Sound Investment

9 years 11 months ago #20635 by Rock
Replied by Rock on topic Sound Investment
$84,150 SRS Contribution Growth To $281,684 In 6 Years

My SRS account after 1 year as at 31st July 2014 has increased to $281,684. (This include latest contrbution in 2013 of $12,750 and $200 dividends yet to come from First REIT) For the year my profit was $60,154. My total profit to date increased to $197,534.

Performance for the year - increased by 27.15%. If exclude the latest cash contribution of $12,750 increased by 28.8%. For the year my cash holding was on the high side @ $80,279. My lastest contrbution of $12,750 was basically for income tax saving. (See SRS account summary)

During 2nd half of 2013 till now we witness nervous stock market, tapping of QE3, soft earnings news, slowing growth in China, geopolitical tensions between Russia & Ukraine, fighting in Syria, Iraq and Gaza Strip and not forgetting Government properties control meassure.

SRS Account Summary @ 31st July 2013
Total Value = $208,780
Total Profit Up To 31/7/2014 = $137,380
Total Contribution Till 2012 = $71,400

SRS Account Summary @ 31st July 2014
Total Value = $281.684
Profit From 31/7/14 to 31/7/14 = $60,154
Total Contribution Till 2013 = $84,150
Total Profit To Date = $197,534

Changes in my SRS porfolio:
Sold off: Biosensors all 30,000 shares at a lost. Biosensors facing headwill in China market and reducing profit margin.
Take profit on Cambridge Ind. Trust all 20,000 shares as share price increased, yield reduced.

Reduced holding on: Cordlife - Reduced 58,000 shares to 25,000 shares. Cordlife oversea bussiness expansion needs time to digest which shows on it's quarterly result. Cordlife is in my radar screen, when oversea business start to contribute to it's top and bottom lines then I will increase holding on this stock.
2nd Chance - Sold off all 45,000 shares. The company had sold off it's properties and future direction of it's business is in question.

Increased holding on: Straco - Increased from 48,000 shares to 88,000 shares. I have identified and highlighed in the forum before that Straco is a perputual dividend raiser stock & the profit margin is one of the best, nearly 50%.
Chip Eng Seng - Increased 10,000 shares to 25,000 shares. CES yield for second line properties is the highest. The future of properties market will depends on the Goverment property control measures.

Bought into: First Reit 10,000 shares. First REIT being in health-care business is resilience and yield of about 7.5% almost the highest.
Hai Leck Holding 50,000 shares. Company is debt-free, good yield and supporting oil, gas and chemical industries.

For the year Straco is best performaning stock.

ROCK: How I made $137,380 with $71,400 in my SRS account

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9 years 10 months ago #20706 by Rock
Replied by Rock on topic Sound Investment
"Investors" refer to people who buy and hold shares for the long term, probably years or even decades.

Investors look at the health of a company - its financial statements, business prospects and dividend yields - in a field of study known as "fundamental analysts"

If an in investor holds a stock which plunges, he may well look to buy more stock at the cheaper price, if he is confident about the company.

"Traders" take a short-term view and look for quick profits - their holding period is minutes, hours or days.

Traders, on the other hand, use "technical analysis" - the study of chart patterns to determine where the price of an asset is heading.

One comment from a trader sticks in my mind. He said "I don't care about the quality of the asset, the company I'm trading 'lost money' is not my concerned, all that matters is I'm making money". "I could be trading jellybeans, for all I'm concerned, all that matters is where the price is headed."

If a trader holds a stock which plunges, he will deduce that the tide has turned against him and sell the stock quickly to cut his losses.

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9 years 10 months ago #20838 by Rock
Replied by Rock on topic Sound Investment
Hope and Regret: An Investor's Worst Enemies

It's often been said that the average investor's downfall are fear and greed. He tends to be too greedy to sell at market tops and too fearful to buy at market bottoms.

Yet fear and greed aren't an investor's worst emotions. Indeed, they have much to recommend them.

Greed - more palatably known as "rational self-interest" - is what keeps us on the hunt for worthwhile opportunities. It brings out animal spirits, the lifeblood of capitalism. If we didn't feel a desire to improve our lifestyle and circumstances, we wouldn't undertake ventures. The free enterprise system - the greatest engine of prosperity the world has ever known - requires risk-takers. We need entrepreneurs to start companies and investors to capitalize them. In short, Gordon Gekko got it right. Greed - the desire to get rich - is good.

