Saturday, November 10, 2018

November Update

As previously mentioned, I am adding to Alibaba stocks till the end of the year for it to become my largest holding.

However, instead of investing my money into Alibaba Stock (BABA), I am investing into Altaba (AABA) instead.  A colleague has highlighted the differences for me. For those who may not be aware, Altaba is the remnant of Yahoo that was not sold into Verizon. It is essentially a investment holding company that holds Alibaba stock (15% of total Alibaba stock), and a few patents that Verizon was not interested in purchasing from Yahoo when it was bought over.

In light of this, especially since it has then sold its Yahoo! Japan holdings, it is essentially an alternative (ALTaba geddit) to Alibaba. The key differences are that it is valued slightly under Alibaba stock, due to the company being considered an American company, and thus having to suffer withdrawal tax should they liquidate Alibaba at any time. However, in return, one can actually hold Alibaba equity, as compared to buying it in the form of an ADR.

The idea is that if there is ever a time that Altaba liquidates its Alibaba stocks, there is a high likelihood of there being tax reliefs that will in fact make Altaba a better purchase than Alibaba.

Intending to employ more cash into other US stocks such as Activision Blizzard. Will highlight reasons why going further ahead.

11.11 is coming and I am looking to get some great deals on Lazada (Go Alibaba!)


Thursday, November 8, 2018

Has Singtel truly became Sinktel?

Singtel. The telecomm company you choose just because everything else sucks. Or so until circles came riding along.

I am still wondering why I bought Singtel awhile back at $3.38. The irony of the matter is I went against Peter Lynch's advice of BUYING WHAT YOU KNOW. I was a singtel user for quite a few years... and then I changed my plan to Circles. and bought singtel stocks.

Shame shame.

the circle here indicates the buffering circle that was my thought process in buying Singtel. 

What the heck was I thinking.

The main considerations here for Singtel is that it is facing cost competitors EVERYWHERE.
From the Philippines to Singapore, and its Indian investment facing fierce competition from a startup with a warchest that would make everything go to pieces.

In Australia, it faced falling profits, as can be seen from this link -

In India, the new entrant is crushing prices and causing Airtel's margin to shrink.

Let's also not talk about the increased capital expenditure required to get 5G in, and the anti-monopoly laws in Singapore that will require Singtel to essentially "share" this tech with the other telecommunication companies.

Another possible long-term end to Singtel's dominance might be that of new technology in another country, and literally far far away - SpaceX, Elon Musk's plan of building Starlink, a global satellite based wifi, to put it crudely. While this is still a few years away, this just highlights how easily telecommunications can be just a commodity and there is no differentiating factor, and highlights also how easily a new entrant can disrupt everything.

(Link for this here)

Those are the downsides, and also a potential end to a once large and deep moat.

I bought the stock on four premises - a good dividend yield (still there I guess) , first mover to 5G in an IOT environment (still the only hope for redemption, yet at great capex ), great market share (not anymore) and dominance in all its subsidiaries (bye) , and a good profit margin (sigh).

The truth of the matter is this is not a stock nor market I should have invested in. I think out of all my purchases, even for those which might have fallen more, this is probably the most senseless stock I bought. I don't see the point in holding this stock for anything more than dividend yield, and yet even that seems to be pointless if the stock price is falling.

The story I bought into was a company that would be able to defend its dominance, but it is obviously not the case. I fell for the irrationality that "Singtel has always been around/protected by gahmen!". So was Hyflux.

I have to admit I dropped the ball on this one. I am considering selling all my shares in Singtel tomorrow and to move the cash to a better company.

Sometimes you just have to admit you made a mistake.


Sunday, November 4, 2018

"Poor Singaporeans can lead lives of quiet desperation and not really experience what living is"

A friend of mine posted this in response to a link being shared around facebook:

tldr; the article is about supporting minimum wages and Singaporeans were sharing it around as a basis that we should actually enact minimum wage in Singapore.

I will admit that perhaps I am not equipped adequately to comment fully on the impact of a minimum wage, I can say that based on what I know that this seems to make sense in the argument for equity in Singaporeans.

On a more personal anecdote, I remember my younger days when my father was retrenched and we had to tighten our belts significantly. My father has always been a person that spent money carelessly; there were many quarrels in my family involving financial issues, what with my mother being the exact opposite.

Shortly after he was retrenched, he started working as a taxi driver. During the time when I was young, I remembered him as the taxi driver, not the engineer he was for a good part of his life.

I remembered my mother's constant reminder to save and to be frugal, and that we were not a well-to-do family, and that it was important not to compare. 

