Monday, August 31, 2015

[SGX Portfolio] August 2015 Update

As mentioned previously, this will be my attempt at having a monthly update of my SGX portfolio. I have also updated that page to include the historical growth of my portfolio. I find it personally encouraging to know I've come so far from where I started. Hopefully other people may be inspired and also decided to embark on their financial journey.
"The journey of a million miles begins with a single step"
Anyway, here are the current stats of the portfolio as of end August 2015.

Total Cost    $19,338.90     
Unrealized Gains-$1,588.17
Accumulated Dividends $642.92
Realized Gains$628.89

*Total Cost is initial purchase cost of the current portfolio
*Unrealized Gains represents the unrealized capital gains on securities still held in the portfolio
*Accumulated Dividends is the total of all dividends collected thus far

*Realized Gains will only take into account the final net capital gain or loss after including transaction costs to close a long position on a security. 

August was a rather interesting month as the stock market made a swift move lower and it caught many people off guard. At the low, we were almost 20% off the highs which would technically be called a bear market, but if I am not wrong, we marginally missed that.

I saw weakness and I took up small positions in Semb Corp, Keppel, Religare Capita Comm, Sin Heng and King Wan.

Keppel and Semb Corp combined makes up a hefty 25% of my portfolio based on either cost or current market value. If their prices continue to drop, I would pump in more cash, but cap my allocation to them at 40% and just consider it as all my ammunition direct at that target board is spent, and I will wait out their market cycle. 

I did not have any sell orders this month, and I doubt I will be making any sells for a very long time to come. We seem to be entering the accumulation phase. Does the stock market takes 2 weeks to "bottom"? The answer is clearly, no.

Overall my portfolio is only down 1.6%, with the dividends and realized gains providing a good buffer in the recent weakness of stock prices. Without taking dividends into consideration, I am down 8.2%, which isn't too bad in my opinion. As expected, the XIRR of the portfolio has turned negative since the stock market is languishing. Even though my portfolio is negative, let me be clear that I am not fazed by what is happening.

Annual income from dividends is now expected to be about $1216 for a full year, but of course I collected some and miss out others by not owning them the entire period. That brings the expected monthly income to $101.33 and daily income to be $3.33.

Based on the dividends I am expected to collect, my portfolio dividend yield on cost is estimated to be about 6.29%. I have taken the lower bound estimate for most of my counters, so it is quite possible to have surprises to the upside. My portfolio yield is dropping as I am trying to limit my individual exposure to high yielding names to spread my risks.

In the coming months I expect the Singapore stock market to continue to perform poorly. My current strategy is to just brace myself and incrementally add on oversold opportunities. If my thesis is right, there are going to be plenty more opportunities in the coming months. I remain heavily in cash.

What drives me with the sharing of my SGX portfolio is to show people an example of how one can work towards their dreams - with discipline and hard work.

Rome wasn't built in one day. Everybody has to start somewhere.

Where are you heading?

Sunday, August 30, 2015

15/32 Weekly Review

Every Sunday, I think I will have a weekly review of what I did in the past week. I'll just try it out, and let's see if this helps me organize my thoughts and actions and become a better financial blogger and person.

This week I ran only once this week, and it was pretty bad. 8.1km in 52 minutes. What is this? Old age? I won't be exercising this upcoming week either until after I finish a checkup on Friday. I better start eating right and exercising seriously after Friday. I have only about 2 months left to pass my IPPT, jeez!

This week I was pretty busy at work. I also had to attend the course, hence the lack of snarky posts this week. On the bright side, I did learn some interesting things this week and I've made drafts to write them out in the future already. I have lots of unfinished posts, sigh.

This upcoming week is the end of the month, so like most bloggers, I'll be doing my monthly update posts. I've already updated my portfolio holdings, so I'm just waiting for tomorrow's closing values so I can do the final calculations. With all those posts lined up, I don't think I'll be having any brainwaves to write much any interesting post next week.

We closed on Friday off the lows, but I still believe that it is merely a dead cat bounce and I am prepared to go against the tide if the opportunity arises.

Ostrich Risk Management Strategy

If you don't know the risks, they don't exist.... right?
If you can't see the risks, it means there there aren't any.... right?

That is the Ostrich Risk Management Strategy (ORMS).

I have met many people who are blissfully unaware of how to deal with risks, and this is especially painful for me to watch when it involves finances.

I cannot tell you the number of times people have told me that since ETFs are diversified, they are the not as risky as other investments, and therefore are the best investment to buy.

Of course, this is completely wrong because as so wonderfully illustrated by Dilbert, being diversified doesn't mean a thing if you don't know what you're doing.

If you wear a helmet while riding a motorcycle, does it reduces your chances of having an accident? Mitigating one risk may not remove the other risks possible.

I'm not picking on ETFs because I think that they are a lot less sexy than they are marketed to be. I own and use ETFs for a strategy that I run. In fact, I think ETFs are probably one of the better investment vehicles that most people would be able to effectively use for investing. The risks of ETFs are pretty clear-cut and straight-forward, and these are fantastic things for a risk manager because the risks can be dealt with.

However, if you do not know what the risks are and how to manage those risks, ETFs can just as well blow up in your face like any other investment.

I suppose the default pre-loaded risk management strategy in humans is the ORMS. You can see this all the time in real life. How many times have you heard people "close one eye"? Ignoring risks does not make them go away, but of course since it is one of the easiest actions to adopt, it is the most common action undertaken.

Sitting down to identify the risks, evaluate their impacts and then having a proper method to control risks is something that people instinctively know how to do, but they only do it for things that they care about.

Getting a new phone? Open up everything and check for scratches. Buy screen protector. Buy phone cover. Phew, all safe now.

But buying whole life insurance with monthly $300 premiums for the rest of your life? I have to read the silly stack of papers and sign that? Fuck that! I'll just trust my agent, they are not allowed to lie anyway. Plus, she's pretty. What could possibly go wrong?

I think many people make the mistake and confuse investment selection with asset allocation, deployment strategy and risk management. Most of the time, asset allocation is 100% and the deployment strategy is single lump sum purchase, which is why you rarely hear those words. Risk management is usually just ignored or "play by ear". Therefore, most people think that the only decision that they have to make is what to invest in.

An example of a simple comprehensive strategy is: 100% allocation into the STI ETF using monthly DCA with CPFIS-SA money. Obviously this is not the holy grail strategy for investing, but it is definitely a simple one that covers all the basics and can be qualified as a decent strategy.

Wednesday, August 26, 2015

Slow Down

With the markets jumping around and everyone throwing out calls for tops and bottoms all over the place, everything is getting noisy. You know things are noisy when suddenly traditional news media feels inclined to explain the drop in stock markets and what it means for everyone. Another sure sign is when people with no knowledge about the markets are out on social media sharing articles and opinions.

I'm just casually managing my sister's and mother's combined portfolio according to what I've planned and thought about for the longest time. Very little "feeling" is involved in managing the portfolio. It is very automatic and actually slightly therapeutic to do the sums at the end of the month to report to my family.

