My stock gains/losses from Oct 09 to 31 Dec 09

No changes for my position this week. Unrealised capital gain has increased from $2125 to $3625 as compared to last week.

Cambridge Technical Analysis (30 Dec 09)

See it for yourself and make your own judgement. Cambridge may be reaching $0.60 as the first target and $0.70 for the second target. If that happen I will be selling half my holdings at $0.60 and another half at $0.70. Looking at the MACD, RSI and Stochastic, it may be a good time(though not the best time) to buy in my opinion. Please note that I am using TA to position myself for long term investing and not to predict the direction of the market.

SingPost Technical Analysis (29 Dec 09)

See it for yourself and make your own judgement. Singpost may be reaching $1.07. If it happens to speculate to $1.15, I will be selling. Looking at the MACD, RSI and Stochastic, it may not be a good time to buy in my opinion. Please note that I am using TA to position myself for long term investing and not to predict the direction of the market.

DBS Technical Analysis (28 Dec 09)

See it for yourself and make your own judgement. DBS chart is facing double resistance. Looking at the MACD, RSI and Stochastic, it may be the worse time to buy and best time to sell in my opinion. Please note that I am using TA to position myself for long term investing and not to predict the direction of the market. My target buy price is still $12.50. If the price never reaches $12.50, then I will not buy at all.

SuntecReit Technical Analysis (28 Dec 09)

See it for yourself and make your own judgement. SuntecReit chart is facing triple resistance. Looking at the MACD, RSI and Stochastic, it may be the worse time to buy and best time to sell in my opinion. Please note that I am using TA to position myself for long term investing and not to predict the direction of the market. My target buy price of $1 is unchanged since last week. If the price never reaches $1, then I will not buy at all.

Singtel Technical Analysis (25 Dec 09)

Just take my analysis as a pinch of salt. During the Jul 09 period, there is speculation or fake break out which bring Singtel price to $3.5x and after that, the price has been push down all the way to $2.8x on Nov 09. MACD, RSI and Stochastic also show a good buying opportunity. That is the point where I accumulate Singtel shares for long term. I am not afraid of losing any money, as I am targetting at dividends.

Based on my analysis, my target sell price for Singtel is $4. I am seeing a strong resistance at $3.5x. If it never reaches $4, I will just hold it to collect dividends for the next few years. Please note that I am using TA to position myself for long term investing and not to predict the direction of the market.

My stock gains/losses from Oct 09 to 24 Dec 09

No changes for my position this week. Unrealised capital gain has increased from $1100 to $2125 as compared to last week.

China XLX speculation play?

This is the price movement over a month.
Lowest Price on 24 Nov 09: $0.395
Highest Price on 8 Dec 09: $0.905
Lowest Price on 22 Dec 09: $0.605

Is this an example for short term speculation play? For those who had bought at $0.905 and hold it till now must be very nervous now, seeing his stocks falling more than 30%. So at what price will it stop falling? Nobody will know.

As mentioned in my post "Investor, Traders and Speculators Charts", identify which types of chart a stock is currently in can save you a lot money.

SunTec REIT Technical Analysis (22 Dec 09)

I have set myself $1.00 as a target price to buy Suntec Reit. Based on the past year dividend and a target price of $1.00, the yield is about 10%. Please note that I use TA to set my target price for long term investment, and not to predict the direction of the market. If the target price is not met, then I will not buy it at all.

How to invest using your CPF saving?

CPFIS stands for CPF Investment Scheme. It allows CPF members to invest their CPF savings so as to enhance their retirement saving. Currently 2.5% interest is given for the Ordinary Account (OA) and 4% interest for the Special Account. And there is an extra 1% interest to be paid on the first $60,000 of a member’s combined balances, with up to $20,000 from the Ordinary Account (OA).

For those who are willing to take risks in order to achieve higher return might want to consider CPFIS. CPFIS allows CPF members to invest in various instruments such as unit trusts, ILPs, fixed deposits, bonds shares and ETFs. These instruments must be stated under the CPF approved list.

In order to invest using CPFIS, you have to:

1) Open a CPF Investment Account. You can open this account with DBS, UOB or OCBC bank.

2) Check how much you can invest by logging into the CPF website. Please note that different limits are set on different investment products.

3) Link your CPF Investment Account with the necessary investment company. For example, if you are buying shares or ETFs, you have to inform your broker to link your CPF Investment Account with your trading account.

To find what more on CPFIS investment, you can try to Google "CPFIS investment" using my Google search box located at the top left corner of my blog.

SPH Technical Analysis (20 Dec 09)

I have set myself $3.20 as a target price to buy SPH. Based on the last whole year dividend of 25 cents and a target price of $3.20, the yield is about 7.8%. Please note that I use TA to set my target price for long term investment, and not to predict the direction of the market. If the target price is not met, then I will not buy it at all.

Click here if you are interested to know more about when I will buy stock.

Singtel Technical Analysis (19 Dec 09)

Just do it for fun. I will not say whether it will go up or go down, so see it for yourself and make your best judgement.

My stock gains/losses from Oct 09 to 18 Dec 09

I will be receiving dividends of $310 in cash and $310 in CPF on 14 Jan 2010. Other than that there is no changes in my portfolio this week.

Will be receiving a dividend of $620 from Singtel on 14 Jan 2010

Currently I am holding 5 lots of Singtel in cash and other 5 lots of Singtel in CPF. Hence I will be receiving a total dividend of $620 from Singtel on 14 Jan 2010.

How to invest regularly if you do not have a lot of saving?

A lot of people may say that investment will need a lot of capital and it is almost impossible for them to invest regularly. This is quite true, just imagine you want to invest in Singpost regularly, you will need to save about $1000 just to buy one lot. For some people, it may take 3 to 6 months to save $1000, so it is impossible for them to invest in Singpost once per month.

However, there are plans from some investment companies which allow investor to fix the amount of money they want to invest per month. One of plans that I have found is the Phillip Share Builders Plan (SBP). For those who has a POEMS account might already know about this plan. But for those who don't know, I will just give a short description.

From what I have read from the Philip website, the minimum amount that an investor needs to put in is $100 per month per counter. Investor can select which counter to invest in from the list of counter stated by the company. For dividend, it can be reinvested or you can choose to receive the dividend. You may want to find out more detail by checking out the plan at the PhilipCaptial website.

