Linda Tay heads the Operations and Human Resource department of a corporate advisory company. I AM NO expert, I don't do candle sticks analysis but I will like to share what works for me.

This is for my personal sharing only and please do not take offence should your opinions differ.

I don't see myself as a trading but investing. 
What I do is save cash and during a bear market, I will start buying.

My preference are bank shares and I only stick to specific banks that I buy/ sell. That's my approach for the last 18 years.

I don't contra and ensure I can pay off the shares I purchase. 
When markets are bad like this, price fluctuations happen, hence to be able to hold the shares is important.

I have learnt I can't predict when the market bottoms out, when I can buy at the lowest, or when I can sell at the highest.

My strategy is to buy a couple of lots, then when the price plunges further, accumulate some more to average out. Once you buy, no need to panic and offload when the price drops further.

Once it bottoms out, the big players will come in to buy and it will appreciate.

During a bull market, I will also set a target price to sell, it doesn't matter if someone can sell it at $10.00, I will sell at $9.00, as I have bought in large quantities.

"We are all very different individuals, with different risk appetites and most importantly, the amount of cash we can commit. Averaging down is just one method and I am sure many of us have different winning strategies.

"The cyclical bull-bear hasn't really lasted for a very long stretch. Recovery for the subprime in 2008 was pretty fast. With globalization, economies are interlinked and our government will have to look into measures to improve the economy when recession strikes and work together.

"My two cents’ worth on the stability of banks and risks? There will still be decent revenue with the impending interest rate hikes, wealth banking sector, investments, corporate accounts etc." -- Linda Tay

I will sell in batches. First batch at my target price, the remainder offload when shares appreciate higher. 

In the interim, while I hold the shares, there is still dividend income. Do note not all shares pay dividends as the company must be profitable to do so.

Why invest in banks? I believe MAS regulates our banks with strict compliance and won't let them collapse. 

I do not believe in penny stocks as many listed companies are family-controlled, hence the board of directors may not act in the best interest of the rest of the minority shareholders.

The best time to accumulate wealth is in bad times, it takes courage to step out of your comfort zone to make $$$.

Good luck all, as the market opens again next week and may the force be with you!

 

On how I feel about penny stocks: Banks are accountable to stakeholders, major ones who have the power to sue them and at AGMs there is definitely good attendance which shows stakeholders are taking their stakes seriously. Banks have been paying dividends, they have strict compliance, corporate governance. The executive board is a separate team from the management.

In penny stocks companies, the majority shareholders are often the directors themselves, forming the board. Should a minority shareholder with an interest want to bring up oppression, if you do not have 25% or more, you have no case. Their AGM often has low attendance.

In a family-owned business, it is not a matter of whether stocks can perform. The main concern is profitability. However, high revenue/ profit can be charged out in many ways through management fees, consultancy fees to related parties, directors' big remuneration packages, directors' fees etc...

By doing so, the company can still be marginally profitable and accountable to stakeholders by paying just a little dividend to them. In this scenario, the majority stakeholders still get the lion's share. In most cases, there is no strict compliance and corporate governance and nobody knows about it.

It's unfortunate that I have seen my fair share of such companies. Without a strong management team of professionals, and old guards who are not receptive to change and overhaul, many such companies become worse off after listing. 

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Comments  

+1 #7 Desmondquek 2016-01-24 20:58
Good sharing....
Currently my top pick property blue chip are CITYDEV trading below RNAV $9.53+ while bank will be DBS below RNAV $15.2+
#6 Linda Tay 2016-01-22 20:48
Hi all , I bought penny stocks before like Jiutian many years ago but it dropped quite a lot and I have to cut loss. Thankfully the amount is small. After that, I do not buy penny stocks.

What I do is to target an amount to save annually that I use these funds to buy bank shares and I spread my basket between the banks.
I do aquire SGX shares if I have excess funds, only in bear market and sell during bull. They do pay decent dividends.

Not that other shares are not good, and hence I do not but them. Time is a luxury to me, so I can also concentrate on 1 sector, which also relates closely to my trade. I do have a good broker to advise me, but ultimately I have to do my own homework and decides if I should proceed with the purchase.
As with my company, I believe in focus. There are only that many banks in Singapore listed on SGX, its easy to follow on any adverse media, announcements, reading the financials. Using my own firm as an example, My secretarial team focus on company secretarial matters, the accounting team- preparing accounts, tax team- focus on tax etc.... If I allow anyone to have dual roles, which I have tried, they are not efficientl. Jack of all trades , master of none. :-)
#5 jeremyow 2016-01-22 13:02
Our three major banks in Singapore are well run. The banking industry is profitable on the whole. Rain or shine they remain profitable as individuals, businesses and organisations do their variety of financial transactions with banks. Since our local banks are well run, the financial risks for them is low abeit not totally risk free.

Thus, I agree with Linda that there is no issue concentrating her investments in the banks only. What she is doing is to buy low and sell high taking reference from the conditions of markets (bull and bear) and pre-set target prices when she buy or sell shares. She has a methodical approach to her buying and selling which she constantly sticks to minimising emotions out of her decision making. I believe she must have been reasonably profitable in her investment approach so far over the past 18 years. So long as her average yearly rate of return from her dividends plus capital returns is consistently good over the years (at least 10% and more per annum), I believe it is already good enough.
#4 Happygal2016 2016-01-20 00:53
Just to add, with regards to management team, I also feel it is a very important factor to consider. In fact I was kind of worried after attending ipc agm i wasn't impressed with their management team. On the other hand I like keppelcorp management team. But now as I look back, events and situation seem to have a bigger impact. I'm a beginner investor so I am still learning and have much to learn but this is what I see/ experienced so far.
#3 Happygal2016 2016-01-20 00:43
Currently, my blue chips like keppelcorp, ocbc and glc are all affected by the current market. In fact, I am most worried about keppelcorp. Yet small cap stock like ipc, lum Chang and qaf are holding up well despite current condition. So I feel that it's not necessary that blue chip means good... Just my 2 cents... :)
#2 Pixel 2016-01-18 12:53
Linda, while I can see why you invest the way you do, can you not see that there are many blue chips (such as ST Engineering and Comfort DelGro) with equally robust corporate governance and lower risks than penny stocks. Do you really invest solely in bank shares?
#1 Nantze 2016-01-16 18:24
Interesting sharing Ms Tay.
May I ask if you have always invested this way? Or you had prior experiences which used different approaches with different results?

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