Tuesday, March 31, 2015

Tough Conditions make Diverse Markets

The word "poor" in this video does not have the conventional meaning of "poor" when it comes to finances.

In places where everything is predictable and stable, the same kind of species thrives. Why wouldn't it? It has already been genetically trained to thrive in such closed-off, specific environments.

On the flip side, places which have the most complex environments give birth to the greatest amounts of biodiversity. The tough challenges forces species to constantly adapt to survive.

Some people like the simplicity of looking out and seeing a forest full of the same trees.

I like the imperfect, complex interactions that comes along with living in the concrete jungle.

I like to imagine to myself, "If I can make it here, I can make it anywhere".

To each their own I suppose. Whatever floats your goat.

Monday, March 30, 2015

Where Are All The Rich People (Going)?

The Ultra High Networth Individuals (UHNWI) are a very mobile bunch, as this article which uses data from Knight Frank has shown.

While their article uses a map to show you where the rich people ARE, it isn't very useful to show you where they are going, unless you have time series. I happen to have the data from the 2013 study and made it into this:

Well just looking at the rankings it seems like London is the up and coming new city to live in, right? Sorry, but no. That is the problem with ranking data. That is why I hate using Ordinal data when I have the Interval data right in front of me. There is point where simplification because harmful instead of helpful, and me for that is the crossing from Interval to Ordinal.

Anyway, looking at the Interval data instead, which focus on the absolute number of super-rich, we get a less pretty picture.

Imagine that! All the top 10 cities that was in the 2013 list have all LOST their super-rich.

It is fairly easy to explain the fall of NYC, LA and SF. Renunciation.

There comes a fine line between the ethics of moving wealth overseas. Is it tax evasion, or diversification? If you think that nationality / citizenship is something that you are born with and you die with, then you're going to think its tax evasion. If you think that the world is your oyster and you are totally fine going for the best deals, you switch countries like you switch telecomm carrier. There is no law or consensus saying that you have to die where you are born. This is probably the same reason for the drop in Beijing as well. Did political tension drive people out of Hong Kong?

The entrants of the other new cities seem to suggest one thing - moving wealth away from the English-speaking countries. There is no perhaps, it is definitely much easier to hide behind a language barrier. No monsieur, l'argent ne est pas pour vous. 

The rise of Singapore does not strike me as unusual. We are a stable country with EXTREMELY RARE cases protests (please, Little India riot is your evidence of social instability?). We have undeniably low crime, we speak the international language of English on a wide scale and we have very Swiss-esque laws regarding our banking and finance sector. If I am not wrong, as a foreigner, unless you commit a crime in Singapore, your finances cannot be investigated. I could be wrong though.

Anyway, I don't see what's the problem with super uber rich people coming to live in Singapore. I rather live in the country where many people are wealthy, rather than the reverse.

Sunday, March 29, 2015

Future Proof Yourself In a Throw Away Society

Living Investment wrote a piece on the transient "Throw Away" society that we live in. Things are replaced to most up to date technology and whatever is old is thrown away. Some examples of this in our modern day lives are very clear:

Mobiles phones are upgraded on the dot every 2 years, if not more frequently.
"Old" buildings get torn down and new ones are built (some maybe only 40 years old or much less)
We use plastic bags for shopping instead of rattan baskets.
We use plastic containers for takeaway instead of tiffin boxes.
Old equipment are thrown away and new ones are brought in.

Our pace of life is SO quick, almost nothing stays the same. The things that do stay the same? They are prone to disappearing very very soon. The question whether it is worthwhile saving the history and heritage of something is a different debate altogether.

And this brings me to problem that I have highlighted in a previous post, which was about the coming obsolescence of labour, due to productivity lower than machines. We can't even handle the basic issue of our productivity being lower than foreign workers, there is no way we can handle technology.

While my preferential solution to address productivity differences and animosity between foreign workers and locals is taking a new perspective on national identity, resident classification and a mutually beneficial partnership and looking at it a new way, of course it will not be accepted by most. Do you expect me to be any less contrarian in my thoughts as I am in investing?

This is the macro version of economy's problem, which is a parallel of the micro situation that each of us faces as individuals. If as individuals we are not able to one-up our co-workers and prove our worth, our value, our MERIT, we don't even need to think about technology replacing us in 10 years time, we need to be worried about a foreign worker replacing us in a few months or a local replacing us tomorrow.

Anyway, my point is this: If you can see and relate to how the world and our lifestyles is so rapidly changing, can you also not see that we (already have been and) need to continue adapting to this change to flourish in the future?

If you don't, you clearly have some problems identifying double standards.

As with always when facing this topic, I end with the Red Queen Hypothesis to rest my case.

Saturday, March 28, 2015

Technical vs Fundamental Analysis

Seriously, ZH has the best brand of humour that I appreciate.

Have a great weekend, I know I am!

Friday, March 27, 2015

Cut Off the Nose?

Xenophobes complain of foreign workers coming here to take jobs and income away. With a citizen / PR unemployment rate of 2.6%, it is the worst argument ever, along with "omgomgomg you have to open your eyes and see what's happening in my office" evidence. Clearly, extremely concrete, right. But hey, whatever works in your delusional minds. I can show you the evidence, but I can't convince you to believe it.