Another plan that I found is Regular Savings Plan (RSP) from fundsupermart. However please note that this plan invest in funds(or unit trust) instead of individual share or stock.

You may want to google "Monthly Investment Plan" to find out other plans that are not stated in my posts.

Closed my CFD account today

Today I am on leave, so I make a trip to one of the Philip branches to have my CFD account closed. The reason why I close the account is because I don't see myself as a trader any more. So I do not need an instrument to do shorting, contraring and leveraging.

If you are not familiar with what is CFD, you may google "CFD account" to find out more.

I also go to the POSB bank to activate the link for CPF Investment account in my ATM card. I have transferred that unused amount (about 10k) from CPF Investment account back to my CPF. Why do I need to do that? I have recently read a blog post @ http://sti-stocksinfo.blogspot.com/2009/08/calculating-cpf-interests.html

Based on the blog explanation, CPF interest is calculated monthly and not yearly. So if I transfer back the money back to the CPF account, I will get more interest next month as compared to leaving it in the CPF investment account.

If you are interested to find out more about CPF investment, you may google "CPFIS" or "CPF Investment Account".

Singtel Technical Analysis (13 Dec 09)

Please note that I am only doing technical analysis for fun and I will never use it to predict the direction of the market. If you are reading this, just take it as a pinch of salt.

As in my previous post titled "Investor, Traders and Speculators Charts", I mentioned that there are three type of charts. Guess which chart Singtel is currently forming? I have put in three blue ovals in the three indicators. See it for yourself whether is it a good or bad point to invest.

My stock gains/losses from Oct 09 to 11 Dec 09

I have updated my gains and losses in my investment from Oct 09 to 11 Dec 09. I have added 5 lots of Singpost in 11 Dec 09 in my investment portfolio as my investment capital has increase which allows me to add in new position. As in my previous post, I will continue to hold my current holdings until some of the stocks reaches my expected values. I will put in new positions when I see new opportunites.

Bought 5 lots of SingPost on 11 Dec 09

I have bought another 5 lots of SingPost at $0.98 on 11 Dec 09.

Rule no. 3: It's far better for other to buy an overvalued stock from you, rather than you buy an overvalued stock from other.

My Rule no. 3 states that "It's far better for other to buy an overvalued stock from you, rather than you buy an overvalued stock from other." As mentioned in my post titled "Investor, Traders and Speculators Charts", stock can be undervalued and overvalued as there are traders and speculators in the market.

I value the stock simply by calculating its yield. See my post "Buying Stocks based on price and value" If the yield is no longer attractive as the price of the stock goes up, I will sell a portion of it first. If the price goes up again, I will sell the next portion. It will make my investment less risky as I know that I will be holding less and less overvalued stocks and I have free some money to target to buy other undervalued stocks.

Please note that I am adopting averaging down strategy when buying stocks. This will keep the average buying price as low as possible. As for selling of stock, I am adopting averaging up strategy. This is kept my average selling price as high as possible.

My Quotes/Rules of Investment

Who can be trusted in the market?

There are so many players in the market and who are the one you can trust?

Recently one of my friends told me that his broker recommended him a stock. He bought it, and since then the price of that stock keeps dropping. I don't understand why he chose to believe in his broker where his broker don't even share out his portfolio at all. This incident make me has the urge to write this post.

In my opinion, there are two people that you can trust in the market. The first one is you of course. If you cannot trust your own judgement in buying stock, why buy it in the first place?

The second one is someone who shares with other what are the stocks he buy or sell, show people how his strategy can work by using himself as an example, but will not make any recommendations.

Give you an analogy. If you want to learn how to play a piano, will you find someone who can talk about the history of piano all day, or someone that can demonstrate his skills by playing the piano in front of you? Of course for myself I will choose the second one as he has the skills who can show me the right way to play the piano.

Every morning, some tv channels always have analysts to talk about the market. They can talk very well and normally with some recommendation on what share to buy. Do these analysts ever show you their portfolio, tell you exactly what strategy they are using, any prove of their winning track record? The answer is almost all "NO". Basically these analysts are just paid to write and talk, just like someone who just talk about the history of piano and you don't know whether he can actually play the piano or not.

Dealing with Market Randomness

Before you read this post, you must convince yourself that direction of the market can never be predicted. You may see my other post titled "Rule no. 1: Never predict the market." and see whether you are convinced.

Methods on dealing with certainty and randomness are completely different. For things that are certain, you just need to go for the best approach to get maximize gain. For things that are random, you will need to manage your risk in order to maximize your gain.

So how to deal with the market since it is random? The keys are:

1) Fixed your own winning strategy and follow it all the way. Don't use it randomly or stop it half way. You can find my strategy in my post "My strategy in investing stocks. "

Have you ever hear of stories from people who had bought the same 4D number for many years. For many years, they have not strike the number, but when the moment they stop buying the number, the number suddenly appeared as the first three prizes in the next few days or weeks. I am not encouraging people to buy 4D as it is a losing game in long run, but I just use it as an illustration. Fixing your own winning strategy and following it all the ways is perhaps a better method as compared to those who never follow it consistently.

Following your strategy all the times is one of the hardest thing to do in the stock market as you are facing real time prices jumping up and down every second. If your will is not strong, your emotion will prevent you from following your strategy. "Buy and don't look back" is one of the ways one can use to ensure strictness on your strategy.

2) Make “dropping of price” and time as your friends and not enemies.

As an investor, I will make “dropping of price” and time as my friends and not enemies.
Seeing a good stock falls in price after buying it at a fair value is not a surprise to me. It is because I have already convinced myself that market is random. See my post "Investor, Traders and Speculators Charts ".

For a trader, he may just cut loss immediately after seeing the price drop. But for me, it provides me a good opportunity to buy more. If the price goes up, I will not buy anymore, but rather wait for the stock price to be overvalued to sell.

Time is my friend as I will just wait as long as I like for the stock to go up. I will collect dividends while waiting. Remember, contra player make time as their enemies as they cannot hold their position for more than 3 days. They are most likely to lose money as compared to a investor who is doing averaging on a good stock.

Rule no. 1: Never predict the market direction.

As stated in my post "My Quotes/Rules of Investment", my first rule is never predict the market direction and my second rule is don't forget the first rule. I have been following these two rules since Oct 09. In my opinion, market direction can never be predicted. Why do I say so?

In mathematics, you might see this simple formula,
y = x + 1. So if you know what is x, you can easily know the value of y, the formula is very easy.