For myself, I'm tuning out most of the noise and just looking at the things which I think matter. I'm not too gungho now because I don't think that the market goes from top to bottom in just 2 weeks. If we really did top out, then we are in for a rather long drawn out bear market. I highly doubt we see the usual v-shaped rallies to new all-time highs. From the cycle watchers that I follow, many think we see the biggest moves by October and then choppy markets until early 2016. That ties in rather well with what I've been planning myself.

I am taking nibbles in the market, not because I think it is at the bottom, but because I'm a damn contrarian. It burns my soul to see names 30% of their peaks and I just have to own them, even if it is just 100 shares. It helps me psychologically endure the wait since I get to periodically buy some stuff. I told you, fugly charts turn me on. I'm trying very hard to resist the temptation to go into the market guns ablazin'.

Even then, my capital is severely limited. At best, I think I can afford to double up my capital that is currently in my SGX portfolio. At best. I predict it would be much lower. As mentioned, I am looking for a property fallout and I am hoping to enter the property market then. Given that predicted course of action, cash is precious and I can't really willy-nilly go into the markets and start averaging down my positions as much as I want to. Ammunition is limited, and I've got to make it count. I really don't feel like it's time to even load the bullets yet.

Tuning out the market has been rather easy for me lately. I've been swamped at work. I'm currently heading a project and I have another one lined up right after this. These projects will keep me busy until year end. I also have a work trip coming up as well. On top of that, I've also been busy learning and practicing my new language. It has actually been something that I've been planning to do for a while, so I am glad that I am making very good progress! I have also been busy starting a real, proper exercise schedule. I think that I might actually have a weekly post where I recap and summarize my exercises for the week as well as start and monitor a to-do list of things. I think if I have a weekly review, it would keep me more motivated to continue exercising, as well as motivation to slowly tackle and strike things off my to-do list, one by one. It might not all be personal finance related, but I would like to draw on the discipline and passion that I have for blogging to help me.

What's the rush? What's the hurry?

Take it easy, take it slow. Good decisions don't come from rashness.

Emmy Rossum is such a beautiful brunette by the way. See, I don't only ogle at Drea Chong and listen to dubstep. I really like the introduction and the emotional depth of this song. No Rihanna, I do not want to stand under your umbrella.

Tuesday, August 25, 2015

Short Update: The pain lingers

The SSE is down 7.6% again today. Oil is still at the $38 handle.

Fundamentally, I think things can get a lot much worse for stock markets, especially since there is a huge mismatch between price and fundamental values for many developed markets. The stock market isn't the economy, and the economy isn't doing all that great in my opinion. The Shiller PE is still at 24. Normal PE is at 19. This is madness, especially when the STI is trading below 12.

"Low interests rates means higher multiples", they say. Whatever.

However, technically short-term indicators have flagged oversold levels and this could mean that we are due for a nice big fat dead cat bounce at this juncture. Of course, I think it is a bull trap. I might even consider shorting if the S&P500 hits 2040.

I don't get why people think that after the US markets have dropped for just 2 weeks the correction is over, and it's now time to BTFD.

Longer term technicals look to me like the fun has just begun.

What's the rush to get invested? Inflation? We're in deflation mode with CPI at -0.4% and Core Inflation at 0.4%!

In the future, I'm expecting a substantially weaker USD, higher commodity prices across the board, and of course lower stock market prices.

Monday, August 24, 2015

Short update: Expect pain

Just a while ago it was -8.20% and it hasn't even reached the half day lunch break yet.

Things are getting ugly in the markets, but unfortunately, I believe that we haven't even seen the big down moves yet. Oil is almost on the way to tag the $38 handle, which is crazy to imagine. I personally do not believe that such low oil prices will be sustained. This plunge seems to be clearing out the non-believers, and I will gladly jump back onto the O&G play when I smell it bottom. The US markets ought to open red (futures indicating at least a 1% drop), considering the current bloodbath in the Asian markets.

I think that the global markets stay in the dumps til at least the end of the year. But then again, you have to know that I've been a bear since like, forever.

So many Singapore stocks look unbelievably attractive at this point now, but my hands are tied because of my property ambitions. If not, I would be out there catching knives along with the rest of everybody. In all seriousness, there are many stocks that look like they are at great valuations now. Building a portfolio with at least 6% dividend yield with what is available now is easy. If you want to push to 8%, I think that's possible too.

This is probably the worse "meltdown" that investors like me (fresh off the boat, post-GFC experience only) have ever seen before. I've done my history research. Things can get way way way uglier.

Don't go out catching knives without protection.

Saturday, August 22, 2015

If you already set your GPS, just follow it

If you already have a plan, the path before you is already defined. It doesn't matter that you can't see what is ahead right now. Follow through on your plan.

Just trust that you had studied well and applied that knowledge to craft out a good plan.

I am currently enacting out my STI ETF accumulation plan. This will help me overcome psychological fear of investing in a falling market. The principle behind it is based on value averaging and it is a very sound principle, especially when applied to an investment vehicle like the STI ETF. The further a market drops, the more you should buy.

Don't be mistaken, value averaging is not the same as dollar cost averaging. It is far more superior.

I've already hit the 2nd trigger in my plan, which is the -15% drawdown from ATH. I managed to queue and get entry prices below my targets, so I currently hold 300 shares of the STI ETF with an average price of $3.047. I am eager for the STI to drop more so that I can buy more.

I hope that we have a global crisis. I want our stock market to crash. I taunt and I welcome the bear.

Put on your helmet. Fasten your seat belt. Brace yourself lads, this might be a bumpy ride.

Bring it on, smooth seas never made a skilled sailor anyway.

If you can't handle the heat, get out of the kitchen.

Friday, August 21, 2015

Shorts Fired: Silverlake Axis

No, I did not short Silverlake Axis, I am not a malicious short-seller! But the guys that released this report most likely did!

Silverlake Axis has been accused by razor99 for multiple infractions:
1) Complex and deceiving corporate structure
2) Alarming reliance on related party transactions
3) Self-dealing and related party acquisitions
4) Large undisclosed loss-making related parties
5) Undisclosed off-balance sheet debt
6) Chairman's history of fleecing minority shareholders
7) Unrealistic profit margins compared to peers
8) Declining product competitiveness and bribery allegations
9) High valuations

And did the report have any effect?

Well, as ST reports, trading for the counter was halted at 1.20pm, but not before it had a waterfall decline to drop from yesterday's close of $0.84 to $0.635 as of the halt, which is a 24.4% drop. On heavy volume.

If you own Silverlake Axis, what should you do?

If I was in that situation, I would read the shortsell report and figure out for myself if their claims could be reasonably true and if such claims really do have impact to the stock. I was in a similar position earlier this year when the shortsell reports for Noble hit the news and I decided to sell out after I could verify their claim. Noble is now 58% lower than my exit position!

I have to admit, this report is too damn long for me to read, but I don't own the stock, so I don't need to do my homework to verify the claims. I am sure out of the 9 reasons they have, at least 1 of them is partially true and that alone would already be a good enough reason to be worried.

