Looking back in 2010...

As usual, we all like to look back into time and ask ourselves, "what have I done this year?". I will add in, "What have I done this year to deserve living another year?"

Recapping the events that happened, I must say 2010 isn't the best that I've lived. Every year should be better than the last, and can't be better than the next, but it didn't happen in 2010.

Studies wise, I graduated with a 2nd upper honours, and if you have been following my life, 3 years ago I said I wanted to get 1st class. I have been deceiving myself that I missed it by a marginal figure, but we all know that it doesn't work that way. You aim for the stars, hit the sky on the way, but ultimately when you land you need to have the star in your hand. I missed.

Career wise, I have been telling people that I am doing full time since July, but in actual fact, I have been fooling with time. Putting in less than 25 hours a week is not working at all. If I have to sum it up in one sentence report book style, it should be "Overall sales increased 4 fold as compared to 2009, but can be better with management of time and discipline."

Before you think 4 fold is a super figure, let's not forget that I am comparing to 2009 and 2009 I was almost non-existent at work. Anything that has more than 100% sounds damn good, and this is really how you play with numbers.

Talking about work skills upgrade, this is probably one area that I done well. I signed up for CERTIFIED FINANCIAL PLANNER (CFP) program in Aug and have successfully cleared 2 out of 6 modules on the 1st attempt. On the practical front, it puts me in a good position to advise clients on financial planning, and I really mean the broad aspect of financial planning, where insurance planning (my main ricebowl) is only a component of it.

Some people don't understand the term financial planning, and will always associate it with insurance, which I don't blame them because this term is overly misused. An example of the kind of service a financial planner provides is will planning and writing, which I advised for the 1st time this year, on a simple will and liased with a lawyer to execute the will document.

Collecting alphabets have become my new hobby and most of you know that I am doing CFA program, which I told myself to gain charter end 2012. However, at the stroke of midnight today I will be able to issue new namecards with these initials AFP, which means Associate Financial Planner.

One great achievement I made in my life this year would be completing a marathon. Since young, I am never the head of a pack when it comes to running and never the best player in sports. When half of the year just passed me in 2010, I asked myself what the hell have I done this year to deserve living, the answer was nothing. So I took the challenge to sign up the marathon that took place in the 1st Sunday of December, which coincides with the CFA level 1 exam I took in 2009.

I trained together with a friend I knew for more than half my life. He also had a down year. I must say this is one event that can potentially change your life. After completing it, we agreed that it gave us newfound belief that nothing is impossible. We can feel the power when we said the 3 words.

I am happy to pick up cycling again. This is one sport that pushes you to the limit and you can't stop. Life is largely like that.

In this new year, the main focus will be my career. I have done a thorough planning and strategy on my business, all written down in my new notebook (which I will let you catch a glimpse of it in near future), it is tough when you are your own boss and you report to yourself. Internal locus of control needs to be present in this line of work.

Achiever's Club bronze
Trigger at least 3 months bonus at year-end

Pass CFA level 2
Clear 2 CFP modules
Pass IPPT ("What?! You did a marathon and you can't pass 2.4km??")

Nothing is impossible.

Winter Solstice 冬至

According to Chinese tradition, this day signifies the crossover of a new year. In case you think that I'm talking rubbish, ask the seniors and they will be glad to enlighten you. This is the day where Earth's axial tilt is furthest away from the Sun and the reversal of the duration of day and night.

This also means that our luck for the year would be changed. For the better or worse, consult your eight characters. Call me superstitious or what I don't care, I do believe in such nonsense. Consult someone that is trained in bazi analysis for advice.

Maybe you look forward to Christmas more than anything else.

Where is the old Tampines?

With Tampines 1 only one and a half years old (opened 9 Apr 09), those staying in Tampines can inevitably feel the drastic change in the traffic flow, especially during weekends. However what really interests me is the type of business that is attracted to this area - fast food. There isn't a major brand that haven't set up shop here. Just in case you have forgotten, Tampines 1 is previously Pavillion.

Here is a summary of what and where of fast food at Tampines central:

McDonald's - 3, Tampines Mall, Tampines Central and Tampines Interchange (kiosk), and mind you, all 3 come with McCafe!

KFC - Tampines Mall (previously at Pavillion)

Burger King - Tampines Mall (beside KFC, previously at Century Square)

Long John Silver - Tampines Mall (previously at Century Square)

MOS Burger - Tampines Mall

Subway - Tampines 1, previously opposite Tampines stadium

Carl's Junior - Tampines 1

Popeyes - Century Square, the 3rd outlet opened in Singapore, after Changi Airport and Singapore Flyer

Wendy's - outside Century Square

By the way, if you are a KOI fanatic, there is an outlet just opened this week at the HDB office.

