Investment Instruments Series - Property

In property, people normally invest in it for 2 aims; either to collect rent or for capital returns.

If you are going for capital returns, just follow the rule, buy low sell high. Property prices goes in cycles. In Singapore, if you take the last property boom(1994-1997), and the current booming market, its about 12 years apart(start of both booms). So for example, if you buy a 5 room HDB flat in Bishan at the low, it would be around $350k. It can easily fetch $450-500k during the boom period. Or if you are cash rich, get a district 10 property and a tidy profit of $400k-$1m is not unusual. During my father's time(1970-80s), he bought the flat for <$100k and now, its going for $350-400k. Nowadays, you will have to buy a new flat for $200-300k and the profit, if any is only at most $50k. Buying and selling flats is no longer as profitable.

If you have read or attended any renowned real estate experts / gurus talks such as Robert Kiyosaki or his advisor, Dolf de Roos, you will know that rental returns is better than the capital gains as you will be using other people's money(OPM) to pay your property. Take for example a property worth $500k. You pay a minimum sum of maybe 10%, and takes a loan of $450k, the monthly installments would work out to be about $1500 for 30 years. If you rent it out for $1800, you will have a positive cashflow of $300/mth. This $300/mth would be your passive income no matter if you work or not. And the tenant would also be paying for your installments of $1500.

But in Singapore, it is very difficult to find a cashflow positive property as the government controls the market very tightly. Furthermore, when you rent a property, the government would impose on you a tax. So all in all, you will not be getting much from your rental income. This scenario has an exception though. From my understanding, only the commercial properties could command a positive cashflow. The only problem is that to buy a commercial property, you would have to pay cash and a good commercial property costs >$1m. Not a lot of people has that type of money in Singapore.

For me, I prefer overseas properties. Depending on which country, advantages being that it is relatively cheaper to buy a property overseas, overseas rental is higher as compared to Singapore, not needing to pay rental tax and no stamp duty. Of course the downside would be not being to see if the property is well managed. That is why due diligence has to be done before one buys an overseas property. The reputation of the property manager, type of tenants, location, possibility of long term lease, country's property law are just a few of the issues to be researched before plunging into the overseas property market.

If you read the Saturday's newspapers, there are bound to be some companies advertising on overseas properties. The cheaper properties are usually from our region, such as Malaysia, Thailand, Australia and New Zealand. I am not comfortable with the Malaysian and Thai government. Malaysian government has changed their property laws several times and this has brought great inconvenience to Singaporean property investors. As for Thailand, I feel that the government is too instable. Maybe I enjoyed my Aussie and NZ trips, I do prefer the people and the environment there. The more expensive properties are usually the UK ones. As a rough reference, Aussie and NA properties ranges between S$150-$500k. UK ones are normally at least $800k. The rental yield for Aussie and NZ properties is usually around 5-10%. But beware of the loan interest rate. It is around 7-9%. So this high interest rates do eat into your rental income.

If you are interested in going into any overseas property market, go to any of the "no obligation" seminars/sales talks advertised in the newspapers. Learn more about the different companies.

The Invisible Hand

This is a post from the Share Investor forum. It's a bit lengthy but has very good information about the big boys, who "runs" the market.

Postings by Mossie first, followed by posting by Warren *********************************************************************
A bit of introduction.In my previous postings, I have often referred to the work of "the invisible hand". It's important to understand who they are; their thinking which prompts them to buy when others are selling; and their motivation.Their buying action is often revealed in charts, displayed in such formations that are collectively called bottoming out or reversal patterns. Some if these individual formations are called Inverse Head and Shoulders, Cup and Saucers, Double Bottoms or "w" shape, extended bottoms or "u" shape, falling wedges etc.If you are not certain what they mean, I have linked to a glossary of technical terms http://www.asiachart.com/glossary.html. If you want fuller explanations, there are many good books around.