The flip side of this "oh-so-horrible" foreign worker issue is that close to none of them own their own residence here in Singapore. Of the 1,355,700 foreign workers living here that aren't domestic workers (living in their employer's residence) or construction workers (living in dormitories), there are 764,000 foreigners  that would have to rent a place of residence. And most of them rent from.... hey, Singaporean landlords!

So, cut off your nose to spite your face?

I suppose that seems like the current plan of attack. Might be time need to rethink that strategy, eh?


"Before anything else, we are all human."

Thursday, March 26, 2015

Scheduled Breakdown 2015 V2

I hope this old train breaks down
Then I could take a walk around
And, see what there is to see

You don't know nothing
But you don't need to know
The wisdom's in the trees
Not the glass windows
You cant stop wishing
If you don't let go

This is basically an edited repost from my previous scheduled breakdown that I had in the start of Feb. My thoughts and views on this are pretty much the same.

This is a version of one of my favourite songs. I like it because it reminds me that I should pull the brakes of Life sometimes because there is so much more to life than just the daily grind. It also reminds me that it is so convenient to just brush aside dreams and aspirations and to put them on the backburner. If you don't seize the opportunity for yourself, no one is going to do it for you. It reminds me about travel and my love for it. Travelling to me isn't just about escaping my routine life and exploring the world while having adventures, but it is also about being able to come back home and appreciate the life that I have here at home. I am thankful that I am able to have such opportunities to even travel.

I started working in mid 2013 and I didn't take any holidays because I went for a major one before I started work.

In 2014, I had 2 holidays. One to Hong Kong and one to Bali. They were both pretty awesome holidays.

In 2015, I went to Beijing and Seoul. I'm going for one now and it's not going to be a cheap one! At the end of the year, I'm hoping to maybe have a relaxing beach holiday, but first let's see if money and time shall permit that, shall we?

So anyway, where am I going? Well, let you know once I'm back!

So the bad news is obviously that I will be travelling and therefore unable to blog, especially about recent events and market moves. So no sarcastic comments about how ridiculous the market is this week. I really hope that the market doesn't crash when I'm on holiday, I would get pretty pissed if it did, haha. Anyway, I've got all my positions either hedged out or with a stop loss now so that I can enjoy my holiday with a piece of mind.

Good news is that I've actually pre-written a few short posts about random thoughts that I've been having and I have queued them up to be posted periodically until I am back. Enjoy!

Happy holidays! 

Wednesday, March 25, 2015

MoolahSense New Campaign: Seoul Yummy (and understanding loan amortization)

Again, I must stress that I am not paid to write about MoolahSense, their current campaign, or the company that is trying to raise money, Seoul Yummy. I am just writing about it because it interests me and I like to share my thoughts with people who bother to look into my deranged mind. I might decide to lend them money in the future, but as of now, nope, I've no vested interests at all.

MoolahSense just launched a new campaign and it is for Seoul Yummy, a Korean restaurant. I think raising money to improve a business is almost always a good idea in my books. They are looking to put together $200,000 to open 2 more outlets (they already have 4).

(The Bugis+ outlet, credits: Eugenia from Spacestardom)

Personally, I really like Korean food, though I must admit that I am pretty distanced from the whole K-pop and Korean wave. I think I've only seen random bits of some K-dramas and maybe a few episodes of Running Man. Running around Korea earlier this year is probably the most involved I've been in Korean culture actually. My grandmother makes really mean Korean food though, so I know what good Korean food tastes like. Don't ask me why she cooks Korean food. That's another story for another day.

(Psst, my favourite Korean girl, Han Jang Hee)

I have written about MoolahSense before, and I still think that having a P2P (P2B in this case?) lending site is great. If there are more sites like this and the scene becomes more vibrant, it would really make way to lower costs of funding for borrowers and higher rates of returns from lenders willing to take the risks. With everything closer to each other, who knows how many more business ventures and collaborations might stem out of this industry? I think it is a good area to explore and develop.

However, I think some people are blissfully unaware that this is an amortizing loan, not a fixed coupon bond.

For example, although the interest rate cap on this campaign is set at 10%, that does not mean that you will get back 10% plus your capital in a year's time. That would be a fixed coupon bond. An amortizing loan is like your housing loan, where you pay the interest and also the principal outstanding. This means that although you are collecting 10% interest, the principal outstanding is reducing, so the interest due is also reducing.

This would be an example of a 1 year loan of $1,000 with 12 monthly repayment periods.

As you can see, the final amount that you collect back in a year is actually $1,054.99, which is pretty much a 5.5% return instead of the 10% return that you might expect.

There isn't any trickery in this, that's just how loan payments are like.

Anyway, back to the campaign. I am actually interested in this campaign! I will probably head down to one of their outlets and give their food a try and also see how their business is doing before I decide to look further. No point investing in a restaurant if you don't think that the food is good, right?

Now, this is the kind of hands-on research that I won't keep procrastinating about, haha!

Things I Argree with LKY

Writing helps me destress. I read that thinking about things in a logical manner also helps the mourning process. Of course I'm going to get flak for this post, but I don't give two shits.

To be upfront and transparent, I have never formally studied politics or political science. Nothing more than secondary school social studies and history, and where I end up on Wikipedia or the fringes of the internet. But who says you need a formal education to be knowledgeable about a subject anyway? Perhaps my views and inferences of his quotes and interviews might be misinterpreted out of context, but hey, everyone looks at a picture and sees something different.

