Friday, May 29, 2015

My Analysis of J-REITs vs. Saizen REIT (Updated May 2015)

A blog reader, Shimamoto, recently asked me about updates on my old post regarding J-REITs and Saizen REIT (Singapore listed J-REIT). Saizen REIT is actually the 2nd biggest position that I have in my humble portfolio, so it is also in my own interests to re-look at this space and see what is going on.

I went to Bloomberg, checked on my old list of residential J-REITs (I will just refer to all of them as J-REITs, but I am actually only referring to the Residential ones, and not any other sectors) and came up with this new data:


In all honesty, the only that has actually changed with J-REITs are that they are now a heck of a lot more expensive.

From quick eyeballing of a few of the charts (my internet is so slow today, so I am too lazy to check all the charts), it looks like the J-REITs have appreciated in price by about 20% since my post in October! That has been more than half a year ago, so at least a dividend payment should have been paid out by then (2% which is half of the 4% yield then).

That means since October 2014 until now, investing in J-REITs would've made you about 20-25% returns! Not too bad!

This is of course corroborated by the fact that the average J-REIT's P/B has moved up from 1.42 to 1.60 and yields have compressed from 4.09% to 3.41%.

But, remember, the returns are in JPY, which has of course deteriorated from 85.76 to almost 92 against $1 Singapore Dollar.

Everything else between J-REITs and Saizen then and now are still the same. Saizen has almost double the yield, because it has half the P/B price. There isn't any rocket science here. Buy something at half the price, you get double the yield.

One column that I did not put here this time was the D/E ratio, which I forgot. But don't worry, not much has changed either. The average J-REIT is still about twice as leveraged as Saizen. For D/E, the price has nothing to do with it. It just means that objectively, Saizen is the least leveraged REIT in the Japanese residential real estate subsector.

So, why is there such a gross mispricing in Saizen REIT? Let me quote myself:

Personally, I think that Singaporean investors, especially those in the REIT arena are very yield-conscious. If they yield is too low, they will not consider it. Many also shun overseas investments because they just feel "less tangible". These are valid reasons no doubt, but I think that a good analysis should be approached from many different angles, and if many agree, it is probably a good conclusion.

Looking at this very specific investment in a niche asset class, I would say that Saizen REIT suffers from only one thing, which is being listed on SGX. If Saizen REIT was listen in Japan, I am certain that it's yield would be bid down to at the very least, a 5% handle, if not, in the high 4+% range. Even if P/NAV is priced at the lowest end of the range, of just 1.0, there is plenty of upside from this current position. On top of the cheaper valuations based on yield and P/NAV, Saizen REIT also has a better balance sheet with much less debt relative to equity. It is a good thing to be better capitalized.

My personal conclusion? Saizen REIT is a gem in the S-REIT environment. While looking at it purely based on yield compared to other REITs available on the SGX, it may seem more risky and unattractive, but comparing it within it's own niche segment of J-REITs, Saizen REIT is actually extremely attractively priced. Singapore REIT investors may not know how lucky they are, but the REITs listed on the SGX are by far one of the highest in the world when it comes to REIT yields spreads.

This is not a potshot to say that SGX investors are humji and only look at yield. It could be just as true that our Japanese counterparts are totally miscalculating the risks involved in such an asset class investment. Are Singaporean investors undervaluing Saizen REIT, or are Japanese investors overvaluing J-REITs? I think, a bit of both, which is why I am happy owning Saizen REIT.

I am still invested in Saizen REIT. Since October until now, I have actually been taking small nibbles on dips. Yes, I know my portfolio is tiny and the nibbles are nigh insignificant, but I like to imagine that my portfolio is not $13,000, but $13 million instead.

If you think Japanese residential REITs are a good asset class to invest in, it makes absolutely no sense to get exposure to that niche subsector through the J-REITs listed in Japan. Saizen REIT offers the exact same asset class exposure, but it is less leveraged and is literally half the price. Sure, it is "small" compared to the giants listed in Japan, but I still think the same fundamental factors affect all of them as a whole together pretty much the same way.

The "natural" P/B premium of residential real estate is supposed to be about -5%, but generally ranging between -15% to +5%. Saizen REIT on this scale is actually priced rather attractively, which is why they are pumping out 7% yields for being in such a stable real estate sector (albeit lower yielding, hence the low natural P/B premium of the sector). Residiential J-REITs are priced insanely, being valued as if they were on the extreme upper end of the HEALTHCARE subsector.

I'm not a professional, but you don't need to be one to witness an accident happening in slow motion.

I was just reading an article on ZH about Paul Singer, which has a lot to do about monetary manipulation. I have talked about the dangers of bonds as long term investments, and why this is especially so in the case of Japan. You don't need to be a genius to see what Japan is trying to do. They have run out of options and their only option left is debasement (or default, but debasement is much more likely).

The risks involved in the Japanese residential real estate subsector are manifold. There are unsystematic risks unique to each REIT. There are systematic risks to the real estate market as a whole. Followed by risks to the entire Japanese economy. Demographics are also not very supportive of the asset class as a long term investment. And finally, you also have (massive) currency risks, which I think is very underestimated. So, should J-REITs offer a risk premium? I think so. Hence, the higher than "normal" yield that Saizen REIT is valued at on the SGX.

I don't necessarily think that Saizen REIT is extremely cheap compared to what is available in Singapore, but I think that it is a very attractively priced given the risks that I am taking, especially relative to other investors that are investing in this niche area. Maybe I am being biased, but I think that SGX investors are pricing Saizen REIT a lot more accurately than our Japanese friends. Anyway, isn't it better to make conservative assumptions so that you are investing with a margin of safety?

There is no way in hell that this sort of NAV premium currently in the residential J-REIT arena can persist in the long run. Even when First REIT (healthcare) was trading at a premium of 70+% in early 2013, it took only a year for prices to correct and for it to be trading at 8% premium to NAV. That was represented by a 30% decrease in unit price. Don't confuse the price and valuation of a company with it's business and fundamentals. Prices =/= Fundamentals.

So, unless you can justify strongly why a certain REIT deserves to command a premium over it's NAV, it is probably a safer bet to buy REITs below their NAV. 

Zooming in on only the Japanese residential real estate market and comparing between Saizen REIT and J-REITs? It is a no brainer choice which to pick, gun to your head. However, Saizen REIT as an investment in the entire universe of investments? Well, you need to think about that yourself.

Wednesday, May 27, 2015

Blogging for Money? My Adsense Earnings

I had applied for Google Adsense almost immediately after I had just started blogging, but I was a bit naive and gungho to think that Adsense would need a 24 year old guy from Singapore talking about finance, which is probably one of the world's most uninteresting topics. I was rejected.

After blogging for about 10 months, I decided to try again, and I applied to join Google Adsense. I was finally reviewed and accepted into their programme on 28th May 2014.

Today is the 27th May 2015, so it's been about a year of blogging with Adsense! I'd thought I'd just share with anyone who is interested about how much money I've made in the past year with Adsense.


Well, $202.76 isn't too bad, right? That works out to be about $16 a month!

Or you can think of it differently as an "asset" producing "cashflows". If you discount the cashflows to infinity at say, perhaps 4%, the "value" of my blog is about $5,000! Howsabout that? I have managed to create an "asset" that is worth about $5,000!