Why do prices gradually stop falling? Invariably, when the market has fallen a great deal, the stock becomes attractive to the "invisible hand". They are people who can see tomorrow's values TODAY!They step in to buy and absorb the selling and hence, arrest the fall of the share price. Over time (six months or more), their buying action creates bottoming out formations that I have mentioned above.Who are they? They are insiders, deal makers, fund managers; people who can see VALUE in the down and out company that nobody else can.Collectively, I also call such people SMART MONEY (as opposed to dumb money). They are legions of deal makers who have made their piles and now become players. They fund projects. They know balance sheets and they know how to restructure businesses. They know how to restructure debt, create holding companies to place their debt etc.They are the brains behind every operation. They employ lawyers,stock-brokers, bankers, accountants to do their legwork and due diligencebefore any action is taken.Now that the introduction to the "invisble hand" is done, I will begin my segment to "stalking the prey" using some life examples like Pertama.Do look out for them.

Continuing my thread, in order for the "invisible hand" to stalk his prey (stock), the stalker (buyer) has to think like the prey(the stock).Before I begin proper, all I am doing is share some thoughts of the stalker. But please, I don't claim to know the answers and I value all of your contributions.

In this instance, I am stalking Pertama. To think like the prey, it's important to understand J Harvey, the business-man. What makes him tick? Isn't he aware of the risks? Isn't he aware that S'pore is renowned for high rents? What is he going to do to preserve margins?Isn't he aware K mart failed in the past? Isn't he aware that there is competiton in Courts, Safe, Pennslyvania House, IKEA etc etc? How does he intend to create his own comparative advantage against the others.How what he do to survive against stiff competition in Australia? Was it by pricing competitively, or raising service levels, or a combination of both? What did he do to compound 30% in his share price over six years? What MARGIN of SAFETY do I the stalker have, if I catch my prey and realise that it's not exactly what I caught (that is, got it wrong). Is there intrinsic value in the prey? Is the cash of $27million sufficient as a buffer? What does George Goh of Ossia know?? He is, after all, a FELLOW STALKER!I am not disputing your concerns on Pertama. But I feel that if I can answer those questions and put myself in Jerry Harvey's shoes, I know what are the pitfalls and, therefore, prepared to ride out the business risks with him.

You see, the stalker may be monitoring SI and all our postings.After all, SI is becoming one of the main financial portals. It is all part of the stalker's game to drive up the share price, entice ALL THE SHORT TERM PLAYERS INTO THE FRAY AND then DUMP the shares to you.Please remember prices condition people's minds. If a stock price goes SOUTH, people say "get me out". But if prices go NORTH, everybody, house traders etc will shout "Blood" and go into a feeding frenzy.(Remember, most of the time, the stalker spends most of his/her time waiting, studying, seeking information about the prey before he pounces). Again, I profess not to know much about the retail industry and I value your feedback. Your input have provided gaps in information that I need to bridge with people who are in-the-know.

However, my sources in Australia have told me that HN practices an innovative franchise arrangement that allows staff to share in the profits of a store. Unlike a traditonal franchisee relationship, staff are encourage to enrol as franchisees without the need of coming out with their own capital. This instantly gives the potential franchisee a sense of ownership without capital being a restrictive factor.In Australia, HN's staff are legendary in their service commitment. Why? Because they NO longer see themselves as staff but as OWNERS of their own businesses.Next, they are coming with an innovative financing scheme that allows the customer to pay the same price for products regardless of whether the purchase was made by cash or hire purchase.

