80%. Having lost all hope of regaining the money, i decided to leave it as it is, to remind myself everytime i checked my investment account. Stubborness took over and i never sold it at a loss. In my defence, before buying into the counter, i performed a thorough study and actually believed TEPCO will rise again one day. Believed in their 2020 vision of cutting fossil fuel dependancy. Nuclear power is actually 30% of their total revenue and they are diversified into other forms of renewable energy. The fact remains still, TEPCO is Japan's biggest power company by generating capacity. 

Recently TEPCO rose a whopping 18% to JPY522 on the TSE yesterday and further risen to 613 today. One of the best performers this week from Japan. I am now at 17% profit from buy price but still not going to sell. This is because when i bought it SGD-JPY rate was 62, the Japanese Yen has depreciated by more than 30% over the past year. In terms of actual profit/loss...i am still at over 20% in the red after commissions and fees.

I am sharing this case study so that others may benefit and learn from my mistakes:
1. DONT INVEST IN COMPANIES DIRECTLY INVOLVED iN A DISASTER
2. DONT FORGET CURRENCY EXCHANGE LOSS   

Finally someone who talks sense about insurance

I have always been confused by Insurance and still am to a certain degree. I know it is a very important tool for financial planning but considered it my greatest weakness. Maybe the fear of being cheated overwhelmed my emotions and thought of Insurance as the "legal version of protection money". C'mon it is! So i decided to embrace my weakness and plunge into the world of insurance. Anyway, couple of years ago, I almost became a "financial advisor" if only i had passed the last exam! The experience has been most rewarding, and i had a clearer picture of insurance policies, requirements based on needs and so on. 

I never believed in getting insurance, and i still don't until i have dependants of my own. As a general rule, there's no point in getting insurance if no one is dependant on your income. My father on the other hand has been paying to be over-insured for the past 20 years, duped by the pretty insurance girl...which he will never admit. Main lesson here is not to under-insure or over-insure oneself. How to hit the sweet spot? Read the article below.  

Financial Planning for Singaporeans - Interview with Mr. Tan Kin Lian

I think this article is very good information on insurance, especially for young people. Please read for your own sake.

 

The original article was posted on BigFatPurse.com:

http://www.bigfatpurse.com/2013/05/financial-planning-for-singaporeans-interview-with-mr-tan-kin-lian-president-of-fisca/

Hope for the Best, Prepare for the Worst

I actually did go away for a week in May after selling off all my Singtel shares but it seems the stock market is relentless. Everyday climbing higher and higher up the mountain until we eventually reach the cliff at the end. Perhaps the best strategy right now is to hold and see, regardless of how heavily you are involved with the stock market, it is always important to know exactly where your emergency exits are at all times. This includes paying attention to technicals as well as fundamentals and maintaining a short term view on the positions you own.

In any case, it helps to be prepared for the worst case scenario, i.e. to evacuate the stock market when the time comes, you will stand a much better change of emerging relatively unscathed vs. those that are fully invested and get caught in a market crash. Personally i position myself for such an emergency scenario by shifting capital to higher quality names which are less volatile and offer attractive valuations with strong technical support. It will do much better then lower quality, high beta and momentum stock (especially penny stocks). 

By the way, I have been thinking, would you consider ThaiBev as a risky investment? After acquiring a portion of FnN, they have strengthened their position as a major player in this region, valuations also look great. That is a question i pose to you fellow readers.   

A little on Japan
It seems that Japan is on this unstoppable path to financial meltdown. Over the last 20 years,  the Japanese economy has gone through property and financial bubbles. Their ageing population is not helping either, increasing social burden on the declining number of taxable labour. As a result of this, Japanese economy has been stagnant and undergoing deflation. What is happening now is Bank of Japan (BOJ) is aggressively pumping in money to combat deflationary pressure by targeting 2% inflation in the next 2 years. However you may feel about this move, Japan is still heading for a serious market crash....which everyone is going to feel. Don't forget Japan is still the third largest economy in the world, they own massive amounts of US treasuries and their financial institutions are intertwined with the global market. Any weakness or shock in Japan, would be MUCH MUCH bigger than Greece, it would send financial markets around the world in a frenzy.

