Tuesday, May 30, 2017

1st Crypto Roadblock

I've encountered my first cryto roadblock! It is an interesting one, to say the least, and one that can only actually be discovered with 1st hand meddling and play around with the currencies.

I had discovered about the Ethereum name service and I wanted to snag a name for myself, but doing that would require paying for it in Ethereum. Based on what I saw, it worked out to be about $3, not bad to be able to reserve a future address like GMGH.eth so that it is easy to receive funds in the future if it really takes off.

I bought $10 worth of Ethereum (ETH), just to play around with. I had heard that transaction costs were about 4 cents.

Oh boy was that outdated information. That was true if ETH was $10. At $150+, the transaction cost is actually closer to $0.60USD... or $1!

The exchange of course charges a fee to change $$$ into digital currencies.
Then to transfer out the currency also has another layer of fees.

Just buying the currencies and moving the money out cost me $3!

After I got my $7 out, bidding for my .eth name and paying for that transaction was another $5.80.

Now I have a balance of $1.20!

Ugh, it's quite steep. I thought transferring in digital currencies are supposed to be cheap. What happened?

Well, see that's where I make mistakes and try to learn from them and also share the information with everybody!

Average BTC transaction cost in SGD: $5.00 and 40 minute confirmation
Average ETH transaction cost in SGD: $0.81 and 1 minute confirmation
Average LTC transaction cost in SGD: $0.16 and 3 minute confirmation
Average DASH transaction cost in SGD: $0.10 and 1 minute confirmation
Average DOGE transaction cost in SGD: $0.01 and 1 minute confirmation

BTC is not only freaking expensive, it also takes forever to confirm.
ETH is the next most expensive (but still cheap by a long shot), but confirmation is a lot faster

LTC is at pretty acceptable levels of cheapness, but confirmation is slightly longer.
DASH is actually cheaper than LTC, and also has a faster confirmation time.

DOGE is crazily cheap with a very good confirmation time as well

Sources: bitinfocharts

DOGE obviously looks awesome, since it is not only cheap, but also very quick at confirming transactions. It has extremely healthy market volumes too, so it's not just a joke. However, it is still a POW system and its joke status and history is a pretty good reason why it's not being adopted on a massive scale. It is also tied to LTC and it is only surviving because of it. It has endless, but reducing inflation, not sure if that's a good thing (prevent hoarding vs. inflation).

DASH and LTC both seem pretty close to me, but my stats on them differ wildy. Coinmarketcap puts LTC volumes at a whooping 17% of market cap, while bitinfocharts has it has just 3.25%. For DASH, coinmarketcharts has it at 4% and bitinfocharts confirms it with 4.25%.

However, it does seem like LTC does have very high volumes, which is due to Chinese miners. LTC has implemented Segwit, as such, LTC has boomed from $5 to $35. With the upcoming lightning protocol brings in XCTx, it seems like LTC could run up even more. It actually really seems very promising.

DASH has its hybird POW/POS model going for it. Even though it's a later player, it has already climbed all the way to be just being LTC in market cap. The volume of DASH leaves much to be desired though.

It is painfully obvious that BTC is losing its edge. ETH has already pass the 50% mark when compared to BTC. However, it's high transaction costs is going to be a problem. Then again, when compared to BTC, you can see that ETH is BTC, but better, faster, cheaper and with more uses.

Unless BTC can make some major radical changes, I wouldn't be surprised to see ETH take over BTC in a very short period. Maybe by 3Q? Might be a good time to jump onto the ETH train.

Are there any crypto investors out there that want to have some discussions or point out any mistakes or flawed thinking that I've made so far? Reach out to me in the comments, email or encrypted email!

Monday, May 29, 2017

Planning on going into Cryptocurrencies

So, I'm planning to take a small amount of my investible assets and "invest" / gamble into cryptocurrencies. Since it's such a long word, I'm just gonna abbreviate with CC.

Fact 1: The market cap of all CCs is about a whooping $71B now, and it is rapidly growing.
Jan 15: $5.5b
Jan 16: $7.1b
Jan 17: $18.2b
Source: coinmarketcap

Fact 2: BTC used to dominate the market with over 90% market share until 2016, hovering around 80% through 2016, but since 2017 it has dropped to under 50% of market share.


Fact 3: Many companies (Wordpress, Overstock, Microsoft, Expedia, Newegg, Dell, Steam, Zynga, Mint... ) are accepting digital currencies as payment (mainly BTC now, but many more CCs are riding the wave and offer advantages over BTC as a payment method)
Source: 99bitcoins

Conclusion 1 based on Fact 1: Crytocurrencies will continue to grow. I have multiple reasons that could explain this. Weak fiat currencies run by weak governments is one. Weak banking infrastructure and expensive methods of payments and transfer is another. Lastly, capital controls (permission of transactions) and privacy of transactions is pushing people to find alternatives that solve those problems.

Conclusion 2 based on Fact 2: BTC's dominance as THE king of CCs is being challenged by many other CCs, arguably with much better technology, and only lacking the network effect and adoption. Feature to feature, usability to usability, benefits to benefits, BTC is a weak CC with limited uses and many who are knowledgable about CCs acknowledge this fact.

Conclusion 3 based on Fact 3 + 1: CCs being accepted as a form of payment by companies is going to spur the adoption of CCs by more people since it is no longer just some geeky shit, but it is actually usable.

Final Conclusion based on Conclusions 1 + 2 + 3: Crytocurrencies will continue to grow for 2 reasons - users willingness to shift from traditional fiat currencies to an alternative system that address the issues they face AND the accepting network of businesses that are willing to accept these currencies as payment (Note: countries with good currencies and financial infrastructures will have their citizens adopt CCs last because they are not particularly lacking a stable currency or fundamental features of banking). BTC will lose its dominance as the main CC due to its inherent limitations. Less popular digital currencies that can overcome BTC problems and can achieve critical mass will become the new standard for the next (mini-)era of CCs.

Action Plan:
Research the most promising cryptocurrencies, with particular attention paid to (1) Primary usage, (2) issues of BTC that it solves and (3) limitations and severity of those limitations.

Narrow down the list to a few currencies, then buy them!

Please feel free to comment below or email me if you want to discuss cryptocurrencies! 

Saturday, May 27, 2017

Thoughts on Bitcoin, Cryptocurrencies and the future of Finance

Hey guys, this is just a blog post of me taking a massive brain dump and just dropping whatever is in my head onto this page here. Ever since my recent post on Bitcoin hitting $2500 (subsequently went on to almost hit $2800 and it is now $2000), I've once again (I've done it before in the past, on 2 separate occasions) plunged back into cryptocurrencies to see what is going on at this front.