In light of the passing of LKY, I have been very ravenous in my readings of all things related about him, especially his much later years in life, as he seems much more worldly, wiser and more in-tune with the modern development of society and technology. Less scary also perhaps.

This interview from 2007 with the NY Times is my main source of information. Maybe since then his views have changed, but this is what I'm working with.
We knew that if we were just like our neighbors, we would die. Because we've got nothing to offer against what they have to offer. So we had to produce something which is different and better than what they have. It's incorrupt. It's efficient. It's meritocratic. It works.
The system works regardless of your race, language or religion because otherwise we'd have divisions. We are pragmatists. We don't stick to any ideology. Does it work? Let's try it and if it does work, fine, let's continue it. If it doesn't work, toss it out, try another one. We are not enamored with any ideology.
Let the historians and the Ph.D. students work out their doctrines. I'm not interested in theories per se.

This is underlying point of this whole post. It doesn't matter what you want, all that matters is what needs to be done. Theories mean diddly shit if they don't work in real life. Whatever works is what we go with.

My biggest problem with self-proclaimed socialists is the undeniable raw fact that they compare the perfect textbook Utopian socialist society to a flawed, but practical and working capitalist society. David Hannan has crushed the socialist point, so let's stop talking about it. (I'm in the midst of writing a review for "Why Not Capitalism".... after I finish my review of another book) Sure, compare Andrea Chong to your real life wife/girlfriend. Fantasies are one thing, real life is another.

(I have website analysis statistics, I know all you tikos went to go check out her IG)

Mr Lee was a pragmatist. I think I have become one myself.

"You take a poll of any people. What is it they want? The right to write an editorial as you like? They want homes, medicine, jobs, schools." - LKY (Source)

Who cares if you are unable to "express yourself freely" if you are jobless and homeless? Maslow's Hierarchy of Needs, anybody? You want to follow your passion, excel in your dream job? You better work for it, because those things don't just fall out from the sky and hit you on the head like a coconut. I want to be a billionaire playboy pornstar, so if you think you should get what you want, why shouldn't I get what I want?

How much you want something has absofuckinglutely no bearing on whether you will get it or not. I refrain from the word "should", because who is judge and jury? "Will" only denotes the simple binary outcome of yes or no.

I want Scarlett Johansson and Kiera Knightly. You want a condo and a car? Join the queue buddy.

First, to understand Singapore, you've got to start off with an improbable story. It should not exist. 
To begin with we don't have the ingredients of a nation, the elementary factors, a homogenous population, common language, common culture and common destiny. 
We are migrants from southern China, southern India, Pakistan, Bangladesh, before it was divided, Ceylon and the archipelago. So, the problem was, can we keep these peoples together? 
The basis of a nation just was not there. But the advantage we had was that we became independent late. In 1965, we had 20 years of examples of failed states. So, we knew what to avoid - racial conflict, linguistic strife, religious conflict. 

I've argued with Mr. Anon about this at related issue at length, but I think this issue of creating a national identity and the need to co-exist with a common goal and destiny is something we are still trying to deal with today. Now our new migrants are from many other countries. Can we keep these people together? Xenophobes say no. Perhaps I am the only one with this opinion, but I think that this is the only way to progress - to absorb those willing to contribute into our society.

The same reasons why people thought we could not succeed as a nation back then are still the same problems that we are facing now. We are not your typical nation, so the typical solution doesn't work.

Well, we are pragmatists. If, in order to survive, we have to open up a sector, we open it up. Because the best test - the yardstick is, is this necessary for survival and progress? If it is, let's do it.
I don't like casinos but the world has changed and if we don't have an integrated resort like the ones in Las Vegas - Las Vegas Sands - we'll lose. So, let's go. Let's try and still keep it safe and mafia-free and prostitution-free and money-laundering-free.
Can we do it? I'm not sure but we're going to give it a good try and we're going to keep our clean and green and safe reputation. That's the plan.

Do you honestly think that we are a benevolent, kind and loving nation that want to share our precious land and wealth to whichever foreigner that washes up upon our shores? Thinking along the lines of pragmatism, if we could do without them, we would. The simple fact and answer is that we can't do without them. As much as they need us for jobs and money, we need for labour and consumption. We have opened up because we had to, not because we wanted to.

As much as he opposed the casino and the notion of gambling, LKY relented and understood the rationale for having an IR. Although the IR has a host of benefits, it does comes with its own sets of cons as well. I think they have managed those cons very well. You think LKY wanted to have an IR in Singapore if he could have it his way? We have them because we needed them, not because he wanted them.

What has to be done, is done.

I think we have to go in whatever direction world conditions dictate if we are to survive and to be part of this modern world. If we are not connected to this modern world, we are dead. We'll go back to the fishing village we once were.
They are here because we've provided security, stability and predictability. If that sense of security and predictability is gone, the money will stop flowing in and will flow out.

Maybe I'm sounding like a broken record, but I do believe that the only way to stay ahead of the game is to keep on running and adapting - the Red Queen Hypothesis. And we have to keep going, because if we ever stop, those behind us will close up the gap. Nobody remembers 2nd place. We shouldn't be happy with what we have, because if we stop for a moment too long, we'll forever be playing catch up.