Of course, it is not a perpetually income producing asset by itself. Quite a bit of effort is spent "maintaining" this asset, so to speak. I spend many a few hours each week researching and writing and proof reading my posts before I post them up online. It's not easy to find inspiration and topics to talk about all the time, and I really don't want to post purely for the sake of it. Many of my articles never even get published, because I don't think they are good enough (My test is if I think my future self will find the post of any value on hindsight). Sometimes when I have sparks of inspirations, I can write for hours, especially on related topics, then I can queue them up to be posted at a later date, so I don't explode all of you with too much information. In all honestly, I think you really do need to have passion to want to write about personal finance on a regular basis.

Anyhow, it is pretty awesome to have that amount of money to just fall from the sky into my lap, especially since I treat this as a hobby and I am doing what I really enjoy, which is ranting and giving my honest, sometimes vulgar, opinions on (mostly) personal finance issues. It's odd isn't it, that one of my interests is personal finance? Maybe if I had been born sexier and chio-er like Andrea Chong, I would totally spice up the personal finance scene. Since everyone is recently so concerned about improving financial literacy, maybe the government can invite her to do a photoshoot dressed as a chiobu auditor looking through financial statements! Guys, if that doesn't raise awareness, trust me, nothing will.

"I'm smiling, but stop talking about me GMGH! YOU'RE MAKING ME SHY!"

But alas, talking about personal finance isn't sexy at all. No one cares about us. We are at the bottom of the feeding chain, which is why the smartlocal conveniently didn't even mention any of us. *collective group hug* Boohoo, but I understand since talking about money is still taboo in our society and culture. I don't think it should be. Lifestyle bloggers and food bloggers can take up editorials and get paid a couple hundred to a few thousand for posting up an entry, sending out some tweets and uploading some photos. Can financial bloggers do that? Eh, not really. What are we going to do? Pose sexily beside an ATM machine? Haha!


Basically, my point is that if you want to blog for money, I highly doubt that personal finance is going to be a good topic of choice for you to monetize your writings and make a living from. Can you make a living as a social media figure? Sure. Even locally, there are quite a few good examples! Just not about personal finance.

So anyway, ranting about the unequal treatment of personal finance bloggers aside, what am I going to do with my Adsense earnings?

Well, last year I was wondering about what social good have I done lately, so I decided to donate my Adsense earnings to charity. This year, I think I will be doing the exact same thing. I am planning to accumulate all my earnings until 1st December 2015, withdraw the amount, match the contributions 1-for-1 with my own savings, then donate it through SG Gives and get it matched by ComChest again! That means whatever Adsense earnings I get for the year, 400% of that will be ending up in the hands of charity!

One of these days I hope to be able to write down and share my thoughts about why I give to charity and how that fits in line with my personal beliefs and thinking.

So, blogging for money? Probably not, I don't even make $1 for an hour of writing. Blogging about something that you like and getting some cookies along the way? Very possible, my friend!

China Stock Market in 3 Pictures




Chinese banana trader, 100% 5 month YTD return, index PE ratio of 71.

What could go wrong?

Picture credits: ZeroHedge

Tuesday, May 26, 2015

And Inflation is now...

MAS has just released the CPI data for Apr 2015.



CPI is at negative 0.5% y-o-y.
Core Inflation (ex accomm & private transport) is a paltry 0.4% y-o-y.


So just how scary is the inflation monster these days? Getting less and less scary I suppose.

That also means that the "cost" of holding cash is getting less and less expensive. Get what I'm trying to imply?

I suppose this means we should all invest in stocks now, since the economy is "picking up" and "rates are going to rise". That all means even higher-er stock prices, right? Better yet, buy negative yield soverign bonds! I mean, pffft, what could possibly go wrong?

Monday, May 25, 2015

Silly Speculator or Calculative Investor?

I know it is age old wisdom to NOT speculate when you are an investor. You need to have a long term view of your investments.

But what should you do if the future looks ubiquitously bad?



If you are 90% certain about something, is it speculation?

Where we are now, the rewards of staying in the market is completely dwarfed by the risks of staying in it. I don't think I'm crazy. If someone keeps checking if they are crazy, they can't be crazy, right?

Now, please tell me about how you are a long-term passive investor and how you are going to "dollar cost average" your way to financial freedom by buying US ETFs.

Why US ETFs? Cos our revered Uncle Warren said so! So, please tell me. I'm all ears.


Mind you, if you think being "invested" means having 100% allocation to equities, you can check into IMH and be my neighbour.

Sunday, May 24, 2015

REIT Symposium 2015 Post Mortem

So, yesterday was the REIT Symposium 2015 at Suntec Convention. As a shareholder of Suntec REIT, I approve.

I have to say, I own quite a few REITs, and I do like REITs a lot. In my personal capacity, I would never, ever buy a physical property for an investment. I would rather buy REITs. I think my stand on this has been pretty clear and frequent about this. Buy a rental property and get 3% gross and 2% net? Thanks, but no thanks.

It is not to say that REITs is the more suitable investment for everyone. It isn't and some people just aren't meant for stock investing. The same people that don't invest in stocks should also not touch REITs. The volatility will kill them. I've read a shit ton about REITs including the REIT Bible, so I think I understand what is the shit that I could get into, and I'm okay with the risks I'm taking. Do other people getting into REITs know? I feel that they do not.

So, being a big believer of REITs as a mainstay asset class in my portfolio, I attended this symposium. Of course being a nobody, I registered and attended in my personal capacity.

Unfortunately, I overslept so I arrived at the tail end of SPH's CEO Susan Leng's talk. I can't say for sure what she was talking about, but all I knew was that the audience was dozing off. I had just woken up and I felt like sleeping after I entered!

I took a seat beside an auntie in the back during the transition to Rusmin Ang's talk.


As you can see, the place was pretty much packed.

Rusmin gave a great talk that was a good primer for REIT investors (and also for his course. no qualms of course, you need to make money). I think the main takeaway from his talk was that looking purely only at dividend yields and P/NAV is not enough to make a good decision on a REIT.

After the lunch break, the crowd thinned out a lot.

David Kuo was the best speaker in my opinion. He gave a very clear disclaimer and repeated it throughout. He did a great interactive exercise to once again drill down the point that PRICE OF A STOCK IN IRRELEVANT. He was also the definite crowd pleaser by sharing his own personal picks of REITs. (which is unfortunately, what most of the crowd wanted to know: What to buy?)

Mr Koh from AIMS AMP REIT was not too bad. It's nice seeing a CEO come down and talk about his company. He was very formal, prim and proper and I think I am quite sold that it is a proper REIT, and not a fly by night company.

However, Mr Wilson Ang from Viva Industrial Trust outshined him. He was a very good speaker and his presentation was not as dry. He also mentioned the oncoming supply of strata-titled industrial space, which I am very aware of. His points regarding them are quite valid, especially the positioning of the company. I am quite impressed.