2 months ago, I wrote a post about Silverlake Axis and why I would not invest in it. Although the business looked good on paper, I was particularly worried about it's high valuations. Personally I'm more surprised that it took a shortsell report to knock their prices down rather than good ol' market forces to notice the sky high valuations. It's EV/EBITDA was selling over 20 when I looked at it AFTER already dropping in price by 30+%. I thought valuations was still crazy.

Then again, we are in a world of crazy valuations. Twitter has negative earnings but it has a market cap of $17 billion USD. Alibaba has TTM P/E ratio of 63.23. Don't get me wrong, P/E isn't a magical ratio that will guide you to riches and glory, it's just a really rudimentary check on insanity. It's like how you look out the window to check on the weather. By no means very accurate, but you can get a rough gist of what's going on.

Would I be interested in Silverlake Axis given the recent decline? Just like Noble group, until they can clear the air by strongly striking down all accusations, I'm not ever going to look at them again. If the air is cleared, perhaps below 50 cents might arouse some curiosity in me.

If you are a shareholder, read the report and if you concur with the report, I would advise you to bail out on this ship. If you are thinking that with such a big 24% intraday decline from $0.84 to $0.635, how much lower could this stock go to? 

Well, the answer is zero.

Resist..... Temptation....

Regular readers know that I have some mental issue. When I see red charts, I get damned turned on.

There are plenty of charts that looks like shit. I just want to scoop them up and smell the steaming fumes that are fresh from it.

I was going to make a list of names that look like shit to me (means names which I am very interested in), but then I realized that TOO MANY of them look like shit. Look at OUE Comm REIT. Or Far East H Trust. Or Starhill Global. Oh gawd. Jizz in my pants.

And that's just the trusts / REITs that I'm looking at. F&N, First Resources, all the Keppel names, the banks, the telcos, Super Group, Sarine Tech, ST Engineering.... they are all baby seals that are getting clubbed over the head one by one.

Let's face it. The STI has only dropped about 15% so far. This fall isn't even technically qualified to be a "crash" yet. As shitty as things look, they can definitely get a lot worse. Don't basic stress tests use -40% or even -60% drawdown simulations?

Normally, looking at those charts in isolation would excite me into action. However, seeing how this is really a broad based decline across the market, I'm holding back my excitement. I don't want to have pre-mature excitation even before the real thing starts.

I think some people also know that I have been talking about moving out and getting my own place. The narrative that is in my head right now is that the Singapore's property market is already fundamentally shit, so all it needs is a catalyst to just tip it over the edge and get the ball rolling. When it does crash, I am hoping to pick up a unit in a development which I have been eyeing for months and months now. Since I haven't been working for that many years, I have not accumulated enough CPF, so most of my downpayment would have to be from cash. That is why cash is so dear to me right now. I have already spoken to my parents that I might need to take a loan from them to bridge any shortfalls I might have, and they have agreed since they feel that the best investment is a house bought during a property bust.

I am consciously sitting out of the stock market because I've got my eyes set for something even bigger. If not, I would be steadily and unemotionally brushing off paper losses and pulling down my average entry prices for all the good names that are now on sale.

Stick to your plan. Don't get too greedy, don't get too emotional. Don't be mistaken, it's not an easy thing to do. If it was easy, everyone would be rich just from playing stocks.

Wednesday, August 19, 2015

Aspial 5.25% Retail Bond Thoughts

First off, contrary to what the Straits Times believes, I do not think that the Aspial 5.25% bonds are in competition with the Singapore Savings Bonds.

Such bonds are in no way an alternative to the government-backed SSBs. The main difference is the default risk, which is why corporate debt is always priced to a premium to government debt. The SSB is a risk-free way to squeeze out more yield, whereas corporate bonds are reach out for more yield by taking on more risk. Governments can just print more money to pay back obligations. Companies cannot.

Giraffe Value wrote an extremely comprehensive post that covers basically everything under the sun related to the Singapore Savings Bonds and I strongly recommend it as a read for people who want to gain more knowledge on it.

TradeHaven wrote quite an informative post to give background knowledge on Aspial. If I understand correctly, compared to their previous issues, this current offering that includes retail bonds is going to be their lowest premium that they are offering to investors. Of course, since the public tranche is 67% and most retail investors have absolutely no clue when it comes to bond investing given how little opportunities there are in the market to hone such skills, you can bet your sweet ass that they are going to be oversubscribed. The narrative in today's newspaper also paints it as a very rosy and generous offer.

(Source: TradeHaven)

This graph on TradeHaven shows their EBIT/interest ratio. I don't know about you, but for me that looks very thin.

Aspial is actually one of the counters on my research list. I do like the fact that they are a diversified business and I quite like the idea of synergy between Maxi-Cash and their jewellery business. However, Maxi-Cash does not seem to be doing very well. Over the past 2 years stock price has dropped about 50%. Michelle Chia as their celebrity ambassador is their saving grace though. Australian property seems to be in one of the biggest bubbles they have ever seen.

Perhaps the only thing I like about this issue is the 5 year tenor that they have, which is longer than the usual 3/4 yr that corporates usually go for. If market cycles do hold true, we would be in for an unhappy time in the near future and getting cash would be not be easy. If their true intentions is to brace for shock, then this issue sounds great for them. Of course, this is just pure fantasy speculations in my mind.

I would not be subscribing this retail bond or buying their stock. However, if my time frame was only 5 years and gun to my head, I had to make a choice, I would go with the bonds. But I'm not in that situation.

That said, the real main reason for not being interested in either its bonds or equity is that I foresee that there will be plenty of opportunities to be had in the near future.

Cash is a position, and a very good position in a falling market.

I Support the Silver Support Scheme

CNA reported that parliament has just approved the Silver Support Scheme (SSS) which will give low-income elderly a stipend of $300 - $750 every quarter to supplement their income.

To my relief, the report mentions that the elderly will be means-tested to see if they qualify for the scheme, and how much they would receive.

One of the main points highlighted is that the SSS is not a substitute for retirement income and it is only meant as a supplement.

Earlier this year, SingFirst (some random opposition party) came up with an article on how they would spend our money, which I dissected and wrote off as being fundamentally unsound ideas.

One of my biggest gripes was their ridiculous suggested policy of giving a monthly $300 "pension" to the elderly. You know, that retired towkay that drives his Merc to MBS for valet parking before he blows through a few thousand dollars? Yeah, he definitely needs your $300 per month, and we working age taxpaying suckers should pony up that money for him. Screw that shit.

Like I said before:
Shouldn't a stipend to seniors be means-tested instead of freely distributed to all? Like because all old people are poor? Of course not. It's to be fair (to all old people), but not really THAT fair (to the younger tax-paying population)? I can understand why children should have an allowance, to ease the cost of bringing them up. But free money just for being old? What's that all about? Means-test, and I won't say anything. By golly, make it even bloody simple to past the test, but don't just piss away OUR money like that. 

I think the Silver Support Scheme is much much more superior than the joke policy which SingFirst came up with. Did they go to a primary school and ask chewren for suggestions?

The SSS targets the correct demographic and there will be means-testing. This is a smartly targeted policy aimed to help those that need the most help, while being accountable to who, how and how much money is given. As a taxpayer, if I can see that the money will managed properly and I understand what the policy aims to achieve and how it will achieve that, and I think it is a good plan, I would pay for that.