I kept this mindset throughout my childhood all the way to university. It was during university that I actually got curious about how much my family was earning in comparison to the Singaporean average. This was after my sister graduated from university and my brother was working as well, alongside my father finding another engineering related job after a hiatus of nearly 5 years.

We were now considered a middle-income family, to my surprise. I didn't feel like that. We rarely traveled; a tze char meal was considered a luxury that we rarely went. I was not jealous nor envious of my friends that drove cars and had the latest phones. I remembered being one of the last in my class to even get a working broadband internet. 

Only when in university did our family really start "living" and not just struggling to survive. I will admit I never was poor to the point of having to worry about food on the table. I am grateful for that. I would just want other families to be like that too. 

On a side note, that tough period in my life shaped my mindset on finance and investing. I realized that my father was not wise with his money, and that led to tough times when it was not necessary to be so.  He swiped the credit card for paying the house to giving me my allowance for school. It was a financial trap brought about by bad financial literacy. I am grateful for what he has done to bring me up, nevertheless.

I guess that's the point of my post. I cannot blame my father for not knowing enough about financial literacy; he did not have the luxury of a father to teach him that (my grandfather passed away when he was 17, and my grandmother was a gambler). Yet, being born in this time and age allowed me to have access to so many ways to educate myself on finance which my father did not, and I would want others to learn as well.

The whole point of wanting to retire young for me is to never be a slave to money, or the lack thereof. I would want to truly experience what life is, and in that same thought, I would want less well-to-do Singaporeans to have that opportunity too (Go minimum wage!) For many others stuck in between poverty and truly living, I would like to think that this blog helps a bit in educating my readers just a little bit more on the true essence of saving, investing and to never be indebted to consumerism, yet still being able to live a good life.
Musing over. Cheers!

Tuesday, October 30, 2018

1.5 Year Check-Point

It has been about 1.5 years since my decision to embark in early retirement (FIRE for anyone who knows about this).

Since the last time I posted about my portfolio, per the portfolio page, I have made some additional purchases to my investments.

I am currently behind both my investment and saving goals, so I will highlight a few reasons why and how I am going to adjust accordingly.

Firstly, I have made some entrances into Alibaba in the past few months, both at 172 USD and 143 USD, in addition to my original amount of 168.88. This has obviously not been great for my portfolio, especially since the current stock price is atrociously low for a company with such great returns.

Hence, I am buying more. As mentioned,  I will be investing in Alibaba till the end of the year, unless there are some significant and huge changes to their earnings growth.

The recent trade war has hit some of my stock quite badly. One particular one of note is Daimler, which has dropped by nearly 18% since my last two purchases. Some of this has been redeemed in terms of a decent dividend yield, so I will just maintain the level of the stock.

Design Studio was another stock that was hit pretty badly with their loss announcement. As much as I would want this to be a turnaround play, as per Peter Lynch's categorization, I got to admit that I went in at the wrong time for this one. The current price would be a better turnaround price than anything, though I would recommend people against going in with a large sum.

Barclay's is another long term dividend play that I foresee better returns with, what with the return of volatility in the market being ideal for investment banks overall. I am also holding long term on this one.

BUOU Fraser's is a consistent dividend play and will be something I might add on to in the coming months to tide through this volatile times. It's high occupancy rate is ideal for tiding through volatile changes in the market, providing a good and steady source of income.

Ah, Alphabet. Recent reductions in revenue GROWTH as compared to analysts' prediction has meant that the stock price has dropped a few basis points. Not concerned about this, as I am still seeing it as a good play. However, the current trade fears is evident in the stock price, and I will look into purchasing more of this after I am done with my Alibaba purchases of the year.


So far, I have been trying to save 10% of my salary as liquid cash, so as to provide a safety net for any extraordinary purchases and also as an umbrella in case of any unexpected unemployment (as unlikely as it may be).

My spending has been increasing due to a few responsibilities I have taken up at home and also due to just spending creep overall. I am looking to reduce this especially in terms of taking grab and eating food out. Since my insurance has been paid for the year, I am still looking forward to the bonuses and hopefully a pay raise next year that will be in line with my goal to retire young.

Possible adjustments

Currently, in spite of the temporary drop in my stocks, I am still okay with the overall returns since I started investing. I am taking this drop in the market as an opportunity to buy and hold stocks that I couldn't have gotten just a year ago, and will utilize it accordingly.

Cheers everyone.