I'm afraid that this post is going to be full of technical jargon. Unfortunately, there is no easy way around this. If I explained all the jargon that will pop up, this is going to be a super long post. I'm sure 50% of readers know close to nothing about Bitcoin, 90% cannot name more than 5 crytocurrencies and 99% probably don't understand the mechanics behind it. So how can we proceed? I just talk and no one understands?

If you don't feel confident about cryptocurrencies, I strongly recommend that you watch this series of youtube videos. It was created by the DASH community (a cryptocurrency which actually allows real world spending through a top-up debit card), but the first 4 videos are relevant to all most cryptocurrencies (maybe I can explain why later).



The general public (99%) have the view that digital currencies are just like "digital funny money", that it doesn't have any value and it doesn't have any real world applications.

While I have to admit that after my first 2 dives into digital currencies, discovering the dark web and even looking at the type of sites that accept digital currencies, I think it would be rather safe to say that the association of digital currencies with unpleasant / questionable things is warranted.

What are the things that you could buy with digital currencies then? Well, excluding the dark web (drugs, weapons, assassination contracts, etc), most of the things on the clear web were like VPNs and gold bars. Very tin-foil hatty, if I may say so myself.

However, much progress have been made. I think the most impactful headway has been made by allowing digital currencies to transact over the current payment platforms, thereby allowing digital currencies to be accepted... sort of. These services almost always hedge for the merchant, meaning that the prices are set in fiat currency and the digital currency FX rate is just adjusted based on the market value. Although not revolutionary, you can't really fault almost any business for not wanting to accept digital currencies outright. However, these services finally bridge holders of digital currencies to transact in the real world through a 3rd party. Not only does it bridge the gap, it does so automatically, without the need to pull out wallets and transfer with QR codes, but also without needing to wait for tx confirmation.

Digital currency debit cards allow people to buy real goods and services without all the hassle of the other party not only knowing, but willing to accept their digital currency and also knowing how to receive it. I'm sure these services aren't cheap, but it's a great way to show that they can actually be used for buying things in the real world. If there was more adoption and direct payments without the fiat intermediary, things would take off a lot faster.

Other than those cards, many big companies have also started to accept bitcoins as payment online. They are making good headway through gift cards as well. Many small retail stores also accept direct payment at their physical locations.

However, this is where a problem occurs, especially for Bitcoin. Since blockchain requires several blocks to confirm a transaction, direct Bitcoin transactions can take a while to be confirmed into consensus. Basically, what is means is that you can spend your BTC at shop A, then you can go to shop B and spend the BTC that you already spent at shop A. And you can keep doing this as long as the merchant is willing to give you the benefit of doubt and trust you that you transaction will EVENTUALLY get through. Of course, it won't in such a situation.

In a layman's term, it's like walking into a shop, purchasing a product, but paying with an envelope that supposedly has the money for the purchase.... but the shop owner can only open up the envelope and check X number of minutes later. The usual waiting time was under 20 mins. The current 7-day average of the tx confirmation time (meaning that there are transactions much slower than this) is 4 hours.

This issue of the tx speed issue and is one of the main reasons why BTC cannot be adopted as a point of sales method. There is no discussion to fix this, but this is a huge problem for BTC being viable for day to day transactions. People can't be waiting around even for 5 minutes every time they buy something.

The distribution of power in BTC is also a cause of concern. Since it is a proof of work (POW) model, the power is held with the miners. Since mining is expensive, there is a shift towards centralization and pools of power, rather than it being more spread out.

I personally prefer the proof of stake (POS) model, or even the POI model by NEM. That means that the power isn't handed over by default to people with expensive hardware. The power is instead with the stakeholders, people who actually own the digital currency and are motivated for it to do well since they have a share. The POS model solves the issue of huge miners with no initial stake pushing their weight around.

Of course, the elephant is the room is the pseudo-anonymous nature of bitcoin. Since all coins are on the blockchain and everyone can watch where everything is going, coins can be followed around and that creates a privacy issue, especially with banks and government controlling the entry and exits by matching addresses to people / businesses when they cash out.

Let's say a business is robbed and the robbers used the stolen cash to pay for goods. The money changes hands a couple of times, then it's your change after you bought some stuff. Yes, the stolen "cash" is with you now, but obviously you would not be faulted over it. The BTC blockchain is different, and it can be traced. So, how far back must a transaction be for you to not be held accountable? There is no answer to this.

This essentially is a fungibility problem. With cash, my $2 note and your $2 is the same. With BTC, it is a problem. Stolen coins or coins used for black market transactions can be followed around, except if it is thrown into a tumbler (virtual money laundering) and is obfuscated.

Many people actually see this as a problem as well, which are why the newer coin technologies have implemented ways to tackle this problem. Some solve it quite well (DASH with private payment), while others are implementing complete solutions (the zerocoin protocol).

However, this creates a new problem. The problem that governments AND businesses will not adopt or support a coin technology which is based on privacy, since they would not be able to check on transactions. This of course opens the pandora's box for tax evasion, money laundering... just generally bad stuff.

The counter-arguement would be that criminals wouldn't use a transparent standard that gets adopted anyway. Right now with BTC tumblers, it is still cheap and easy for anyone to hide what is going on with their money trail. With the first mover advantage, name recognition and a huge community to support it, BTC can still act as "digital gold". And just like how you don't see people paying for things at shops with gold coins or bars, it would be hard for BTC to be used in such a way as well. BTC seems to me more like a store, but then again there are newer technologies that could win over supporters.

Now that we're done talking about BTC, let's talk about the reasons for digital currencies and why it might be adopted.

For some of the coins with a very fast transaction confirmation (less than 1 min, some as fast as a few seconds), they are actually viable to be used as a point of sales method. Why would anyone want to do that?

Counterparty risk
Settlement risk

That's why.

If you get paid instantly and you see that money in your bank account, you've removed your settlement risk and can happily and confidently release your goods, knowing that you've been paid.

And since the money goes straight to your wallet, and not your bank or any other 3rd party, you don't need to have "trust 3rd parties" who basically add a middle man in between your initially direct transaction.

Digital currencies that can transact quickly immediately removes both counterparty and settlement risk. And the removal of risk also reduces costs that were previously associated with managing those risks.

Sending the digital equivalent of TTs would be almost instantaneous (instead of several days) with a cost more like 0.01% (instead of the industry standard of 1/8% + FX fees).

So that's for businesses. How about people?

I think for people, the cost becomes less of an issue, while the convenience, privacy and trust of the network becomes more important. Why? Think of the last time YOU transferred money to another PERSON. Now think of all the times that you transact with businesses. You've probably transferred money to people a couple of times the last month, while in a given day you could already have made several transactions by the afternoon!