I don't think that sweeping robinhood policies are good ideas, but this policy is well-thought through. I support this SSS and I think that policies like this are what is needed for our government to enact for our people in our country.

Not some kiddy-policy that paints using one broad stroke. Seriously?

Of course the haters are going to come out and say, "Walao, $300 per quarter? $100 a month? So little? Pui pui pui". And to that I say, no one owes you a damn thing in life.

Actually I wrote a much more angsty conclusion, blasting a whole array of things, but that turned out to be more of a rant on delusional self-entitlement rather than anything that has to do with the SSS.

I am curious to see what will be the effects of this policy once it officially starts.

Tuesday, August 18, 2015

What's Your Real Cashback %?

Today I decided for the heck of it to check out what's the total value of my cashback that I've received for 1 year.

I went to look through my e-statements from OCBC and I made the table below:

The credit card that I have is the OCBC Frank card. It's a pretty simple and straight forward card. You get 6% rebates for online spending (cap of $60 per month) and 0.5% rebate for everything else.

My spending is on average about $800 per month, but this excludes the big bumper month of January that saw me drop a bomb paying for my trip to Beijing/Seoul and also my airfare to New Zealand. If you exclude September 2014 when I went to Bali too, the monthly average drops to $700 per month and I think that is a pretty realistic gauge of how much I spend normally.

Normally I also foot the bill when I'm out with friends and then collect back everyone's share slowly through ibanking. Some months it can be as low as only $50 while recently it has been over $300. By me paying for the bill first, I am artificially inflating my actual spending power and that helps me hit the $500 monthly spending mark to qualify for both Frank rebates and the 360 account bonus interest easier.

As you can imagine, it is not easy to have most of your spending as online spending. Perhaps a third of it for me? Which is why my effective rebate rate is 2.07%.

A strong cashback heavyweight is the AMEX Cashback card which has 1.5% cashback after the promo period ends. However, as you can see, my effective rate is higher than that. Also, AMEX is really not as widely accepted as Visa.

For those people who only use cash and don't want to "trouble" themselves and "complicate" their lives with a credit card, I would strongly advise them to reconsider moving their spending onto their credit cards - so long as they have the discipline to pay off the entire amount owing in full every month.

I am unwavering, so I don't get tempted by any of the credit card marketing for promotions and discounts, and this is very important because it means that I do not spend and consume more just because I have a credit card and access to such deals.

Whatever I spend on my credit card, I would have charged to my debit card or paid in cash anyway. However, by charging onto my credit card I get a few benefits:

1) Starting your credit history
2) Free financing for 1 month (or however long it takes to bill you)
3) Spending less (through discounts, promotions or rebates)
4) Optimize your wallet (credit card, transport card, NETs Flashpay card 3-in-1!)

Currently, I am considering switching to the OCBC 365 card since I realized that quite a bit of my spending falls under the dining category. Although in the recent 3 months I can see that my spending is higher than average, I don't know if I will be able to consistently spend over $600 per month to qualify for the 365's cashback. The current $500 target for me is an easy one to remember because that is also the same amount needed for the OCBC 360 account to get the bonus interest rate. Perhaps if I can see that my credit card spending is consistently over $600 every month, I would move my spending over to the 365 card instead and hopefully increase my effective rebate so somewhere above 3%.

The 2 other possible alternatives are the ANZ Optimum and the CIMB Visa Signature. I'll see how it goes a few months down the road, probably at the end of the year.

Monday, August 17, 2015

My 2 cents on local politics

I just read this post by Cassidy from Swinging Singapore and I think it is really almost exactly whatever I have wanted to talk about.

Anyone that says the gubbermint takes our CPF because they are broke, please GTFO now. You clearly must have been accidentally linked here from the usually cesspools that you lurk in. You would not enjoy my pro-PAP post.

There all this crap about the "old guard" and how the OLD PAP under LKY is so awesome with unicorns and shit. Of course they have to say that, since we all collectively agree that Singapore was pretty crap 50 years ago when we had to fly solo. But then the next statement is how the "current new people" are all idiots and useless. Somewhere somehow everyone just turned incapable and started ruining the country. With their MRT breakdowns and all. Give me a break. In fact, give me 2. I can't handle this shit.

Cassidy has ripped apart idiots that have commented on her piece and I think it is lovely. Here is my favourite exchange:

So many people that have the urge to comment on such pieces talk exactly like Kelvin Wong, saying that the authors live in ivory towers and know jack shit about reality. Cassidy threw back a sucker punch with one the best counter arguments to shut all these people up. Jeez, everybody has bloody problems. But only the people that you happen to talk to somehow just happened to have the most important problems that needs to be solved? How unbiased of you to think that way. (clear sarcasm here, fyi)

One thing that I have observed personally is that the people I know who have lived overseas, either for study or work, or they happen to not be Singaporeans, almost all agree that there are many things that are right in Singapore compared to the few complaints about things that are wrong in Singapore. Unfortunately, spending your whole life in Singapore doesn't make you an expert on developed countries, or as they like to call it now, "first world". Without any alternative perspective or basis of comparisons, it is hard to critically examine yourself and know what is good. That is why, as silly as it sounds, people from overseas have a more honest and objective take than what the locals would have.

You don't think so? Let's try this easy exercise. Whatever complaint anyone has, substitute Singapore for any other country and see how they are dealing with that same problem. You're going to find out that others are in a shittier situation and handling it much worse for pretty much anything you can think of.

Here's another exercise. How about reading the newspaper and seeing all the headline shit happening in other countries, then substitute that country for Singapore and see if we have that same problem and how we are dealing with it.

Go to another country and take your checklist of shit that you're so unhappy about and find out about how they handle it in their country. You don't even need to go so far. Just cross the border. Why not? Malaysia not good enough for you?

I'm not saying that because all other countries are having their own shit and we have less shit than them that we should be happy and contented about our position. I'm just saying that we should recognize that we are in a position with a lot less shit and we should slowly work on fixing the problems that we have in a smart way. The people who have brought us to this position of less shit should be given credit despite all the "massive uproar" over missteps like... a fucking MRT breakdown.

Do you really think that no more COE and ERP, no more CPF, no more foreigners will bring us to the pinnacle of developed "first world" countries and solve all our problems?

Just like stocks, we can make our decisions based on past performance as well as the present situation. Alternatively, we could invest in future promises. I personally prefer the former.

What irks me about elections are the people that know so little about government policies. They are probably voting based on a single issue that they like/dislike with complete disregard for everything else, yet they have the same vote as me. But, democracy, amirite?

At the end of the day, vote for what's right for the country. Vote PAP. Vote opposition. I don't care. I plan to live here and retire here, but all it takes is for the driver to make a few wrong turns and if we go backwards far enough, I ain't going to stay and put up with crap.

A sailor doesn't curse the weather, he adjust his sails.

Please be reminded of my house rules.

Sunday, August 16, 2015

SMARTER financial planning beyond 50: Property Downsizing?!

In the Invest section in today's newspaper, Lorna Tan talked about 8 issues that people approaching retirement should be looking at.