Eric Khaw from Nikko AM probably had the worst presentation of all. Not only was his content highly technical and complex with a lot of jargon, he presented it like a robot. The entire crowd was about to pass out. The content was good, no doubt, but unfortunately as a money manager he has no choice but to follow analyst consensus view. I felt that too much things was being "hoped" for, such as the relationship between the SGD and visitor arrivals. Forecasts say weakening SGD. I would disagree.

Finally, there was a panel discussion with Vincent Wee from CapitaLand, Sonny Tan from Reitas, Ivan Looi from RHB Research and Stephen Finch from SRE Capital. I thought this was actually the best part of the entire symposium. It was a shame that the hall was only perhaps 40% full compared to the hella boring presentation by SPH CEO.

One thing that Sonny said that really struck me was how the government has loosened up their control and role in urban development and sort of passed it over to REITs to renew existing infrastructure. By allowing investors to continually and opportunistically profit from upgrading, improving and maintaining quality urban infrastructure, the outcome has surpassed anything that government planners could have hoped for. Case in point is how strata titled properties are so much less lucrative than their wholly managed counterparts. Another point to capitalism and the free markets!

Sonny also flouted with the idea of an S-REIT ETF, which is something that I've actually talked to my friends about. Perhaps if Singapore manages to attract a lot more listings with more assets. I personally don't see this taking off. Interesting idea though.

Vincent Wee, coming from CapitaLand, focused on preaching that investors should not only look at dividend yields to make their choices, but to also look at the history and performance of REITs and their ability to grow. Of course he said that, because the Capita REITs are all amongst the lowest yielders, but fundmentally they are great. The price you have to pay though....

Ivan Looi emphasized that for retail investors, the only advantage that we have against managed money is that we DO NOT have to always be in the market. If the market is at nose-bleed valuations, we are free to cash out and wait, because we are not compelled to be in the market. When the risks are high, get out, because retail can, but institutions cannot. I wholly agree with him.

He also talked about avoiding paying rich valuations for companies and highlighted that the biggest risk that REIT investors take - paying an unwarranted high premiums on a company, and having that premium permanently disappear. Again, I agree with his statement. His quick and dirty screening method is anything under 4% is insane. With a historical yield spread of 3.9%, anything under 4% would be overvalued. I think this is a bit too simplistic, but I can't agrue with it as a good rule of thumb. Any REIT under 4%? Run away.

Stephen Finch was the most general and the most pragmatic of the lot. He kept emphasizing diversification and personal risk tolerance, which I think is paramount to the retail investor to understand. One of the things he said which I want to repeat is how REITs behave like "equity in the short term, but like property in the long term". His final closing comment that make me tear a little? "If you invest in REITs for the long term, it's as good as gold". Hehe. As good as gold.

All in all, I thought that the REIT symposium is an excellent primer for people who are genuinely interested in REITs as a long term investor. Unfortunately, 70% of the crowd were uncles and aunties who seem to think that REITs are fixed deposits with 6% yield. This will not end well. Brace yourself REIT investors, retail is coming.

One thing I like to personally add is regarding the "white elephant in the room" that was mentioned like every 15 minutes. Interest rates have very little effect on REITs in the long term. Interest rates affect bonds, and not REITs. Any short term weakness caused by rising rates is an opportunity to load up on them suckers. The correlation of REITs to bonds is almost perfectly zero. Interest rates do not affect each asset class in the same ways.

Even being quite knowledgeable in REITs prior to attending, I think I still learnt some new things, while reinforcing some of the more common mistakes to avoid and some of the correct ways of thinking about REITs.

If there is a REIT symposium next year, I might attend it. Just post the damn schedule online and don't make me sit through another painful talk by the Nikko AM guy. More cute girls at the booths would be nice too. And the aircon not so cold. K thanks bye.

Friday, May 22, 2015

POSB Invest Saver 4.0: Re-invest Dividends!

Update 26/5/2015: Called up DBS/POSB and spoke to someone there and got verbal confirmation that dividends CANNOT be reinvested. This post is therefore not valid.

Thanks to a reader for commenting and pointing out this new development in the POSB Invest-Saver Product!


This is the screenshot that he sent me of what he saw inside his ibanking page.


Well, now that changes up some things a little, doesn't it?

I have written about the POSB Invest-Saver product a few times:
1. Comparing the RSPs of POSB, Phillip and OCBC
2. POSB's Invest-Saver inclusion of ABF Bond Fund (with sample investment plan)
3. Feedback on POSB's Invest-Saver to include dividend re-investment

Now, with the POSB Invest Saver being able to re-invest dividends, I think that they are the clear winner as the simplest and most useful tool for the average Joe that understands LOOOOONG term investing and wants a super hassle free product.

Personally, I have not used POSB Invest Saver before. Can anyone who is currently in the plan confirm or dispute the information that Fitri shared? Thank you!

What do you think? Would you recommend POSB Invest Saver to family and friends? Yay or nay?

Thursday, May 21, 2015

The Future of Singapore: Self-Driving Public Transport?

When people think of self driving automobile technology, why do people only think about cars and taxis? Why not public transport? Perhaps it is because much of the technology is being developed at Google. And we all know that the USA has no notion of public transport.


After chancing upon this article written by Zack Kanter, I started thinking more about self-driving vehicles.

There would be less accidents and deaths.
Public transport would be cheaper.
Public transport would be faster.
Public transport could operate 24/7.
Car ownership would drop.
Vehicle pollution would drop.
Commuting times would drop.

Basically, people getting where they want to go in a faster, cheaper, more convenient and safer way. To me, I think that is where we should be aiming. Not more cars and cheaper cars for everybody. Unfortunately, our climate and current infrastructure isn't friendly enough for other modes of transport, such as cycling and zip cars.

I don't know if people realize how important and big the Smart Nation initiative actually is.

With all the good things technology might bring, think of all the jobs that will be lost as well. The good news is that jobs that don't even exist now will be created, perhaps like mobile technicians and centralized control room operators.

As a refresher, here is a video by CGP Grey explaining the situation.


Don't be a luddite and fight against the inevitable. Does using payphones and writing handwritten letters really simplify your life? Or does using smartphones and the internet greatly enhance your capabilities and opportunities?

Change is coming eventually. Whether we face it with stride and flexibility to adapt, or we face it with resistance is up to us. Will I be standing in front of this steamroller? Hell, I hope I'm driving it.

M1: This Time It Is Different?

I have to say, I really like the stock screener that Richard from Invest Openly has shared.

It isn't perfect for sure, I do see some inaccuracies, but most stock screeners have that issue of never always having the right information. However, they have enough basic ones for me, and I think that it is good for screening through "candidates" for deeper dives.

One of the candidates that I am currently looking at is M1.

In the past 5 years, M1 has pretty much been a rocket.


From being priced at $2.07 five years ago, it is trading at $3.33 today. In fact, it was trading as high as $3.99 just a few months ago! Either way, you are looking at annualized capital returns of 10% or 14%, depending which final number you are using.

To add icing to the cake, you would have collected $0.7579 worth of dividends per share over the past 5 years. That is 36.6% yield on cost, or 7% a year.

That jacks up total returns of M1 to between 17-21% annualized over the past 5 years.

Can this rocket continue shooting out returns like that, or is this time different?


M1 has been a trend follower's wet dream. In late 2005 until early 2007, it's MAs were flagging issues. The stock pretty much went no where those 2 years, before shaving off 40% due to the GFC.