Right now, I think the simplification of coin technology to laymen have advanced a lot. Some simple intro to block chain, followed by the important understanding of public + private keys and you're good to go. Certain currencies are trying to make it even easier for people by associating those long address strings with something like usernames, which helps for sure. I hope I can snag a good name if that really happens!

Privacy and trust is an issue too. If anyone had a choice, most people would say that they would prefer that NO ONE knew what they were buying or up to lately, especially businesses (customers can be subject to price discrimination) and governments. While many people believe that any currency that is private will fail due to the lack of support from businesses and governments, I actually think that it could be a winning point, especially if your government is failing ie. doing a really bad job in developing the country, the economy, stable exchange rate. In such a situation, you SHOULD be able to try and preserve your wealth by moving it somewhere else, and the government shouldn't be able to stop you. If there is yet another banking crisis in the near future (which I'm quite certain there would be one), the faith in the banks and of the currency of their country will be shattered by many.

I might even go so far as to say that a collapse in areas of the modern banking and finance system would encourage adoption of digital currencies.

Of course, that is very unlikely. In fact, I would say that it would be nigh impossible. If anything, a financial crisis would weaken the unquestioned faith of fiat currencies, the misplaced trust in banks, governments and offer people a parrellel and alternative way to do things that they already do (save, spend) with digital currencies.

So, don't get me wrong. I don't think that the world is going to digital currencies. But I see it that it is going to really pose a very serious and proper alternative to the traditional way of "it's always been done like that" thinking.

Anyway, to end off my thoughts for now, I do still think that the recent coin mania was a bubble, but I can totally see how it becomes even more and more bubbly. That said, while you could make 10X your money over a few months, you could just as easily lose 30% in 24h.


Why do I think it's a bubble with even more potential? There plenty of 15-25 year olds with YouTube channels going on about crytocurrencies almost as if they were fund managers. Some are rather bright though, and their massive profits speak for themselves, but its just food for thought to know how many young people have already gotten into digital currencies. Here's a video of one of the guys that I stumbled upon.

  

Of course I'm biased because he has precious metals, and thinks that bonds, stocks and real estate are overvalued. What's wrong with my echo bubble? Go back to your stock / property bubble and yell at me from there! (Haha, just some humour)

Thursday, May 25, 2017

Bit-Bloody-Coin



Bitcoin (BTC) is trading at freaking $2500 USD now.

That's just mind blowingly insane! (especially when previously I was considering buying in at $500, ehehe #notsalty)

I'd say that I understand cryptocurrencies quite well (better than your average Ah Huat). It takes a fair bit of brain power to understand how public and private keys work and how to move the money around. Interestingly, I even ventured into the dark web and discovered "tumblers", which are basically money laundering services. For the privacy-concerned, this is an essential step since all bitcoins can actually be traced moving around. Tumblers solve this problem, at least I think. Sure, it's more of obfuscating than actually washing, but I think it does the job pretty well.

Pair this up with direct P2P cash-BTC meetups and deals, throw in / hire a middle man with fake accounts to do the deal and drop offs, and you've pretty much got an almost anonymous way to deal with money.

Okay, sounds very criminal-ish, but that's the reality of bitcoin. It moves fast, it moves together with thousands of other transactions, the owners moving the coins around can be anonymous and finally cashing out requires no law, authority or permission. And to be honest, I think that is the appeal of BTC.

Personally, I believe that the future of money is the world is going to be local, sovereign currencies governed by each country, but co-exisiting with unregulated crytocurrencies.

I'm still waiting on a crytocurrency that has the potential to be go mainstream.

As it stands right now, BTC is used for allowing capital flight, black market transactions and money laundering. I question the amount of legitimate transactions going on with BTC.

Methinks that a future crytocurrency would be able to do all of the above as well, but the main difference would be that the volume of such "dirty" transactions would make up a fraction of the volume changing hands. I'm rather certain that most of the transactions and the bulk of the value of BTC movement are for sketchy purposes.

Definitely not a tech savvy hipster paying for his matcha-latte frap at a BTC-accepting hipster cafe.

If a crytocurrency can break into the mainstream for practical usage purposes, I believe we would have found our next "gold", or at least, an international medium of exchange.

Until there is adoption by at least a sizeable amount of people using it for actual day to day purchases, crytocurrencies are in a bubble to me.

That said, Japan legally accepts BTC as payment, so they do have that going for them. With the recent news that BTC has just enabled scaling (allowing more and faster transaction confirmation), BTC does seem like it could go mainstream.

If we see more countries accepting and legalizing BTC usage, I would say that it would be time go to into BTC. Even though its not intrinsically valuable, such "legitimization" would allow BTCs to at least be cashed out in those accepted countries and prevents it from being stuck or worthless.

Watching the meteoric rise of crytocurrencies lately and also hearing stories of a guy sitting on $2,000,000 worth of alt-coins from an $8000 investment also makes me feel like jumping in, but really, it's a lot of risk, but I guess for a lot of reward as well.

I await the rise of crytocurrencies and now I'm just on the sidelines watching the big boys slug it out (BTC, ETH, LTC). BTC is simplistic, but it works, it's improving and it's big. ETH is the new player, but it's still in development and seems highly speculative as of now. But looking at the volumes, it seems quite safe to assume that quite a lot of BTC holders are moving their profits and diversifying into this. LTC, while promising, looks completely overrun by the Chinese. This could lead it to have a bigger run up, but it could also leave it high and dry (no volume).

Of course, while all this is happening, we are also watching governments de-value their currencies.

I happily sit atop my pile and count my stash of precious metals.

Wednesday, May 24, 2017

10 Tips for "Adulting" for Graduates of 2017

Hello graduates of 2017! Congratulations and welcome to real life, where you now have responsibilities and can no longer hide behind the excuse of "but I'm a student!" anymore.


There ton's of things you need to do to "adult" properly, like have a proper resume, cleaning up your social media, etc, but I'll just go through the finance aspect of it all. I am a financial blogger after all. Even though I'm a small time blogger, some people say I'm on course to be almost as famous as Andrea Chong. My influencer management agent is not doing so well, so maybe that's why I'm not so famous yet (please join Huat Ah! Sosher, then we can go for food tasting together!).

"Looking for financial rants? Look for GMGH!"
(no, she didn't really say that)

1. Watch this Video


The rest of the tips here will never be as good as this one. If your only takeaway from this post was watching this video, that's good enough for me. This video will probably give you the best advice you'll ever hear, but I'm pretty sure that you're not going to like it.

2. Count and consolidate your money


How much money do you have in your bank account? How many bank accounts do you have? Do you have all your passwords / tokens to control all your bank accounts?

Are your parents or any other relatives safekeeping money for you? Is there any money that has been stashed away for "when you graduate"? Well, it's time you took it back!

