Sound Investment

Hi Rock – Wow, your portfolio increased by  418% compounded over 4 yrs, much better than  W Buffet.  The Oracle’s Berkshire  book value “only”  increased by 20% compounded annually  over  47 yrs or a doubling of his portfolio value every 3.8 yrs.  He measured his performance against S & P and nobody even came close to his record over such a long period of time.  I’d be happy if I can beat the STI again this yr.
Only a few can make a decent living out of  equity investment, hence I think the best investment is to invest on oneself.  Get a good education and consistently upgrade one’s skills to ensure good pay.   Most “gurus” write investment books just to make money.  “Those who know don’t tell and those who tell don’t know” –  Michael Lewis.
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[Rock 25-01-2013]:

 
Many people have the wrong believe thinking stock markets are for speculation & gambling, for making quick bucks. They will buy low & sell high for quick profit. Next they will buy high and sell higher & then buy higher and sell higher higher. No profit they will hold on. They feel painful to cut lost. These people will only sell the winners & keep the losers. (Kia Su mentality) Eventually they will end up holding all the losers which are mostly penny stocks. Just ask yourself why are these companies end as penny???
 
It is very true one can double or maybe treble their profit within days by speculating/gambling in penny stocks with all their saving or on leverage on margin trading. But remember they can also lost every cents. (Win all or lost all) Why should we expose our life saving to such high risk? Maybe for some excitement it is advisable not more than 5% of our saving expose to penny stocks.
 
Investment is about value investing. Buy good value stocks & holding for long term for appreciation & dividend yield. Let your money work for you & not work for your money. In this way you are able to sleep well. Review your portfolio from time to time. Here are some guardlines which have helps me in my investment:
 
1) Invest in Growth Stocks. Investment is about growth of companies.
2) Invest in undervalue stocks which give you a safe margin of risk.
3) Learn about market cycles.
4) Invest in sectors which you are familiar with.
5) Stay in focus & be disciplined.
6) Sell only stocks over-run it value or fundamental. Be thankful & never regard your decision.
7) Cut lost if the company future is in questions. (smell or see cockroach)
 
History of past crisis: Black Monday 1987, CLOB, Asia Financial Crisis 1997, .com bubble 2000 Credit Crisis 2008 & PIIGS Financial Crisis 2011.
When crisis hits I will review my portfolio. Build up cash position & buy up the gems during the crisis. Remember, crisis resulted in great opportunity.
 
During the 2008 crisis I’m able to recover fast by turning lost to profit. In 2009 & 2010, my performance for 2 years is about 200%. In 2011 my performance is about 15%. In 2011 last year my performance is about 50%.
 
My advice is to invest wisely, sleep well & see your money trees bear fruits. Let your investment generate passive income yearly. The best part is able to outperform the markets.
 
 

 
Hi relaxing, you're too flattering, it should be about 65% annually for 4 yrs.
I don't think anyone can match WB. He manage billion of dollars & able to achieve 20% for 47 yr annually. I have learn from WB & these are my guide:

What matters to Buffett is the underlying economic fate of the business. ‘I let my marketable equities tell me by the operating results, - not by daily, or even yearly price quotations.– whether my investments are successful.
The market may ignore business success for a while, but it eventually will confirm it.

Timing the market is next to impossible-
Adopting the correct time horizon for specific investment objectives is however essential.
Staying invested in the market for the long term is the only way to achieve long term goals.
The more frequently investors evaluate their returns, the more likely they are to make inappropriate short-term decisions because they always sell the winners to take profit & keep the losses.
Speculators & gamblers will end up losing to the house. Time is on the side of the casino.

I fully agree with you relaxing "the best investment is to invest on oneself.
Get a good education and consistently upgrade one’s skills to ensure good pay."
We have also to update ourself regularly on whatever all source of information. I would give credit to Sumer who share information freely.

We need wisdom to make wise decision.
King Soloman ask God only for wisdom instead of riches & wealth.
As the result he is not only very wise but he also achieves riches & wealth.

Lastly the greatest enemy is ourself, greed & fear. We need to overcome these two areas.
Furthermore we need to have the fruits of patience, self control and peace in addition to wisdom to invest wisely.