FYI, not counting the kiosk, there is a total of 5 McDonald's restaurants in Tampines. 4 of them operate 24 hours. I wonder if I can stay healthy like this.

**forecast: Old Town should be here next.

How many of us are born to do what we'd love to do? Do you wake up and become a CEO one day? Or that sportsman that break the world record on his first competitive run?

We reach the top by working hard and doing great the things that are expected at the bottom. You don't just dream, you set a vision to reach there.

Running Journey

We are 5 weeks away from Stanchart marathon and I am still tuning the way I run. Last week I participated in the Nike 10km run and finished in 69mins. Today I went for my long run and did the same timing, with a different way of running.

During the Nike run I tried 2km run and 1 min walkbreak but found it too hard to complete the 10km in a breeze. Today I tried 7min to 1min and find it so much better and with enough energy to do another 30mins on the clock.

No Job Is Beneath You

Read a really good story on The Last Lecture by Randy Pausch. It appears in page 168 of the book with the title as above.

It's been well-documented that there is a growing sense of entitle-ment among young people today. I have certainly seen that in my classrooms.

So many graduating seniors have this notion that they should be hired because of their creative brilliance. Too many are unhappy with the idea of starting at the bottom.

My advice has always been: "You ought to be thrilled you got a job in the mailroom. And when you get there, here's what you do: Be really great at sorting mail."

No one wants to hear someone say: "I'm not good at sorting mail because this job is beneath me." No job should be beneath us. And if you can't (or won't) sort mail, where is the proof that you can do anything?

_____

It sets me thinking about the mentality of us youngsters nowadays....

Just when you thought interest rates are already at rock bottom...

"Effective Oct 15, interest rates for POSB savings account will be pared to 0.1% from 0.125% for balances under $100,001."

Live within your means

Many a times, we forget this simple thing because we are doing well. Just look at America today and you get the answer.

There are many kinds of salesmen out there and I have nothing against them. I am one as well!! You sell the products and services that you believe in, where your core values tell you that it is right. For example, you may not see people who sell soda as ethical because it makes consumers fat.

Just like I hate credit card salesmen. I know of plenty of people who had to declare bankruptcy because of debts. And credit is the root of these problems. Before you point the finger at me for not educating enough consumers on financial planning, review your own spending habits.

Think about it. Our banks are only paying 0.125% interest and that wonderful card that holds the key to your future money is charging 24%. $1000 in the bank becomes $1001.25 and your $1000 bill becomes $1240 after a year. That makes you $238.75 poorer, which also means that you lose 23.88% of your wealth. Think about it.

The greatest challenge is not what we do when we are poor. But what should we do when we are doing well?

Manage your expenses

A common objection I get from people I meet on my work is that they do not have money. I mean, it is either they are giving me the perfect excuse or they really can't save!!

I have shared with my clients that financial planning is 10% insurance and 40% savings and investment, out of their take-home salary. Which also means that the guide is to only spend 50% of what you take home every month.

So my job is to help you with the 10% and 40%, while it is your job to make sure your expenses don't exceed 50%. And the first step that I recommend you to do is to have two different bank accounts, One for your day-to-day expenses, the other for the 10 and 40.

Remember, this bank account must not have any linkage to bill payments and please tell the bank teller you don't need the ATM** card as well. Your job don't stop here. Next, whenever you get your pay, you have to diligently transfer that portion over to the other account.

It's not too late to start now.

**ATM = Always Take Money

Question: When should you stop working for money?

Answer: When money start working for you.

Behave like the boss

Many veterans in my industry tell me to treat this career like a real business. And the most important part to running a business is to behave like the business owner! "Remember that you are providing a service for the better of others, not just asking people to buy insurance."

After attending the 3-day Leadership Education And Development (LEAD) program at the end of September, I began to understand the whole picture. In that small class of 20, with the oldest at age 62 and me being the youngest, I start to see ways people conduct their business, some aspiring to achieve the highest personal income, some highest volume, highest ethical standards and some highest number of manpower. And I aspire to be the youngest leader in my own standards.

I start to ponder, how is mine a business? I thought hard over the few days and found the answer. My mum is my answer.