In the adult world, NO MONEY NO HONEY!

3. Pay back "Ah longs"


Did you already have an agreement about the funding of your higher education? Did you manage to scam your parents to promise to pay for your university if you could make it in?

Do you have any student loans, membership fees, student credit card bills?

Knowing your debts and clearing them off is a very important part of successfully being an adult.

4. Begin take-over sequence


Bank accounts. Handphone bills. Insurance policies. Shield Plan. GP and dentist clinic and contact numbers.

Basically, you should be taking over and be in control of all your big people adult stuff already. No self-respecting adult has their mother calling to make dental appointments for them.

5. Start Fresh


This is my recommendation for the best starter products:

Current Account: POSB Everyday Savings Account
Savings Account: CIMB FastSaver
Debit Card: PAssion POSB Debit Card
*Credit Card* (optional, recommended only for advanced users): SCB Cashback Card

The POSB Everyday Savings Account is a good basic account with a low minimum ($500). Don't expect much from it. POSB and DBS (they are basically the same) have one of the best ATM networks around, and that's probably the only reason why you would want to have a POSB account.

The CIMB FastSaver is handsdown the best savings account for people starting out. With no special terms and conditions to fulfill, you only need a minimum of $1000 to start earning a very decent 1% interest on your savings.

The PAssion POSB Debit Card is amazing. It is your ATM withdrawal card, your MasterCard debit card, your PAssion membership card and ALSO your EZ-Link-sorta transport card (link it directly to your bank account so you never need to top up again!).

*WARNING, ADVANCED USERS ONLY* If you have been using a debit card, or even a credit card, and you understand how they work and how to pay off your dues, then you can consider adding this card into your arsenal. The SCB Cashback card is a no-frills 1.5% cashback card. That's it. Spend on whatever, get 1.5% back. No minimum spending, no cashback cap. It's basic, but it does the trick when a debit card just won't cut it. The golden rule is: Always pay off your credit card balance every month, in full. ALWAYS.

6. Protection is important


All those insurance policies I told you to take over? Evaluate them now! You might have endowment plans bought for you that you need to evaluate - surrender or let it run its course? This is also the same for a whole life insurance product that you might have. Insurance salespeople can be slimy and deceiving. The policy that your parents bought for you might no longer fulfill your needs, or there might be better, cheaper and newer insurance products in the market for you.

Insurance premiums have been dropping like crazy. If you're locked-in on an old plan, you might actually be better off completely trashing your current plan and buying a brand new one with the same coverage and maybe half the premiums.

Maybe people don't understand insurance properly and many people (including agents) mistake insurance for investments. Insurance is not investing. Anybody that tells you so is either an agent trying to make a sell, or a misinformed person. I've written quite extensively about insurance, so you can search for keywords on my blog, find posts tagged with Insurance or at least read my take on insurance in Singapore.

7. Prepare for Emergencies


Zombie. Vampires. Aliens. You name it, be prepared for it.

However, it's more likely to be a sudden medical issue, or an unfortunate incident that will require you to break the piggybank.

You MUST have an emergency fund BEFORE you start doing any risk investments.

A good rule of thumb is 6-12 months of expenses, but it never hurts to play it safe and have a bit more. Stick that money into your savings account where it will less convenient for you to dip into it. What's the point of having an emergency fund if its empty when you need it?

8. Invest / Risk only what you can afford 

Investing involves risk. Risk means that you can lose money. If you're investing, you need to ensure that you aren't gambling away your rent/food money!

A simple and easy strategy is to put aside a fixed small amount into some tried and tested strategies with known risks.

$100 a month into POSB Invest Saver is a good start. Maybe $500 in a Singapore Savings Bond to get yourself a CDP account and understand bonds.

Giraffe Value has a massive guides with step-by-step instructions for a variety of investment instruments (slightly outdated though). I think dropping by is a great way to familiarize yourself before you start actually risking real money.


9. Freeze this moment


Once you start working, you're not going to realize how quickly time flies from month to month and from year to year. The next thing you know, you're 28 and writing a blog for people 4-7 years younger than you to read.

I think it is important to know that your career does not define your happiness. You're in your early 20s now. You know what happiness feels like, and you know that having a nice job contributes to that happiness, but in most cases, it is not the source of happiness.

Too many people get caught up in the rat race and corporate ladder, chasing an ever shifting goalpost of what society's counts as success. Luxury accessories, private cars, condos. Next it'll be boats and airplanes. The race never ends. It is up to the runner to decide when to stop.

Just pause for a while and think about the things that make you happy right now. Good health, close relationships with family and friends, opportunities and time to explore your interests. I think most people can agree that delicious food, beautiful vacations, luxury goods and all are wonderful things to have, but they aren't essential things to happiness.

MORE MONEY =/= MORE HAPPINESS

If material wealth is what drives you, you need to be able to pinpoint when enough is enough. Most people dream big and end up small. I advise to dream humbly and realistically, and anything above and beyond that should be happily cherished as a bonus.

10. Go forth and conquer the world



10 years ago, utter the words Uber, Airbnb and Groupon and people will think you were mumbling gibberish. Today, they are multi-billion dollar companies.

We live in a world today where the possibilities for tomorrow is endless. Want to start your own business? Want to pick up a new skill? Want to learn a new language? Want to live in a different country?

Nothing is stopping you.

Having a good financial base gives you a sturdy and stable foundation to fall back on when things don't turn out your way. It is also a solid foundation to keep you on track to easily do the right things.

Have cheap and simple insurances to transfer away your risk that you can't afford to deal with.
Don't buy things you can't afford.
Save diligently.
Live happily.

and most importantly, PAY YOUR CREDIT CARD BILLS EVERY MONTH.

Tuesday, May 23, 2017

And Noble Dies


As some might know, I was actually a Noble shareholder, but I exited once I could verify the Iceberg report against them.

In fact, I actually made profits with Noble. A decent 3.4% for a month. Annualized is 50%, but that doesn't really matter, hehe. If you had cut loss in March 2015 after my post, eating a 15% loss then compared to what has happened now isn't that bad, right?

Even coming out in June 2015 when the next Iceberg report and Muddy Waters news would only be a 30% loss. That was the post where I called out Noble being a value trap.

As an investor that identifies himself as a deep value investor, it's times like this that really help me hone my craft. Being able to spot between value traps and discounted stocks is the main thing that determines the success of a value investor. Noble looked, smelt and tasted like a value trap to me. It has so far proven itself to be even more of a bad investment than I had thought.