Let us see another formula,
y = x + z + 1. Again you must know what is x and z, then you can calculate the value of y. The formula is a bit complicated but still managable.

How about this formula,
y = a + b + c + d + e + 1. There are total of 5 variables and you need to find out all the variables before you can calculate the value of y.

Why economics news make a trader hard to predict the market? Let say there are 5 economics news which can affect the market, you must know whether all the 5 news are positive or negative. To find whether y (the market direction) is postive or negative, you will need to sum up a, b, c, d, and e economics news first. But before you are able to calculate based on your formula, the market direction has already affect in the news. So if you try to predict the markets, you are often too late.

Why Technical Analysis cannot be used to predict the market direction?
I agreed that TA can be used to calculate risk/rewards ratio, but never the direction of the market. If someone were to predict the random market direction accurately, his or her brain will be more complex than the random market direction.

For example let's says the daily share price of a stock is as follow, 1, 2, 2, 3, 3, 4, 5, 5, 4, 3, 5, 6, 7, 8, 9, 8, so what is the next price after 8? You can say is 7, 8, 9 or other number by using TA. That is simply guessing. If you do not know what is the next number in my mind, how do you know what is the next number. The only way you can guess correctly is to read my mind. That will mean that you have powerful six sense or you are a super human being who can control my mind. Even you can read my mind accurately, can you read millions of people mind who trade in the market?

So next time if there is a stock guru tells you that he can predict the market direction, give him a series of ten numbers and ask him to guess whether the next number is higher or lower than the tenth number.

My Quotes/Rules of Investment

My stock gains/losses from Oct 09 to 3 Dec 09

I have tabulated my gains and losses in my investment from Oct 09 to 3 Dec 09. As in my previous post, I will continue to hold my current holdings until some of the stocks reaches my expected values. I will put in new positions when I see new opportunites.

The Goose That Laid the Golden Eggs

One of my favourite childhood stories is "The Goose That Laid the Golden Eggs". I believe most of you have heard of the story. For those who have forgotten the stories, I have written a summarize version of it below.

The story goes like this: A farmer had found a goose that will lay a golden egg every day. Even though his life is getting better as he no longer needed to do any farming, he found himself not getting rich enough. Due to his greed, he decided to kill the goose thinking that he can get all the eggs inside the goose. Unfortunately, he was not able to find any egg inside the goose. For that day onwards, the farmer grew poorer and poorer as he can no longer find another goose that will lay golden eggs for him every day.

In the stock market, there are many such farmers or investors around who do not know how to value their stocks. Some of the stocks are actually providing a lot of yields or golden eggs every year, but because of a sudden increase or decrease of stock price, they decided to sell the stock away for a short term gain or cut loss. After selling their stock, they realised that the price and the yield of the stock went up even higher. They had decided not to buy back the stock as the price has increased a lot.

My purpose for this post is to suggest that it is good to hold those good fundamental stocks with good yields which are bought at low prices. It doesn't matter that the price movement of the stocks may be slow. What is more important is that these stocks are providing good yield consistently. So don’t try to sell them for a short term gain or cut loss as most of the times the price of the stocks will go up after selling it. You will find yourselves very hard to buy it back at high price even thought it is still a "Goose that laid the Golden Eggs".

Why I am not afraid of losing money in my investment?

Here are the reasons why I am not afraid of losing money in my investments.

Reason 1:
I am using my own extra money that I can lose.
In my post titled "Do you have a peace of mind after buying shares?", I have mentioned that I am using the money that I can lose, and losing this money will not affect my life at all. I did not borrow any money, or using any leverage instrument to increase the risk of investment.

Reason 2:
I am buying fundamental good stocks.
In my post titled "My Stock/ETF choices", I have mentioned that I only buy fundamental good local stocks that are very safe in my opinion. I only buy stock that I can understand and I will never speculate.

Reason 3:
I am buying under valued stocks which give good dividend.
In my post titled "Buying stocks based on price and value", I have mentioned that I am targeting stocks that produces good value or yield. With this in mind, I am not afraid to hold these stocks for long term as they are constantly giving me good dividends. In the same post, I have stated my formula to calculate the value of the stock.

Received dividends of $187.50 from SingPost (1 Dec 09)

I am happy to see that dividend of $187.50 from my 15 lots of SingPost has been transferred to my bank account today. I will not spend but save this amount of money for further reinvestment.

I have created a new blog "Saving money in Singapore"

I have created a new blog titled "Saving money in Singapore". The objective of this newly created blog is to share tips on how to save money in Singapore.

The blog url is http://savingmoneyinsingapore.blogspot.com/

Feel free to visit and comment.

Why I invest in Cambridge industrial trust?

In my opinion, Cambridge Industrial Trust is a wonderful company. So far it has been giving good dividends ranging between 0.01 to 0.02 cents every quarter. Even during the recession period at year 2008, the dividends given are still very good. At the current price of about $0.40, its yield is about 10% per year.

From the company website, CIT invests in industrial properties such as logistics, storage and warehousing, manufacturing and showroom facilities all located across Singapore’s key industrial zones. With this strong fundamental and high occupancy rate, I believe that this company will continue to do well.

Click here to see my other choice of stocks/ETFs.

My stock strategy from now till 2010 (Updated on 27 Nov 09)

My current holding is as below:
5 lots of Singtel (CPF) ==> Confirmed dividends of $310 (Dec 09)
5 lots of SingTel (Cash) ==> Confirmed dividends of $310 (Dec 09)
15 lots of SingPost (Cash) ==>Confirmed dividends of $187.50 (Nov 09)
25 lots of Cambridge (Cash)

My strategies:
My stock strategies are as below:
If Singtel reaches $3.50, I will sell 5 lots of SingTel(CPF)
If Singtel reaches $4.00, I will sell 5 lots of SingTel(Cash)
If Singtel reaches $2.65, I will buy another 2 lots of Singtel using Cash.

If SingPost reaches $1.25, I will sell 5 lots.
If SingPost reaches $1.50, I will sell 5 lots.
If SingPost reaches $1.75, I will sell 5 lots.
If SingPost reaches $0.90, I will buy 5 lots.

If Cambridges reaches $0.70, I will sell 10 lots.
If Cambridges reaches $0.90, I will sell 15 lots.

If DBS reaches $12.50, I will buy 1 lot.