I think that security, stability and predictability is all about the economy. Companies set up shop in Singapore for a variety of reasons, like geolocation, transport links, language, efficient labour, fair laws, good policing etc. If those reasons start to falter or disappear, so will those companies, along with all the people they hire and spending that they do locally. If the money does start flowing out, the fallout will be a lot larger that we think, and can probably handle. Jobs, homes, standards of livings will start to crumble.

Somethings are too important to play around with and screw up. You can do whatever you want with your own life, that's fine. Once things involve other people, it becomes everyone's shared responsibility to make sure we got this shit down right. I don't care about your hippy vibes or whatever feels you have.

To end of this post, it is from another interview in 2010 with the New York Times:

I'm not saying that everything I did was right, but everything I did was for an honourable purpose.

If you have ever been in a situation where you had to choose between your own personal gain or the benefit of a group, you might appreciate and understand the situation that he was in, many times. Not many people can put their personal gain behind that of the group. I know I wouldn't, but I'm screwed up, selfish and would never be a politician. True respect to this man.

I might have not known this man personally, but he has very deeply affected me in ways that he will never even know.

If my week goes as planned, I will be going to pay my respects at Parliament House this week.

Tuesday, March 24, 2015

Unconventional Eduation: My First Stock Investment

No, it was not Croesus Retail Trust that I bought back in March 2014.

In fact, it was much much much further. Think back to maybe.... Year 2000.

I'm not sure exactly when, but my first time having anything to do related with the stock market was when I was playing Neopets. Back in primary school, that's what all the nerdy people did.

I know it was kind of ridiculous, but the neopet's stock market was where I made all my millions of neopoints.

That's right. Millions.

The stock market in the world of Neopets was a pretty simple and easy game.

Every day, you would be allowed to buy a maximum of 1,000 shares on the stock market (cutely named the Neodaq).

For a stock to be purchased, it had to have a minimum value of 15np. There did not seem to be a maximum value to how much each stock can go up to. Stocks could go up to face value of 100np+. If a stock fell below the 15np value, it could no longer be purchased until it increased in value to 15np or higher.

But here's the funny thing: Stocks never go bust.

So, my strategy was simple. Every single day I would log on, buy the maximum amount of 1,000 shares in any stock selling at 15np face value. That is a capital outlay of 15,000np a day.

Since the stock prices seemed random, but could never go bust, all I had to do was wait until the price of the stock I bought rose over 15np, and all the excess would be profits. If I wasn't in a rush for my capital back, I could sometimes wait until I had made 300% profits before I sold.

Although the expected returns of this strategy is hard to forecast because it depends when you sell, this strategy was practically risk-free. It wasn't a fast strategy for quick riches, but it was a sure-win strategy if you could wait for it.

From this silly game, I learnt how to formulate a strategy to make crazy amount of profits in an entirely risk-free way, but it only worked if you had the patience. Sure, it's not like the real stock market, but it's a game for little kids.

I didn't just learn about the stock market. I learnt about savings and interest. About consumption items vs assets. About working hard to earn money. Developing a skill to make more money.

In a very weird sense, it was a microcosm of adult life. Optimizing my time online (my daily 24 hours), earning neopoints playing games (earning money) which depends on my skills (gaming skills) and spending my free time and money doing other things that I enjoy. Looking back, as much as it sounds like a silly game, it taught me a lot of things, gave me exposure to what real life is like as well as exposure to many other things, like history, culture and geography.

All in all, I think it was a pretty educational "gaming" experience for me.

Who said that learning and education should be only restricted to classrooms and schools?

Monday, March 23, 2015

Thank You Sir

In my close to 26 years wandering around this red dot, I have never had the rare opportunity to bump into or see Mr Lee Kuan Yew in person.

All I know about him is what I've seen in textbooks, books, newspapers, online articles and on TV. I've never seen the man in action live.

To be fair, when I first started secondary school and was aware of anything, he was in his late 70s. The only think I remember was that he went from Senior Minister to Minister Mentor.

There was the running joke that soon after, he would become Senior Minister Mentor, and then Super Senior Minister Mentor. It was a funny thing at that time.

While Mr Lee clearly touched a lot of people, I think many people have let recency bias affect them in the way that they see and judge him as a political figure, especially the youths. What has my generation seen or heard about LKY? Same as me, whatever we were taught or we saw on TV.

I think many people have forgotten what a great leader Mr Lee was when he was much younger and was a fully active politician running the country. When I was doing research back in my uni days about politics, I stumbled upon this old video of our then PM, Mr Lee.

People have asked me, "Why are you sad, what has he done for you?". I can't say that any of his specific policies were meant for or dedicated for me, but I like to believe that he made decisions based on what he thought was the best for the country at that time, whether it was a popular decision or not.

While it may be a big exaggeration to think that Mr Lee single-handedly brought us to where we are today, he did play a very large part in the overall picture.

Personally, I am very happy with the Singapore that I live in today, and I attribute much of the features and benefits that we have today to things that Mr Lee set in motion many moons ago.

Here's to the man who made it so that I am blogging in English and not Chinese. 

Thank you Sir.

Noble Verdict: Death

Read the latest Iceberg Research report.

I've warned about Noble back in Feb when the 1st Iceberg Research report came out. It was very easy to verify that the claims regarding Yancoal's valuation. I don't like to be screwed around with. I folded my hand and walked away from the table with 3.4% profits in the pocket.

Since I closed out my trade at $1.06, Noble has fallen 18% to $0.875.