(Coincidentally, this was the exact same time when I was buying into Super Group after its share price had slowly dwindled over 60%)

I think an interesting point to note is that Noble was part of the STI all the way until 21 March 2016, after losing about 70% since the Iceberg report about it came out. It took the STI more than a year to figure out at Noble was a risk and remove them from the index. So much for outsourcing stock picking to indices and let them decide the constituents, eh?

Today Noble is crashing due to the downgrading from B+ to CCC+. Basically it has moved from "junk" to "very junk" territory. Noble is down 28%, but trading has been halted. I wouldn't be surprised if everyone is grabbing anything they can and jumping off the ships. Speaking of ships, I would advise against blinding going in just because price has fallen, ie. "doing a Rickmers". We all know how that turned out, right?

"All I see is a bad company becoming even cheaper and cheaper. I don't see anything currently that can give it's share price support and form a price floor. What's stopping it from going to zero? Maybe it can turnaround in the future, but buying things that aren't obvious is gambling in my view, which is why I cannot wrap my brain around growth investing.
I'm going to stick my neck out here and call Noble a value trap. Maybe it is, maybe it isn't. I don't have to be invested in it to have front row seats to watch how this show ends." - GMGH, Jun 15

Are things going to start getting more exciting from here on out? Would there be contagion? What are the fall-out effects if Noble fails? What's the impact to Singapore, and the local economy and stock market?

GMGH, your favourite financial asshole, patiently awaits for all hell to break loose and for there to be blood on the streets. Or as your favourite unker Warren would say, to be greedy when others are fearful.

Do All The Little Things Add Up? (2017)

As per usual, I made my annual pilgrimage down to the Singapore Mint to change my coins into something more useful.

looks exactly the same as the last time I went

As I've explained before, one of the best life hacks that I've adopted that really has simplified my life is not caring about coins at all. I keep a coin box at my work desk, and another on my desk at home. Once I return from the horrible coin-giving outside world, I empty my pockets into my reliable companions who just gobble them up and keep them safe in their bellies.

I went almost exactly a year ago in May 2016, so I had about 1 year's worth of accumulated coins with me to deposit.

The total came up to a very respectable $307.32.

Since my first deposit in Jan 2014 until now (3.5 years), I've managed to put in a whopping $1200 worth of coins into these machines! That almost works out to be $1 a day. I can't believe I generate so much coins!

Anyway, the Mint's coin machine is back on tour, so you can look at the schedule here to find out where it's going to be next. The calendar actually stops this month, but I'm sure they will update it again soon once they decide where to site the machine for the rest of the year.

Sure, it's not exactly free ($0.00375 per coin after the 1st 1000 coins if you don't go to the HQ), but for someone with 1000 pieces of coins, paying about $3 odd for this service is not a bad deal. Especially when you compare it to the $0.012 per coin that POSB charges for the same service, this is cheap (~70% cheaper).

People of the world, I urge you to stop stalling the queue at the cashier while you fish for a 10c coin so you can get back a $1 coin or a note as your change. Just pay with what you have, drop the change into your coinbox and then never have to care about dirty coins for the rest of your life!

Monday, May 22, 2017

The Everything Bubble?


Honestly, I like Mike Maloney a lot. Quite a number of people think he's a shill and just goes on about tin foil hat precious metals stuff so that people will buy his book. I don't think that's true. He has time after time given away his book away at heavily discounts, or even for free. And to be fair, he book is 4.6 stars on Amazon and considered as the only proper book for precious metals investing in the modern world.

Anyway, just watch the video, but of course don't take everything at face value and keep asking yourself - "does this info really prove that it is in a bubble?".

Do I also think that we are experiencing an everything bubble? I don't find all his statistics particularly useful when taken in isolation, but with the context of combining all of them together, it is quite convincing to me.

Mmm, US stocks are overvalued on plenty of metrics...


Bonds require no special chart at all. Short term rates are basically dictated by governments.

Real estate in plenty of places all over the world, particularly Canada and Australia, look very giddy.

Personally, I buy into the tin-foil theory and I refuse to give in to the this time it is different camp. I'm not afraid of missing the boat, I know that there will ALWAYS be another boat.

My portfolio is mostly cash, cash alternatives, low-risk bonds, precious metals, precious metals miners and some stock here and there. I'm starting to look at silly places again... Brazil is back on my radar. I'm still holding onto Russia with 30% unrealized gains. I bought precious metals 2 weeks ago when gold was at USD 1225 and silver was at USD 16.20. I'm pretty happy with my precious metals buy.

Anyway, no rush. I find it really hard to find attractive asset classes or investment ideas to put my money to work. Since inflation has picked up a bit, that's not too good. But on the bright side, at least I'm getting about 2% nominal just sitting around and waiting.

Friday, May 19, 2017

[SGX Portfolio] Bye bye LMIRT

I bought Lippo Malls as one of my very first investments back in June of 2014. Wowza... that's almost 3 years! My thesis wasn't very complicated. Retail REITs are a nice class of REITs, Indonesia has the demographics to give a nice "growth" story, gearing was really low (just 26%) and most of all, because it was an overseas Asian REIT, it was just shunned by most investors, giving it a nice P/NAV discount of 10%.

Just a few months later in Dec 2014, price dropped a whopping 25%, from $0.405 when I bought it, to $0.305 when I was talking about it. If I had sold, I could have booked in a beautiful annualized loss of 50%, hahaha. Instead, I rolled up my sleeves and plunged myself arms deep into the anus of this beast (very graphic imagery, I know).

Fast forward to where we are today, the past month has seen LMIRT poking above $0.40. With prices slapping at my anchored entry price, it piqued my interest and got me looking at my LMIRT investments which have been a steady, steady dividend payer all this while.

Looking at the financial statements, LMIRT has a NAV of $0.3735 (1Q17 statement). I decided to sell all of my shares of LMIRT at $0.42, which represents a premium over NAV of 12.5%.

Does LMIRT really deserve a premium of 12.5%? Sure, Indonesia does have higher property yields compared to many countries, so a high premium does not necessarily mean a low distribution. However, one of my biggest guiding principles when it comes to REITs is the P/NAV premium and discount.

The "natural" premium of malls / strip properties is probably about 4% (just guesstimating from Green Street's data and approximating to the mall conditions of Indo). Throw in the default 5% deviation and BAM, you see that we're on the upper ends of what is plausible. Of course, this sort of thinking isn't that good since who knows what is an appropriate premium for Indonesia retail REITs and what its actual SD is.

Of course if you use dividend yields as your main metric, you'd likely get a different answer and that LMIRT is just fine for giving out about 8.5% dividends. To each their own I suppose.

My average price of my shares were $0.353 and I sold at $0.42, giving me capital gains of 19%.
I've collected quite a bit of dividends here and there, but since I've owned different amount of shares at different times, the dividends work out to be about 21%.