If none of the prices as above are reached, I will keep all stocks for dividends.

Please take note that I am applying my rule No. 1, which is I do not try to predict the future. So I have planned for both market directions. I am also applying my rule No.3 which is "It's far better for other to buy an overvalued stock from you, rather than you buy an overvalued stock from other".

Bought 13 lots of Cambridge on 26 Nov 09

I have bought another 13 lots of Cambridge on 26 Nov 09 @ $0.415. So now I have a total of 25 lots of Cambridge.

Bought 12 lots of Cambridge on 24 Nov 09

I have bought 12 lots of Cambridge on 24 Nov 09 @ $0.415

Sold 4 lots of STI ETF on 24 Nov 09

I have sold 4 lots of STI ETF (CPF) today @ $2.83 for a profit.

GOLD VS SGD (20 Nov 09)

In my last post on gold "GOLD VS SGD Chart. Why Gold might be a good investment in Singapore? ", I mentioned that Gold is might be a good investment/hedging for inflation in Singapore. We shall do a update for gold price in term of SGD.

The closing price of GLD 10US$ has reached $112.360, and the USD/SGD is 1.3888 on 20 Nov 09. So if we multiple both the value together, we will get S$156.0456/GLD. In the beginning of 2009, I have calculate the value to be S$121.18/GLD. So GLD has actually increased by 28%.

But having say that, I am not a fan of gold is because it doesn't give me dividends. I treat it as a hedge for inflation. And one more thing, gold is not meant for shorting. Shorting gold has no meaning at all and you are exposed to high risk as you are dealing with both GLD price in USD and the exchange rate in term of USD/SGD in singapore.

Investing is boring

After I have set my goal and bought my target stocks, the next thing is to wait. I am starting to find that investing is boring.

Investing should be as boring as possible so that you are not emotionally affected by the price changes everyday.

I found myself no longer look at the dow future and charts. Instead, I would spend some time searching for other quality, high dividends and value stocks to be invested next time.

I finally understand what Warren Buffett meant by "Only buy something that you'd be perfectly happy to hold if the market shut down for 10 years."

My stock strategy from now till 2010

On 16 Nov 09, I have placed my last position, and my holdings are as below:

5 lots of Singtel (CPF) ==> Confirmed dividends of $310 (Dec 09)
4 lots of STI ETF (CPF) ==> No confirmation yet.
5 lots of SingTel (Cash) ==> Confirmed dividends of $310 (Dec 09)
15 lots of SingPost (Cash) ==>Confirmed dividends of $187.50 (Nov 09)

My stock strategies are as below:
If Singtel reaches $3.50, I will sell 5 lots of SingTel(Cash)
If Singtel reaches $4.00, I will sell 5 lots of SingTel(CPF)
If Singtel reaches $2.65, I will buy another 2 lots of Singtel using Cash.

If SingPost reaches $1.25, I will sell 5 lots.
If SingPost reaches $1.50, I will sell 5 lots.
If SingPost reaches $1.75, I will sell 5 lots.
If SingPost reaches $0.90, I will buy 5 lots.

If DBS reaches $12.50, I will buy 1 lot.

If none of the prices as above are reached, I will keep all stocks for dividends.

For ETF, I have no plan to buy in more or sell away in the near future.

Please take note that I am applying my rule No. 1, which is I do not try to predict the future. So I have planned for both market directions. I am also applying my rule No.3 which is "It's far better for other to buy an overvalued stock from you, than you buy an overvalued stock from other".

My Quotes/Rules of Investment

Rule no. 1: Never predict the market direction.
Rule no. 2: Don't forget the first rule.
Rule no. 3: It's far better for other to buy an overvalued stock from you, rather than you buy an overvalued stock from other.
Rule no. 4: No discipline is the key of losing money in the market.
Rule no. 5: For a wonderful company, be delighted when its stock price falls, be regretted when its stock price rises.
Rule no. 6: Slow and steady will definitely win the race.
Rule no. 7: You can never find it easy to catch a butterfly unless you have a big net.

Bought 3 lots of Singtel on 16 Nov 09

I have bought 3 more lots of Singtel @ $2.95 today using CPF. This will be my last position for this year. Remember few days ago, I sold my only lot of DBS. The money from the sale of DBS shares is used to buy 5 lots of Singtel shares (last friday and today).

DBS is getting speculative. The yield is less than 4% based on the current price. That is why I quickly sold it away. I will consider buying it again if its yield is more than 4.5%. Singtel however is having a better yield. I estimated it as more than 4.5%. It is not as speculative as DBS, as you can see the price movement of DBS is very fast. Singtel price is slow and steady which is what I like as a defensive stock.

Investor, Traders and Speculators Charts

Sun Tzu said, "If you know yourself and your enemy, you fight hundred battles with hundred victories." So it is important to identify yourself and other players in the markets before you do anything.

There are basically three types of player in the stock markets. They are the investors, traders and speculators. Because of these different types of player, the pattern of the charts will keep on changing.

Let say there is only investors in the markets and there are no traders or speculators. A chart of a growing company will be simply like the picture above. It is a pure straight line without any noise.

When traders come into the markets, the chart will look like the above. The price is going up and down in a trend. The green dotted line shows the actual growth of the company.

When speculators (who has big amount of money on hand) come into the markets, the chart will look like the above. The price is push up very high by these speculators in order to lure investors or other traders to buy at higher price. Once the bubble is formed and burst, the price will start to drop very fast. It may even drop below the fair value of the company. The red dotted line shows the actual growth (fair value) of the company.

One very good example for speculation is the above crude oil chart. You can see

that the blue oval highlighted portion shows that speculation has started. The price rose from US$80 to almost US$150. But is this the true value of the oil at that time. The answer is no. . After the bubble has burst (see red oval highlighted portion), the price fell rapidly down to about US$40. From about US$150 to US$40, that is more that US$100 drop. You can see that the speculators are very aggressive. If you are not able to value the price of oil, you might buy it during the speculation time at high price.

For a normal investor, we must know that traders and speculators are everywhere trying to earn money from us. It is not necessary a bad thing to have them in the markets. But you must try to protect yourself against them first. In order to protect ourselves, we must know how to value the company. Buy stocks only when the stock price is undervalued. If you do not know how to value the company, you will not know whether you have bought its shares at the high price or not.

Two quotes from Warren Buffett to illustrate my points:

"If a business does well, the stock eventually follows."