Since then, just following the simple MAs would have kept you in and invested the entire time over the past 5 years. There still isn't a "sell" signal yet based on a crossover of the MAs, but... the price performance recently does look a bit suspicious, doesn't it?

Was $3.99 earlier this year the peak? Is another 40% decline in its future?

- Rates are set to rise (or so they say), making it a comparably less favourable option for income investing.
- OMGTel and SMRT are going to be coming in as a 4th telco player. No need for rocket science, all 3 telcos market share will drop.
- M1 has the weakest grip on its customers as opposed to the other telcos (or so they say), making the 4th telco affect them most negatively.

Have we as Singaporeans reached peaked connectivitiy? Everyone with a smartphone and a tablet who want to be connected, already are. Of course their need for connectivity is a luxury, though I don't think people are going to cut away one of the most prominent and tangible benefits they enjoy on a day to day basis if they need to tighten their belts. I don't think most people can or would cut back on their data plans. So in a sense, I don't think that telcos are that affected by market cycles.

Of course, fundamentals of a company can have absolutely nothing to do with share price. Market cycles can make all investors feel down and sour about the general market, depressing the multiples across the board, even though fundamentals has not changed.

I have used all 3 telcos in my life (PSST. ALL THE SAME LAH) and I currently use M1 now. I actually queued for M1 at $3.50 a while ago, but no luck (or on hindsight, good luck?). After looking into this stock's big picture, I have to say that I am pretty glad that I didn't buy into it at $3.50.

Given it's stellar performance in recent years, I really wonder just how much longer this can go.

It's weird, but I am skeptical of things that have been doing recently well, and I am always curious about things that have been doing recently bad.

I am watching this, and the other telcos, patiently from the sidelines. Mr Market, flush out all the weak hands, please?

200,000 page views milestone!



I started blogging only back in the middle of 2013, so that is about 2 years ago!

I am pretty glad that people actually do come by and read my posts. I must admit that having interactions with commenters and linking up with other bloggers is definitely more fun than just talking to the wall.


Unfortunately, my logs don't go back far enough that I can pull out all the other interesting visitors to say hi to. All my tracking software are free (cheapo!), but I would like to shoutout to some of the people I've seen recently browsing through.

I will continue to blog because I really do enjoy it. I hope that people that come by get what they were looking for - either some useful information or some sarcastic remark of the day.

I am also pretty glad that I have remained anonymous thus far. I think it is a lot easier for me to share my opinions, as well as my portfolio since who I am as a person is made irrelevant.

So, hi everybody! Thanks for helping to keep me motivated to journal down my personal finance journey! Let's continue, I'm not where I want to be yet!

Wednesday, May 20, 2015

Mancrush on our DPM, Mr Tharman Shanmugaratnam

Almost a year ago, I attend the DBS Asian Insights Conference and that was the very first time that I saw Mr Tharman Shanmugaratnum live in person. It was bloody impressive.

Recently I stumbled upon this video of DPM at the St. Gallen Symposium. I actually had a friend who had helped organized one of the previous symposiums before. This was the first time I've seen a video from it.

The video is really long, but it is absolutely awesome. If you want to see how someone so clearly frames problems that Singapore has and answer them with such striking clairvoyance, this is it. I've always liked our DPM for being a very good speaker, especially when put on spot.


The breadth and depth of knowledge that this man has is mindblowingly amazing. Which isn't surprising if you know more about his background. I am really proud that he represented Singapore there and is a civil servant.

I cannot say that I trust the thinking and mindsets of many of our political leaders in Singapore, PAP or opposition, but I think that my view of economics and politics (same thing, by the way) are eerily similar to our DPM.

I was just explaining to my visiting friends over the weekend about the importance (and intrusiveness) that our government plays in our public housing system, immigration laws and freedom of speech. I didn't even watch the video yet. Needless to say, just like Stephan Sackur and the audience started our skeptical and very defensive of cliche western values, but slowly understood the bigger and more important point of creating a better social outcome at the cost of imposing some limitations, they warmed up to the idea that the "western way" isn't the only way.

Will Singapore go the way of other developed countries further down into the future? I seriously hope not. Screw the western definition of "free speech" and "personal liberty". I want to live in a country where I have a good job, I feel safe and I can eat whatever the hell food I so damn please. Am I sad that I can't slander people and speak whatever is the first fart that sparks up in my brain? No, because why the hell should I be doing that in the first place? Am I am an asshole or what? I am glad that people cannot go around just saying anything that they want to say, "juz cuz', freedom of speech yo". (if you support Amos Yee, GTFO)

To think that we're so far ahead of everybody else that we can stop is to fall victim to the allure of a simple non-self sustaining way of life. If you have to take away anything from this video and post, it is that there isn't a specific goal that we have to achieve or a place that we want to be so that we can stop and be satisfied.* It is about create a self-sustaining model that keeps us relevant and ahead, now and for many years to come.


*Of course I am only referring to business and competition. In terms of personal happiness and lifestyle goals, you shouldn't be endlessly chasing a carrot on a stick.

Tuesday, May 19, 2015

[SGX Portfolio] Throwing Out The Dirty Fish


I bought into China Fishery back in November last year when priced had dropped 10% to sell at $0.30 a share. I thought that such a plunge was a huge, and it looked like an opportunity similar to Valuetronics.

Of course, it was not. I made 70% from Valuetronics in a mere 6 months.

After they announced their rights issue to raise money to reduce their leverage, their stock got smacked all the way to the rights price of $0.173. If I am not wrong, it even traded under that price for a while.

For a company reducing it's expensive debt, I didn't understand why it was being smacked down. The release and explanation by the board also made me decide that I should participate in the rights issue, so I did.

However, after hearing words of caution from Felix and LP, as well as learning more about their company and their parent company, I felt a bit more uncomfortable with my position. Based on my 1st initial lot that I bought, I was down more than 40% on that position! However, because I averaged down and took part in the rights issue, my final average cost of all my holdings were $0.21286.

The latest quarter results showed that net profit is down 75%, but strangely the stock soars. This was my chance to get out.


Today I sold off all my holdings at $0.235, which represents a modest 10.4% return over the last 6 months when I had skin in the game. Taking into account transaction costs, my net return is in the high 9+%.

I think that I did quite well considering that I was down more than 40% when things were at the worst! I was queuing up to sell at $0.25 yesterday, but I think that 10% returns is very modest considering how many people find this a horrible stock. I will never know how I managed to come out of this strange counter in the green, but I feel a lot more relieved now that I am finally out.

When things get worse and their stock price drops, I wouldn't mind to be a buyer actually. However, if things get worse and the stock price pops? Then it's the time to cash out your winnings and leave the casino.

DIY "Capital Guaranteed" 4.3%pa Structured Deposit with FCL Bonds

For whatever reason, there is huge huge interest in the FCL 3.65% 7 year bonds. I think they are only all right. Lots of people have covered about them as an investment in great detail, and why you should own them and why you shouldn't, so I won't talk about that.

Personally, I'm not subscribing. I am fairly certain that within 7 years there will be an opportunity for me. Plus, with the yields I am getting on my liquid cash, the opportunity cost is not startling.