I really like the bucket approach and I think it is the most prudent way for someone with zero prior financial planning to start preparing for retirement. For people that have already started their financial preparations way in advance, the only takeaway is that it would be optimum to have such investments be matured or ready for withdrawal over a period of time to maximize their returns, rather than to have them en masse mature at the same time - retirement age.

However, I have a big beef with her point of #7, which is property. Her suggestion is to downsize the house. The next suggestion is to do the HDB Lease buyback scheme. I am not very sure about the HDB buyback scheme, so I shan't comment.

I think that for a retiring couple, a 3 room flat is ideal space-wise. While the extra bedroom may no longer serve its purpose as a bedroom for a child or a guest bedroom, it could be retro-fitted to be a hobby room or more likely - storage space. After living on earth for that many years, most people would have accumulated a fair amount of trinkets and possessions.

First, let's look at downsizing. 

Looking at the resale prices of HDB flats, if you choose to downsize, you would get on average between $60,000 to $140,000 depending on the flat you have and what you end up with.

Surfing around property guru, the listings for room rentals vary vastly. Rooms that rent under $300pm are almost definitely actually part of a room shared with multiple other people. Rooms can go as low as $500pm with just the bare bone basics and might not come with a fan and definitely without aircon. Proper functional rooms without psycho landlords seem to rent at around $700pm (confirmed by my Malaysian friend) and goes up based on location. Do take note that for the rest of the example I am going to use this number of $700pm, which in reality would differ from estate to estate and could be much higher for people living in better estates or at very good flat locations.

Thinking about it, collecting $700pm translates to $8400 a year, which is actually 13.6% of $61,765 (the amount "got back" from downsizing from a 5rm "study" to a 4rm)! It is common knowledge that the rental yield of rooms are much much higher than the rental yield of entire flats. Even from a 4rm to a 3rm, the yield is a very decent 6%. You tell me if it's possible to get 6% gross in the rental market today from an entire unit, even from shoeboxes.

If you're downsizing from a 5rm to a 3rm flat, you would get back $201,547, but you would be giving up a rental income of $1400 a month (1 rooms and 1 "study"), which translates to $16,800 a year or in other words, an investment that gives about 8.3% gross yield. Net? Probably easy over 7%.

Do you think it is better to downsize and collect back a big lump sum? What would the future returns of that lump sum be? Can the retiring couple resist the urge to "spend a bit for a treat"?

Would it not be better to hold onto a currently valued $201,547 real estate asset that produces 8.3% gross annual yield? Even if the rental market is in the doldrums and market rate falls by HALF, you would still be getting returns of 4%. Net returns still ought to be over 3% in that sort of doomsday scenario. If the property market is red hot, rental rates could rise and there is also a good opportunity for further capital appreciation.

Living in a bigger HDB and playing landlord for the first 10-20 years into retirement and then finally considering downsizing when it is too tiring to manage the tenants seems to me like the much more prudent and conservative strategy that actually produces very good returns as well.

The downsides? Lack of privacy and security, which can be mitigated by carefully selecting tenants and having a CCTV system. Repair and maintenance would likely be marginally more tiring, since upkeep is still required for the rest of the apartment that the tenants are not living in.

Retirees shouldn't be thinking about how they can invest and earn more money. Instead, they should be focused on smartly using their accumulated assets, which in this case might mean managing their real estate asset to produce supernormal returns and then only disposing of it much later.

NB: I don't think that people should buy bigger homes with the purpose to rent out existing unused rooms, unless they can reasonable foresee that they will expand their family and make full use of those rooms in the future. It would make more sense to just right-size your home to begin with. As appealing as all the intangibles sound and the ring of being a multiple homeowner, I have thought about it and I think it would make a lot more sense to invest the difference in REITs compared to another private property. However I can understand how people might be in this situation of having "unused" space in their homes when they are nearing or at retirement. In such a scenario, it makes sense to me to handle it in the way above.

Saturday, August 15, 2015

Do You Have Expensive Tastes?

I was actually halfway through a draft of this post when I saw this article by Just Some Thoughts regarding the exact same topic. That pushed me to finish up my post on this topic.

Everytime I go and eat my favourite wanton mee, I always think to myself, "Damn, my life is bloody awesome that I can eat this whenever I feel like it!". I always have a good meal and a good day after that.

For a bowl of wanton mee, it is definitely not cheap ($5.50 for a big portion). But when you compare it to just normal casual dining restaurant food where you'll be paying around $20 per pax, sweating a few dollars more is a price I am willing to pay to eat this wanton mee in a semi-restaurant setting.

(Photo credits to Johorkaki, please see for more photos and review)

Personally, I think that someone who is able to truly enjoy the simple joys in life is someone that is going to live happy. That is not a hard conclusion to arrive to. I try to live a life where I do not need or long for expensive things and expensive experiences.

Perhaps if I ever do get so wealthy in my future, I might indulge in absurd things. The point of money is so you can spend it on happiness anyway. But for now when I don't feel absolutely certain about my financial situation in the future, such things are just.... irrelevant.

I don't know if its a generational fad of if it is something people do when they hit their 20s, by apparently everyone around me is crazy about "diving" these days. It's not to say that I don't like the idea of diving. I quite enjoy the outdoors and nature!

(random public image)

I know a quite a few divers. After looking at their diving life, I think the costs scared me away. First there are the diving courses so you can actually go out and dive. Then there's all the dive trips after that. Which of course have to be done overseas, so they are forced cum-holidays as well which means airfare and accomm. Then there's all the diving gear. Apparently there are dive watches too. My friend just dropped $800 for one. After that there's all the photography stuff. Every diver seems to have a GoPro. Diving is not a hobby that can be done alone, so all that extra socializing costs aren't even counted yet.

The reason why I'm picking on diving so much was because I was actually genuinely interested! I actually almost signed up to learn diving, but then I thought about it and decided against it. After all of that, I would probably only have time to dive maybe once or max twice a year.

This is just one example of an expensive hobby that I have decided against picking up. There are plenty of other hobbies that I will refuse to partake in. Golf? Horse-riding? Motor sports? Watch collecting? Nope, nope, nope. Travelling to foreign countries to take selfies with semi-famous monuments? Hell no. Why people pay thousands to go to a foreign country, take that selfie and then spend the rest of the time connected to wifi at the hotel or at the shopping centre is beyond me.

I'm not saying that all these things aren't great things to have. They are lovely. But these arent my #lifegoals . I'm not working hard in my life so that I can get and enjoy those things. I already know and am very certain that I can live an extremely happy and fulfilling life without those things or hobbies.

I'm honestly just as fine taking the MRT and checking the time on my phone. Bring me out to eat Eng's Wanton Mee. Have a nice rainy afternoon to read some chapters of my book and watch some Korean dramas. The thought of me being able to so easily do things like that and enjoy myself already makes me happy.

If only expensive things can make you happy, be prepared to be unhappy.

Thursday, August 13, 2015

Hanging out with Giraffe Value

Today, Giraffe Value wrote a post where he interviewed a very handsome blogger, which is none other than myself. Haha, walao so bhb max. Okay, just kidding. I actually quite fugly, that's why I never show picture.