"We simply attempt to be fearful when others are greedy and to be greedy only when others are fearful."

So don't be afraid if you have bought the stock at a low price and it went down further. But make that the company is good, before you buy its shares.

SingPost is a wonderful company to invest in

To me, SingPost is a wonderful company to invest in. It is a defensive stock with good fundamentals and have been giving good dividends in these few years.

The below dividend diagram is what I get from the Singpost Website. You can see that from FY02/03 to FY08/09, the dividend has been increased. Even during the market crash period, the dividend payout is not reduced. If the total dividend for FY09/10 is 6.25 cents, then is yield is about 6.5% (based on the bought in price of 0.95 cents).


I will accumulate more SingPost shares if it happens to drop to 0.9 cents. If not, I will not be buying any more.

Bought 2 lot of Singtel on 12 Nov 09

Seeing the market panic selling just now in the afternoon, I take the opportunity to buy 2 lots of Singtel stock @ $2.93 using CPF. Reason of buying is because Singtel is increasing its december interim dividend from 5.6 cents last year to 6.2 cents this year. That is about 10% increase in dividend. I will expect the Aug 10 dividend to be 10% more than the Aug 09 dividend of 6.9 cents.

Let assume Singtel is giving 7.6cents(10% more than 6.9 cents) for Aug 10, then the total dividend for the year will be 6.2+7.6 = 13.8cents. So based on the price I bought today, the yield will be about 4.7% which is not a bad deal to me.

Sold 1 lot of DBS on 11 Nov 09

I have sold my only lot of DBS @ $13.98 today for a profit.

Explanation:
This year, DBS is giving 4 x $140 dividends per lot. If based on the current price (about $14) , it is about 4% yield. I feel that 4% yield is not very attractive to me even though it is a good stock with potential to go up. My profit is about 6.9% based on the price I bought. So instead of waiting for one year, I already get 6.9% gain immediately by selling today. I have freed this amount of money so that I can buy other value stocks.

If it happens that DBS shares drop to $12 per lot, I may consider buying again.
If it happens to remain at the current price or go up, I will not buy again unless the value goes up.

Please don't mistaken me as a trader. I am not a trader and I don't depend on chart any more. I am a simple investor who just go for value and price.

Buying stocks based on price and value

Warren Buffett said, "Price is what you pay. Value is what you get."

Sun Tzu said, "The general who wins the battle makes many calculations in his temple before the battle is fought. The general who loses makes but few calculations beforehand."

That is why I always based on price and value and do my own calculation before buying stock See below for the formula that help me to know when to buy stock.


Price is the current price of the stock.

Value can be capital increase or dividend given from the stock. It will be very hard to estimate the capital increase of the stock, but it is easy to identify which are the stocks that are giving regular dividends. I always look for stocks with good fundamentals that give regular dividend even during the recession time. These stocks normally go up and down at a slow rate which is what I like. To me it works like fixed deposit. Click here if you are interested in my choice of stocks/ETFs.

Target return is the minimum amount of return you want to see when you invest in a stock. For example, if you set it at 5%, then every year you will expect to get 5% return from your stock. I will only buy a particular stock when the result of the formula is greater than my target return.

Example 1:
If a stock is giving dividend of $0.05 per year and the current price is $2, then the return will be 2.5%. So if my target return is 5%, I will not buy this stock at the current price.

Example 2:
If a stock is giving dividend of $0.1 per year and the price is $1.00, then the return will be 10%. So if my target return is 5%, I will definitely buy this stock at the current price.

Bought 3 lots of SingTel on 9 Nov 09

I have just bought 3 lots of Singtel @ $2.89

Some of my favorite quotes from Warren Buffett

1)It's far better to buy a wonderful company at a fair price than a fair company at a wonderful price.

2)If a business does well, the stock eventually follows.

3)Only buy something that you'd be perfectly happy to hold if the market shut down for 10 years.

4)Only when the tide goes out do you discover who's been swimming naked.

5)Rule No.1: Never lose money. Rule No.2: Never forget rule No.1.

6)We simply attempt to be fearful when others are greedy and to be greedy only when others are fearful.

7)You only have to do a very few things right in your life so long as you don't do too many things wrong.

8)Price is what you pay. Value is what you get.

Things to avoid in stock markets.

There are a lot of things you should avoid in the stock markets. These are the things which put you in an unfavourable position and increase your chance of losing money.

1) Contra
Contra is a method of buying stock without having to pay for it. The catch is you have to sell your stock after certain number of days, normally is 3 days. If the stock price goes down during the 3 days, you will be force to sell and lose money instantly including commission.

2) Shorting
Shorting is a method where you sell a stock without owning it, and after some time you buy it back. The difference between the buy price and sell price is what you gain or lose.

Why avoid shorting?

• The maximum gain from shorting a stock can never be or exceed 100% of the share price. For example, you short a stock at $1, and you buy back at the price of $0.005, you will gain $0.995, or 99.5% gain.

• Using CFD is one of the proper way to short a stock. CFD stands for contract for difference. CFD will incur cost when you borrow shares to short, normally is about 5% or more PA on top of the commission. You also need to pay commission every month if you intend to keep the short for long. If trading is halt for the company, you will be stuck with your short and you still have to pay interest.

• If the shares are giving out dividends, instead of receiving the dividends, you have to pay out the exact amount of dividends.

3) Leveraging
Leveraging means "buying" of stocks by paying only a certain percentage of the total stock prices. Currently CFD is one of the facilities that provide leveraging. For example, your total stock cost is $10000, if the leveraging is 20%, than you need to pay only $2000. This is very risky. In case, your stock value fall by 50%, your loss will be $5000. In that case, you have to top up additional $3000 to pay for the losses. My advise as a investor is don't ever use leveraging, as it can cause you to become bankrupt if you are not careful. Just imagine, based on my example just now, what if you do not have the additional $3000 to pay for the losses? And also remember that using CFD will require you to pay interest and commission every month as you don't physically own the stock.

These three things are normally used by trader for short term gain. If you are not one of the top best traders, then you should avoid these things and invest normally. I always look at long term recurring gain rather than short term gain.

Bought 5 lots of SingPost on 6 Nov 09

Today I have bought 5 more lots of SingPost.

Reinvest money from passive income

In my cash flow diagram, I mentioned about the reinvestment of money from passive income can help you achieve financial freedom faster. I will use my example as show below to demonstrate my point.