These innovative schemes have been practised in Australia for years but, I guess, have not been followed in Asia.Also, my friends in Australia told me that HN's staff practice a motto: do all you can to get the customer back into your shop. What do I mean by that? If you had purchased a phone from vendor A (somebody other than Pertama), and if that phone breaks down, they are prepared to take in that phone for repairs at no cost. How about that for service? Suggest that to Singtel or M1? They will flip!!My point for sharing is this: competition is everywhere and in every industry. You and I are in business and we know competition is a given. But it takes somebody who thinks totally "out of the box" to rock the very foundations of that industry. The person who keeps questioning the assumptions and is an out-of-box thinker constantly innovates and keeps the customer coming back into the shop.Jerry Harvey is one such visionary who I feel comfortable to bet on. He has the track record to back it up.Frankly, I am looking forward to their arrival because I am quite tired of the poor service quality that I have been receiving. Service level in S'pore needs to raised. One way of raising service level is to make employees feel like owners through options, franchise arrangements that do not require them to come up with capital etc.

Since I am on this topic, let me cite another example. Today, I went to Funan looking for some software. The chap who served gave me smiles and took pains to answer all my questions. I thought that was great. But the moment the sale was made and he left me to the cashier, the cashier's rudness undid all the good impressions created. My guess is that the salesperson is incented by commissions but the cashier wasn't. And it really showed.

In this posting, I will be introducing another strategy that is the favourite of "the Invisible Hand".This strategy can best be described as using "Other People's Money" or OPM. OPM is centred around the principle of LEVERAGE, making your money work hardest for you, doing more with less, getting more returns from $1 of capital.If you are in business, you will be familiar with leverage. The most successful businessman use OPM and, I daresay, your success or failure as a businessman would depend on whether you mastered the art of using OPM. The most basic form is borrowing from banks for capital to start a business, mortage to buy a house etc. Seldom do you buy a house with 100% of your capital. To get the "maximum" return possible, you use a combination of your own capital and other people's money (in this case, bank debt).

The more advanced form of using OPM is practised in the stock market. How is this so, you may ask?Well,when you list your company, you add another currency. That currency is the stock price. Having a company listed and having that new currency (stock price) is equivalent to adding another weapon to the stalker's arsernal to negotiate deals, issue derivatives (like warrants), serve as collateral to banks for addtional debt and so on. Also, having a public listing allows a stalker to "borrow" from the public by issuing rights issues to the public, enticing them with warrants and other freebies. What I have stated above is nothing new to most of us. What I have done is encapsulated the principal of leverage.

However, understanding how the stalker uses OPM (leverage) in the stock-market will, hopefully, prevent you from falling into one of the stalker's schemes. This is one of the hardest concepts to explain in a forum such as this. So please ask me to explain any concepts that are unclear. I look forward to learning from one another. Yes, we need constant reminding of the workings of the "invisible hands". Remember, money is always made on the way down. "Invisible hands' are not charitable organisations. They will not buy and chase prices up. Why? Because that will only benfit every one else. They BUY only when prices fall. Why? They are buying somebody else's losses (or cut losses). "Invisible hands" understand the psychological effect of what prices do to people. They know that prices condition people's minds. They know when punters are disinterested when prices fall and how punters will chase and get all excited when prices move up. They know how to use this info to amke $$ for themselves.I make no apologies for repeating this message again and again. Forumers must be made aware how the Mr Market robs those who was disinformed!!A monumental posting on the IH written by sifu Warren. Reproducing here for archival purpose.

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Price & Volume studies

Elle,I thought I'd add my 2.5c worth of how I use price and volume studies to detact the action of IH. I use the charting system by Bridge Information Services where they have many different programmes that allow the manipulation of data to show whatever configuration I might want. Be it intra-day charts for 1 day to 21 days, daily charts with price feeds for one year, weekly charts for price feeds over 5 years and monthly charts for upto 12 years, or howsoever much data there exists for that particular stock. All these price data is accompanied by volume figures which get charted at the bottom. They also have the ability to chart volumes (and this one I like the best of all) , along various price bands that gets displayed on the lefthand side of the chart.Armed with that capability, I go hunting in the market, hoping to stalk the path taken by IH.My reckoning is if IH is active at a particular stock, his presence will be felt by the amount of volume that changes hands along a price band. You see, whenever collection/distribution takes place, it is done based on price, not time. If one decides to collect millions of shares one will naturally do it in within specified price limits, and continue to do so (of course taking market sentiment into account) irregardless of time taken.