Fear - is another essential ingredient. It keeps us from getting carried away. Fear reminds us that the pursuit of wealth has a downside: loss. And it can be painful. As Fred Schwed wrote in his classic 1940 book Where Are the Customers' Yachts, "There are certain things that cannot be adequately explained to a virgin either by words or pictures. Nor can any description I might offer here even approximate what it feels like to lose a real chunk of money that you used to own."

Fear and greed balance each other. Greed keeps us looking up. Fear reminds us to "look out below!"

The Real Enemies

In my experience working with many hundreds of individual investors, what foils too many investment plans are not fear and greed but hope and regret...

Hope - in particular, has no place in any serious investor's tool kit. Finding yourself saying "I hope the market keeps going up" or "I hope this stock turns around and starts going the right way" is like hoping no one checks your alibi or audits your tax return. It's a clear indication that you're already off the rails.

We invest in stocks not because we hope the current trend will continue for another month or another year but because owning a diversified portfolio of fine businesses is the time-tested method of building and protecting wealth. Hope that stocks will keep trending up is often futile, a faith that will always be undermined eventually. But owning great companies to build long-term wealth? That doesn't disappoint.

Except in the short term. Then you may find yourself haunted by hope's evil twin: Regret - As in "Why did I ever buy that company to begin with?" or "Why didn't I diversify outside the stock market?"

These are examples of counterfactual thinking. Thoughts like these generally begin with "If only I had..." or "If only I hadn't..." As Jason Zweig writes in Your Money and Your Brain, "Counterfactual thinking creates an alternative universe in which outcomes are always knowable and the right thing to do is always obvious."

It's make-believe, in other words. What you need instead is a proven investment strategy that allows you take advantage of the uncertainties inherent in the market. The Oxford Club's investment system, for instance, allows us to identify worthwhile opportunities, size our bets, hedge our risk, protect our profits and preserve our capital... whatever the markets throw at us.

Indeed, that's why the independent Hulbert Financial Digest has ranked our flagship letter The Oxford Communiqué among the top-performing investment letters in the nation for more than a decade.

In short, fear and greed keep us optimistic but sober. Hope and regret? Those are signs that someone is out of his element, over his head... or just dreaming.

Good investing,

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9 years 9 months ago #20889 by Rock
Replied by Rock on topic Sound Investment
It's so sad many had lost money on S-Chip again. The last time was Eratat and the latest is Foreland Fabrictech.

Eratat able to deceive SGX for many years; able to increase it cashflow yearly to over five hundred millions RMB but trading at market cap. one-third of its cash value yet SGX did not take notice. Worst of all Eratat need to loan 100 million RMB and paying loan-shark rate yet SGX apporove it. Eratat was also voted by SIAS as the most transparrent company. What happen to SGX and SIAS. SGX is more interested in it's bottom line rather than as regulator!

Midas seen the favourite stock among the analysts. Since October 2013 to August 2014, call to buy Eratat 16 times from share price of about 50 cents. But the share price instead fall gradually to 35 cents. Can the retail investors trust the analysts? Analysts interest is to their pay master but not retail investors!

We have to manage our risks and beware of investors pitfall. In fact I have lists out: "Risk Management Check Lists" & "Investment Pitfalls" in this furum previously. (On 15th August 2014)

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9 years 9 months ago #20893 by Rock
Replied by Rock on topic Sound Investment
Sorry for the error, my previous post for Risk Management Check Lists & Investment Pitfall was on 15/8/2013 and not 15/8/2014. Below are the check lists for "Risk management" & "Investment Pitfall"

Risk Management Check Lists

1) PROFIT MARGIN: Keeping track of profit margin changes.

2) BUSINES COMPETITION: Either companies gaining market shares or losing market shares.

3) DELAY Project delay, material delay, goods delay etc.

4) COST – Product costs, administration costs, marketing costs, labour costs, etc.

5) PROBLEMS: political, social, environmental, etc

6) POLITICAL: Change of Government.

7) INTEREST RATE: Changes in Interest Rate.

8) MANAGEMENT: Company Mismanagement Or Accounting Problems.

9) DEBT: Look at debt level, some sectors like property developers, it's common to have debt, but know the industry norm for debt level.

10) IN VENTORIES: For manufacturing or distribution or retail, check inventories and receivables turnover rate, cash cycles etc.

11) OUTLOOK OF SECTOR: If possible, the state of health of their customers and suppliers. Track expiration/ renewal of key contracts

12) RESIGNATION & FUND RAISING: Check for sudden resignation of personnels, frequent fund raising.