She started her business of hairdressing in her early twenties (considered late since she started as an apprentice back when she was 14). She built up her clientele based on her skills and spread her base by word of mouth though with a shopfront. Same like her, I do not have a product to sell. People all need to cut their hair, just like all need insurance in their lives.

She grew with her customers. The initial part of all businesses are tough. You got to call and call and promote your services so people come in and consume. "And you will make it with hardwork", so says my mum. Today, the whole game has changed. People call her to make appointments to cut hair.

Many times, we missed out the way to do business because what we see is success. It takes tremendous hard work and someone big to be there. I am ready to take the challenge.

Are you ready to run with me?

Putting money to work

We are talking about compounding over here. As mentioned before, using Rule of 72, that is, taking 72 divided by the percent-return, that is the number of years needed to double your money. It also means that you have to put all the new money to work immediately once you receive it.

This is how it goes:

To double your money in 2 years, you need 41.42% per year.
To double your money in 5 years, you need 14.87%
To double your money in 10 years, you need 7.18%

Now, prepare for the eye opener...

To double your money based on 10% monthly compounding, it will take 8 months!!

Question is, do we have an instrument that pays interest (ie. returns) monthly? How safe are investments like this?

I wonder why...

I have two 14" CRT televisions at home, one is a very old Thomson and the other is a recently bought Akira. No matter how I tune it, the picture quality for my Akira cannot be compared to the half-decade old Thomson.. Why is that so? Aren't they both TVs?

Inflation adjusted, I guess the Thomson cost twice as much as the Akira.. That will probably explain why...

In the midst of asking my friends to buy insurance, they start to forget that I ask because I care for them...

Choices

Sometimes I have people coming to me and ask me why I don't join companies which can offer insurance policies from many insurers, which brings me to the question of why people would want to go there? And why are there still companies out there with only one offering? Shouldn't such companies be driven out of the system?

Long ago, the 3 top insurers in Singapore, namely AIA, Great Eastern and Prudential, do not distribute their products to Independent Financial Advisors (IFA), for a very simple reason which I have mentioned. They are the best around, so why would you pass a good product to strangers to sell, knowing there is a possibility that they might mis-sell it? (see recent article on Finexis great work with AXA, here and here).

I usually tell my price-sensitive clients that things are expensive for a reason, especially in a competitive market like this. Why is Magnolia milk priced higher than HL milk since both are milk? The difference lies in the quality, which means the process of producing that milk you drink is of a higher cost. Similarly, some insurance policies have returns, which are superior to their competitor, and of course not forgetting quality customer service and claims process.

Would you buy a policy which takes 3 weeks to process a claim, when you need the money most?

Telco

I first got a handphone in sec2, back in 2000. I signed up with Starhub, which I believe was relatively new at that time. It was a lousy Siemens phone. Then I went on to Singtel, then to M1, back to Singtel and now back to Starhub.

2 years ago I made some profits from the iPhone craze (3G). This time, I was waiting patiently for the iPhone 4 and just nice it was released the same time I am eligible for a recontract. Back then, I was aiming the Nokia E71. This time it is the HTC Desire.

The day before I already found my buyer and got news that Raffles Place's Starhub had limited stock. So off I went to Raffles Place at 10.30am the next day, only to find that it is out of stock. Went to M1 to enquire and got the same answer. Down but not giving up, I went to Cuppage and got it. A bit of running around but managed to get there with minimal effort.

32gb was selling for $380 for SmartSurf 300. So with the porting discount of $100 and trade-in of $150, I paid $130. Once done, I called the buyer and headed down to iluma to meet him. It was a handphone shop. So I asked if they had the HTC Desire in stock, which is indeed available. So he paid me $1250 and I paid him $760 for the phone, which a nice $350 profit in my pocket.

Less off the $250 porting and trade-in, I still made $100. Not to forget I got the phone for free (which was selling for $148 with plan). So net-net I made $248. Good stuff arbitrage.

Financial Planning

Being an insurance agent is really easy, I just need to know one or two products, then go out and start peddling them. Whether you need or don't need, as long as I make you think that you need, the sale is done. However, being a financial planner is real tough job. You have to identify needs by going though a thorough fact find, then analyse some critical numbers before finally coming to a solution. This process take time, knowledge and experience.

Many of them, including me, start out as an insurance agent. Even organisations do that, first by focusing on product features, then begin to look into customers' needs to come out with new versions of the product. Financial planning takes a lot of knowledge, basically the planner must know everything related to money; from deposits to stocks to fund to property. It is until you gain some serious experience before you embark on a total planning route.

