Tuesday, May 10, 2016

Generating 30% a year by buying the Dip on Vicom : A look back at the trade idea

I had written about Vicom a year or so back.

Old post on Vicom in March 2015

The trading idea was

"I think the current spike is due to the special dividend of 9.5 cents.

Chances are this is setting up the share for a steep fall once it reaches ex-dividend.

The share price is trading at 6.55 as of this post.

My estimate is that it will trade to below 5.8 when it goes ex-dividend.

That should set up a good long term buying opportunity.

The way to evaluate this would be

a) Does Vicom trade to below 5.8 SGD from now till Dec 2015?
b) A year from now, assuming one buy below 5.8 SGD and holds it till ex-dividend date of 15 August 2016, what is the return one has made?"

It is time to answer part (a).


Vicom traded below 5.8 SGD by August 2015.

In fact, right now it is close to revisiting the lows of August 2015.

The question now is, will it do a run up till August 2016?

This right now is very attractive as a risk return, so, if we buy now below 5.8 and hold it for its run-up, it might be worth it. Even, in case it does not run up, the risk of falling below 5.5 is very low, so it is a low risk investment opportunity.

As is normal, let us wait till August 2016 is over before we examine whether the return estimate of 30% holds.

Disclosure : Neither long nor short, currently, likely to go long in case share price falls below 5.8 SGD. 
  
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, May 9, 2016

Outperform the Market by 2% a year - Evaluating the RP ratio a year on

I had written about the RP ratio about a year ago.

Here is the old post on the RP ratio.

Post on RP ratio

The STI Index was at 3459.97 and the STI ETF at 3.46

The way to measure this is one year later, 

a) what is the return for this equal weighted investment vs STI vs STI ETF?
b) Has this outperformed?

The STI is at 2760 at the time of writing and the STI ETF at 2.8

The returns are -20.3% for STI and -19.1% for the STI ETF.

As the saying goes, a picture speaks a thousand words.

The RP ratio does outperform the STI ETF by more than 2% a year.



In short, if you are looking to outperform the market the RP ratio would help.

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