However, I think this is a good time to show an example of how you can make your own "capital guaranteed, return guaranteed investment product". I will be using the FCL bonds and the STI ETF for my example.

To do this, you usually have a bond portion and a stock portion.

For example, let's say I only want to use $10,000 as investment capital, how do I go about doing this?

The first step is to work backwards to find out how much bonds you need to guarantee that their yield will be equal to the capital amount invested.

I did the math for you. If you use $8,000 to buy FCL bonds, after 7 years of collecting $292 of interest payments a year and socking it at 0% interest, your total value of interest collected and capital returned will be $10,044. This is the part that "guarantees" your capital.

With the balance of the $10,000, you have $2,000 which you can gamble with and put in stocks. I would do it the POSB Invest-Saver for a one month lump sum of $2,000 and select the option to re-invest my dividends. Hassle-free yo. Based on the long term average, perhaps we can expect stocks to go up 8% a year, which would grow the $2,000 to become $3,427. Now add that back to the bond portion and we get projected final value of our "structured deposit" to be $13,471. That gives you a projected total return of 34.8% or annualized returns of 4.3%. Not bad considering you CANNOT lose more than your initial capital, eh?

If stocks end up shitfaced and suffer a 40% drawdown and never recover, our stock portion actually shrinks from our initial $2,000 to only $1,200. Add the bond portion to get a final value of $11,244, which is total returns of 11.2% that translates to annual returns of 1.7%. That's not too horrible considering that stocks got raped. Working out this downside risk is the "guaranteed" returns part, since the stock portion won't go to zero. It would still be worth something.

I think people fall in love too much with structured deposits, especially if they are capital guaranteed. It isn't that hard to create a product like that.

Now, look at UOB's current structured deposit offer. 6 year period. Capital guarantee of 11% total returns. Max upside of 13%, WTF.

CIMB's offer seems even worse. 5 year period. Capital guarantee of 9.4%. No talk of upside or projected returns. WTF.

DBS, OCBC and StanChart are smart enough not to put their structured deposits online, or I will criticize the shit out of it. If you are smart enough to notice the trend, their products would also evoke a WTF reaction. A negative WTF, not a positive WTF.

Now, you can go run along to one of the banks or insurance companies and get one of those structured deposits or endowment policies and get returns 2% a year, or you can make your own with a "capital guarantee" and a "returns guarantee" of 1.7% pa. But in this case, the upside is much higher, at 4.3%.

One of the biggest misconceptions of structured deposits and endowments plans are that the banks or the insurance companies magically conjure up the money to pay investors. That is completely untrue. Almost every product is created similarly to this. Even before you buy the product, they know they will not lose money on it. For endowment plans, they will use a portion of the returns to purchase a cheap term insurance over the period of investment, which is why there is always some small insurance portion to it. But it is so small. To insure a life for the capital amount will put on drag on returns by less than 0.5% a year. For young people, it's closer to 0.15% a year. Over 7 years? A 1% drag on total returns.

So, the expected returns of your own DIY structured deposit is 4.3% annualized over 7 years if the stock market continues it's long term path, and worse case scenario looks to be 1.7% annualized. Perhaps I should open up a bank and offer a flat 1.7% guarantee with a "performance bonus" that all the banks like to call it, of maybe an extra 3% in the final year. That means if all goes as expected, I can collect 34.8%, I would only payout to investors 14.2% and I would pocket the difference of almost 20%! If the world turns to shit, I just payout whatever I collected. I am in a riskless position. I either make money, or I don't lose any money.

This is a classic example of doing it yourself and getting the best deal, as opposed to asking someone else to do it for you and you get screwed over by them.

So, that is it for structured deposits and endowment plans. Good for you, or good for the company that you are buying from?

Monday, May 18, 2015

[SGX Portfolio] Looking at Croesus, My First Love

The very first stock that I ever bought in my entire life was Croesus Retail Trust back in March of 2014. I was a newbie (I still am, but I'm not so mega noob anymore), but I had done lots of research and had looked at a lot of counters. Croesus looked to me to be the best pick of them all.


Since then and now, I have had capital appreciation from $0.875 to the current price of $0.935. I have also collected $0.079 worth of dividends from each share that I own.

That represents very modest gains of 7% capital appreciation and 9% dividends, giving me a total return of 16% over the past 13 months. I think that is very respectable returns.

Strangely though, when I had bought CRT back then, it was trading at a 5% discount to it's book value. Today it trades at a premium of 16%. However, yields are still on the high end, coming in at around 8%.

Of course, the reason for the drop in NAV is caused by the Japanese currency fluctuation (manipulation?) since it has moved massively against the SGD from 60 to 90 over the past 3 years. That's like the SGD appreciating against the JPY by 15% a year. Like I said before, when the Yen goes to 100, I'm booking a holiday to Japan!

Regarding REITs, I think the main metric is P/NAV. There are other metrics that are useful, but I think this is the most important one with regards to REITs valuation. One of the few things that totally screws with my brains when it comes to looking at REITs is when REITs are selling at a premium over NAV and have a yield higher than average, or when REITs are selling at a discount to NAV but still have yields lower than average.

Viva Industrial Trust and Croesus CRT are 2 good examples of the first scenario, pumping out yields of 9% and 8% respectively while being priced over NAV. Suntec and Far East Hospitality are 2 good examples of the second scenario, pumping out yields barely over 5% while selling at a discount to NAV. This discrepancy is of course caused by other factors, but I have to admit that my methodology of finding out why has not been refined yet. I have a few theories though, but I need a lot more time to test them out.

Currently, I am very happy just sitting down and collecting decent amount of rent while experiencing modest capital gains.

Oh, how I wish all my investments was like this baby.

Saturday, May 16, 2015

My Stubborn View on Insurance

Kudos to Peter Lin for writing this article about insurance and investments. I think it was a very well written piece with a fantastic analogy about jumping off a plane. I think it is good because it reminds people that they should settle their insurance before even thinking about investing. Many do not.

When you jump off a plane, you always, always, always want to make sure that you have a parachute. That is your insurance. Nobody ever jumps out of a plane without one.

I wouldn't say that I completely agree with his analogy (because I think that everyone should still have investments as a requirement, rather than an extra after-thought), but I think that it is good enough to drive home the important points. You always need insurance. Having investments would be great too.

Now, I know when it comes to insurance I'm very thick-headed and opinionated. I'm not trying to be arrogant or impress anybody with what I know. Who the hell gets impressed with opinions about insurance? You probably have to be an agent with really low self-esteem or low product confidence to be affected. Don't like what I'm saying? Close the damn window. I'm fucking anonymous and I don't sell any of this shit. What do I gain? For me, this is like taking a huge metaphorical dump. I just plop it all out, and gawd, does it feel so good to get it out of my system. Take my shit for what it is or don't take it at all. After all, this is the internet guys.

There are so, so, so, so, so many snake oil salesmen out there trying to hit their monthly target to win a prize so their face can be on newspaper and they can go overseas reward trip. If you don't know what you are buying, why the hell did you buy it in the first place? I have an unnaturally large understanding of insurance products, and I can personally say that I have zero godamn interest in this absolutely boring topic of personal finance. My only interest is not getting screwed over, which is why I care so much. The amount of material I have read on insurance is beyond ridiculous for anyone my age who has no business in the financial industry.