For that simple reason of wanting to be in the top of the industry in terms of advisory, I am enrolling myself into the Certified Financial Planner (CFP) program to hone my skills as a financial planner. Earning myself into the Million Dollar Round Table (MDRT) by volume is not what I aspire, going there because I have solid clients who trust their financial plans with me is my dream.

By the way, if you are wondering how many people in this industry hold the CFP or ChFC designation, I can safely tell you that it's less than 25%. Correct me if I am wrong.

Our 3rd Anniversary @ Kota Kinabalu

We booked this trip last Oct when JetStar held some promotion and we got our tickets at $44 each, all in, travelling on JetSaver Light (handheld baggage of less than 10 kg only). Adding accomodation, this trip costs us $125 each, not bad considering that we are going there by plane and staying in a 3-star hotel.

We were scheduled to depart at 1035 on 8 Jul, but the day before we received an SMS saying that the flight was retimed to 1210. To be safe, we reached there at 0900, got the tickets and went for breakfast at T3.




Unfortunately, the flight was further delayed and we took off about 1230, reaching there at 1500. It was drizzling and we called a taxi at the airport counter for 30RM.

Reached Best Western Kinabalu Daya hotel in about 15 mins and was greeted by the friendly staff and proceeded to check-in. Pleased with the quality though the room was abit small. Settled down and proceeded out to explore the town.



Decided to have early dinner at You Kee Bak Kut Teh 佑记肉骨茶 (very near to the hotel). Food was served with the traditional pot of tea, you tiao and tou pok. We ordered 2 bowls of bak kut and 1 bowl of fen chang. Total 22.50RM and happy with food and price.





The whole stretch of city can be covered in 1 hour, like walking from Somerset to Orchard. We visited KK Plaza and Centrepoint and it was quite pathetic. The highlight of the night was the seaside as we caught breathtaking scenery of the night setting in.



Went back to hotel, cleaned up and proceeded out for supper at Little Italy, a restaurant beside the hotel. The food is mouth watering and service is superb, a must-try of KK city. We didn't order much as it was already late.

Day 2

Woke up late. Decided to visit some offshore island to relax and take photos. So we went to the ferry terminal to find out prices with an intention to go in the late afternoon to catch the sunset, but found out that the latest ferry back to KK city was 1700hrs, therefore would not be able to see any sunset. After some pondering, we decided to move out straight at 1045 and returned at 1300. It turned out to be a lucky decision because it started pouring in the afternoon and did not stop until late at night.

Handed 23RM each over the counter, boarded the speedboat bound for Pulau Sapi. Entrance fee 10RM each. Love the ride, love the sight, love the company.



Went to Suria Sabah, a new shopping mall which is around 20% occupied. Had lunch at the foodcourt, 13RM, foodcourt standard, disappointing.



Went back to hotel to wash up and waited for the rain to abate. Moved out at 1700hrs for dinner, destination Lintas Plaza, which is out of city. Took a taxi, paid 20RM to and 25RM fro. Dinner at the Koganei Japanese Restuarant 95RM, excellent service and fresh food.

There were nothing else to see at that place, so effectively the meal cost 140RM. Went back to the hotel, washed up and started packing up. Went down to Little Italy for supper again.




Day 3

Woke up at 0700hrs, finished some final packing and went down to consume the hotel complimentary breakfast. Worst meal of the trip, but still edible. The taxi uncle that took us out of town the day before came and picked us up. 25RM to the airport.

Took the tickets and went to Old Town for coffee. Didn't have any decent coffee during this trip. It actually turns out that Old Town is quite normal, but I don't know why I visited the Singapore outlets so many times.



Arrived in Singapore on time. Went to DFS wanting to purchase liquer but found out that there are restrictions for passengers who visit Malaysia. Only wines are allowed, and duty must be paid. Bought Inniskillin Ice Wine Gold Reserve 375 ml at $116.37.



Great trip, as compared to Batam and Genting. Will definitely go back someday to snorkel or even climb Mt Kinabalu. Travel insurance for a 4-day trip can be purchased at $13. For the uninitiated, Kota Kinabalu is in Sabah, Malaysia.

Singapore Pools

Recently, I have been entering Singapore Pools on every draw date to purchase a $2 Quick Pick ticket. For the uninitiated, in Singapore, we have Toto every Mon and Thurs, and 4D every Wed, Sat and Sun. Quick Pick means that the number generated on the ticket will be random. I do not believe in buying the same number over and over because lottery is all about pure chance, and the probability of you striking 4D is 1 in 10,000, which isn't too bad as compared to Toto.