I fully expect much more selling pressure in Noble given the very unfavourable report by Iceberg. I am sure that right now the entire team at Noble are scrambling and working midnight oil to craft up a PR miracle defense. I am sure that it will be weak and feeble. At this point, it seems like nothing can save them.

How low can Noble go? I'm not even going to try and guess. I am most definitely not even going to be interested in this counter as an investment until this whole mess is cleared up - if it ever does.

All the best to all the brave knife-catchers out there. Don't mind me if I don't join in on the party this time fellas. There are 700 other counters on the SGX to play with, I'm not gonna get sliced into shreds trying to play this.

Sunday, March 22, 2015

No Action, Talk Ony

"I've watched or read every great speech ever written.
I compiled all the best advice into one speech, 
and then I read it out loud.

And guess what I sounded like?

A pompous ass.

I'm 18 years old, what do I know?"

I know I haven't been in this game long enough. Only two things separates the winners and losers in this game, and that is knowledge and experience.

I feel that so far I have been fortunate enough to sidestep all the mainstream garbage and bad "conventional wisdom" to arrive to where I am with my current wealth of knowledge. To me, I think it is a wealth of knowledge because I feel so much more enriched and enlightened with all the information that I have accumulated and learnt. I might not be able to remember every fact and facet at the drop of a hat, but just the exposure and awareness of such things even existing broadens my horizons. I know where to look if I need to find something. That's a heck of a lot better than most people.

So yes, apparently a lot of people think I'm all talk, no action. I'm sorry. Is it my fault I don't have the experience?

Many of the most successful investors say that what defines you as an investor is not what you do during a bull market. Any idiot with a broker can make money during a bull market. However, only a successful investor will be able to come out on top after a bear market.

I might be a naive and all-too-green idiot, jinxing the market and calling for bad joojoo to happen because I'm an ignorant fool. But you know what? I'll never know if I've got what it takes to survive the storm until it actually comes.

I know that what I lack is experience. Unfortunately, no amount of other people telling me that I need experience will give me the experience that I need. Yes, I taunt the bear. I want the bear to come. I need it to come.

Not because I know I can face it.
Not because I am confident I will win.
Not because I have nothing at stake to lose.

But because if I don't, I will never get anywhere.

So yes, I taunt the bear.

Saturday, March 21, 2015

GMGH's Allegory

I have a list of names of 100 people who are in a room.

"50% of the people in this room are women"

Is each person 50% female?
No, each person is either female or not.

Are 50% of the people in the room female? Yes

"20% of the women here are pregnant"

Is each woman 20% pregnant?
No, each women is either pregnant or not.

Are 20% of the women pregnant? Yes

"20% of the men here are married"

Is each man 20% married?
No, each man is either married or not.

Are 20% of the men married? Yes


For whatever reason, I need to try and pick out all the pregnant women and all the married men. That is 10 each, or 20 in total.

I have with me a variety of data about each person in the room which I can try to use to infer if they are pregnant women, or married men, but nothing to tell me for sure except for their gender. I can only make rational guesses based on the type of house they live in, the car they drive, the food they eat, the things they buy, etc.

For example, I think I would exclude people that spend large amounts frequently at bars to be married men or pregnant women. Likewise if someone drives a Ferrari or lives in a single room apartment, we can also make some guesses about their lifestyle.

With whatever I know and the reasons I came up with to back my thinking, I pick out 20 names from the list of 100 people that I have.

I now have 20 people, 10 male and 10 female.

Are 20% of these women pregnant. Are 20% of these men married?


Personally, from what I have read, the stock market goes up in the long run. However, more stocks die off than continue successfully. The returns on the top 30% of all stocks are higher than the 70% that try to drag the index down the other way. Once you net them together, you get the long run rates of stock market return to be between 5-9%, depending which indices you use and if returns were nominal or real.

Some people think picking stocks is a fool's game. I don't disagree. I do not think I will ever make a direct investment into any overseas equity stock market and buy a single company. However, I think that picking locally is do-able. The universe is not that large, the companies are closer to home and the small size of the market makes it unattractive to big players.

I do think that it is possible to weed out companies with the attributes of failure to create a remaining list of stocks that would outperform the market. From what I am left with, more than 30% would outperform, while less than 70% will underperform.

Pay Less Taxes, Doh

Although this is a quote from an American judge regarding the American tax system, I think it is applicable to anyone who pays taxes.

Contrary to Robin Hood believers, I believe that it is everyone's own personal responsibility and RIGHT to reduce the amount of taxes that they should pay within the legal framework provided.

Paying more taxes than you should doesn't make you a good charity man, it just makes you stupid. If you really wanted to "donate" your money, just donate directly to charity, at least the charity gets the money directly.

Tax season is upon us and I urge people to see if they can claim tax relief and reduce their own income tax burden.

Information from IRAS in plentiful and in detail, so they are extremely useful. Download a copy of their income tax estimation calculator and you'll be able to see all the different reliefs and rebates available that you may be able to qualify for.

Do yourself a favour, spend a while trying to figure out how to reduce your own tax burden. Who knows, you could save yourself a lot of money that was already yours to begin with.

Friday, March 20, 2015

If a Bubble came right up to you and slapped you in the face

Would you even know it?

[SGX Portfolio] Mopping Up The Stagglers

From Civmec's intraday high of $0.80 on 18 Aug 2014, it has fallen 50% from it's glory.