19% capital gains with 21% returns from dividends is a nice 40% gains. Over the past 3 years, that works out to be about 12% annualized returns, not too bad I guess.

Honestly, I like LMIRT. If the premium comes back to something more realistic or attractive, you can be sure that I'd be willing to go back in.

Buy low, sell high. That's the name of the game, ladies and gents

Wednesday, May 17, 2017

Who Even Takes Taxi Anymore?!?!


I stumbled on this Yahoo Fin article which had the original Value Penguin post about this.

Take note that the values above are supposedly BEFORE PROMOTIONS. That means coupled with promo codes + credit card tie-ups, you could be getting even bigger savings with Uber / Grab.

Another thing to note is that their calculations is based on the airport surcharge being $5, which is only true for Fri - Sun from 5pm to 12mn. For all other times, the surcharge is only $3. Ideally, you'd want to knock off $2 from their Taxi figures to make it more apples to apples, I would imagine.

That said, even with a $2 reduction across the board for taxis, taxis are still on average about 30% more expensive than Uber / Grab. Throw in promo codes and credit card promos and you could be looking at huge savings.

Why take taxis when they are more expensive and the quality variance of the drivers are so huge? With driver's rating directly affecting the driver's income (eligibility and tier for bonuses), I can say that my rides with taxi-atlernatives have almost always been very good. What are taxis ONLY advantage? Kerbside pick-up. That's it. And honestly, it's not a very big advantage, especially if I can tap a few times on my phone and save 30% of my transportation costs.

The sooner taxi companies realize that they are being raped - and for very valid, clear, obvious, transparent, economic reasons - the sooner they might just clean up their act and actually come up with a proper business model and solution which people would actually use.

As of now, only the tech unsavvy and tourists take taxis.

Tuesday, May 16, 2017

GMGH Insurance Review 2017

I did an insurance review just last year in Oct 2016, but I recently made some changes so I thought I'd just share that with anyone who is interested.

Change 1: Addition of standalone Early CI / CI plan

In November, I was pondering about early CI coverage. My main concern is how that my only current coverage is a rider of a group insurance policy. After weighing the pros and cons, I decided to supplement my early CI coverage by taking this standalone plan. It has slightly more coverage and relaxed claiming terms, but the independent nature of the plan is what won me over.

I went through DIY insurance and I have already received my commission rebate. It was a very fuss-free experience. I highly recommend it to people that are independent and know what they want. 

Change 2: Changing IP Shield and upgrading rider

I'd say this is probably the biggest changed I've made to my personal finance situation this year. I made a very long blog post about it in March after thinking about it for a long time, and that really helped me sort out my thinking. 

After getting a letter from NTUC telling me that my premiums was increasing and I get very "meh" extra bonuses, I decided that it's time I shop around for another shield plan.

In the end, I decided to go with AXA because of several reasons. Firstly, I had a very good experience with AXA when I was buying my DIRECT DPI insurance in Jun 16. AXA does have good duration of pre and post coverage (180 and 365 days respectively). Finally, AXA is the only insurer to offer a no-pay rider option without the bells and whistles.

I contacted AXA through their website and I got assigned an agent. She helped me answer all my questions and we met up for 15 minutes to go through the documentation. Less than a month later, my application was approved and I have already received my policy documents.

Of course, with the additional early CI policy and also an "upgrade" from a co-pay rider to a no-pay rider, my premiums have gone up.


All-in, my annual insurance burden is $2413.50 a year, or approximately $200 a month. Cash outlay is lower at $2016.50 a year, or $168 a month. My premiums would stay the same until I'm 30, so I've a few more years before some of my premiums adjust upwards.The difference in premiums at this stage of life should be very minor.

Compared to anyone else paying about $200 per month (most people forget to count DPS and their Shield plans), I think I have pretty good coverage levels - excessive levels, in fact.

Let's be frank. There's no reason anyone like me should have a $1,150,000 death coverage. I have no dependents. This runs counter to my insurance philosophy. However, given that it is so unbelievably cheap, it's almost criminal not to max out my MHA policy.

I think this is going to be the last time I make any major changes to my insurance policies. With what I have now, I think it is sufficient for me unless circumstances in my life change quite drastically.

If anyone has any questions, or want to discuss about finer details, please feel free to comment and maybe we can have some good conversations there.

Friday, May 12, 2017

China's Yield Curve Inversion


What is a yield curve inversion? When shorter tenure bonds have higher yield than long tenure bonds.

Why is this a problem? Banks won't lend out money because they wouldn't borrow short term money (typically cheaper, but now more expensive) to lend for the long term (typically higher, to pay back the borrowers + profit for the bank). It's not a difficult concept to grasp.

What happened in the past when a yield curve inversion happened? In China, it has never happened before (at least for the 10Y - 5Y). In the US, all 7 out of the 7 times that is has occurred has led to an economic recession.

Conclusion: Unless China has some magic bullet up their sleeve, this signals low inflation and low long-term growth. Economic recession looks imminent, especially with their WMPs looking more like WMDs. A crash in China assets and a devaluation of the RMB? Who knows!

Wednesday, May 10, 2017

What does Jack Bogle, Jeff Gundlach and... GMGH have in common?!

What does Jack Bogle, Jeff Gundlach and GMGH have in common?

How about all of us being geniuses? (haha, I'm just kidding about myself)


Okay, so what is it that we really have in common? Well, it's that while we all think index investing is wonderful, there are limits to it being a forever successful strategy.

Don't get me wrong. Don't get triggered so fast.

I own ETFs and I think that indexing is a very decent strategy for most people. However, there is NO strategy that is infallible. There is no holy grail investment with low/no risks and high returns. There are obviously some strategies that are better than others (value, growth, momentum, etc) and some which are worse than others (buying stocks that start with a certain alphabet, or based on your horoscope). Index investing falls into the category of the "better strategies", but that is not to say that indexing is perfect, meant for everyone, in every situation, all the time.

One of the things that irks me is the fact that almost no one ever talks about the risks and problems about indexing.

Yes, even Jack Bogle, the freaking guy that started Vanguard, one of, if not, the biggest asset managers in the world (couple trillion AUM) that is literally built upon indexing, has said that indexing has a limit. The same limit that I mentioned 3 years ago - the problem if everyone starts indexing.

With 25% of the US market already indexed, and growing, the financial markets are steadily marching to a world where everyone becomes a freeloader and hopes for average market returns. Of course, you wouldn't need to be a professional freeloader to know that if more people are freeloading than contributing... it doesn't work out. Price discovery breaks down and the net worth of countless of people can be pushed around on a daily basis by the remaining and actual market participants.

Gundlach is even more critical of index investing, but his points are absolutely valid. Indexes are still created upon a set of rules that someone has come up with. The only difference is that a computer follows those rules without question, while the human that created those rules, can choose to follow or break those rules, and also charges a more expensive fee.