It would be wrong for me to brandish my opinions as objective. Insurance is highly subjective, because it depends on your personal preferences. Just like music, you can enjoy Justin Bieber. I just won't be your friend. I am just sharing what I think. If you don't agree, that's fine. Who cares? However, unlike sensitive topics, I can talk shit about the opposing view. What to see responsible freedom of speech in action? Well, this is it.

I believe everyone should have H&S insurance their entire lives. I believe that term life insurance is important from the start of work until retirement (NS for guys). I believe that TPD insurance is a cheap rider that helps you sleep at night. I believe that CI and early CI is dependent on your family history and is much more important for some than others. I believe that certain insurances are just necessary, like auto insurance and home loan insurance.

I believe that travel insurance should be necessary for most people. People who don't travel much should have it because they are more prone for shit to happen to them. People who travel a lot should have it because cost of insurance per trip is so low. People who travel between 1-4 times a year should consider a one-off travel insurance if they are unfamiliar with the trip they are taking.

I believe that whole life insurance is unnecessary in Singapore where there is no estate tax. I believe that "locking in lower premiums now" works exceptionally well for people who don't understand inflation and time value of money. I believe that ILPs and endowments are more of a shitty investment with some hints of an insurance, rather than an insurance product. I believe that both Personal Accident and Disability Income insurance is very largely dependent on lifestyle and job, and most white collar workers are unlikely to need such insurance.

Even though there are so many shitty products around, I still believe having a bad something is better than having absolutely nothing. Phew, lucky I said that right? Now anyone that has bought whole life insurance or ILPs is absolved and can sleep well tonight knowing that they didn't make the worst decision possible. Not the best decision for sure, but not the worst either. It's always a comforting thought knowing that you aren't the last.

I believe that it is better to be able to enjoy and use your assets accumulated in your lifetime, and ultimately have the decision to squander it all away or bequeath it however you see fit, instead of having it rot in an insurance policy, forever unable for you to enjoy, leaving it all only for your beneficiaries.

I have friends who are insurance agents, but unfortunately some of them really have no clue what they are selling. I read SillyInvestor's post about his sister who is an insurance agent, and I whole-heartedly agree with what his sister said, which is that "Not many can invest DIY, if you can, please go ahead". If you don't have the knowledge or skills to do it yourself, you best approach someone to help you. Getting a less-than-optimal insurance is better than having no insurance.

Although I think that our financial industry and system is crap, and jobs like insurance agents and property agents will be massively reduced in the future, I still think that there will always be a demand from people who just cannot be bothered and will pay for such services.

Can't be bothered to learn how to drive? Hire a driver.
Can't be bothered to learn how to cook? Everyday eat out.
Can't be bothered to do something? You pay more to get someone to do it for you.

To expect something to be done for you at the same cost as doing it yourself is just stupid. If you can do it yourself, congratulations, you save money, hooray! If you can't, you go out there, find somebody who can do it for you, and pay for the all the shit that you can't do yourself.

So, is the job of an insurance agent bad? No. Are there too many and is their reward system flawed? Yes. Hell, but that's the way for bankers too, isn't it? Which is why I like to ask people the question, who has a nicer car: you or your banker? Or any banker for that matter. (hint: it is confirm your banker) Now, that's food for thought, isn't it?

Lastly, I would like to touch on one final thing.

If you ask an insurance agent if you should buy whole life insurance or term life insurance, which do you think he would recommend?
If you ask your property agent if you should buy the property, what would he say?
If you ask your broker he has any stocks to recommend to buy now, what would he say?
If you ask your aircon guy if your aircon needs servicing every 3 months, what would he say?
If you ask your barber if you should have a haircut, what would he say?
If you ask the cashier at McDonald's if you should upsize your meal, what would he say?

Fuck la, stop asking stupid questions, can or not?

I am thinking if I should write another insurance-related post regarding "How much insurance do I need". I'll see if there is interest in a topic like that, if not I'll just put it on the backburner to write at my own leisure. I think it is one of the most important things about insurance, yet most people haven't a clue. Please don't say "rule of thumb is 10 times annual salary". Rule of thumb is used when you have no other information and need a quick estimate. If you actually bought insurance only using that, I shake my head at you for being gullible enough to trust whichever agent did for you such a sloppy job. I feel like chopping off people's thumbs with a cleaver when they say that.

Once again, I do not work in the finance industry. I don't get any commissions or kickbacks or referral fees or any money at all talking about insurance. I don't even like insurance. I don't sell insurance. I don't sell any financial advisory services. I don't sell anything. And I don't want to sell anything. Don't ask me to sell anything. I perfectly happy, sitting here in my rock house, throwing stones at glass houses. It is awesome.

PS. If you ask me about anything regarding insurance which I have talked about before, don't mind me if I'm too lazy to reply since you are too lazy to read.

Friday, May 15, 2015

Just a random post today

Speaking of long weekends, I am having a long weekend starting today. I'm on leave today because I have friends arriving in Singapore later and I'll be spending the whole weekend playing tour guide with them.

Good news though (or bad news), I've written a post scheduled for tomorrow. I'm sure many people are going to hate reading it. Just a friendly reminder that you don't have to.

In other news, I chanced upon this very, very interesting video of Ray Dalio.


Quote of the day? (start from 1.11, that's where he gets riled up)

If you don't own gold... there is no sensible reason other than that you don't know history or you don't know the economics of it. - Ray Dalio

Of course, all the Buffet worshipers are quick to point out that Buffet thinks that gold is a "barbaric relic". It just sits around all day and doesn't do anything. That may be so, but it's still hella better than negative yield bonds now, isn't it?

Dalio's response to Buffet's remarks? (1.38)


Andrew Ross Sorkin: Warren Buffet won't touch gold!
Ray Dalio: Mmmm, okay. Yeah.
Andrew Ross Sorkin: Do you think he's wrong? Clearly, you must...
Ray Dalio: I think he's making a big mistake. Yeah.

Anyway, I just wanted to throw into the frenzy why gold is not a "sucker's investment" from the point of view of a really smart man. Sure, Buffet is without a doubt a genius investor. But what do you want to do? Make his sayings into holy text? Angkat bola ttm please.

Thursday, May 14, 2015

Has Oil Really Bottomed Out?

Tiho from ASSOL (with his 2nd resource from Frank Holmes) has made a pretty compelling argument FOR the bottoming of oil:



Now, I know that I was hoping for a May low, and even though all the stars are not aligned perfectly, I do concede that it is very possible that Oil did make it's low back then.

Could I be wrong about oil? This is actually a mitigating factor which I thought about when I decided to enter into SembCorp Ind. However, I also accidentally glossed over a very very important detail which I had known since late last year, but forgot to take into account now. SCI has not been buying back their stock recently! They were quite aggressively defending their share price late last year and early this year, but it seems like they have yet to step in again. If share prices continue going down, I will remember to watch out for buybacks as that might help form a price floor.

The Math of Long Weekends

In Singapore, there are 11 official public holidays every year. There are going to be 6 long weekends in 2016! Enjoy!