It's okay, fugly nevermind. As long as got money, got honey, right? (women are tracing my IP address and plotting my murder right now as we speak)

Anyway, jokes aside, since my blog is run like a dictatorship, it never occurred to me to talk about what other people might what to know, instead of forcing people to read the insanity that brews in my mind. An interview forced me to answer the question instead of rattling on impulse about whatever just sparked up in my tiny brain.

GV asked me some interesting questions, so if you're curious to read more about our exchange, head over to his blog and read his post!

I think I've got to remind people that I'm just a 25 year old guy stumbling through life. I share my thoughts publicly because I think that it might help the few people having the same thoughts and also because it helps me declutter my mind about that topic. It is not because I am trying to be a guru or anything.

I hope people don't get my intentions wrong.

Wednesday, August 12, 2015

Pet Rock For You, Sir?

Just last week we saw Gold trading at $1080 and Silver at $14.50.

Right now, Gold is at $1122 and Silver is at $15.55.

Unless the Yuan continues to be devalued (which is actually a very possible scenario), I would put it that the USD has topped out.

A weakening USD is beneficial for all commodities, and that means Oil and Precious Metals too.

WTI actually went to $42.60 per barrel, which is just marginally higher than the $42 set in March. If the USD is going to weaken, this might be a significant bottom.

I am very very comfortable with my positioning and average price of my precious metals position now. I am resisting the urge to continue to add even though I think the prices are still fantastic.

If this is really the start of the shit hitting the fan, I need to be holding onto as much cash as I can.

[XMM STI ETF Investing] My STI ETF Playbook

I did mention in my most current monthly update that I am finally interested in the STI after it has made a leg lower.

The SPDR STI ETF (ES3) made a closing high of $3.54 on 16 April 2015. The schedule of my future purchases if this is a bear market will be as follows:

I have decided to have my allocation based on lots since it is easier to implement as my portfolio isn't large enough to round off effectively to the near $300.

After the 10% drawdown mark, every additional 5% drop will trigger a buy order. After the 1st signal, the next purchase will be 2 lots and increase by 2 lots every signal until it reaches 10 lots. At a 40% off it's peak, additional 4 lots will be purchased instead from 14 lots onwards. At the 60% mark, I will be buying a final purchase of 30 lots and would have exhausted all my current dry powder.

Basically this follows loosely on the principle of value averaging, which dictates that you should buy increasing more units the lower the price goes.

This is just a simple mechanical strategy that I will be employing. If the STI drops 60% (really though, what are the odds that it drops 60% from these rather fair valuations? no sarcasm here), this strategy would have me 95% invested based on my current portfolio of $28k.

Logically thinking about it, if the STI is 60% off its high, wouldn't I want to be almost 100% invested? I think that this is a good strategy to force me to not time the market and keep my cool and invest in a smart way that runs counter to basic human emotions.

I have made my 1st purchase based on the 10% trigger and I now have 1 lot of the STI ETF purchased at $3.14.

I am more excited and looking forward for a massive blood bath now. I'm all pumped up, LETZ DO DIZ SHIAT. WOOHOOO LET'S GOOOO!

Please don't follow me if you don't know what the hell you're are doing. Actually, if you know what you're doing, you shouldn't have / wouldn't want to follow me anyway.

Off we go, down the rabbit hole.

Tuesday, August 11, 2015

Capita Comm, Why You So Loser?

Why is Capita Commercial Trust (CCT) being such a little bitch these days?

On Jan 23rd 2015, it closed at a high of $1.925.

Today it is at $1.38. This is a huge decline of 28% in a mere span of just 7 months.

NAV is at $1.72, which means that CCT is selling at a 20% discount to it's NAV. I strongly dislike buying REITs at a premium over NAV and this is honestly one of the more important factors that I look at.

Based on 1H 2015 DPU of 4.31 cents, the yield at current price is a decent 6.2%.

CCT has a credit rating of A3 by Moody's and A- by S&P, making it one of the highest rated REITs. CCT has a very low gearing of only 29.5%, making it one of only 4 REITs to have a gearing lower than 30%.

It seems that the market is thinking that CapitaGreen is going to be shit because it only has a current occupancy of 80.4%. The leases on CapitaGreen are long, expiring only after 2018, so I don't know why this seems to be an issue.

CCT has a portfolio occupancy rate of 98% and if they exclude CapitaGreen that has just started, it would be an impressive 99.7%.

CCT is a branded REIT and has well-known properties in central locations. It has a good credit rating and low gearing. Valuations seem attractive to me.

Revenue up, NPI up, DPU up, NAV up.
But, stock price down. What gives?

Is this scare because of the alleged "rate hike"? Many people have come out and talked about how "rising interest rates are bad for REITs". It's obvious that at ZIRP, interest rates can only go up. However, I strongly strongly strongly doubt that we are going to see sustained higher rates in the near future. The Fed may really raise rates, or maybe they won't. However, I've done my homework and I know that interest rates has nothing to do with long-term REIT returns. The correlation is 0. If rising rates are making REITs sell off, then by golly, I'm going to be buying all this shit up with both hands. If bonds, then of course! I know a lot of people don't agree with me on the interest rates / REITs relationship, but hey whatever, that's what makes a market right? You don't want to hold it anymore? I'll take that shit off your hands for you, you're most welcome.

There is absolutely no need to rush into the markets now and use up all your dry powder. The fireworks show hasn't even started yet! The STI is only 10% down.

But at a price like this, I wouldn't mind to nibble into CCT, even if it is on it's way down into the abyss. This is a good price to me already. Can it get cheaper? Why not? What will I do? Probably buy even more.

It's madness, buying stocks when they get cheaper right? Or is it?

Monday, August 10, 2015

"Bro, Weak Wrist Game"

This has actually been something that I've wanted to talk about for a long time, especially when I hear so many stories about watches from time to time.

The last real watch that I had was a $100 Seiko watch that my parents bought me for my 20th birthday. It was a nice, clean and simple design and I wore it to school on days I dressed up or had a presentation, or if I was going out for a nice occasion. I've had many people compliment me about it and some genuinely inquiring more about it because they were actually looking for a simple but elegant watch to buy. Unfortunately when I was about 23, the watch died on me. It was worn, beat up and scratched up from the short few years of casual usage. Since then, I've never had a "dress" watch.

Today I have 2 digital watches. One is a GPS watch which I use when I go out and exercise to help log all my run data. I can't run with a phone on me, I find it very uncomfortable, but that's just me. This watch can be annoying sometimes because I'd want to go for a run and I realized that it's not charged, but I have to admit that I find having my run data and history pretty useful.

My other watch is one of the basic standard Casio watches. Yeah, this one. The one with the "10 year battery". I believe I got this watch sometime during NS because I lost my other Casio watch outfield. When I bought the watch from the auntie down at the watch shop, she told me, "Okay boy, I see you in 10 years time to change battery!". Damn funny, haha. I use this watch when I exercise and I don't need the GPS function, but also for when I go travelling. I'm a bit of a paranoid traveller, so I hate to pull out my smartphone in public, but how else would I know the time? Well, with this watch of course.

And that brings me to the reason why I don't own a dress watch and I don't wear a watch everyday anymore.