As you can see, my passive income has almost reached $850 per month, which means about $10K per year. I will be using this money to reinvest in stock/ETF. Assume I get 5% dividend from the $10K, which is calculated to be $500 or about $40 per month. In that sense, for every year my passive income will at least increase by $40 per month. As I am applying the power of exponential here, the increase in passive income per month will be higher for each year.

Let say my saving for one year is $20000(just a figure that I put in for demonstration), and I use it for investment. That will give me $80 per month.

So in total, my passive income will increase $40 + $80 = $120 per month every year.

I am waiting for STI to be 2500 or 2800 before I will invest again. So for now, I will relax myself and focus on other things. Having a peaceful and undisturbed mind and a winning strategy are keys to successful investment.

I am not going to subscribe the UOB China A-Share exchange-traded fund.

After reading the prospectus, I have found that this fund is very complicated. It involves in P-note which is link to a sub-fund which is very confusing to me. And lastly I am not sure whether dividends will be paid or not.

Although I am in favorable of China economy, I have decided not to put any money into this UOB China A-Share exchange-traded fund. Always invest into something you know. If you unsure, don't put any money in.

STI Chart looks bullish

The STI chart looks bullish and a good time to buy since the graph has touched the lower trend line. Of course like I always say, market cannot be predicted.

Bought 10 lots of SingPost on 4 Nov 09

Today I have bought 10 lots of SingPost today. In my opinion, SingPost is a safe stock which gives regular dividends each year.

My strategy in investing stocks.

Since I have identified the stocks/ETFs to be bought for my portfolio, I will be using my strategy to buy these stocks. My strategy is using averaging. I believe that it will be very hard to maximum your gain by guessing the market. However using averaging has a good chance to get half the maximum gain (or half the maximum loss). If got time, I will explain the mathematics for this strategy. My only assumption for this to work is market will go up to break new high in the future.

Using averaging strategy, I will buy at equal amount at each hundred level of the STI index. For example, when STI reaches 2700 I will buy some, STI reaches 2600 I will buy some, STI reaches 2800 I will buy some. I must maintain a discipline not to overbuy at each level. In my planning, the lowest level will be at 1000.

In that sense, I won't be worrying about uptrend or downtrend of the market. Dividends are what I am targeting, so a strategy that can restrict my loss to 50% is very important.

Bought 2 lots of Singtel on 2 Nov 09

I have bought 2 lots of Singtel and prepare to hold for long term. I don't really care it will go up or go down after that. If it can go down to $2.60, I will buy other a few more lots.

My Stock and ETF Choices

I will only be interested in buying the following for long term:
1) DBS
2) Singtel
3) SMRT
4) Singpost
5) SPH
6) SuntecReit
7) Cambridge
8) STI ETF (this is ETF which track STI index)

If you are a Singaporean, which company from (1) to (6) you are unsure of? Even you ask a primary school kids, he or she can roughly tell you how these companies make their money. I will only buy company that I know and understand what they are doing.

They may not be the best performance stock but I consider them as very safe stocks/ETFs in my opinion. I choose them is because they give regular dividend and they give me a peace of mind after buying them for long term.

The reason why I include STI ETF is because only 35% of the investable OA CPF money can be use to invest in stock. I will use the rest of the investable OA CPF money to buy STI ETF. I don't buy Unit Trust as they seldom or never give out dividends, and also their management fee and sale charge are quite high in my opinion. STI ETF in the past has been giving good dividend in my opinion.

Dow crashing 250 points, after rallying 200 points the day before.

As you can see, market is unpredictable. One day can rally up by 200 points, the next day will crash down by 250 points. If you are an investor, will you have a peace of mind when you see dow crashes after the day you had bought your stock? Will you be panic in selling your stock in the next trading day at a loss? What if dow goes up by 300 points in the next trading day?

In the past, I definitely will not have a peace of mind when I see dow crashes. One of the reasons why I cannot have a peace of mind is because I invested too much at one go, hoping the markets will go up from the day I invested. This is a wrong thinking. Two days ago, I have added 2 lots of STI ETF in my portfolio, and I am not afraid of losing that money.

In another thought, I really hope that STI will drop below 2400 again so that I can buy some more. I have my own winning plan, so I just follow it without any fear. My advice to all the investor is to stop trying to guess the markets. Plan for your strategy and follow it strictly and fearlessly.

Do you have a peace of mind after buying shares?

Do you have a peace of mind after buying shares? If you don't, it is possibly due to one or more of the following reason?

1) You are speculating. You buy because the shares keep going up without reasons, hoping that the shares price will go up somemore.

2) You are buying shares of the companies, without even knowing the fundamental of the companies. You buy just because of the influence of the analyst, your friends or colleagues.

3) You are using someone else money.

4) You are using money that you cannot afford to lose.

5) You invest too much money at one time, and left no more money to invest when market goes down again.

6) You are leveraging. There is a possibility to lose more than your initial investment amount.

Bought 2 lots of STI ETF on 29 Oct 09

Today market gapped down again. I quickly use this opportunities to buy 2 lots of STI ETF using OA CPF.I don't care whether the market will go up or down as long as the dividends keep coming in.

Why I prefered to become a investor rather than trader?

Sun Tzu said, "If you know yourself and your enemy, you fight hundred battles with hundred victories." Knowing yourself is important when it comes to investment.

I preferred to be a investor due to the following reason:

1) I am not a TA expert for short term (I try to learn for one year, but the chances of success is still 50%). I don't think I can predict stock price movement better than a kid who is just merely guessing.

2) I want to have a stress free mentality when it comes to buying stock. I prefer to buy and hold for good stocks for dividend rather than trading speculative stocks for short term gain. Receiving constant dividend is a source of passive income. Trading for short term gain is a type of gambling. The more stocks I buy, the more dividends I get, that's why my passive income is increasing. With this in mind, I can sleep well every night.

3) I rather spend more time to do other thing that can increase my active or passive income, than mindlessly looking at the prices of the stock jumping during trading hours. Reminder time is money. There is no need to keep track of other thing like the Dow Jones future.

4) Trading need to pay a lot of commission for buying and selling. If one trade is $30, ten trade per month already $300. That money can be better used for long term investment.

5) I have constantly saving part of my income for investment. Together with my passive income, I can buy any time when there is any correction from the market.