Now, of course I love public holidays and long weekends as much as the next person. However, what I find strange is how people react every year once the news of the next year's long weekends are out.

Suddenly, everybody becomes a wanderlust traveller and start sharing articles about all these places that they want to visit (but never do) so that they can tame their wild roving heart with exciting adventures. Really? You are going to backpack South America over that long weekend? Oh please, tell me more.


But lame people saying that they do things and not doing them aside, let's run through the math of long weekends. What does this have to do with finance? Absolutely nothing. I just wanted to do some practical math in real life.

Of the 11 recurring public holidays, Good Friday always happens on... Friday. Ba-dum tssss. That's 1 guaranteed long weekend right there.

So there are 10 public holidays left.

If a public holiday falls on a Friday or Monday, we get a normal long weekend.
If a public holiday falls on Sunday, Monday becomes a holiday instead, so another long weekend.

So if a public holiday falls on these 3 out of any of the normal 7 days of the week, we get a long weekend.

3 out of 7 is 43%.

If we have 10 remaining public holidays, we should roughly expect 4.3 long weekends from them.
Add in the 1 guaranteed long weekend from Good Friday and you get an expected number of 5.3 long weekends a year.

Of course, you can't get 0.3 long weekends, you need a binary outcome. So, let's look at the number of long weekends we had since the start of the where I can find data from.

2007: 3
2008: 5
2009: 7
2010: 7
2011: 5
2012: 5
2013: 4
2014: 4
2015: 7
2016: 6

10 year average: 5.3

Well now, that's pretty damn accurate, isn't it?

So why is everyone so surprised that we have around these number of long weekends every year?


Beats me man, I don't know.

Wednesday, May 13, 2015

[SGX Portfolio] Dipping Into SembCorp Ind


Perhaps it is against my better judgement, but I have taken the smallest nibble possible into SembCorp Ind. (3% weight in my portfolio)

SembCorp Ind isn't a bad company. Nice big company with 50% government ownership. Plus, I know they take out the trash in my estate. Am I going to fire them? I don't even know how to.

Why against my better judgement? Well, I think Oil has yet to bottom still. I know right, what a douche. But that's just what I think. I ain't forcing my thoughts down your thought and transmitting a short-sell order to your broker for USO on your behalf. If Oil goes lower, we should expect related industries to go lower as well.

Plus, if Gartman goes long Oil, damn, you better be careful.


I also know that some people at SembCorp are bored to death, staring at the ceiling waiting for work to land on them. That means more bad news in store for SembCorp, right?

SembCorp Ind can definitely go lower from here, who's to say that there is anything to give it a fixed price floor? But I like to buy when people are selling, and I like to sell when people are buying. At this price that I entered today, I feel quite comfortable with it. I'm trying to diversify my strategy that instead of only going for deep discounts basement bargains, I also buy into blue-chips on attractive dips (at least to me), like the one we are seeing now. What would I do if prices go lower? I guess I would continue buying on dips.

Tuesday, May 12, 2015

CIMB 18-Month Step-Up Fixed Deposit


So, CIMB has relaunched their step-up fixed deposits again! Actually, last year I wanted to open up a CIMB StarSaver account and also consider a their 1-year or 5-year step-up fixed deposit, but they removed the promotion by the time I wanted to get to it!

Anyway, they are back with a step-up, but obviously the difference now is the time frame.

Previously, their 1-year step-up deposit had an EIR of 1.06%
Now, their 18-month step-up has an EIR of 1.39%.
Which is pretty sick since their previous 5-year step-up was only 1.56%.

So, the EIR is 1.39%, or 1.388% to be more exact, which I have calculated and did the sums in the table below:


So, 1.39% for an 18 month step-up fixed deposit is not too shabby. From memory and what I see now, banks are offering rates between 1.1 - 1.4% for regular Joes like us to have a 1-year fixed deposit with them.

Even though the yield might be higher with other banks, I think that the flexibility to withdraw monthly and still keep the accumulated interest accrued so far is a huge factor for me. I personally like my cash-like assets to be.... cash-like, meaning that I can liquidate them relatively quickly and easy without penalties.

Basically, you are paying up a premium to have the option to withdraw your deposit without interest penalty. I'm willing to pay that price.

Personally, I have yet to max out my OCBC 360 account which is yielding 2.25% on my deposit now, and the Singapore Savings Bond has yet to be officially launched, but opening up a CIMB StarSaver account and taking up an 18-month fixed deposit with them in my possible next move. Really not sure if I will do this, or the SSB. Perhaps a split between both?

The current "yield" of this fixed deposit is 1.39%, which equates to about 3.5 years of the Singapore Savings Bond. If you forsee that you'll be opening up your warchest within the next 3.5 years, it might be better to roll your fixed deposits than to dump it all in the SSB. The SSB isn't the holy grail of fixed deposits. It is a completely different product, though it is somewhat similar. Don't make the mistake to confuse the 2 as the same thing.

Unlike their WealthSaver product, this is actually something I would have no qualms taking up myself, as well as recommending to family and friends.

Monday, May 11, 2015

SINGAPORE SAVINGS BONDS NEWS IS OUT


Ouch ouch, hot hot! Fresh off the press! Click here for the official MAS release.

Requirements:
  • 18 years old
  • CDP account
  • Banks accounts with either DBS/POSB, OCBC or UOB


Purchase / Redemption request period: From the 1st day of the month until 4 business days before the end of the month.

Processing date: 3 business days before the end of the month, which is why orders close 4 days before.

Bond Issue date: Bond will be issued on the 1st business day of the month
Bond Redemption date: The redemption amount will be credited by the 2nd business day of the month

Application / Redemption fee: $2 per transaction, redemption waived if matured after 10 years.
Minimum purchase: $500
Maximum purchase: $50,000
Individual limit: $100,000
Partial redemption is allowed in blocks of $500  

Returns: Dependent on holding period, but would be similar to an SGS bond

Interest will be paid every 6 months from the purchase of the bond date. For example, applying for an SSB in January, you will receive it on 1st Feb and your interest will be paid semi-annually every 1st July and 1st Feb until maturity.

Now, here comes the really interesting bit that you can find in the FAQ if you are a freaking nerd like me.


Paging Mr 15HWW!! Haha, yes, we can redeem the SSB at par, then reinvest with 1 month lag. However, the sentence after that gives us the flipside of that situation. The lower initial payments might not outweigh the higher current coupons that you would be giving up to make that switch.

I have talked about the Singapore Saving Bonds before, and I think this is in line with what I expected, except for the extremely large individual cap of $100,000. I am quite stunned about that number.

Now that almost all the variables are known (save the 3 local banks to show their fees and dangle promotions), I think it is time that some smart local bloggers come up with the optimal solution to milk these SSBs for what they are worth! To point y'all in the right direction, Kyith from InvestmentMoats showed a link to FSM's SGS bond page which shows duration to maturity and current yield. A good place to start crunching numbers, yeah? I want to know what is the best strategy to begin buying the SBB if I had $100,000 right off the bat, plus how I should know if I should sell and roll over an existing SBB into a new issue. Gamsia!