Today, everyone carries their phone around with them every second of the day. Perhaps the time where your phone is the furthest distance and away from you the longest is when you take a shower or do some sports. If you have your phone with you all the time, I really don't see the functional need to have a watch. Time? Date? Alarm? World time? Stopwatch? Countdown? A phone does all of that, and more.

I must admit that some watches do have some cool functionalities, like altimeter and compass, but then again you don't have to pay thousands of dollars to get a watch that can do that.

Some people will say, but hey, what happens if your phone runs out of battery? You won't know the time! Well, there are watches and clocks everywhere. And there is also the old school way of how we used to handle these sort of situations in the past, which is to poke a stranger and ask, "Excuse me, do you know what time is it?".

In terms of aesthetics, I must admit that a watch which is well matched to an outfit can improve a look. I've seen decent watches under $200 that are sharp looking and easy to match with a variety of styles. If I was going for form over function, I'd rather have a small arsenal of watches to wear on different occasions than a single obscenely expensive piece to be pulled out for everything. That is to directly say that wearing a Patek Philippe while wearing old army singlets and shorts when you go to the market is not going to make you look like a million bucks, but rather an idiot instead. I think it's a pretty huge misconception that the watch is the most important dress piece and says everything about you. Yeah maybe it does, that you are a big douche?

One of the most obnoxious situations that I have ever experienced in my life was overhearing 2 friends around my age talk about watches for 30 minutes while trying to convince me that I should totally buy a luxury watch. It made me sick listening. "You've never truly lived until you slap down $20,000 in cold hard cash to buy a watch". Are you freaking kidding me? That's the definition of truly living life? I questioned my friendship with them after that. Smart fellows, no doubt. Superficial? To the max.

What is a watch? A symbol of how much money you have? That you have so much money you can buy a $50,000 watch in your mid-20s? Of course, buying it on an installment plan kind of ruins that sexy luxe lifestyle image one might be trying to achieve.

To me a watch was and still is an instrument to tell time. However, in this modern day and age, it can also be a telltale sign to how obnoxious and superficial some people might be (note: not are, but might be). I've heard stories of girls meeting guys and then searching how much their watch cost to see how rich they are. Sounds crazy, but I swear it happened.

I don't see anything wrong with owning a nice and expensive watch if you're rich. What the hell are you going to do with all that money anyway? The point of money isn't to accumulate a huge pile then die on it. But I think that there is a problem when a person buys an expensive watch so that other people will think they are rich. A true watch aficionado at 25? Dude, you need a new, realistic hobby. That's like me saying that I only date Victoria Secret Angels.

I know that there are Facebook groups of watch fanatics where people take "wrist selfies" of everything they do. On the train to work, selfie of wrist while holding overhead hand rail. At work, selfie of wrist with desk in the background. Going to eat at lunch, selfie of wrist while in the food court. Going to watch movie, selfie of wrist with movie tickets. Seriously? I don't think that there is anything wrong, especially since it's a group of people doing what they like and sharing their interests, but it just blew my mind that people do that. I guess if you really do freaking love watches, getting a nice watch is worth it to you. Whoever said money can't buy happiness didn't know where to shop.

Being rich should not cheapen the happiness and experiences of simple things, but sadly that seems to be the mindset that I see quite a few of my friends shifting towards. "Not expensive = not good". I don't prescribe to that kind of logic.

But then again, what do I know? I'm probably just some poor 25 year old loser that is sour he can't afford a luxury watch.

Saturday, August 8, 2015

When Minimum Wage Backfires

Case #1: Walmart

Walmart raises the minimum wage for its employees to improve worker morale.

However, the opposite effect has taken place. Current senior workers who have been working for many years have suddenly realized that brand-new employees with no experience or knowledge would be getting salaries similar or slightly below them.

Many senior employees are extremely dissatisfied and feel like their contributions and efforts over the years are being under-appreciated.

Case #2: Gravity Payments (Source 2)

COE decides that everyone in his company should have at least an annual salary of USD $70,000.

The people in the most senior positions got small or no pay raises, while the people doing the jobs with the least amount of skill required and no experience had their salaries doubled.

Feeling that new policy was not fair, some key members have left the company.

New people hired to manage the additional work cost substantially more given the minimum wage set by the company.

Customers that did not agree with this "political" statement have stopped working with them.

Other customers do not believe that the company's business model is a good one and have left due to future expectations of higher service fees by the company.

Personal opinions:

I am not a big fan of the minimum wage. I'm more like a USB-powered mini fan of it. Useful in some situations, but not most.

As a citizen, I understand that the government has to somehow ensure that the low-skilled citizens are able to get jobs because it can become a social issue, even though it is an economic drag.

As a human being, I don't think that 2 people doing the same quality of work should be paid differently because of whatever.

I think that regardless of being a man, woman, young worker, old worker, citizen or foreign talent, salary ought to be paid based on quality and other work-related factors. However, that is just what I would like to imagine it would be like in my imaginary world. In this imperfect reality that we live in, there will always be discrimination.

Don't be confused and look at the perfect theoretical outcome, but rather look at what is the best practical situations in reality now. Discrimination is of course not ideal, but as long as it exists in society, there should be a way for people to deal with it and overcome the hurdles that it places in front of those people.

For people facing discrimination in the labour force because of whatever reasons such as, education qualifications, having ovaries, physical handicaps, social disorders, different race, different religion, plus sized, unpleasant looking, body odour etc, their only tool that they can use to bargain for a chance to prove themselves is their salary.

A minimum wage effectively places a lower limit to how much they can bargain, and it restricts their ability to fight back and prove that whatever nonsensical prejudice is being held over their head is exactly just that.

If the minimum wage is so awesome, why is it $1,000 a month? Why not $1,500 a month? Sounds okay right?

What about $2,500 a month. Or $3,000 a month? Do you feel slightly uncomfortable now?

I still believe that the current PWM is a minimum wage, but I concede that it could be justified if wages are indeed being suppressed and are not adjusting as quickly as compared to the free markets or if they are engaging in social engineering. If it is the former, then it seems that somehow our government has found a free market mechanism that isn't prices. I don't buy it, however I'll just go along with it. The way I see it, the government is just taxing the companies that hire these people in order to create social stability. It don't know whether it's a good thing or a bad thing, but it sure must suck being a business owner with that sort of hiring requirements. However, it could be the latter since the economic optimal point may not be at a socially optimal point. This clearly can exist, which is why housing policy is not a complete free market. There is an economic drag, but the social benefit outweighs it. The issue here is if their policies of social engineering is going to have the correct positive effects that they were aiming for.

Somehow or rather, we seem to be slowly morphing into a communist socialist country where everyone feels special and entitled and that the government should look after them. Happy SG50 everybody.

Friday, August 7, 2015

The Dollar-Oil Relationship

Personally, I am in the view that we are very close to a bottom in Oil.

The worst declines of the rig counts seem to be over. The market is extremely negative on Oil. The only factor that isn't playing nicely with my thesis is the USD, which I think is the most important factor of the 3.


The good guys from Market Anthropology make awesome observations like this.

If the USD tops out here, we would see Oil make a bottom and head higher. So what is the USD doing and what has it done before in the past?