Civmec has an EV/EBITDA of 4.5 and a simple and clean balance sheet. Perhaps the only 2 things that irks me are that their receivables are high and I am buying over 33% premium over NAV. But all things considered, I'm not worried about them going under.

The main forces started the war a week ago and the battle has been fought. The bulls have been slaughtered. I'm just cleaning up the mess.

Taking up a small position here and not caring about penny pinching for the best price.

On a side note, I also picked up some shares of Falcon Energy yesterday.

Would I Buy Neratel?

I know Neratel is a long time darling stock of dividend investors. And for good reason too. Not only does it pay a pretty high dividend, it has been appreciating in capital value as well. All the hallmarks of a happy ending to an investment.

Neratel is at 52 week lows, with it's yesterday's closing price at $0.675. Oh how the mighty has fallen from a high of $0.815. That's a 18% fall from it's peak. 2% away from going into a bear market, haha.

Now, with prices cheaper compared to before, is Neratel a good buy?

P/NAV is not useful since this a service company, so meh. My favourite metric gone. D/E ratio is 1.3 which I am not very fond of, however payables do make up 62% or 85% of debt, depending if you want to count non-trade payables. Cash seems at a healthy level, not too much, not too little.

Gross margins seems good at 33% and net margins come in at 9%. Is that normal for their industry? I have no idea. Operating cashflow is positive, but overall change in cash is negative. That's something I don't usually like.

EV/EBITDA comes in at 12 while P/E is 15. Value stock? No way.

Is this a decent stock? Yes, it does seem like it. If we weren't so long into a bull market, I wouldn't mind accumulating this stock at pullbacks. However, does this fit my traditional criteria of shopping for value? Nope.

I see owning this stock at these valuations as simply having a preference to have returns in the form of dividends paid out, rather than capital appreciation. If prices fell far enough, I think that one day in the future I might be able to look at Neratel as a stock that can deliver both dividends and capital appreciation.

As good as this company is, I would not buy this stock at this price.

Am I greedy? Most definitely.

Thursday, March 19, 2015

Why Am I Not Surprised?

Stocks saved by Janet Yellen again? This shit show doesn't ever get old.

Oil surged 6% yesterday cos that totally make sense with forecasted lower future growth, right?

Yes, I'm a photoshop expert. Stop mocking me.

I wanted to put in orders for SembCorp Industries and Marine today, but I decided to just sit tight. What's the rush?

On the bright side, Gold and Silver are up since I went in balls deep. Are we finally going to see the USD start to fade and commodities start their bull market? That's what I'm betting on.

Gushcloud Exposè part 2: Legal Vs Ethical

Reading about the whole new expose by Xiaxue about Singtel and Gushcloud makes me shake my head. You know things are more serious when they appear in CNA instead of Stomp.

After all the mud slinging and finger pointing, the blame has fallen upon a rouge employee who "did not adhere to Singtel's marketing standards". As much of an isolated incident as that is, I'm sure a lot of heads are going to be rolling in Singtel. Are you telling me that nobody else knew? Or maybe nobody thought it was wrong. The latter would actually be a lot worse.

But if anything, I don't think that the problem has anything to do with Singtel or Gushcloud. These are corporations, not people. Do they have a soul, humanity or cognition of right or wrong? No, they don't. They are made up of people within the organization. If the entire marketing department of Singtel was fired and replaced with new people, you can be sure that whatever questionable corporate culture or ethics they had will not be passed on. People make up an organization, and they can be replaced.

In my opinion, I feel that the bulk of the fault likes with these "influencers" who followed through on these dirty deeds. No one was holding a gun to their heads.

New Nation made a fantastic satire of this. I kind of feel bad for Eunice Annabel for all the blowback that she is getting. I ever saw her along Orchard Road before and I wanted to take a picture with her, but my friend die die don't want to help me take, say so malu. She's not my type, but I can see how people find her attractive. Got so bad meh?!

 Quite hot what, no meh?

In the end I didn't even say hi.  Her apology doesn't seem to be helping, and I think it is because her cover story just doesn't seem very... legit. But hey, that's just my opinion. After watching so many episodes of Castle, I've learnt that sometimes things can appear a lot more complex than what they seem. Then again, Occam's razor.

Nothing that she did was illegal (I think), but is it ethical? I don't think so.

When I was in university, I took a module called "Leadership and Ethics". I think that was the only module that I got a "C" for in my entire university life. When I was preparing for my CFA Level 1 exam, my worst section was my ethics portion. I had to drill myself to memorize the ethical answer. It did not come naturally. I did pass that portion in the end though.

My point isn't that I'm a very ethical person. I do not have any sense of moral highground.
Au contraire, my point is that I'm actually very unethical to begin with, yet even I think that this is unethical.

Of course as a nobody, hobbyist blogger it is easy for me to throw bricks at the glass house. I don't have the influence and nobody listens to what I say. I have no flock to lead astray. I don't have a glass house to speak of.

But in light of the recent shenanigans going on, I have decided to update my "Contact Me" page and make it clear about my affiliate work and how much it costs to bribe me to me to be unethical. My only affiliate that has ever paid me money is BullionStar and so far I think maybe $50? And I do seriously use them for their services, so I have no qualms talking about them.

