Thursday, November 17, 2016

Investing is not a Stock Market Game

Investing is not a game

I was searching on google for some small cap stocks on SGX and came across this article.

http://www.straitstimes.com/business/invest/invest-idols-picks-two-small-caps-with-big-potential

This article is a good illustration of the problem in investing.

The winner won Invest Idol on the basis of

a) A concentrated pick (2 stocks)
b) Focus on growth stocks
c) Margin of Safety approach
d) Great presentation
e) Discipline.

The two picks were Lum Chang and Falcon Energy.

Below is the performance till date



A 15% decline in portfolio value.

In short, it just proves that investing is not a game.

Disclaimer :- 

I am not an investment professional.

I encourage you to do your own independent "due diligence" on any idea that I write about, because I could be and probably am wrong.

Nothing written here is an invitation to buy or sell any particular stock.

At most, I am handing out an educated guess as to what the markets may do.

The market will always find a new way to make a fool out of me (and maybe, even you!).

Even the best strategies of the past fail, sometimes spectacularly, when you least expect it.

I am not immune to that, so please understand that any past success of mine will probably be followed by failures

Wednesday, November 16, 2016

Nothing or Nobody to Piggyback On

Piggyback on Insiders

I had posted about CWT Limited a year back.

https://sgx-stocks-sti.blogspot.sg/2015/11/cwt-limited.html

The gist of the idea was that if CWT Limited dips to around 1.5-1.6, the chairman / insiders in the company will be buying into its shares and if one follows them, one can reap a 20% return.

http://www.valuebuddies.com/thread-1003-page-10.html


Here is a look at the performance of the shares in the last twelve months.


The share price never dipped below 1.8 in the last twelve months.

Unsurprisingly, there has been no insider transaction either.



One might think this is no use, but it is.

It just seems to validate the original hypothesis that CWT gets undervalued at around 1.5-1.6 and 1.9-2 is fair value for the company.

Full Disclosure : I will be keeping an eye out for any insider transaction in CWT Ltd and deploying some cash to piggy-back


Disclaimer :- 

I am not an investment professional.

I encourage you to do your own independent "due diligence" on any idea that I write about, because I could be and probably am wrong.

Nothing written here is an invitation to buy or sell any particular stock.

At most, I am handing out an educated guess as to what the markets may do.

The market will always find a new way to make a fool out of me (and maybe, even you!).

Even the best strategies of the past fail, sometimes spectacularly, when you least expect it.

I am not immune to that, so please understand that any past success of mine will probably be followed by failures

Monday, November 14, 2016

Did you buy a Stinker? - A look at Yanlord Land Group

Image result for did you buy a stinker of a stock

Many investors cite Warren Buffet's saying of Be fearful when others are greedy and Be greedy when others are fearful.

I had posted about Yanlord last year.

https://sgx-stocks-sti.blogspot.sg/2015/09/yanlord-land-evaluation-after-year.html

The summary of the thesis was

"Chances are this will serve a position in the portfolio where are investing in a hated sector i.e. Property in China is being cooled, no point investing, so, you are taking a contrarian approach.

The bull thesis is that, all you need is for majority share shareholders to privatize this and pay out a small premium to traded price of say 20% and you have made your 20%.

One can take a patient approach and wait for the counter to hit 90 cents anytime from now till March 2016.

There is likely to be a run up in April or May 2016 at which time one has an exit price of say $1.2."

This was posted when Yanlord was at $1.



It dipped below $1 to the 0.98 level by January 2016.

I have highlighted the selling point above, anytime in April or May where one could have exited at 1.2.

All said, one would have reaped a cool 20% for a three - four month holding period.

Disclaimer :- 

I am not an investment professional.

I encourage you to do your own independent "due diligence" on any idea that I write about, because I could be and probably am wrong.

Nothing written here is an invitation to buy or sell any particular stock.

At most, I am handing out an educated guess as to what the markets may do.

The market will always find a new way to make a fool out of me (and maybe, even you!).

Even the best strategies of the past fail, sometimes spectacularly, when you least expect it.

I am not immune to that, so please understand that any past success of mine will probably be followed by failures



Monday, October 10, 2016

Did History repeat itself or was it a Rhyme? - Irrespective, 18% return is the reward

I had posted about Metro Holdings a year back.

Old Post on Metro Holdings



The trading idea was

a) Buy if and when when it falls to below 85 cents before end Nov 2015.
b) Sell when it reaches $1 by 1 July 2016

Without trading friction, that is a return of 18% for a holding period of around 8 months.

Without further ado, take a look at the chart below.



So, not only did Metro reach below 85 cents before November 15, which we saw in an earlier post.

February 2016 Post on Metro

It also crossed above $1 in April and stayed above $1 till July, allowing one plenty of time to exit.

All in all, a satisfactory result.

Disclaimer :- 

I am not an investment professional.

I encourage you to do your own independent "due diligence" on any idea that I write about, because I could be and probably am wrong.

Nothing written here is an invitation to buy or sell any particular stock.

At most, I am handing out an educated guess as to what the markets may do.

The market will always find a new way to make a fool out of me (and maybe, even you!).

Even the best strategies of the past fail, sometimes spectacularly, when you least expect it.