I think this chart is just amazing.

The current narrative is that every mother son is long USD in anticipation that a rate hike will send demand rushing back for US treasuries. Which is why the USD has been on a disgusting climb the past year. Will it continue?

I think not. The last time we had such an extreme move in the USD was back in the 80s. Look what happened then.

The USD peaked out and reversed it gains rather quickly.

Of course, history doesn't repeat itself exactly, but it does rhyme.

At these levels of overbought, I am expecting a reversal in the USD strength in weeks, not even months.

Basically, observed in singularity, many signs are pointing to me that the drop in Oil may be over very soon. On it's own, there are many good reasons to look at the USD topping out. Add their close inverse relationship together and do the math, it seems very plausible to me that they will make make important turning points roughly at the same time together.

I may dive into broad commodities, but I think it is more likely that I would increase my positions in the precious metals. I bought Silver at $18 with a solid thesis. Silver at $14.70 still has that same strong underlying thesis, but at a much better price.

I would not be too eager to chiong into oil-related equity firms just yet. Even if oil prices do not go lower, stock market weakness could mean weakness in oil names as well.

WTI is at $44.20 now. Will it make a slightly higher low than it's previous low of $42 in March? I'm not sure if it will, but I know what I would be doing if it does.

Thursday, August 6, 2015

SSB vs GE 2% Guaranteed Saver

After reading this post by Dollars and Sense, plus seeing a flood of recommendations and also infographics like this being shared around on my newsfeed, I decided to talk about this.

Let me be very clear and upfront. I do not fancy insurance and insurance agents. That's just my personal bias. I have to talk about insurance even if I don't like it, because insurance is part and parcel of life.

In all honesty, this GE promo actually looks quite pretty decent, as far as an "insurance" product is concerned. However, this isn't insurance in any shape or form, which is why it pisses me off that they EXPLICITLY STATE Guaranteed issuance with no medical underwriting on their product info webpage.

If I'm selling chicken rice, do I need to add that "All customers are guaranteed issue with no medical underwriting"? Absolutely ridiculously. I hate it when "insurance" products are dressed up and presented in such a way.

Anyway, shoutout again to D&S for writing about this and doing the real work comparing the pros and cons in their article, but I'll do a simple recap.

Default risk is a no brainer. MAS won't default. Great Eastern, as slim as that probability is, could default. You take a risk (admittedly, a small one) with GE.

Returns for the GE promo is 2%, nice and easy number. The SSB is a moving target and based on this reference table from FSM, we are looking at yields between 1.94 and 1.98% as of now. Of course the finalized yield will only be known when the bond is issued and it could definitely be higher than 2%. But for now, it is under 2%.

Minimum outlay required for the GE promo is a whooping $20,000. Do you have that kind of cold hard cash to drop? With just $500 and in $500 increments, you can invest in the SSB. This is a big factor.

Early redemption for these kind of saving "insurance" plans are of course, usually not possible, or possible with a "surrender value" which might actually eat into your capital to redeem. The SSB can be redeemed the following month and it will retain its capital value as well as any interest earned between the semi-annual payouts. Partial redemption is also possible. This is the most important factor in my opinion, as you can put in money that is not only specifically meant for use after 5 years. If you want to redeem some amounts in case of an emergency or an unforeseen expense, it is possible to do so conveniently and without penalty.


By losing out on 0.05%  of returns, you will remove default risk, allow the minimum capital outlay to be as low as $500 and add the option to redeem your capital in a month's notice with no penalty.

In a month's time when the bonds are issued, the 5 year returns could have moved up by then and perhaps be even offering more than the 2% from Great Eastern!

The biggest and least talked about comparison flaw is that you don't need to redeem your SSB after 5 years if you don't want to. After 5 years if you realize you don't particularly need the money for anything, you can keep it for up to another 5 years and immediately have a product that earns 2% and increases every year.

The main drawback of the SSB? The $100,000 limit. But seriously, that's a 1st world problem right there.

Investors need to clearly understand the differences between products like Fixed Deposits, the SSB and "insurance" savings products like this GE promo before they have over thousands of dollars of their hard earned money. Marketing gimmicks to juice up returns are very common and it is basically industry accepted practice nowadays. (See this example for OCBC's Bonus+ Savings account)

I have to admit, the people I know working for Great Eastern are pretty good guys. I know that they are smart for sure. I recently found out that a girl I had a major crush on back when I was 16 has become an agent. This current savings "product" is probably one of the best that I've seen that has clawed out from the insurance world.

But is this product really good? Objectively and relatively to other options?

Without a doubt, I would buy the Singapore Savings Bond instead.

Of course, if I had $20,000 and my insurance agent is my old crush, that would be a whole different story.

Wednesday, August 5, 2015

[XMM STI ETF Investing] July 2015 Update

It has been quite a while since my last update. I have been updating on my spreadsheet monthly, but I always forget to post up my review.

As mentioned previously, this will be my attempt at having a monthly update of the small portfolio that I am running for my sister and mother. The aim to have as little downside risk as possible, and maximize returns from there.

No changes to the portfolio this month, I am still playing it safe because the STI doesn't seem to offer any very compelling entry points yet. It looks fair valued, but I just feel a buying opportunity coming around soon.

Here are the current stats of the portfolio as of end July 2015.

31 July 2015       Sister             Mom               Total       
Amount Contributed

31 July 2015  Stocks  BondsCashTotal
Amount Contributed

- Bonds are in UOB SGD Fund Class A with 5902.1 units.
- Cash is earning 2.25% from filling up the remainder of my OCBC 360 account.
- Additional $600 was added to Cash.

Starting May 2015, the OCBC 360 account now only gives 2.25% interest. This is unfortunate, but it is still the best cash option for me.

Returns for the rest of this year should be quite optimistic considering that the bond fund was busy paying off its sales fee last year. I will most likely be running out of space in my OCBC 360 account as I near the $60k limit myself, which means I must find this cash another good yielding alternative

I have rebalanced the portfolio in January to have a better portfolio allocation between bonds and cash. I think a 40/60 split between bonds and cash is a good "war chest" allocation, especially since I highly suspect that 2015 will have an opportune time for me to pick up some lots of the STI. 2014 did not even experience a 10% correction the whole year, so just simple probability is telling me that there will be an opportunity soon. Very very soon.

Based on the amount of cash I have on hand in the portfolio, I will be executing this plan below:

I buy my first STI lot once the 10% drawdown mark is reached. After that, every additional 5% will call for another additional lot compared to the previous time.

-10%: Buy 1 lot
-15%: Buy 2 lots
-20%: Buy 3 lots and etc.

It's not a scientific method at all, but it follows the basic principles of value averaging which calls for buying more when the price goes lower.  Of course, I don't want things to be so mechanical, so on top of this, I may opportunistically invest the fresh cash added each month into the STI or even liquidate my bond holdings if the opportunity really is once in a lifetime.

The goal is to average down without being too kan chiong or humji, so I think the base case would suit me fine to help me dip my toes into the STI at increasingly safer levels. That's right, the lower the STI falls, the safer it is to invest!

No rush at all, really.