Well, that equates to a spending of $10 every week and $520 a year. Based on a $2 ticket, I will require striking a Starter prize once a year in order to breakeven. Best thing is, I have not struck that kind of prize money for as long as I started buying. Sad.

I believe everyone buys lottery for the dream of striking the biggest prize. I don't know how many times in your life you are going to get it, but it is definitely good to dream.

I found something that is able to give an even better prize money. Better still, it has a sure hit prize money of near $30,000. In other words, you will have to strike first prize 8 times to get more than that! Before you start thinking that I going to keep this all to myself and be an selfish idiot, you can actually try asking and I will be willing to tell you how to do it.

I don't know about you, but I am going to stop buying 4D altogether and start on this journey of receiving my $30,000. Good luck.

五月天 Mayday



十万人在台北中山体育场
四月十七号，新加坡演唱会会有多少人呢？

Hundred thousand people in Taipei stadium.
Come 17 April
how many are we expecting in Singapore National Stadium?

Technical Analysis (TA)

There are many courses out there teaching technical analysis, commanding fees of few thousands dollars just to teach you how to read a series of bars and lines. Question is, are they really useful? Can you become a millionaire by analysing chart patterns? Personally I feel that fundamental analysis is still more sound for investors holding long term, and I only know basic technical analysis, which I use to determine my entry point.

People who only use TA to trade should not be able to generate profits consistantly, taking into consideration transaction costs of buying and selling, and also the resources spent in identifying stocks (time is also money). This two points will always hold as long as markets are at least weak form efficient (read on efficient market hypothesis). And if they are not, I suggest you quit your job now, become a full time trader and we can all become millionaires.

And seriously, people who sell you courses by showing charts of stocks showing some "buying signal" and then an upward movement on the following days, coupled with big, bold caption "DON'T MISS THE CHANCE TO MAKE MONEY". I can show you many other charts with the same "buying signal" but not the result. This is what we call "with benefit of hindsight", stupid.

Don't believe? Take a look at the stock I hold: United Engineers



I entered at $2.13, virtually the highest point in recent months. I went in without looking at past prices, on the hope that it will ride the momentum, which had been proved wrong. This trade would have attracted mockery from "traders".



Two months on, we are still looking at the same chart, my entry point is the long white bar to the left of the red-line hump. The price today is $2.50. Before you say that I could have entered at a lower price, my fundamentals are not wrong. This stock is only trading at 0.5 P/BV ratio when I bought it.

So my question now to Mr Trader: based on technicals, am I supposed to exit tomorrow? Or must I wait for some "confirmation"?

Disclaimer: Please do not take the above mentioned stocks as a form of recommendation and start cursing me when you lose money. I would not mind that if you can share some of your wealth with me. Thank you.

Happiness

An article appeared in today's The Business Times Weekend (page L13) on the subject of happiness. I am not surprised to find us Singaporean faring lower than our counterparts, even worse than poorer nations like Vietnam. The main reason, if you have not already known, is social comparision.

I believe everyone who has lived in Singapore for one point or another should understand how competitive it is here. Fighting to be the best is what we are trained from young. First to top the class in every subject, then for the highest paying job and then fighting to be the best in your species to attract the best from the opposite sex. Never ending.

Having one of the highest living standards in the world also mean that we need loads of money to be termed as successful. And the problem really comes when we don't know how much is enough. A sentence from that article struck me hard, it says

Materialism leads people astray, because having money is a poorly defined aspiration. "When a student wants to graduate, there is a specific goal. But how does one know when they've made enough money?"

Indeed. This question was in my mind sometime ago when I was a bit lost in the midst of my career. Because this line has no cap on earnings, I asked myself how much is enough. Who should I benchmeark against? The top 20% of the industry, top 20% of the company or top 20% of the agency? I don't know what I want and it got me really unhappy as I hate to have unknowns in sight.

But when it comes to academic performance, it is really easy cos the cap is 100%. You know what to aim for when you know 100 is the end point. And that is also the problem for many students because most see 50 as their end point and a handful of them 70. They don't understand that what you want is what you get and nothing more.

Are you happy with what you have? I am happy with what I am going for.

Dollar Cost Averaging - Part 2

I posted on DCA recently (read here)and I was in a similar discussion with a friend but the difference is that we are not talking about funds, but a particular stock.

He told me that if a stock is good, you should not use up all your capital and purchase it at one go, i.e. showhand. It is wise to leave some of your capital so that when the stock drops, you can execute DCA.