Now, for the collection campaign to be successful, there must be enough volume passing through within those price limits. Not enough and the campaign maybe just a minor exercise. Plenty of volume changing hands and the campaign is usually a prelude to some future price assault.What I'm looking for in the chart is to find price congestion bands where large volumes have changed hands. Now if the price bands are near the top of the chart and volumes are high, you can bet that active DISTRIBUTION is taking place. Naturally, for that to have occurred, some previous collection must have taken place some time back. The result will be market peaks which could take the form of head-and-shoulder, double tops, triangles etc, collectively known as rounding tops. After sufficient stock has passed from strong to weak hands, price breakdowns occur, and the sheer weight of all that stock passed at the highs will cause prices to weaken once the bear market begins.The converse is ACCUMULATION. Look for price congestion bands near the bottom of chart and where prices, after a long and deep plunge, begin levelling off and seem to meander along a somewhat sideways pattern. The price ranges are tighter and volumes, while not especially high, are significant. There will even be occassions when the chart 'breaks' and prices drop down to new lows for a while, but only to come back within the observed price congestions.

The result will be market bottoms which could take the form of head-and-shoulder, double bottoms, rectangles etc, collectively known as rounding bottoms. After sufficient stock has passed from weak to strong hands, price breakouts or bull flurries occur as IH triggers the start of a new uptrend. With sufficient stock firmly tucked away in firm hands, the upside thrusts (initially on high volumes), will continue as IH walks the stock to whatever level desired.So large volume at the highs means distribution, while large volumes at the lows signify collection. That simple? Not really. There are many other tricks they employ (Carol had highlighted some of these in this thread earlier on) to throw the scent off and hide their tracks. What I use then is the weekly and monthly price/volume tables to determine their actions. Bear in mind that action is being taken around price limits, so you can spot that clearly when the price ranges start getting narrower and narrower such that theprice range between highs and lows on the monthly table tighten.

I look for a clear stretch of time when this occur and add up the volume figures, and if these add up to significant %age of the total issued capital of the stock, I start getting excited. For I know that the IH had been active, and I better be on guard for a new (and unexpected) trend will emerge.Naturally, if congestion price ranges were near the lows and large volumes had changed hands, the next trend will be upwards. I investigate more of the stock, conducting other TA studies like MACDs, RSI, Stochastics to determine if the timing is ripe for the planned move. What usually is the missing piece from this jigsaw puzzle is the TRIGGER. That is where, with the benefit of FA and an active imagination I set about scenario planning likely outcomes. I map out what sort of corporate actions would set up the stock for a market re-rating. Oddly enough, these usually produce outcomes that eventually become the subject of market rumours. Once done, I plan my entry into the stock and await the IH to show his hand.

Folks, there you have it, my personal method to track and spot winners and losers in the market. I hope it could be of use to you, for it has worked well for me. Thanks for the patience in reading this posting.Warren.

Schroder's BRIC fund

Schroder's BRIC is all about emerging markets. BRIC stands for Brazil, Russia, India and China. All 4 markets are considered at a very fast pace and the potential is great.

I bought BRIC a little while after its inception early last year. To be more exact, I bought it in late Apr 06. It is now a little more than one year and with its present return of 21%, I am more than satisfied. It's a pity that this investment was not with my money. Anyway, I have sold all my BRIC units.

I again bought BRIC using my CPF in late Jan 07. My rational then was to get as much returns as possible in a very short term (2-3 months), hopefully before the expected correction. Unfortunately, the correction came before I could realised the profits. When the correction came, my returns was about 4% and after the correction, it was minus 10%. The fund basically lost about 14% within that 1-2weeks. Luckily, it quickly rebounded within the last 2 months. Though it has yet to reach its peak(before the correction), it has given me 3+% within the last 3+ months. Though it might not look much, for one, if you compare to the CPF interest, 3+% is definitely better than 2.5%. Furthermore, this 3+% was achieved within 3+ months. Annualised it and you will get 10+% pa.