However, his point isn't about the more expensive fees. His point is about how indexes are still subject to human creation and influence, which means that managers can still decide which stocks to include and exclude from an index, and in what amounts...... HEY WAIT A MINUTE, THAT SOUNDS LIKE ACTIVE MANAGEMENT.

Because it is.

Really, the only differences is the fees. Which is fine if your main argument is that ETFs are cheaper, and that is the main reason for the outperformance over traditional active managers. Basically, you have to think that indexing performs well because of the savings in management fees, not because the index includes, excludes or allocates to stocks better than active manager. The index itself neither gives nor has an special magical powers to generate superior returns.

When investors decide to index, THEY STILL HAVE TO PICK THE INDEXES AND THE ALLOCATION. 

It's one layer above stock picking within the index, but it still requires active decision making. Do I want to have emerging markets exposure? Which countries / continents / currencies do I want to avoid and which ones do I want to overweight? What asset classes should I be in? Hey, isn't that a commodity index? Should I also have commodities?

If you think that by deciding a few years ago to only invest in 1 ETF *COUGH COUGH STI ETF COUGH COUGH* and that is called passive investing and it's a super solid strategy to weather all conditions, you might want to really think if that particular index is right for you.

Sure, investing solely in the STI ETF is still indexing. But so is choosing to buy an ETF that follows the index of diseased livestock.


ETFs don't magically make risks disappear. They reduce unsystematic risks based on number of holdings in the index and the allocation to them, but they hold plenty of systematic risks. And that right there is the biggest issue I have about people anyhow promoting indexing. They say all the good stuff and gloss over or leave out any of the bad stuff.

Indexing is a decent strategy. To get to the point where the majority of the market is indexed is still some ways out in the future, which is a different problem to deal with for a different time. However, let it be known that there are risks involved in indexing investing.

Monday, May 8, 2017

1.28% Savings Account?


Wa, 1.28% is not bad. Actual link is here. Let's look at the details:
  • Initial deposit of $1,000- $5,000
  • Monthly GIRO of $200 - $10,000
  • Interest rate for first $200,000 balance
  • No restriction for withdrawal
Questions that need to be answered, but with no information:
  • What is the minimum bank balance?
  • Is there a fall-below fee?
  • How is the GIRO set up? Authorization to SIF to deduct from your appointed bank?
  • *BONUS* Will this GIRO be considered as a GIRO transaction by your appointed bank?
  • *BONUS* How MANY GIRO deductions can be set up? ie. Can 1 SIF account be used to GIRO in money from multiple bank accounts?
This looks quite enticing. Current market competitors are CIMB FastSaver (1%, minimum $1,000 deposit) and Citibank Maxigain (0.75% - 1.95%, minimum $15,000). As a pure savings-only account, either for emergency or general savings, these 3 accounts are pretty good.

If you have a small sum and you can't spare a $200 GIRO, go for CIMB and get 1%
If you have a small sum and you can spare a $200 GIRO, go for SIF and get 1.28%
If you have a large sum and you are okay to wait, go for Citibank and get 0.75% that will roll up into a very formidable 1.95%

Personally, I like seeing that consumers are getting good options. Personally, I use CIMB FastSaver for money that I think I might need to withdraw soon, while the rest of my emergency fund is nicely sitting in Citibank MaxiGain, getting 1.65% as of last month.

With OCBC being such a bitch for dropping their 360 interest rates, Citibank looks set to be the contender for their money. Once I max out at 1.95%, there is no reason to fulfill any criteria with OCBC anymore, since throwing it all into Citibank would yield me even higher interest and with no hoops the jump.

Saturday, May 6, 2017

[SGX Portfolio] It's time to EVAC!


Global Logistics bought for 2.44, sold for 2.91 (~19% capital gains)
Tai Sin Electric bought for 0.35, sold for 0.44 (~25% capital gains)
ST Engineering bought for 2.88, sold for 3.8 (~32% capital gains)
Ho Bee Land bought for 2.05, sold for 2.40 (~17% capital gains)
New Toyo bought for 0.269, sold for 0.295 (~10% capital gains)

Global Logistics received 0.115 of dividends (~5% dividends collected)
Tai Sin Electric received 0.046 of dividends (~13% dividends collected)
ST Engineering received 0.15 of dividends (~5% dividends collected)
Ho Bee Land received 0.12 of dividends (~6% dividends collected)
New Toyo received 0.076 of dividends (~28% dividends collected)

Global Logistics total returns ~ 24%
Tai Sin Electric total returns ~ 38%
ST Engineering total returns ~ 37%
Ho Bee Land total returns ~ 23%
New Toyo total returns ~ 38%

Perhaps this defies general logic, but I personally prefer to buy low and sell high. To me, at least relative to my purchase price, these counters have gone up quite a bit to a level that I am comfortable selling them away.

I think I've got to emphasize that as a rule, I do not invest in companies that do not pay dividends, unless its some special circumstances and I am trying to profit based on something other than my standard strategy. Everyone has different strategies and different beliefs that guide their strategy. For me, I believe that any company that doesn't give out dividends and expect their shareholders to profit from cashing out... is not a good company to be with. There isn't any right or wrong, it's just my preference.

I've held New Toyo since 2014, so this is an investment almost 3 years in the making. Ho Bee land, Tai Sin Electic and Global Logistics for 2 years. ST Engineering for just over a year.

Of course, while my winners and my gains look delicious on paper, I do have my share of bad performers as well (Casa Holdings, Sin Heng Heavy Mech, Perennial Holdings, ValueMax, King Wan). My bad apples make up only 10% of my portfolio on cost. If I could pick stocks correct 100% of the time, I would be a friggin' rich genius. I think 80% of my portfolio is positive if you count dividends (why wouldn't you?), so I think overall I'm doing quite okay for myself.

Anyway, I'm just lightening up and streamlining. It's good to take a look at your portfolio every once in a while. I used to check my portfolio several times a day when I was starting out. Now I barely even check it once a week. I think as time goes by, I'm getting a lot more used to the daily ebbs and flows of the market.

One of the things that I am looking to buy is actually precious metals. We'll see about that.

Friday, May 5, 2017

Smartly - Finally Ready to Launch?


I just happened to chance upon this news.

Is this good news for the financial landscape of Singapore? I personally think it's definitely a big step forward!

Why are robo-advisors good? I wrote a long post about it, but it is safe to say that I strongly support robos. Much better than trusting John, your secondary school friend who is now an insurance agent, to pick out unit trusts for the ILP that he recommends. Much much much better.

