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.