Lastly Sun Tzu said, "The best outcome for war is to win without fighting". I am currently following my winning plan with ease and stress free.

3rd quarter 2009 residential price index

URA has released the 3rd quarter 2009 real estate statistics. Click here to go to the URA website. I have done a snapshot of the chart on the residential price index. I draw a blue line to see whether there is any trend. Will the index goes up some more? Is now the best time to buy property?

STI Index movement Prediction (Oct 2009 to 2011)

I always believe in long term trend rather than short term trend. In this post, I am making two predictions for the STI Index from now to 2011. Here are two possibilities pattern that might be slowing forming.

The first pattern is head and shoulder pattern. The diagram below suggested that STI may be reaching 3000 before the next big correction. The correction might send STI back to 1600 again. This is what most of the people will expect now. Remember, if a lot of people have the same thinking, the chances that they are wrong are very high.

Prediction 2: Double Top Pattern

The second pattern is double top pattern. The diagram below suggested that STI may be reaching 4000 before the next big correction. Yes, a lot of people might say I am crazy, but see the two blue highlighted circles; they might be similar points for past and current bear market. EXPECT THE UNEXPECTED. The next major correction might also send STI back to 2000 again.

So after seeing these two patterns, what are your views? Which pattern will be forming? Or do you have another pattern in your mind? No one can be sure what will happen next. It is your planning and strategy that will determine whether you are the winner or loser for this game.

STI INDEX (Comparison between 1998-2000 and 2008-2009)

I have done a comparison for STI index between 1998-2000 and 2008-2009 period. You can see that there are a lot of similarities in it. By looking at the picture above, we are in the last phase of the bear rally?

S&P(2007 to 2009) VS NIKKEI (1990 to 1992)

I have tried to align the chart for S&P500 (2007 to 2009) and NIKKEI(1990 to 1992) chart. Can you see the similarity? Guess what will happen to S&P500 in the next few months.

China A-Share exchange-traded fund

I am very glad that UOB and SGX are launching the China A-Share exchange-traded fund. This ETF is a must to have in my opinion. The reason is there are a lot of potentials in the development of China and the expected growth rate is 8%. I expect in 10 to 15 year, this ETF will grow at least 3-5 times the value. Currently SSE is only about 3000 point, the previous peak is 6000. So it is still cheap to invest in China. I hope that this ETF will give good dividend which serve as a passive income.

US Dollar Index down & S&P down (21 Oct 09)

This is probably the worse scenario you can have with the market. S&P was down by about 0.9% and dollar index was down about 0.5%(with EURUSD breaking 1.5). This may signifified that reducing the dollar may have little effect on pushing up at the market at this point. So what will happen next when this happen?

US Dollar Index analysis (21 Oct 09)

By looking at the weekly chart of the dollar index, there might be some rebound from now. Question is will the dollar index in the start of the new bull run? We shall see in the next few week.

Why I use S&P500 to find out market direction?

I always use S&P500 to find out the market direction. The reason is S&P500 is based on 500 large-cap common stocks actively traded in the United States. If you study statistics, you will know that the more samples that you have collected, the more accurate is your result. Dow and STI index only has 30 components. So if one or two stocks go up or down by big margin, the index will be affected greatly even though the rest of the stock are unchanged.

EUR/USD 10 years chart

Happen to see this 10 years EUR/USD chart. After looking at it, there might be a possibility that head and shoulder pattern may be forming. The right shoulder is in the midway of completion. Will the pattern play out? If so, what will happen to the equity market?

S&P 500 daily chart (Nov 08 to Oct 09)

The above S&P 500 shows that we might be hitting on the resistance line (blue line). The index keeps increasing from Sep 09 till now, but the volume keeps decreasing. So is it dued for a correction soon?


Let us looks at the weekly chart, S&P 500 is going to hit the major resistance line (blue straight line). You can see that the index is increasing with volume decreasing(see red line).

With these two charts, do you think the index will still go up without any major correction? I remembered what Sun Tzu say, if the odd of winning is low, don't bother to fight. So do you want to risk by buying up now?

True value of S&P 500 based on dollar index (1988 - 2009)

I have drawn up the chart to see the effect of multiplying the S&P500 and dollar index. My purpose is to show why non US investor must know the Dollar Index if they are buying US shares. US Dollar Index is the measurement of US Dollar value compared to other major currencies.

To simplify the chart, I am using one value for each year taken from the beginning of the year. Please note that I have used Oct 09 value for year 2010. Let make a assumption that the movement of your share price is tied to S&P500.

We can see that during year 2001, the product of S&P500 and dollar index is the highest. It means that if you are a non US investor, you will buy or sell US shares at the peak. In 2007, we can see the S&P500 have reach 1438 which is higher than 2001, but the product of S&P500 and dollar index is lower than that in year 2001. It means that if you buy US shares in year 2001 and sell share in 2007, you are in fact making a loss.

The chart also shows that the value of US shares is getting weaker since 2001. The recent bear rally has only reached the value during year 2003. So don't you think US shares are still considered very cheap now? The question now is will it get cheaper or it is worth to buy US shares?

Taiji Symbol VS S&P 500 (25 years chart)

The above is the 25 year chart for S&P 500
Based on my Taiji Symbol analysis:
Red portion: Body of white fish
Blue portion: Eye of white fish
Green portion: Head of white fish
Yellow portion: Tail of black fish.
So what is next? Will body of black fish come next? If that happen, the index may break 600, and that is terrible.

There is a Technical Term called "M pattern" which is showing in the chart and that is a very bearish pattern. After "M pattern" it will be followed by a "V" pattern up (Currently forming), and next will be a "A pattern" down.

Taiji Symbol VS US Dollar Index

In the last post, I have said that Taiji Symbol is my favorite symbol. For this post, I am using Taiji Symbol to analyse US Dollar Index. US Dollar Index is the measurement of US Dollar value compared to other major currencies. It is important for non-US investors to know this index when they invest in US stock markets. Why? If their stock goes up 10%, but dollar index goes down 10%, basically they are not making money.

Red highlighted portion of both charts represents the tail of the black fish in Taiji symbol. The index started to weaken slowly at this stage.

Blue highlighted portion of both charts represents the body of the black fish in Taiji symbol. The index falls a lot at this stage.

Green highlighted portion of both charts represents the eye of the black fish in Taiji symbol. The index starts to rebound strongly at this stage.