For now, I am clearing all China related funds, as i still strongly believe China will trigger the coming correction.

I am thinking of exiting from my Henderson Asia Pacific Property fund, but as it gave dividends on the 15 Nov 06, I am thinking of holding on for a few more days to see if they give another round of dividends on 15 May 07.

Hotung the Venture Capitalist

Hotung is a Taiwanese venture capitalist. Basically, it funds new start ups and take certain percentage share of the start ups. It reaps the profits when the company gets listed. It fell into the black hole(making losses) during the dotcom bubble burst. Fundamentally, the company has posted a profit of NT$364m for FY06 vs a loss of NT$648m in FY05. It has 8 companies on hand targeting to get listed in Nasdaq and other bourses within the year.


I am more interested in the technical analysis of this counter. Personally, I only look at the moving average 20, 50 & 200, the MACD, volume and sometimes the candles. For any counter to be considered, the price must cut the MA20. If MA20 cuts MA50, it a good sign and if MA50 cuts MA200, it is normally one of the sure signs of a uptrend. For this counter, all the above scenarios have came true.

Next, MACD must be positive. It is now positive. The average volume per day is about 1-2 million shares changing hands. Though it is not considered very high volume, my criteria is just 1 million shares per day. So the above criterias have all passed.

I have drawn 2 purple lines, signifying the resistance and support lines. The bottom line is the support, and the top line is the resistance. Right now, the price seems to be consolidating between $0.14-$0.145. Once it is able to break the resistance of $0.155, it should shoot up.

From KELive research, the target is $0.19. If the target is reached, it translates to a 31% returns.

Investment Instrument Series - Land Banking

This will be a series of investment instruments which I will be writing. As I have been to a presentation and done some research, I decided to start on this investment instrument.For a start, land banking is quite new in Singapore. I believe it appeared around 3 years back.

I believe all knows that property is normally a good investment. If you research on most, if not all, property markets in the world, you will see that the property market gives a return of at least 10% pa (this is provided you take a long term view). In Singapore, the type of properties that are worth more are the freehold properties. People are not interested in the building when they buy the "property", they are more interested in the land beneath it. Land appreciates while the building depreciates over time. That is why companies are now selling land rather than the property as the returns can be very lucrative. Just a carrot here, the returns can be as high as 10-20 times your capital. In London, land prices has been rising at about 20-25% for the last 5 years.

How these land banking companies work.
They buy a hugh plot of undeveloped land first. Then they split them up into small pieces and sell them to investors. Previously, such investments are only for the super rich as the hugh plot of land cost millions. Now, with the smaller pieces, small investors can join in the fun. The cost of a small piece of land is as low as S$10,000 (area of about a 4 room flat). Please note that as this is a piece of undeveloped land, the price is very low. The company then tries to get this plot of land approved by the government to be developed into either residential or commercial land. When it does get approved and developers will then buy over this piece of land at the current residential or commercial land price. Normally, this price is at least a few times your buy price. A catch in land banking.....you will have to sell your piece of land at this stage(as contracted).

Question: Why does the company not want to buy the plot, get it approved and take all the profits?
This is an economy of scale. Say for example the land cost $1million. If this company has a million dollars, it can buy this land, wait for a few years and then sell it for 5million. But on the other hand, if it cuts this land into 100 pieces and sell each at $20,000, it would have immediately $2million. These companies normally will keep about 20% of these cut-up land. If the company sells 80 pieces of the cut-up land at $20,000, it would have $1.6million. They could then use this money to buy another 1-2 pieces of land and do the same thing. When the land gets approved, they would also profit from the 20 pieces of cut-up land that they have kept. The new pieces of land then are cut up and sold again and the cycle goes on. With this concept, the company then can generate enough money and profit to keep the operations going.