13) MANAGEMENT STATEMENTS: Over bullish outlooks that dun pan out frequently, hiding problems, etc. management selling large amt of shares.

15) Understand as much as possible you can about the business you are buying. If some things doesn't make sense give it a miss. Better be safe than sorry

Investment Pitfalls

1). Letting our egos get in our way - our emotion.

2). Over-trading.

3). Momentum Investing - chasing after penny stocks when they suddenly burst back to life. Watch out for BB in the game (Penny stocks in play)

4). Noise trading - confused between the false signals sent out by a stock's trading pattern & the overall market trend. Investors have poor timing, follow trends, over-react to good & bad news.

5). Growth Investing - buy out-of-favor stocks with low price-to-earnings and price-to-book ratios.

6). Selling the winners & keeping the losers. We should build a portfolio of winners not losers.

7) Don’t be taken in by increase in profit. Profit comes from one-off increased. Examples; Sale of assets, revaluation of assets & completion of project.

8) Share price low does not mean it will rise to its past high. This is because its prospects are dim.

9) Don't stir-frying fundamental sound stocks, do that in the kitchen and not in the stock market. Trading in fundamental sound stocks rather than hold for long term investment.

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9 years 9 months ago #21006 by Rock
Replied by Rock on topic Sound Investment
The Newspaper Headline That Could Scare You Witless

Dear Foolish reader,

Some things just never change.

When investors get greedy stock markets have a tendency of getting ahead of themselves. But when investors get scared, stock markets take an early bath.

Over the long term, though, the value of a company is driven not by emotions – as some might like to believe - but instead by fundamentals. If a company does well, its stock should eventually follow. If it doesn’t do well, it deserves to get hammered.

If you can keep in mind these simple ideas when you invest, then you shouldn’t have too much to worry about when you buy shares.

Old News

Just the other day, as I was throwing out some old newspapers, a headline in one of the broadsheets caught my eye. It stopped me in my tracks. The banner at the top of the article read: “S&P 500 suffers worst week since June 2012”.

It seems that the US benchmark fell for a second day on 1 August 2014, which led to the biggest weekly drop in US shares in two years. The fall was attributed to debt problems in Argentina and banking troubles in Portugal.

The author of the article even managed to find a few eager I-told-you-so investment professionals to put some meat onto the story. One expert pointed out that “geopolitical things” that didn’t matter a few weeks ago had started to serve as “catalysts to sell”.

The money-manager went on to say that “investors are getting more risk-averse”.

Oh Really?

Bear in mind that the article was written some three weeks ago, when the S&P 500 index closed at 1,925 points.

Now fast forward to 22 August, when the same index, was knocking on the doors of 2,000 points. That is a rise of over 3% in the first three weeks of August.

Peter Lynch was right when he said: “There is always something to worry about”.

If we look around us, there will be things aplenty that could give us sleepless nights. But these disturbing events have a habit of fading into distant memory.

It was only last week that I came across another headline. It could not have been more different to the one that appeared only a few weeks earlier. This time the headline read: “Asian stocks higher after S&P 500 record close”.

I don’t know about you but I don’t think any of us can invest properly if we are constantly flitting from one extreme opinion to another. One moment the world looks like a bed of rose and the next it could resemble a bed of nails.

Lynch was also absolutely spot on when he said: “The key to making money from stocks is not to get scared out of them”.

Fright Night!

Over the coming few weeks and months, stock markets are likely to be jostled by concerns over the timing of an interest rate rise in the US. Add into the mix tensions in the Middle East, a possible slowdown in China’s economy and the Ebola outbreak and you have a potent cocktail of bad news that could scare us witless.

Don’t get me wrong. I am not, for one minute suggesting that we should sit around a camp fire and old hands whilst singing a couple of verses of Kumbaya.

Economic worries could quite easily unsettle markets. But if you are prepared, it can’t hurt you. It could even benefit you.

Stock market declines can be good opportunities to pick up bargains left behind by investors who are ill prepared.

Take Jardine Cycle & Carriage as an example. It is a stalwart of the Singapore market. Since the turn of the Millennium, the conglomerate has delivered a total return of about 20% a year, which isn’t half bad.

But if you had the foresight to buy during the depths of financial crisis in 2008, the annualised return would have been 25%. Trouble is, would you have had the courage to do so, given the unrelenting bad news that appeared in the news day after day?

I’ll leave you this week with a thought from Jerry Seinfeld who said: “It's amazing that the amount of news that happens in the world every day always just exactly fits the newspaper.”

Foolish regards,
David Kuo
Director, Motley Fool Singapore

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