So I asked him why is it that since he feels so good about a particular stock, and he is predicting that it might drop? Then he said that it would be naive not to consider market shocks, which means that some adverse news can bring a market down no matter how strong your pick is. True.

Then the real question comes. How do you know that the stock is good? Based on what? Historical price? Business model? Future growth?

Then what? How do I know how much it should be worth (intrinsic value) now? How much should I sell?

Take a look at the chart below. One of the scariest charts of all time... Cosco Corp



So here we address the first question: Picking stock based on historical price. The stock was selling at less than $3 for the first half of 2007, then it went up to $8 in Oct07, which got you so excited and ready to pounce. Less than a year later, it dropped back to $3, so you thought that the perfect time had came. You entered at $3 hoping that it will go back to $8, which will translate into more than 250% return and you can become the first millionaire made in the stock market. So you sell your house and play showhand. $300,000 in, and you are still sitting in a pile of shit today, with a loss of 60%. Too bad, your wife and children have left you.

Next question on DCA. One other stupid man also saw the opportunity. He decided to enter 10% of his wealth first, $30,000 in. One week later the price was $2.50, still convinced that his investment is sound and this time it's cheaper, he threw in another $50,000. 1 month later, price $2, "and this cannot be", he thought to himself, so he decide to dump 30% of his wealth into the sea, $100,000. The average cost works out to be $2.25 only!! "I found gold!"

October 2008, the price officially drop below the $1 mark. And he still believed that your stock is a good pick and the phrase "what goes down must come back up". So he also played showhand - $120,000 of remaining wealth all in. This time your investment really cheap liao, $1.50 per share only. Until today, the stock has never risen back to $1.50. By now I think his wife would have left him too.

The wise one would have spotted it and left that stock alone. He is the one who doesn't buy without looking deep into the company. And he would probably end up sleeping with the two homeless wives.

Note: Life is contradicting. Some methods that should be there to help you destroys you. And remember that wives leave not because you are a lousy stock picker, they leave because you spend all your money on companies that don't make LV bags.

Life Teachings

Sometime ago on a particular Saturday morning when I was back in office, my Director was also in. He shared some ideas on management and teachings with me, obviously hoping that I start recruitment and rise to manager as soon as possible.

He told me that men should be prudent and live within our means. Earning loads of money doesn't mean that a person should live a lavish lifestyle, drive big cars and look down on people. For you do not know where you stand in the future. When one becomes rich and famous, he tends to become arrogant and comfortable with what they have, which is the start of their downfall.

To sum it up, he said:

花没有百日红，

人没有千日好。

Loosely translated, it means that flowers don't bloom for a hundred days, men don't flourish for a thousand days. I was so impressed with this statement, especially when it came from a veteran who has lived two times as much as me. Now, when people talk about life and earning loads of money, this phrase constantly rings in my head.

The moral of the story is: Everything in this universe moves in cycles, like it or not. So remember that you can be earning $100,000 per year now, but you can also be out of job when I come back to visit you two years later. It is therefore important to save for a rainy day and don't pretend that life must get better.

In finance, we call that random walk. Today you might be up, tomorrow you have an equal chance of going up or down. This trend may persist for a prolonged period but eventually it will revert to the mean.

High Dividend Yield Stocks

Before we go into the content, let's look into what the title means. Dividend is a payout that rewards you for holding a share of the company. It is similar to the interest on your bank savings. The difference is that the company can choose not to give any dividend for the year.

The yield on the dividend, is the dividend divided the share price, for instance, a company's share is selling at $2.00, and dividend declared is $0.01 per share, which means the yield is 0.01/2 = 5%.

Is dividend yield important? Of course, that equates to your return on investment. Still don't understand? Imagine now that you hold Company A's stock that costs $4.00 per share compared to Jacky who holds Company Z's stock that costs $2.00. We have the same capital, which means that for every stock you hold, Jacky holds 2 times as much. So when Company A and Z both declare a dividend of 1cent per share, who would be happier? If you still don't understand, I suggest you go back to sleep now.

Ok back to serious business. This week, a number of companies announced earnings for the last financial year, which is also the time they propose dividends to be distributed to shareholders. On average, Singapore listed companies generally yield about 2% on dividend and 4% or more is considered generous.

So, take a look at the latest companies that are cum dividend (CD) currently, computed based on the amount declared for this period. Prices of stock fluctuate, so the denominator is not accurate. Therefore, dividend yield is accurate to not very accurate.