For now though, hope for the best....diversify and relocate capital to safer avenues, preparing for the worst to come in 2014. 

Disclaimer: The above is only my viewpoint on the market situation now. It is in no way advice to get in or out of the market. Investing involves calculated risks and you may lose all your money. Please consult professional advisor before making any investing decisions for yourself.

Sell in May and Go Away...to China?

Its the time of the year when i usually do a re-assessment of my investment strategy and capital allocation in order to stay ahead of market cycles. I am guilty of holding onto some counters for way too long even after they have reached my target price. It seems most brokerage houses keep upgrading stocks and shifting their target higher and higher. One such example is Singtel, now its target is $4.20? sure, maybe but not in the short term. I had to take profit early and trust me Singtel will come down eventually to find support at a lower level before the final push to the $4 region. All of my REIT holdings are also above target prices, Genting seems to be under the bus at the moment so i shall have to wait longer for it to reach my target price.

Anyway in order to do capital relocation, i need to free up some money. Chinese stocks look super attractive at the moment, with such valuations one cannot resist. I am going to pick individual counters which are growth stocks and play the broader index to diversify. 

Another point, I know for a fact, battery technology we currently use is outdated (over a century old). Cant wait to say goodbye to the pencil batteries. Having worked on Lithium-Air batteries myself, next generation battery technology is headed towards leaner, paper thin, Lithium Ion batteries with a greater capacity and recyclability than any existing alkaline or lithium cadmium ion battery. Therefore, i invested in BYD, manufacturers of next generation lithium ion batteries, PV cells and Electric cars. They are registered on the HKSE since 2002. Even Warren Buffet himself bought a huge stake for himself, however i must say, his timing was way way off. But you know what, this is a long term play and he knows it. Small retail investors just dont have the sort of capital to throw around so our timing has to be at least accurate. 

*Additional note: Interestingly fellow blogger WealthBuch also started taking profits. Refer to posted link below:
http://wealthbuch.blogspot.sg/2013/05/taking-little-profit-off-table.html

Disclaimer: Same as usual, dont just take my word for it. Perform your due dilligence before making an investment decision.     

Genting Singapore: Sell or Hold?

Lets look at OCBC's outlook for Genting:

Genting Singapore: 2013 outlook more cautious
Genting Singapore (GS) reported 1Q13 revenue of S$669.6m, down 15% YoY and also 16% QoQ, hit by much weaker win percentage (2.12% versus 2.85% theoretical) in the premium players’ business; net profit posted a decline of 44% YoY and 13% QoQ to S$115.9m. All in, a pretty muted set of numbers, as top-line only met 20% of our original FY13 forecast while bottom-line met 18% of our full-year number. Going forward, management has turned slightly more cautious, citing the still uncertain global economic outlook, especially with the recent muted economic data coming out of China. We pare our FY13 revenue estimates by 10% and core earnings by 16%. As such, our DCF-based fair value also slips to S$1.41 from S$1.52 previously. Recent run-up in share price seems slightly over-done; hence we downgrade to SELL from Hold on valuation grounds. However, we would buyers closer to S$1.30 or lower. Longer-term catalyst could come from a potential IR license overseas in markets like Japan. (Carey Wong)

 I am not sure whether to hold or sell Genting but i do agree that there will be more buyers around $1.30 region. In fact i was one of them to picked this counter up at $1.30 several months ago. Lets look at the 1yr and 3yr chart:

It may be slightly bearish at the moment, but i am betting on the importance of the tourism industry in Singapore. This has a long way to go being supported by the rising trendline. I would be careful if the price drops below the 200-day moving average in the 5 yr chart. The price of genting is nearing a turning point soon, either it breaks down terribly or keeps rising above the previous weeks closing, being supported by major trendlines and 100d, 200d moving averages. Also notice the relatively low volume, i guess majority shareholders will adopt a hold and see attitude, as would I.