Perhaps the scary thing that I learnt about this fiasco is that for bloggers like us, things that we say in the past can be dug up to haunt us. I was reflecting about "change" the other day. I don't think that our person, behaviour, characteristics, thoughts or beliefs in the past is an unchanging thing. Over time, people do change. When I started out my blog, I am sure I made tons of false assumptions, ignorant commentary and maybe even come off as arrogant. Maybe I am still do now. I can assure you it is not my intention to be a prick, but sometimes I guess I just am.

Oh gawd, I used to be a socialist and I even supported Obama. #mistakes #killmenow #regrets

May our mistakes in our past not haunt us forever if we can recognize them, learn from them, get over them and make progress in our lives.

Anyway, my favourite famous local person is still Andrea Chong. Her blog posts has almost no words and I'm sure nobody reads her Instagram captions. How to fumble like that? Plus she's a chiobu. Oh yeah.

Wednesday, March 18, 2015

Long Forgotten Asset Class

When's the last time you heard anyone speak of the "asset-class-that-shall-not-be-named"?

Tiho from ASSOL has written a very compelling post regarding commodities. Unlike property or dividend counters, I know none of you have any interest in this investment at all, which is why I'm so happily openly talking about it. None of y'all are gonna front run me. Like seriously.

With price as our main guide, we can see that at the current prices, we can go a long long way back. Think about this ridiculous fact. In 1982 at the commodities bottom of the year, prices of commodities were more expensive than it is today.

Yes, that's right. Travel back in time 33 years ago, commodities were more expensive than it is today. After adjusting for inflation, the number doesn't even make sense anymore.

Anyway, as a contrarian, sentiment is a very important tool and indicator.

Sentiments are down in the dumps, levels last seen in 2002 and 2009 which....

Omg, coincides with a market bottom? Must be a rare coincidence I guess.

I don't think that history repeats itself so obviously, but it does tend to rhyme. Tiho's preferential play is through Silver, which I think is a good suggestion. I have plenty of Silver myself and surprisingly, bought at an average price which is only slightly higher than market prices today.

To people that think commodities like gold are "barbaric relics" that produce no income streams, might I throw up some statistics to back up my case so I don't look so crazy?

Since 2001, gold has returned 11% returns annualised.

But most people only remember the 40% losses since 2011.

I think the long run paints the most accurate picture. It's hard to disupute that since 1970 the annualised return is 7%.

It's very easy to manipulate statistics to support your case, all you have to do is shift goal posts. Are you looking too near? Or am I looking too far?

XYZ says that you need more of their product!

Saw this article on ProeprtyGuru today.

Let's see how many "headlines" I can also create:

Insurance agent says you can never be too safe by having too much insurance
Property agent says there is never a bad time to buy property
Broker says that that stocks always a good buy in the long term
Mortgage loan agent says that better get fixed interest loan now before rates go up
Bank officer says better get structured deposit because future rates are unknown
Relationship manager says better to put into fixed deposit before rates go down
Handphone salesman says latest model has even more useful features
Air con repairman says servicing should do every 3 months
Car salesman says cars will probably never be this cheap again
Motorbike salesman says roads are getting safer for motorcyclists
Transport minister says public transport is very efficient
Taxi driver says no other mode of transport is as convenient
Uber driver says they offer a cheaper alternative to taxis
Chicken rice auntie says chicken rice healthier than duck rice
Duck rice uncle says duck rice has less fat than char siew rice
Char siew rice uncle says #yolo, bitch

Barber says you look like you need a haircut

From my examples I gave, the "statements" made by these people may not completely wrong, but they are definitely not entirely right as well. By only showing 1 side of the story, these people can present their product to be more attractive and favourable. And of course, they get a tangible benefit by selling their product or service.

The question we need to ask ourselves is, are their interest aligned with my long-term interests? Unfortunately in most cases, perhaps only their short-term interests aligns with our short-term interests. Getting to be in a win-win situation for both parties in the long-term (the buyer too, not just the seller) is not a natural or easy situation to be in.

So, what is my personal solution? I like to ask them, what have they done? I think people should eat the cake they bake. If it's a good deal, they would have taken it. If it is good advice, they would have followed it. If not, why not? I think you will get a much better understanding of the situation if you can find out these answers.

Monday, March 16, 2015

Rule #2: Double Tap

This silly rule is from Zombieland. I thought it was an awesome movie, but then I realized I was the only person in the cinema laughing. Is my sense of humour that bad? Anyway, the rationale for a "double tap" is to be really sure that the zombie that you killed is dead. No harm making doubly sure that you are safe, right?

Well, Oil seems to be going for the double tap right now. Out to kill all the people that took long positions in Oil. Given the strength in the USD since end January (DXY 95) compared to now (DXY 100), it wouldn't be a surprise to see Oil breaking down pass its previous low. Not your typical "double bottom" in my opinion. I would actually see a double bottom as a bullish chart pattern given the strong dollar.

Perhaps now is about the right time I stop wasting time watching TV shows and finally get down and dirty to narrow down my shortlist of stocks that I want to use to play the negative sentiments of oil.

Just off hand, I think Semb Marine and Semb Corp are very tasty looking now, considering they have the firepower of the buyback bazooka mandate helping them prop up prices at the current levels. I am sure they will be chasing their counters down from these prices, but who knows, maybe they might decide to let the weak hands exit first?