I would share why I hold Thomson Medical shares for so long until Peter Lim bought over @ $1.75. The business is recession proof, stable recurring profit. It's paying about 5% div. bought for about over 20 cts. Thomson Med. able to gain market share yearly even thought our Singapore birthrate is falling. The yearly growth is about 10%.

Therefore I strongly believe CORDLIFE is a potential muti- baggers. Resilience business, no debt & a growth stock.
Cordlife 1Q 2013 revenue increase by 13% & profit increase by 50.9%.
Look out for 2Q 2013 result very soon.

 
Avoiding Common Investment Mistakes - Investment Pitfalls

Articles main points from Sunday times 27th Jan. 2013

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.

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-favour stocks with low price-to-earnings and price-to- book ratios.

6). Selling the winners & keeping the losers.

By Goh Eng Yeow Sr. Correspondent

 
In a bull market everybody will make money, whether blue chips, value stocks or penny stocks. In fact penny stocks will outperform the market. The risk for penny stocks are very much higher, it’s more like win all loss all situation. One has to be very nimble on penny stocks. Those who play with penny are usually traders and speculators, many of them are trading full time. These people are basically working for their money. To safeguard against their position they set stop loss for their stocks.
During a bull market, stocks are chases up higher & higher. The higher it climbed the higher the risk. Many of these stocks are at unrealistic price. That is why it is important to set stop loss. It’s very common to see stocks trading above 100 PE ratio. Traders will sell for profit & are ready to cut loss. Novice will sell the winners & keep the losers & eventually end up with all the losers. (greed & kiasu)

As for value investors it is important to protect our downside risk. The key message is protect your downside, let your upside take care of itself. The time to take profit is when the stocks is trading at fair value or over-run it fair value. Fair value is depends idividual risk appetite. Once target price is achieve, it's time to take profit gradually and be happy & no regard. This is how we should built up our cash position ready for the rain or storm.
When storm comes that is the best opportunity for buying up good value stocks. (crisis resulted in panic selling) The best time to buy is when the sell is almost over and few buyer & price gradually stable up. (need patience they is opportunity to buy cheap)

I believe in going for “Long/short”. Long –To be vested in the companies for as long as possible. Short –to take profit or cut loss if the companies over-run it’s fair value or the fundamental of the companies is in question. Watch out for cockroach in the companies (coackroach theory)
If a stock price increases to unrealistic level, it’s like creating money from thin air. Someone will win money and eventually someone will lost money when the bull-run is over. (Win, loss situation)

As for a value stocks which able to increase it’s profit year after year it will justified the increase in share price. In this situation. (win, win situation)

Looking at the chart of those penny stocks which many are in play, are on the downtrend for the last 2 years and many drop to less than 10 cts.

On the other hand value stocks which able to increase it profit last 2 years are on the uptrend. This goes to show that as long as the company able to perform we need not worry. That is what I mean money works.
This goes to show value investors are to perform at all seasons.
W. Buffett approach to Value Investment:
What matters to Buffett is the underlying economic fate of the business. ‘I let my marketable equities tell me by the operating results, - not by daily, or even yearly price quotations.– whether my investments are successful.
The market may ignore business success for a while, but it eventually will confirm it.
 

 
Bull market have been running for almost 3 months. The index of:
Dow J. rises from 12500 to 14000
S & P 500 from 1350 to 1500
ST Index from 2950 to 3290 approaching 3300.
I'm reviewing my pofolios which to hold on & which to sell off those undervalue property stocks. At this stage unless these undervalue stocks unlock value, or pay decent dividend, there are not much incentive to hold on. These undervalue stocks will still sell be down during market correction or crisis. These are my pofolios:

Undervalue Property Stocks:
Chip Eng Seng: Yield more than 5% & major shareholder is buying in. CES has rises 65%. - Hold on
Standford Land: yield nearly 7%. - hold on
Hiap Hoe & Superbowl: yield very low. Share price increase by about 45 & 75%. - reduce holding gradually
Roxy Pacific: price already increase by 200%, yield low - sold all

Growth Stocks:
Biosensors: no dividend - take profit
CORDLIFE: dividend more than 6% - awaiting 2Q result to decide action.