In Singapore, the 2 main players are Walton International (http://www.waltoninternational.com/asia/about.asp?ArtID=104) and Profitable Plots (http://www.profitableplots.com/). WI is selling Canada land whereas PP is selling UK land. It seems that more Singaporeans know WI but with PP's advertisement in English Premier League, I believe more people are aware of PP now. PP's website has more information on how it sells, market and gets approval for the land they sell. WI has recruited quite a number of salesperson to sell their land.

To all who are reading this, though I have vested in land banking, I have not heard of any track records from both these 2 companies in the lands which they have sold to Singaporeans. Maybe it is only 2-3years since they have started and it normally takes about 5 years to get any approval. That is why I have only vested a minimum amount with Profitable Plots. If you are interested in this investment, feel free to contact me. If I refer you to PP, there is a referral fee. We can share this fee (win-win). In any case, please do your due diligence before deciding to invest in land banking.

Ways To Grow Money (for Unsophisticated Investors)

I wrote this blog a couple months ago in my other blog, but copied it over as I feel it is more suited here.

This is what I have written for a couple of friends whom I have been hoping that they would invest some of their money rather than putting them in banks a few months back. Basically, what I have written in point form are only very basic information about each instrument, where you can put your money in. Please note that the figures are true(to the best of my knowledge) at the time I write this article.

1) Savings Account
Banks (~0.25% - 2.48%)
Financial Institutions (~1% - 2.9%)

2) Fixed Deposits
Banks (~0.5% - 3%)
Financial Institutions (~0.5% - 3.215%)

3) Currency Deposits
Banks
Financial Institutions
Additional currency fluctuations

4) Structured Deposits
Slightly higher returns but issuer can terminate any time they want.

5) Bonds / Treasury Bills (2.8-3.5%)
Govt or private companies
Bonds are longer term

6) Equities / Stocks
Returns depend on company performance
Growth or Stable or Income stock
IPO, pre-IPO & post-IPO

7) Unit trust / mutual funds
Big basket of stocks / bonds / deposits depending on structure of fund
Region, Industry, Type(growth, emerging, income, bond)

8) Investment Linked Insurance
Same as unit trust except a portion of premium is to cover insurance.
Fund to choose are normally from the insurance company.

9) Warrants / Options
Buying into future equities

10) Property
Spore or overseas

11) Land Banking
UK or Canada

12) Business
MLM, Insurance, Property agents, shop owner, internet marketer, service or product provider.

13) Commodities
Gold, Silver, cotton, cocoa etc

After going through what I have written, I think there are a lot of decisions you have to make in order for you to do good investments. One of the foremost is to gauge your risk appetite. On one extreme are people who don't mind losing all their money in hope of very big returns(1000s%). On the other end are people who cannot sleep if their money depreciates. I will write more on each instrument and some strategies in time to come.

Happy Investing.

My Recent Sells in my Funds

I was disappointed at the mild correction in late Feb 07. STI only dropped about 10% and then rebounded back to its original level in within a month. That is too fast and now, the index is going to record highs every week. I view this as negative as the faster you climb, the harder you will fall. Coupled by the overly overheated China market, I believe Spore market will be experiencing another correction soon. There are a lot of reports that the China market is already over valued. It's PE is now >40 times and by comparison, Spore's market has a PE of only about 16. Note: PE is price over earnings and it is a measure of how fast a company can recover its capital. For me, the number should be as small as possible. In China, uncles, aunties and even monks have poured that hard earned money into the stock market, without knowing the fundamentals of what the companythey have bought into are doing. When the big institutions(also called Big Boys) feel that they cannot sustain such risks anymore, they will pull out of the market and a sell panic will occur. As such, I believe the China market will initiate the next correct in Asia. Though i believe a correction is coming, I do not forsee a drastic correction as the Chinese government will take all measures to prevent a collapse of its economy before the Olympics next year.