I am not immune to that, so please understand that any past success of mine will probably be followed by failures

What has Lee done in the last year?

Image result for what has lee done in last one year

This post is a look back at Nam LeeI had posted about Nam Lee last year and a link for that post is below.

Last year's post on Nam Lee

My hypothesis in the post was “It is worth adding to this as the stock has got appreciably more valuable by close to 40% and the market has not appreciated it.

Compared to the STI, it is likely to provide better returns as it has become more valuable as a company.

The market will slowly start appreciating the additional value created and mean reversion itself will take the stock up by at least 15-20%”.


The two questions were

a) Does the stock appreciate by at least 15% in the coming year?

From the above chart, one can answer that with a resounding yes, it did, by 47%.

b) Does Nam Lee continue to provide better risk adjusted returns than the STI in the coming year?

The second question can be answered with this chart below:-


The STI ETF went down by 3%, so, all in all, Nam Lee was a better investment from a risk adjusted perspective.

Disclaimer :- 

I am not an investment professional.

I encourage you to do your own independent "due diligence" on any idea that I write about, because I could be and probably am wrong.

Nothing written here is an invitation to buy or sell any particular stock.

At most, I am handing out an educated guess as to what the markets may do.

The market will always find a new way to make a fool out of me (and maybe, even you!).

Even the best strategies of the past fail, sometimes spectacularly, when you least expect it.

I am not immune to that, so please understand that any past success of mine will probably be followed by failures

.


Tuesday, October 4, 2016

Festina Lente - Make Haste Slowly



A good way to think about investing is to follow the principle of Festina Lente, Latin words for classical greek, attributed to the Roman Emperor Augusts.

To read up about Festina Lente, please visit the Wikipedia link below


I know that some of you will be nodding your heads, while some others will be mumbling, enough with this Greco Latin mumbo jumbo, get to the point.

I had indicated an approach, where I am pivoting towards a ETF based approach for investment from a stock-picking approach.

This was outlined last year in the blog, the link for which is below.


The reasoning for the shift is that I am quite confident that
a) I am not good at timing the markets
b) I am not smarter than the average investor, let alone the big professional investors

So, what is good for the market is good for me and all I want is to achieve the average market return less costs.

Some of the ETF's which I held as part of this pivot, i.e. the Japan ETF and the Asia Real Estate ETF have been liquidated.

Details of this are provided on Value Buddies

Details of Japan ETF liquidation


Details of Asia Real Estate ETF liquidation


I have over the last eighteen months, slowly increased the ETF component of my portfolio, by liquidating some stock exposure and transferring it to an appropriate ETF.

I am working on a timing model for the ETF entry, but that is still very much work in progress.

So far, the results are satisfactory, but it is very early days yet, as a lot of the satisfactory results could be due to blind luck.

Country / Region
Type
ETF
% Portfolio
Target Weight
Annualized Return
Holding Period (Years)
China
Equity
DBXT CSI300 ETF (KT4)
3.31%
7.00%
-21.28%
1.086
Australia
Equity
DBXT ASX200 US$ 10 (LF1)
3.71%
2.00%
14.17%
0.154
Asia
Equity
CIMB S&P Ethical Asia Pac Opportunities ETF (P5P)
7.68%
2.00%
15.66%
0.049
Asia
Equity
db x-trackers MSCI AC Asia Ex Japan High Dividend Yield Index UCITS ETF 1D (N2F)
2.00%
2.00%
0.89%
1.170
Japan
Equity
Asean
Equity
CIMB Asean 40 ETF (M62)
8.09%
3.00%
-1.94%
0.317
Europe
Equity
Lyxor Europe 10US$ (JC5)
3.29%
19.00%
-1.01%
1.409
Singapore
Equity
STI ETF (ES3)
4.17%
1.00%
-0.07%
1.508
Hong Kong
Equity
Lyxor H.S.I ETF (A9B)
2.95%
2.00%
5.85%
1.137
USA
Equity
Lyxor Nasdaq US$ (H1Q)
11%
USA
Equity
SPDR DJIA10 US$ ETF (D07)
3.74%
12%
2.69%
0.763
USA
Equity
SPDR S&P500 US$ ETF (S27)
6.64%
12%
4.84%
1.055
Asia
Bond
iShares Barclays USD Asia High Yield Bond Index ETF (QL3)
10.07%
20.00%
6.51%
0.128


I plan to wait for at least a year for each ETF, before reviewing the ETF performance and then taking action in terms of addition or not.

The simple rules are 

1) Add to an ETF which is under-performing.
2) Ignore the performing ETF
3) Use Investment addition to rebalance the portfolio weight rather than through active sales, i.e. avoid trying to time the in and out as all I want is global exposure to a set weight

Disclaimer :- 
I am not an investment professional.
I encourage you to do your own independent "due diligence" on any idea that I write about, because I could be and probably am wrong.
Nothing written here is an invitation to buy or sell any particular stock.
At most, I am handing out an educated guess as to what the markets may do.
The market will always find a new way to make a fool out of me (and maybe, even you!).
Even the best strategies of the past fail, sometimes spectacularly, when you least expect it.

I am not immune to that, so please understand that any past success of mine will probably be followed by failures