Yield Stocks:
Cambridge, First REIT & Sabana. I'll take some profit when yield below 6.5% & sell off when yield below 6%.
I believe this round is only market correction. The market at this stage will not crash. Reasons: QE3; all time low interest rate; bank is flooded with cash; smart money is switching round to park their fund & equities i\are still profitable. At this stage equities is neither expensive or cheap. Don't panic if you're caught holding undervalue or high yield stocks, the most you have miss out profit taking as most of these stocks have been performing. Only those who speculate in pennies will panic & suffer loss.
I maybe wrong, the market may go crazy but I will not go crazy over it. It's better to be safe than sorry. God Bless.

 
Hi Rock – You wrote “ During the 2008 crisis I’m able to recover fast by turning lost to profit. In 2009 & 2010, my performance for 2 years is about 200%. In 2011 my performance is about 15%. In 2011 last year my performance is about 50% “
Just to clarify my earlier post re 418% gain,  I  thought you were talking about your overall share portfolio compounded over 4 yrs?   ie  $1 became $3 after first 2 yrs, after which add 15% in 3rd yr and another 50% in 4th yr =  $5.18 .  This is equivalent to growth of 50% compounded annually or doubling every 1.7 yrs.  I understand  the “ 65% annually for 4 yrs ” is your est. average yearly returns ?  From my experience in the 1998 and 2008 crisis,  it’s  not unusual to pick multi- baggers just after a serious market crash ( ie early 2009 ).
I am also a big fan of Buffett and I agree with most of what you wrote re share investment.  But the  SGX  has lots of retail gamblers, so I think it is okay for experienced investors to  trade ( with small % of portfolio ) speculative stocks when the market is in a frenzy.  I  sometimes do that but it can be too time consuming for small pocket money, so better to focus on good stocks as this could be a super bull ?  Stock speculation is like playing poker with a group of strangers in the casino, a few ( good players ) will win while most will lose as the house takes a commission every round. It does add  spice to life but I think one should only gamble with spare cash so that even if lose all, our lifestyle  is not affected.
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[Rock 27-01-2013]:

 
Hi relaxing, you're too flattering, it should be about 65% annually for 4 yrs.
I don't think anyone can match WB. He manage billion of dollars & able to achieve 20% for 47 yr annually. I have learn from WB & these are my guide:

What matters to Buffett is the underlying economic fate of the business. ‘I let my marketable equities tell me by the operating results, - not by daily, or even yearly price quotations.– whether my investments are successful.
The market may ignore business success for a while, but it eventually will confirm it.

Timing the market is next to impossible-
Adopting the correct time horizon for specific investment objectives is however essential.
Staying invested in the market for the long term is the only way to achieve long term goals.
The more frequently investors evaluate their returns, the more likely they are to make inappropriate short-term decisions because they always sell the winners to take profit & keep the losses.
Speculators & gamblers will end up losing to the house. Time is on the side of the casino.

I fully agree with you relaxing "the best investment is to invest on oneself.
Get a good education and consistently upgrade one’s skills to ensure good pay."
We have also to update ourself regularly on whatever all source of information. I would give credit to Sumer who share information freely.

We need wisdom to make wise decision.
King Soloman ask God only for wisdom instead of riches & wealth.
As the result he is not only very wise but he also achieves riches & wealth.

Lastly the greatest enemy is ourself, greed & fear. We need to overcome these two areas.
Furthermore we need to have the fruits of patience, self control and peace in addition to wisdom to invest wisely.

I would share why I hold Thomson Medical shares for so long until Peter Lim bought over @ $1.75. The business is recession proof, stable recurring profit. It's paying about 5% div. bought for about over 20 cts. Thomson Med. able to gain market share yearly even thought our Singapore birthrate is falling. The yearly growth is about 10%.

Therefore I strongly believe CORDLIFE is a potential muti- baggers. Resilience business, no debt & a growth stock.
Cordlife 1Q 2013 revenue increase by 13% & profit increase by 50.9%.
Look out for 2Q 2013 result very soon.