United Engineers - 4.5%
Sembcorp - 4.1%
Parkway Holdings - 4%
CSE Global - 4%
Rotary Engineering - 3.8%
Allgreen Properties - 3.6%
ST Engineering - 3.3%
SembMarine - 2.9%
UOL - 2.5%
Haw Par Group - 2.5%
Hong Leong Finance - 2%
Sing Holdings - 1.8%
ComfortDelgro - 1.8%
Golden Agri - 0.93%
SC Global - 0.85%
City Developments - 0.78%


Take note: Dividend yield computed is based on the most recent report, which may be dividends declared for the quarter, and may NOT be the dividend yield for the entire year, because I am not so free to find the data and I don't hold a dividend paying stock for so long. Call me myopic.

Important: Please do not take this as a stock recommendation. Life doesn't work based on one factor. Even when using dividend yield, you must also know when is the CD and XD dates and the effect on stock prices on these two crucial dates. More will be shared after you have lost money. Good luck and have fun.

Stocks

My recent posts on stock trades have set me wondering why I did something so unmeaningful. Why am I posting my results when it is not going benefit anyone? It doesn't make sense.

Moreover, I have been trading actively in and out of positions and this market correction is not really helping. I gained a little and lost quite a bit.

Then I thought of sharing some picks that are undervalued, which means that the price is low as compared to its fair value and I expect it to go up in near future. Then again, why am I sharing something that doesn't benefit me? You can say that I am just another noise trader out there and know no shit about this, I really don't care.

Moreover, these picks may stay mispriced for a longer period of time than I expect.

If you are here looking for stock picks and after reading this you decide to shut my blog out forever, I think I still can offer some value by posting stocks that have high coverage (read: glamour stocks) by analysts in brokerage houses and that might give some guidance. But I advise you to hold them as most of them covered are blue chips.

Good luck and I don't see much light in the Singapore market this year of 2010.

New Year Resolution

It's February and more than 8% of the year is already over. So am I too late for a resolution now? My apologies for not following the calendar, but I am Chinese, so my new year only starts now. I don't usually set new year resolutions for a simple reason that what I want to achieve is of a longer term horizon as compared to you, who make a resolution like making a wish which never happens.

That is the problem with people. People say new year must have new start so must think of what to do for the new year. Then you come out with some crap and don't follow through. What's the point of wasting that precious brain cells to come out with something in the first place

Some wish to lose some weight, some wish to spend more time with family, and some wish to spend less money. And the whole problem begins. How much is your "some"? Can you be more specific? Lose 1kg is lose some weight, lose 10kg is also lose some weight! So how? Must I really come out with an answer? Shall we abandon it now?

So, before something stupid comes out of your ideas again, think properly and ask yourself how much you want it. For me, I have 2 tasks to accomplish:

1) Increase sales by another 100% before June
2) CFA in 2014, age 27

Happy Lunar New Year to all. Tigers and bears both have paws. So take care for the year.

Dollar Cost Averaging

This is a concept used in investing, more eminent in insurance where policyholders do a regular monthly investment plan. Dollar Cost Averaging (DCA) is useful when the price of asset (or apples, if you like) fluctuate and when you are not sure of future prices.

An example of the above two conditions is the stock market. Over the long term, prices should be on the uptrend, the same way you pay for the same fishball noodles, but prices are subject to "noise", which means it will shift up and down of the fair value in the short term. For example, the fair value of apples is $1, then suddenly an apple hits Isaac Newton's head, and it goes for $2 the moment after. Or there is news saying that in actual fact it's a mangosteen a day that keeps the doctor away, resulting in apples selling for $0.50. So that is the lousy example I came up with.

Now back to serious business.



Take a look at the chart. Assuming you are an investor and the time now is 2004. The right side of the chart is blank. You decide to split your investment into five years from 04 to 08. And you retire in 09. The prices at the beginning of the years are $1.10, $1.20, $1.60, $2 and $2.60 respectively. The average cost works out to $1.70. Unfortunately nobody retired willingly in 2009 cos the price plunged to $1.60 and you made a loss of $0.10 in your investment.

But you happened to know another investor who made one lump sum investment into the same fund in 2007, when the price was $2. He also wanted to retire in 2009. But he played a wrong game of showhand and he had to work harder than you now cos he didn't know the concept of DCA.

Note: The chart shown is taken from Great Eastern's official website, and the fund is Enhancer, one of the best performing funds of all time. Morningstar rates it 5 stars. The 5-year compounded return is 12.47%, which means that a $10,000 investment would have grown to $17,989. More info here.