While this SSB is no doubt a good product, I still think that it has to be said that they are not exactly the same as fixed deposits, SGS bonds or even CPF. Different financial instruments have different uses. There is no single holy grail that gives you all the pros and none of the cons. Bear in mind that the CPF SA starts out with a freaking high interest rate of 5%. The catch? That becomes your retirement money, haha.

The timing of this SSB works out just nice for me. Soon my 1.5% fixed deposit with POSB is going to mature, and I will be able to shift around my cash here and there. Oh, mid-year bonus also! Ho ho!

Oh, this has just made my life so much more exciting. I'm counting on you other smart bloggers to come up with a solution and maybe a calculation formula to know if it is more worth it to sell and roll over into a higher interest rate SBB.

Is Sarine Tech's P/E 28 or 145?


Sarine Tech released their recent quarter results. Check it out.

I don't know about you, but it looks horrigible to me. Comparing this quarter to last year's quarter, net profit got ravaged 90%. That's a shit lot of percents.

Diluted EPS:
2014 Q2: 3.04
2014 Q3: 2.05
2014 Q3: 1.45
2015 Q1: 0.34
TTM EPS: 6.88

TTM PE = 197 / (3.04 + 2.05 + 1.45 + 0.34) = 28.6
Q1 EPS extrapolated PE = 197 / (0.34*4) = 145

Of course the benefit of using TTM is that it smooths out dramatic swings in earnings, like this recent quarter.

However, the downfall is that (as innate with all other sorts of indicators that average out historical values) too much emphasis might be placed on the past, and the situation then and now might have passed a pivotal turning point and have dramatically changed.

Don't get me wrong though, they are an awesome business. I especially love that they have almost no debt and they are very cash rich. They had thick fat margins too. As a business, I love it.

However, like I said before, valuations is outrageous. Sorry guys, I'm really not cut out for growth investing.

CIMB Wealthsaver 4.8% pa?



If you read the Sunday Times like I do, you would have seen a similar advertisement. Now, just like how I ripped apart the really lame OCBC Bonus+ Savings Account (which only gives you 0.768% interest pa instead of the 2.35% in big big bold bold words), let's look at this "promotion" by CIMB.


Basically, cutting through all the voodoo magic mumbo jumbo, their promotion that they are offering to customers is a 2% fixed deposit.

Preferred customers get a better 2.5% fixed deposit, but they have to have $250,000 with the bank. Do you have $250,000? Neither do I. Let's move on.

Now how you finally get 2% on your interest is not very important, but if you are keen to find out, I have written about their previous 1-year and 5-year step-up fixed deposits, which have since been discontinued. They do have a new 18-month step-up fixed deposit and I shall be posting about that soon.

However, to qualify for this seemingly good rate of 2%, you need to jump through a few uncomfortable hoops.

Firstly, the minimum deposit sum is $50,000.

Secondly, you need to buy products from the banks. This could be $100,000 worth of unit trusts, a $50,000 single premium insurance policy or a $10,000 regular insurance policy and finally $100,000 of structured deposits.

Personally, I think that the second conditions are all crap. This is somewhat similar to the new OCBC 360 terms, which I think is ridiculous. Buying unit trusts from banks is daylight robbery with the amount of sales charge they are sticking you with. You're better off paying close to nothing with Phillip. Don't even get me started on insurance, that gets me so riled up. It is hard to comment on structured deposits because I do see how they could be favourable if you get a good structure that suits your views and risk profile.

For people with existing relationships with CIMB and are going to fulfill those criteria already independently, then it is no harm to get a nice juicy 2% fixed deposit with any excess cash.

But for most normal people, the bottom line is that most will not qualify for this promotion and should not try. It isn't really that attractive.

Sunday, May 10, 2015

Looking Online For My New Income Stream

A while ago, I talked about some considerations people might have for starting-up a company.

Since then and now, a few good ideas has been flouted to me by friends, along with a massive slew of horrible business ideas. It isn't easy telling your friends that their ideas are bad ones, but I do it out of friendship and concern.

One of the things that I have noticed is that I have a very biased view against anything that is brick and mortar. I've all along known that the rents in Singapore is what kills off bad businesses with absolutely no mercy. Rather than taking a small risk to own a business, I'd think most people get slaughtered and lose most of their capital.

Lady Iron Chef wrote an absolutely awesome post about the cost of opening up a cafe in Singapore a while ago. Quick answer without reading his post? About $120k to $150k minimum.

Many times I have friends telling me about a business idea, but much too often they require having a physical location and selling something. Way too much capital outlay and almost zero downside protection. My friend wanted to have a shop selling handmade jewellery. I had to smack some sense in her. There is a snowball's chance in hell that a shop in Singapore selling such low value added products would be able to cover all the costs involved - the materials, the rental, the labour. There would be no profits to speak of. It would just be paying money out of your own pocket to call yourself a business owner!

A lot of people don't understand that there is a price to pay to be a business owner. Yes, it is super cool/cute to call yourself the owner of a hipster bar (for guys) or cafe (for girls), but there is a cost to it. It is the opportunity cost of what you could have done with all your time instead. If you earn a monthly salary of $3,000 a month, the monthly cost of being a business owner is $3,000 PLUS whatever the business is losing. Only if the business can generate profits above and over $3,000 on a consistent basis, then it would be a good idea, objectively. Of course, the intangibles like flexible working hours and not having a boss to report to has a price tag to it, but that really is quite subjective.

So, instead of having a brick and mortar business, I am thinking of doing something that doesn't tie me down to monthly rentals and labour cost. Instead, I am thinking of doing something online. Online businesses have very low opportunity costs since the fixed cost running these are really low.

There are tons of resources online for the bootstrapper looking to penny pinch. This article by thesitewizard is a very good basic resource to start with to get an overview of what has to be done to launch your own website. Just register a domain, find a host, upload you web designs and boom you're done!

The total annual costs involved? A domain might be perhaps $50 annually. Hosting plans vary, but I've seen offerings from as low as $3.50 per month from Exabytes to $10 per month from Vodien. (skimped through all the other hosts... pet peeve is stock photos of ang moh people smiling on the home page) Web design should be able to be done at close to zero cost. The ceiling on this should be less than $170 annually, but I am aiming for less than $100.

In primary school I learnt the basics of how to make a web page. I'll be exploring Wix to see if it really is free and if it really is useful for webpage design. If not, I'm ready to roll up my sleeves and learn from scratch how to code a website. My goal is actually for a really simple 1 page website (probably gotta relearn HTML and CSS though) just to advertise my services, so I don't think it is going to be too hard.

I know the prices of getting a proper web design company to launch a website. Personally, I am not prepared to shell out that sort of money for something that might end up being just a passing fad that I'm not committed to.

Anyway, this is just something that I plan to do in my own free time to earn a bit of extra money from another income source. With just $100 a year to maintain, I think. But the thought of having to register as a sole proprietor and do my own accounts is a bit off-putting.

Oh well, we shall see! Everything is just in conceptualization process now, I'm not in any rush at all whatsoever. I don't think that my pie for my intended future business is going to be eaten by other people anyway, haha!

I'm still deciding between a few skills for me to learn, so that I can have something to "sell" in the future.

Any suggestions for really low-cost web hosting? It would be purely as a business landing page, like an online business card.