I can easily see myself committing a small sum every month ($50 or $100) into one of their portfolios geared for the long term. Perhaps I'll seed it with $10,000 so I get into the next tier with lower management fees (0.7% instead of 1%).

Word is that they go live in June, but let's just wait to get more information.

I'm quite excited about it!

2 Interesting Thoughts Right Now

1. Kyle Bass spoke to Bloomberg about China's issue with WMP's and how it's on a scale way more massive than the GFC, approximately 5 times larger than it. Commodities are currently blowing up and the Shanghai exchange is following cue. This might actually be the bear that shoves the bull off the cliff.

2. The second interesting development is the Japanese frenzy into Bitcoin. Japan is pushing for digital currencies and is actually dropping the 8% consumption tax in July. However, even with the 8% tax in place, JPY makes up more than 50% of trading volume in the past 24 hours. I bet you either couldn't care less, or you are completely flabbergasted at the sheer volume and interest in BTC coming out of Japan. I know I am the latter. $200 USD up in 4 days is no joke.

Needless to say that a smack in broad commodities is at least short term negative for both oil and gold.

I might be looking to pick up some precious metals soon, the decline is already 14 days strong. If China does have a systematic failure, I can assure you that precious metals would... shine. Lol, dat pun.

Back in Feb, I said that I don't think that Oil is recovered. The path ought to be bumpy, and if we head lower (and it seems like it), I wouldn't mind to accumulate more.

Regarding China, I do see it as a huge problem, but like Kyle Bass said, the timing is anyone's guess. It's probably best to avoid China related stuff for a while. Quite a few smart people have been predicting a devaluation of the RMB and it seems like that might really happen.

In Singapore, I doubt digital currency will be taking off anytime soon. There are just a few exchanges in Singapore (Itbit, Luno, CoinHako) and most people have (1) no idea what it is (2) no idea what you can spend it on (3) no idea how you can get it.

I do have an account with 1 of the exchanges, but it's more of an emergency getaway plan. Could I buy bitcoins, move them into the dark web, wash it and disappear and then cash out on the other side of the globe? Yes, yes I can.

As much as I am in denial, I am quite certain that the future would be digital currencies of some sort. Personally, I'm a gold and silver kind of guy.

Wednesday, May 3, 2017

Short Housing Conclusions May 2017

Since my previous post, I have been ravenously reading up about property - more so than my usual latent interest.

One of my more detailed previous posts that I re-read was a long one about BNP's property research report. Since 2015 wasn't over since the report was published and we are already in 2017 now, I found the relevant 2015 and 2016 numbers and plugged it into the model. Unsurprisingly, at least on the demographics side, it is leaning towards the bear case scenario, in which property prices only bottom between 2018-2020. Of course, this isn't an exact science and their model could be wrong, especially since I didn't use every aspect of it.

Demographics point towards a very marginal increase in foreigner population (2-2.5%), which is markedly lower compared to previous periods.

Supply looks just slightly larger than expected, which is of course negative for prices overall.

HDB's recent ruling changes to grants and eligibility also includes more and I would argue is very attractive in luring first-time buyers away from the private property market. As a government policy, it makes sense though.

How much of an impact these factors make is hard to calculate, but they are quite price negative with regards to the private property market.

The hard data which comes from URA, fresh off the press on 28th Apr, only has a positive of vacancy rate dropping from 8.4% to 8.1%.  Since the peak of 2Q16, vacancy rates from 8.9% has been dropping each quarter until the latest figure. However, it should be duly noted that vacancy rates have never broke past 10% in recent times even during crisis (like past 20 years), so levels above 8% are still considered high, with the average looking to be between 6-7% during normal periods and 5% during hot times. Long story short, the decrease in vacancy rates is positive for price, but these levels are still not good and nothing is stopping it from stagnating at these elevated levels, or deteriorate in the coming quarters.

Of course, we can talk about this and that, but all these indicators are just derivatives so that we can gauge price. That said, price is the ultimate indicator, isn't it?

The PPI shows the PPI has yet again declined. From its peak in 3Q2013 at 154.6, the index now stands at 136.7, which is a 11.6% drawdown. The rental index is also a similar figure.

However, the SRX research shows something slightly different, which is that property index that they use has risen since Nov 2016. I have no idea how they came up with that statistic, but that's only a 5% drop from the peak in 2013. Doesn't look realistic to me, but I thought I'd mention it since I did come across it.

Being one of the more prominent sites talking about property, Mr Propwise's outlook is a must-read. One of the things which is often forgotten is how rentals affect the prices of property, which Mr Propwise kindly reminded people in his post.

The thing is that rentals lag a bit because of the contract period, so it's not a very instant indicator, but plenty of properties are clearly exhibiting the trend of rental renewals dropping in the recent months.


Here's an example of a property which I think exhibit this phenomenon rather well. This condo is quite well known for having lots of expats (hence, decent volumes of rental transactions). As you can see, until February 2016, rentals have always been $3000 or higher. The rest of 2016 saw rentals half above and half below the $3000 line. However, it is clearly noticeable that in 2017, rentals are being renewed mostly under $3000.

Rentals have dropped from being in the $3400 range, down to about $2900. That's a drop of 15% of rental revenue!

Landlords would know why this is a problem. While the revenue has dropped, fixed costs like the condo maintenance and utilities remain constant. That means a 15% drop in rental revenue is more like a 20% drop in actual rental income! The larger the fixed costs, the more pronounced the effect of the rental drop.

Based off recent valuation, gross yields of that development have dropped from 3.7% to 3.1%. Count in net yields after paying off fixed expenses and rental taxes and I strongly doubt returns over 2.8%. Is that good yields given the investment quantum and the risks? Personally, I don't think so.

As eager as I am to purchase a property, barely anything makes sense to me, especially with recent "premium" mass market units selling at $1800psf. I can barely grasp how some $1200psf developments make sense, that's just beyond my comprehension.

I strongly doubt the notion that investing in properties now is a good time. Lucky for me, time is on my side. With most recent launches being bought for the purpose of investment, I am sure that further down the road when rent is either low or non-existent and buyers being few and far in between, I will be able to get a sick deal. Perhaps the last domino that has to fall must be from the property owner's side. I feel there isn't enough cost pressure to force them to release their grips and many are currently holding on thinking that the worst is over. I think that things will still continue to get worse, but I'm not sure if that would be bad enough to shake out enough of the market and cause a rout. Particular individual developments are routing, but it's largely confined to recent mass market units, especially those marketed as investment properties and are just full of identical 1 and 2 bedroom units.

There have been quite a few launches recently and it makes it look like the property is making a comeback, but I would reckon it's just a bounce and we continue to head lower.

I'm in no rush at all. It totally didn't feel like a bottom. Maybe just Sentosa, ahaha.