I am an authorised agent qualified to give advice on funds specialising from bonds to sector-specialised equity. If you are interested to start a monthly investment plan, leave me a message but I can't guarantee that I have time. Just kidding.

Investing

Quote of the day:

股市- 上爬楼梯, 下搭电梯.

Passed!!



June 2009 passing rate 46%
December 2009 passing rate reverted back to normal of 34%. Yes I am one of them.

Investing

Quote of the Day

"If you can find an investment that guarantee 15% returns, I will go to all the banks in the country to borrow money to invest in it."

My Trading Story Thus Far.... Stocks

This series is a real life trading story of mine. Armed with a capital of $8000, it is my own record of the investments I made and to share my experience, which was quite painful for a start. In this case, I believe some experience has to be bought with money (by losing) and I have to remind myself not to make the same stupid mistakes again.



Number 1 trade of my life - Sinomem at $0.60, I believe this is one of the strongest water treatment companies listed. Dropped to a low of $0.47 during holding period for 2009. (click on picture below to see chart and description)




Number 2 trade - Unifiber. Worst piece of investment. Learnt my lesson, never to listen to recommendation without doing any research. Speculating makes me a victim. End 2009, still holding on, making losses, looking for the best time to breakeven and offload.

Number 3 - Swingmedia. Another lesson learnt. Believed too much in research reports and not knowing the best time to enter. Bought at the highest point. Looking to offload half of the holdings.

Number 4 - Frasers Centrepoint Trust. One of my favourite REITs. Great prospects following Northpoint 2 mall and Yew Tee Point. Offloaded holdings due to liquidity needs and after receiving dividend of 2.04 cents per share. Only made a pathetic $15.61 (1.23% holding period for less than 1.5 months). Looking to buy back when price is good and if I have the cash.




Number 5 - Singtel. Bought at the lowest point for the 2nd half of the year, at $2.90. Best piece of investment thus far. Still holding, looking to sell at $3.20 or $3.30, depending on the strength of resistance.



Also made a contra loss of $135.86 on Hock Lian Seng.

Total for 2009 (3 months) - realised loss of $120.25.

Rule of 72

Last week, we discussed about the power of compounding, which of course, more is better and if the frequency of the compound is higher, the more money for you to put in the pocket.

Today, I will introduce a tool for you to compound your growth: The rule of 72.

Apparently, Albert Einstein is the owner of this rule and what it says is that by taking 72 divided by the interest rate, that will be the number of years needed for your money to double. Amazing, isn't it?

The effect of compounding can actually be represented by a mathematical function called e, the exponential function. People are always interested to find out how long it takes to double their money, so this is a useful tool to use.

Again, for illustration purposes:

Suppose the bank pays you 0.5% interest every year. Take 72 divide by 0.5 and you will know that you won't get to see your money double in this lifetime.

Similarly, if there is an investment that promises 10% per year, you will get two times your money in approximately 7 years. But before you dump all your money into that unknown Ponzi scheme, please be assured that there is no investment that promise they won't lose any of your money. If you manage to find one, please leave a message cos I want to invest too.


Your writer is lousy in english. So he is trying to put things as simple as possible.

The Power of Compounding

Compounding is really a basic term that we encounter in our day to day life. It doesn't take a scientist or a financial expert to explain correctly what compounding means. This is what growing money means. Compounding will ensure that your $1 today will be worth more tomorrow and even more the day after.

A simple illustration:

You invest $100 in a financial instrument called bank deposits. It promises 1% interest every year and they pay at the end of each year.

End of the year we will all celebrate the welcome the new year, and at this time, the bank pays you $1 on your $100 (1% of $100 = $1), and they too, went on to celebrate their bonus for the year. So being somemore who haven't used a single cent in that account, you have $101.

One more year and the whole cycle repeats itself. You are still happy and nothing changes except for your account. The bank is sad cos they have to pay you $1.01 for interest this time. You have $102.01!

Of course, I am using this example to mock at you for leaving that $100 in the bank since he doesn't withdraw it to use. He can put it into a better purpose called investing.

Now suppose the returns (interest) is 10% instead of 1%. End of year 1 will be $110 instead of $101, and end of year 2 will be $121 instead of $101.10. You decide for yourself which one is more.

From today onwards, after celebrating the enterance of year 2010, I will be sharing something every week, be it investment knowledge, study advice or whatever nonsense. But I am good at none of these.