As such, I have exited my pure China funds. I have sold my DWS China fund as it has acheived 5% returns in the last 2.5months. I feel that is sufficient. In addition, I have also exited my Shenton Greater China fund. For this 5.5 year-old fund, it has given me an average of 19%pa return, which I deemed terrific. My target for funds is 7-10%pa returns.

My last recent exit was the free Shenton Income fund. This exit has nothing to do with the expected correction. I exited as this fund is only <$30. Though I have exited this fund, I viewed this fund as a good fund for stable income and will definitely add to this fund when I have more money for investments.

I will be monitoring the market for next couple of weeks to determine when to sell my BRIC fund. Unless something more drastic happens, I don't think I will be selling off my property funds and the global equity fund.

Funds Holdings

I bought my 1st fund(can't remember the name but it's a internet fund) about 9 years ago during the internet bubble. Luckily, I bought only $1,000 because it nosedived to $200-300 ever since the internet bubble burst. Subsequently, the fund house decide to close this fund and I only got back $200+.

Then in 2001, I decide to read more about funds and bought Shenton Global Equity($1k) and Shenton Greater China($1k). Both these funds have quite impressive historical performances. The global equity is for diverification and the China one because I feel China would do very well in coming years. I deduced right. I am proud that Shenton Greater China fund has returns of 104% of of today. If divided by 5.5years, it means it has grown an average of 19% each year. As for Shenton Global Equity fund, I started to add $100 to it every month for the last 1 year. So the returns have been much muted by this addition of funds. But before I have added this RSP(Regular Savings Plan), this fund was way better than the China fund. Even at the price, and with the RSP, I am still getting returns of about 70%.

Last year at around this time, I felt that the market is very bullist and funds are a good buy. But problem is that I do not have cash and my CPF is stuck because of the intention to buy a new house. So I recommended to my sister and wife. My wife put $5k and my sis put $1k with me for my investment. I bought Schroder BRIC fund($2k wife and $1k sis), Henderson Global Property fund($3k wife). I also bought Henderson Asia Pacific Property fund($1k+ $100/mth RSP). This fund is more for Ryan. HAPP has also given me a dividend of $71.18(2.3%). As of today, BRIC is up by 20%, HGP is up 14.5% and HAPP is up 14%. I felt that this 1-year returns has been quite impressive. For funds, my target return is 5-10% pa. As there was a promotion in Fundsupermart, I got $25 worth of Shenton Income fund FOC. Though it is not much, this fund has also grown 4.5% and has also given me dividend os $0.33. And at the same time, both my wife and me left some money in Fundsupermart's cash account which was giving about 2.6% interest. It has converted to the Cash fund which gives daily interest(2.4-2.8%). From the compunding point of view, I think the effective interest is around 3%pa.

In Feb 07, though i believe a correction is coming real soon, I got impulsive and bought Henderson European Property fund($10k), Schroder BRIC fund($10k) and DWS China Equity fund($20k) with my CPF. I was quite happy for the 1st 2 weeks as each of these 3 funds were climbing at a steady rate. All were up between 2-4% within 2 weeks. I was a bit panicky when the 28 Feb 07 came. All became negative within that 2 days. I was thinking of selling both DWS and BRIC but held on in the end. Anyway, as of now, HEP is now 2.8% up, BRIC is 3% up and DWSCE is 5.3% up. Think this is also not bad for a <3mths fund investment.

Lastly, one of my goals is to grow my investments(both stocks and funds) at a steady rate and one of the actions which I have done is to put a small amount of money into these 2 investments on a monthly basis. Besides the 2 RSPs, I add $200/mth to my stock investment porfolio. As for my funds, I intend to save enough for my emergency fund before I continue putting more money into the fund investment account. The amount should not be less than $300/mth.

I will write more about my recent switches and actions in my next blog.