Sunday, October 28, 2018

A commentary on leveraging REITs with loans

I recently took a look at another blogger that utilized Maybank's 2.88 percent yield loan to leverage on REITs. The idea, in essence, was borrowing cash using the yield loan mentioned above to obtain dividend yields from REITs that will allow one to pay back this loan while accumulating the remainder as fine, hard cash. This blogger had loans in the hundreds of thousands (good lord) making use of this strategy.

Using Mapletree North Asia REIT as an example, one could get a dividend yield of 6.7%, pay off the 2.88%, and be left with a "free" 3.82% yield on your loan amount. That is in essence, making money work for you when you don't even have money.

In theory, that sounds like a fun and dandy idea, so I actually had a discussion with others about this.

Firstly, we have to find out the logic of why a bank like Maybank would be willing to loan out their money for you to leverage, instead of just buying these REITs themselves.

Most banks are regulated in ways such that they are unable to convert all the liquid cash they have into assets, due to certain financial regulations, that while differing in each countries, tend to set a certain percentage of debt to their equity in the form of a capital adequacy ratio. In essence, they are prevented from essentially throwing all their cash into REITs, so it would make sense for them to just loan it out to us poor souls, and just kill us with interest.

Benefit of leveraging in this context

Let's face it. That 3.82% yield is pretty good, considering that it is based off money that you don't own, and the leveraged amount could be 2 times larger than your initial capital ( had a call with maybank but honestly forgot what was the minimum margin ratio required).

If the REIT one purchases appreciates in capital gain, it can also be quickly sold off for extra cash on top of the "free "3.82%".

Now, what are the risks then?

Risk(s) of leveraging REITs

Firstly, 2.88% is pretty high. The potential upside may not necessarily be justified by the risk one takes when entering these positions.

Maybank, and other institutions that provide this service, retain the right to select what REITs they will allow you to purchase with the leveraged loan. This also means that at any time, if they find that the REIT no longer fulfills the criteria for their AAA rating ...
They will just remove it. What this means is that the financial institution now has the right to ask for their money back. In the event that you can't cough up the cash, it will either use the cash that you have to hold in the margin account (per the ratio) or if you are using other equities (other REITS as an example) to leverage off on, to pay for the outstanding balance. This will be on top of you holding a sub-AAA rating REIT, which would most likely be due to it suffering from some management issues.

Essentially, what this means is that one takes on the risks in two ways : the risk of the REIT's capital value dropping, and also being forced to sell/liquidate equities and cash to maintain the margin call.

Not a fun thing to happen.

Which brings us back to the other blogger. I noticed that he hasn't been posting for awhile now, and got curious about some of his/her holdings. Some of the REITs he has bought has depreciated nearly 50% or more in value. The margin calls triggered were probably not fun.

The main essence of this is that in investing, unless one goes for the Singapore savings bond, there is no risk-free option.  It is more about taking risk proportionate to one's expected returns.

If one wishes to utilize this, it would be prudent to look at the safest REITs, instead of just the ones that have the highest yield. Also, the amount leveraged should never be a large sum.

Wednesday, October 17, 2018

On the topic of failing

More a personal thought than any.

I recently have been going through some difficulties at work and also in my personal life. It was not fun to check on my stocks and see a huge drop either. Sometimes it feels like my goals are not being achieved as much as I want them to be.

Such is life though. Last year, I had a cute little nephew joining the family. Today, my brother in law sent a video of him trying to stand up and walk. He would take a few steps and proceed to fall flat on his face. With my brother-in-law's encouragement, my nephew smiled, picked himself up and continued trying again, taking a few more steps every single time, and finally walked to his dad.

What happened to failing and trying again. Isn't that how we learn?

I need to remind myself of that, both in my life's journey and my financial goals, to learn from my mistakes and to be better.

Monday, October 15, 2018

Reminder to buy the boring ones

Stocks can be exciting. Who would not want to buy Amazon and watch it climb with its stellar growth? Autonomous vehicles, so exciting (yes I am shooting my own foot here.) Netflix and chill anyone?

In all seriousness though, I have to remember one of Peter Lynch's adage here. One must remember that many a time, the most boring companies are the ones that can earn the most. I am looking into my portfolio again to see if there are better and more boring stocks to buy. Excitement into stocks tend to drive up prices, whereas the sheer boredom of what a company sell can often times be perfect; Boring companies are honestly what earns money a lot of the time, and still keep on the down low while doing so. One then can swoop in and hopefully get a ten bagger.

I have to remind myself of that too.

November Update

As previously mentioned, I am adding to Alibaba stocks till the end of the year for it to become my largest holding. However, instead of i...