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.