But like I said, the bottom doesn't feel in yet to me. Show me a weaker USD, deceleration of rig count drop and more panic and coverage on oil, then I'm convinced. Unlike many of the other older, more experienced market vets out there, I have a much smaller warchest. With limited ammunition, I need to make my shots count, so don't mind all this caution and apprehension I have.

Things Getting Hot Down Under?

Australia hasn't had a recession in 23 years. I'm not sure if they are the record holders for the longest streak in modern history, but it sure seems like it. The last time they had a recession was in the 1990s. If there's one thing we know about business cycles.... it's that there are cycles.

I don't know about you, but I've been hearing a lot of pretty nasty news coming out of Australia lately. Basically, the narrative goes like this:
China is slowing down, and that is a problem for Australia because much of the basic materials that China consumes comes from Australia. Australia is already suffering because of the long drawn commodities bear market pressuring prices, a slump in total demand will make things even worse. The Australian Dollar is sinking like a ship, while their housing market is on fire.

If you thought Singaporeans loved property, you should check out what is going on in Australia. Zero down, interest only mortgages. Hardcore? You bet. I see Australian properties being marketed every now and then as well, but they don't look good under the surface to me. It looks to me like Australian developers are selling off high-end units earmarked just for international investors to "invest" in. The lovely couple from SG Prop Talk did a nice write-up about Australian property buying, but I think the most interesting facts are that foreign "investors" can only purchase brand new developments, and only offload their properties to locals. Sounds fishy? Smells fishy? Probably is fishy.

Needless to say, things like these usually don't end up too well. Drop it while it's hot.

Fraser Centrepoint Limited has a nice cool 45% of operating profit coming from their Australand division. Doesn't really help them considering they paid a 22% premium over NAV to acquire Australand. Which is probably why FCL is trading at a 22% discount to NAV right now, looking at the discounts on other land developers, that might not seem like such a bargain anymore.

Stamford Land has it's entire property portfolio almost exclusively in Australia, save for 1 hotel in Auckland, 1 floor of an office building in Singapore and a luxury housing development in Auckland. Now, they are selling at a premium of 3% over NAV, but I hear it is because they do not adjust the value their properties on their balance sheet until it goes on sale. Whatever the case, they would be affected by a slump in Australia, especially if it concerns real estate.

Singtel actually has a decently sized exposure to the Australian market through Optus. How big? 41% of revenues or 31% of EBITDA, whichever you like to look at more. If something bad happens to Australia, I would imagine that there would be blowback, but given the defensive nature of the business, probably nothing too extreme. Noticeable, but not extreme, I would imagine.

So those are the three stocks on the SGX which I quite like which has quite a decent exposure to Australia. If Australia does suffer a beating, then Miranda Kerr won't be the only thing on my mind when someone mentions "Australia" anymore.

Do you think Singtel, Stamford Land or Frasers could distract me from Miranda Kerr? Maybe, but they have to be looking pretty damn fine, because she does. Oh yeah baby.

Sunday, March 15, 2015

It's Not How Big It Is, It's How You Use It

Your warchest, that is.

(The) Boring Investor wrote an excellent post today related to this.
"Even if a bear market is really coming, does mean that an investor with 100% war chest will definitely do better than another investor with only 50% war chest? Much will depend on how these 2 investors deploy their war chests, how long and how low they think the market would go, and what stocks they buy. The key issue is, besides having a war chest, do you also have a good game plan to go with it?"
I am very pleased that I read his article and his views resonates with mine. Being caught in a bear market is not a complete disaster when you are still on your investing journey, it only becomes a disaster if it happens right before your retirement. 

I gather that the main point of his article is about balancing between being invested and being on the sidelines. Having cash and just sitting on it can be a silent killer, since we all know inflation slowly kills our purchasing power. However, being invested also means that the money invested is subject to the stress testing of a bear market. Many stress tests fail during a bear market. How do you strike a balance between the two?

I think it is about identifying the risks involved in each position given the current market situation.

That is why I'm holding onto very healthy positions on cash and less risky assets. However, my allocation is quite barbell looking. I also hold a lot of allocation in traditionally "risky" assets, such as commodities and their miners and even equities in Russia. So, not very typical I guess.

I don't need to hope for a bear market to come. It will come eventually. I've already got a rough plan sketched out in my playbook, do you?

Saturday, March 14, 2015

Twitter, Netflix, Yelp, Groupon: What do they all have in common?

F***ing ridiculous valuations, that's what they have.

Twitter and Groupon has negative earnings. P/E ratio = #REF!

Netflix and Yelp has P/E ratios over 100.

Why anyone would buy a company that doesn't make any money is completely beyond me. Clearly, I do not have the appropriate education or logic to invest in the modern era.

I only like to invest in companies that actually earn money and at a good price. Wtf, so old school, right?

But don't take my advice, I don't live in a big shiny Manhattan apartment or work on Wall Street.

Shorts Fired: Oil

At the time of writing, we are $1.50 away from the most recent intraday low since 2009.

We are a mere 73c away from the lowest close ever since 2009 at $44.15.

And you know what? I still think we have more room to fall. Of course, what sort of narcissist would I be if I didn't highlight that last week I said I don't think the drop in Oil is over yet.

Don't mind me, I'm just yanking your chain.

In this game we play, guessing what happens 1 week out is a fool's game. It's luck, not skill. If you think I'm your guru for you to follow and make investment decisions based on, sorry to break it to you, I'm just an average Joe.

Even a blind squirrel finds an acorns every now and then.