My Transactions So Far

Sold my only holdings, SMRT @ $1.45 and SembMarine @ $3.40 in Jan and Feb as i believe a correction is coming. Think selling SMRT at that time is good as it went down to $1.3+ after i sold. The opposite could be said about Sembmarine. It flew to 3.6+ immediately once I sold. Anwyay, i believe in not regreting your decisions, be it good or bad, as long as you learned a good lesson.

In early Feb, my bro-in-law told me that YongNam has a very high chance of getting the IR contract as it is the only steel structure counter in Spore. I did not take action as I did not have any cash. My sis bought 10lots @ $0.22. IT flew to $0.34 in 3 weeks. My sis was greedy and held on. It nosedived back to $0.22-23 during the end Feb-early Mar period.

Since this counter has shown that it has potential, I bought 10 lots @ $0.235 on 5 Mar 07. I thought of selling when it was hovering around $0.28 but stuck with it as it was in top volume for many days. As i research more into YongNam, I got to know that the construction industry is booming with the IRs, en-blocs and condo developments. There were a few interesting counters: BBR, CSC, Lian Beng, Tat Hong. I chose BBR because it is still only $0.16(ie not risen too much). And i do see their logos at some contruction sites, ie means thye do have a presence in Spore. I bought BBR 10 lots @ $0.16 on 18 Apr. A research house also wrote an article with a buy rating on BBR with target price at $0.20. Thus, my target is $0.20.

Next, greedy me also bought CSC 6 lots @ $0.31 on 19 Apr. CSC because it just acquired L&M, G-Pile and Soil Investigation. With these acquisitions, it becames the biggest foundation and Geotechnical Company in Spore and region. I believe it will rise further due to their involvement into Malaysia(with acquisition of G-Pile). And there are not many foundation companies in Spore. So their chances in getting the IR and en-bloc developments are higher. My target is $30%, ie $0.40.

Between 16-20 Apr, I see that Lottvision was riding the bull and has risen very fast. Forums was praising it for going into China market for their gambling biz. So i got even more greedy and bought 5 lots @ $0.66 even i know i do not have the money to pay. I was hoping to contra it off within T+3. Unfortunately, the price only fell and after T+3, the fall was quite alarming and I quickly cut loss @ $0.53. It hit my -20% stop loss. I lost $705. Side note: it rose again after i sold!

As i would need money to fund my CSC purchase, I sold 5 lots of YongNam as it hit my target price of $0.34. I sold at $0.36 on 30 Apr. I profited $600. I sold the remaining 5 lots on 30 Apr @$0.35 as i fear thaat there is a correction coming from China. Got $550 return on this sell. Reports are saying China market is very high, with P/E above 40 and too many ignorance people coming into the market.

So right now, I have only CSC and BBR on hand. I feel CSC has the potential but some big investors are pressing the price down as there is always a very big sell queue @$0.325.

My Stocks Strategy

This is my first post in this blog. Today, I will be writing on the strategies which I hope to adhere to most, if not all my stocks actions, be it a buy, sell or hold. These are also limitations or rules i set for myself after experiencing through a few rounds in the stock market.

1) Percentage of Investment
No matter what amount of capital i have, I will utilize at most 40% in one stock. Eg, if my capital is $5k, i will only use $2k to buy any one stock.

2) Stop Loss Trigger
Before I buy any stock, I will determine the stop loss trigger price. By default, it will be 20% below the buy price.

3) Target Sell Price
Before I buy any stock, I will determine a target sell price. By default, it will be 30% above the buy price. This price can go up, depending on the performance of the stock.

4) Determination of Buy Price
A few points to consider before buying any stock.
A) Fundamental of company must be good,

• at least earning money, preferably with double digit increase in profits for last 3 years
• P/E not higher than 50
• Company product or services must be in demand

B) Technical Analysis of Company must be as follows:

• Price must cut MA20, MA 20 to preferably cut MA50 and best to have MA50 cut MA200.
• MACD must be positive and blue cut red line
• Shares should not be overbought

5) NO Contra on Speculation!

I will be slowly adding more rules to my investment strategy.