Grey highlighted portion of both charts represents the head of the black fish in Taiji symbol. The index will again fall at this stage. It is hard to tell whether will it break new low but the fall is significant.

The two charts above show my two predictions. The first prediction shows that Dollar index will go up very soon (starting the tail of the white fish). The second prediction shows that Dollar index will still go down (continue the head of the black fish) and break new low before it will go up.

Taiji Symbol VS S&P 500 Chart (Sep 07 - Oct 09)

The above shows the S&P chart from the start of current bear market to now. For Oct 07 to May 08, signified the start of the bear market(tail of the black fish of the Taiji Symbol). For May 08 to Mar 09, signified the bear market is in the mid stage(body of the black fish). For Mar 09 to now, signified that some recovery on the way(Eye of the black fish). My guess the last stage will be a downtrend that will bring the index lower than Mar 09(Head of the black fish). This is just my own interpretation, so there is no right or wrong for it.

This symbol tells me that everything will have a slow start, accelerated growth and peak. Remember the important point is slow start, whether it is a bear or bull market. If you can identify the start points, you will be slowly be rich. For market that goes up or down too quickly, there will be a reverse in direction in no time. If you see that, it is important to clear your postion(whether long or short) before the reverse in direction.

GOLD VS SGD Chart. Why Gold might be a good investment in Singapore?

In my last post on gold, I mentioned that gold might provide a good hedge to the dollar. I am using SPDR GOLD SHARES for this example. Gold are traded in USD. I will combine the USD/SGD and GLD/SGD so as to see whether is gold stills a good hedge. Instead of taking all individual values from both charts, I just take values from beginning of each year. Please note that the 2010 values are estimated values from OCT 09.



I multipled USD/SGD and GLD/USD values together to get GLD/SGD. You can see that gold price keeps going up from 2005 to 2009 Oct. Even though market crash from 2008 to 2009, the value of gold in term of SGD still go up. Isn't it a safe haven investment? From $70 to $140, is about 15% compound annually.

Click here if you are interesting in how to buy gold.

Update: GOLD VS SGD (20 Nov 09)

What are Shares, Unit Trust and ETF?

SHARES:
The most commonly investment instrument is shares. Shares are normally distributed by companies to raise fund for their operation or expansion. You can buy and sell shares within the trading time provided by the exchange.

You earn money when your share price goes up, and you lost money when your share price go down. You will be given dividend if the companies make money and decide to give part of the profit to the share holders.

You will be charged commission when you buy or sell your shares, usually less than 0.5% of the total cost of your shares.

UNIT TRUST:
Unit trust is a form of pooled investment where a fund manager invests funds on different shares on behalf of a group of investors.

You earn money only when your unit trust price goes up, and lose money when your unit trust price goes down. Please take note, most of the unit trust do not give out dividends.

There are sale charges when you buy unit trust. Normally is about 1 to 5% of the total cost of the unit trust you buy. There will also be management fees which normally range from 0% to 5% per annual.

Please take note, the updated price of the unit trust is done in daily basis. Normally you do not know the exact price when you buy or sell the unit trust because it will be based on the next day price.

ETF:
Exchange-traded funds hold a basket of securities like unit trust but they trade like a stock which means that they can be purchased at any time of the day.

You earn money when your ETF price goes up, and you lost money when your ETF price go down. Please note that not all ETFs will give dividends.

You will be charged commission when you buy or sell your ETF, usually less than 0.5% of the total cost of your ETF. Like unit trust, there will be management fees which normally range from 0% to 1% per annual.

Taiji Symbol is my favorite symbol

One of my favorite symbol is the Taiji Symbol. The symbol is make up of two fish, one with white body and black eyes and another with black body and white eyes. The white body fish or yang fish represents brightness, strength, life. The black body fish or yin fish represents darkness, weakness and death. The eyes of each fish has the opposite colours as their body. This shows that within a yang there is yin, within a yin fish is yang. The symbol shows that thing move in cycle over and over again.

A lot of things can be related with this symobl, and one of it is life. The tail of the yang fish represents new life is borned. The head of the yang fish represents the strongest point of life. The tail of the yin fish represents weakness in life started to show out. The head of the yin fish represents death. The cycle continues when new life is borned.

If you apply the symbol to show the strength or weakness of a country, you can see that a country cannot be strong or weak forever. You can look into history book, there is no country that can dominate the world forever. There are times when a country is strong, and after that it will become weak.

For economy or stock market, the yang portion represents bull markets, and the yin portion represents bear markets. If you expose to stock markets, you will know that after a bull run, bear market will come eventually. After a bear run, bull markets will come eventually.

Remember the eye of the fish are of opposite colours than the body. It means there will be a strong signal telling us that the cycle is about to change. After the signal, the yang will become "yanger" intially and then slowly go toward the yin side. For the yin, it will become "yiner" intially and then slow go toward yang side.

How to buy gold in Singapore?

If you have decided to hedge your money by buying gold, you must know what types of gold are available in the markets. There are three ways you can buy gold.

1) Buying gold from jewellery shop.
Well, the first thing in your mind is to buy gold from jewellery shop. This type of gold might not be a good hedging as firstly you will be charge on the workmanship for the design, and secondly you will be charge GST(currently at 7% as of today). When you intend to sell it next time, you may be charge GST again. With all these, your value of gold will go down a lot.

2) Buying gold bullion.
What is gold bullion. It is commonly known as gold bar. Yes the one you always see in movies showing a safe room which a lot of gold bars inside. It also comes in term of coins. Again this types of gold may not be good for hedging too. Firstly, you will be charge GST, secondly you must find a safe place to store it. If you keep in the bank safe, you need to pay an amount every year.

3) Buying paper gold.
In SGX, there is a ETF called GLD 10US$ which is a form of paper gold. Like shares, you can buy it if you have a investment trading account. The only extra cost is commission when you buy or sell your paper gold. This commission is generally less than 1% which is much lower than GST. One thing to note, this ETF is traded in US$. Before you start buying (or selling), you must take the exchange rate between USD and your currency (singapore dollar).

You can also invest in paper gold using the UOB Gold Savings Account. However please take note on its monthly charges.

What are Investment Instruments?

Investment Instruments are tools that individual use to make their money grows(or gone).
These tools include:

1. Equity Stock Market
2. Unit Trust
3. Bond
4. Forex
5. Future
6. Commodity

I will be explaining each of the above investment instruments in details in my next few posts.