## Tuesday, June 29, 2010

### CAGR II

Recently, I was given an opportunity by a reader to explain more about CAGR. It's not a brand of cigar. It's refers to compounded annual growth rate - a calculation to find out the compounded returns per year (note that this is different from simple interest rate). I actually wanted to share how silly this calculation is about but I had a feeling that I've written about it donkey years ago. After searching, I realised I did write an article about CAGR here, so I'll just highlight or perhaps add some points to it.

Frankly, I've not used CAGR for years because of I realised that with one calculation, the whole story can be quite distorted. Basically the calculation of CAGR depends on three variables - Future value, present value and time period. The most significant gripe I have about CAGR calculation is the fact that you can get hugely wide differences in value by just changing the variables. Essentially it boils down to a GIGO (garbage in garbage out) system where the output depends firmly on the input that you put it.

 CAGR CIGAR is a stick used for smoking, giving a pleasurable feeling afterward

Take a look at this example. Let's say these are the figures for yearly profit from year 1 to year 4 respectively:

10, 15, 20, 25

Present value: 10
Future value: 25
Time period: 3
CAGR: 35.7% per yr

Here's another example of yearly profit from year 1 to year 4 respectively:

10, -2, 45, 25

For those who are synchronous with me in thought would have realised that the CAGR for the two examples are exactly the same. Why? The first example and second example looks very different but the three variables that affect CAGR calculation - namely present, future value and time period - are all the same.

So, what does that leave us?

1. Firstly, you must realise that the CAGR just draws a straight line between the start value (present value) and the end value (future value) and ignores all the ups and downs in between them. In a non-linear world, this assumption is just plain bullshit. I can make a good CAGR by carefully selecting my base year and my final year, so do be careful of it. Statistical calculation must be treated firstly as a blatant lie.

2. Secondly, it would be better to accompany CAGR calculation with the actual values of the data points in between the present and final values. To make it better, I would suggest a graph. It's like doing linear regression calculation in A'lvls - you must accompany each calculation with a scatter plot. This will give a bigger picture of the meaning of the CAGR value calculated.

3. Lastly, I simply do not use it anymore. From experience, projecting the past into the future is at best a guesstimate because the reality could be more optimistic but usually more pessimistic. Since it's a guesstimate, there's really no need to put a numerical figure to your guesstimate. I do not use it anymore because I fail to see the value of such calculations in fattening my wallet, though it might well do to fatten my ego.

## Sunday, June 27, 2010

### You need both rainy and sunny days to make life's rainbows

** "BIAS" is a special feature in my blog where I get to say whatever I want with scant regards for your feelings. I'm not politically correct in this feature, so go ahead, judge me."

Time seems to fly these days. It seems like it's the opposite of what Einsten's theory of relativity had proposed. You know, in that theory, if you travel as fast as the speed of light, time seems to stop from your point of view. In work life, it seems that if you work very very hard, time seems to fly even faster. Day and night zooms by, punctuated by meal times and the occasional travelling and before you know it, Monday goes and Friday comes again, thus ending the week.

Since there is really not much activity in the market (okay, except for my sell order that I had been consistently keying in everyday but didn't get filled), I thought it'll be good to talk about things that I'm grateful for and things I'm not so happy about. Here goes:

 An unhappy cake. Have you seen a cake that wants to be eaten?

1. I spent my morning reading through the Sunday times and saw an article about CEO of SMRT saying that the mrt trains at its peak are carrying 1.4k passengers, compared to its 'crush load' of 2k passengers. She then compared to the peak carrying load in Tokyo and HK and implied that the trains are not as fully packed and Singaporeans can squeeze in if they choose to do so.

I think if she takes a break off her car for 1 month, and try to take the MRT to work everyday, squeezing in with the crowd in the morning and again in the evening, she can better appreciate the implications of her statement. The stress related to being cramped in a tiny morsel of space day in and day out cannot be described to a person who had not experienced it before.

I hate it when people in authority starts comparing to other countries to 'bring out' the goodness in our system. Things are not so easily comparable. I can similarly cherry pick things that are good about other countries to 'push down' our system of doing things here too.

2. I was woken by a sharp diarrhea this morning way before my alarm rings. Must be some nonsense I've eaten last night.

3. Some horrible horrible inconsiderate people are honking their car horns so early in the morning. I'm sure whatever problems might be in front of them can be solved by calmly walking over and talking to the person, or simply by waiting. Honking your car horn doesn't make things any better. When I was a learner driver, I had my fair share of it. It made me worse as I get even more nervous. I'm sure whoever is honked at would feel the same too, or that they are simply immune to it. Either way, honking the car doesn't get things done...perhaps it only serves to wake up some people around the neighborhood.

I remembered a joke from my army daze. A group of us are sitting in the bunk, trying to escape the evil all-seeing eyes of the CSM. One of my buddies asked what should be done if you're driving and the car in front of you starts to slow down. He's studying for his basic theory so he's asking some possible questions.

a. Slow down
b. Speed up and overtake him

Did anyone choose option (a)? Well, not contented, another of my buddies started wisecracking and said that we should honk first, then slow down and honk again. There you go.

 I like this picture a lot. Simple and to the point.

Things I'm grateful for:

1. I went to Robinson sales at Singapore expo with my girlfriend yesterday. It was such an interesting experience! There was a concurrent MPH warehouse sales so we went over there first, where my gf bought 9 books (it's considered a few...I'm sure she'll carry more if I didn't force my way with her). I guess she can spend her whole lifetime reading her already immense collection of assorted books lying all over her room and threatening to spill over other parts of her home. Silly girl :)

The books are priced at \$8 each for 1 general book, and \$35 for 5 general books. The collections are quite varied and I haven't even walked 50% of it. I think they are ending today, so go and check it out if you like a good bargain.

The Robinson sale was fantastic too. Bought some Adidas shirts at over 60% discounts. All sorts of things there, but be prepared for long queues :)

2. I'm grateful for the early morning showers that makes the day much cooler and more pleasing. I was joking to my student one day that we should all go down to Orchard road to grab some floating iphones and hermes bag when one of these high intensity, high duration rain comes again :)

3. Wonderful technology - blue ray. Was at a brother's place watching some 'brue lay' movies and was once again amazed at the crisp clear pictures. I must have said it more than once that I'll be happy just watching the subtitles because they are so pleasing to the eye!

4. School holidays will be over! I can finally get to rest in the morning and resume my vampirish schedule which I think I'm better suited for. Begone early morning classes, welcome night classes!

## Tuesday, June 22, 2010

### One weekend at Fullerton Hotel

I went over to Fullerton Hotel over the weekend for a break from work. Work had been getting more and more unbearable, so I think a mid term break from all of it, even if it's for a while, is good for my mental well being. Since I've never been to a local hotel before, I thought of going there instead of the slightly more troublesome trip to my favourite Batam. Batam is good for those long stretches of idle days...something I can ill afford now.

Anyway, I signed up for the 1 night stay there, which cost me \$340. The package includes a \$88 rebate for any amount of money spent in Fullerton (it can be the Courtyard, the bar or the Jade restaurant), so I think it's pretty worth it. Me and my gf are celebrating something over there, so we also get to have some chocolates and a bottle of wine complimentary from the hotel. There was some misunderstanding, so they didn't really send the bottle of wine and chocolates up to our room during our stay there, but they made it up by giving us a pack to bring them home. Quite impressive service.

 This is about the only proper picture taken off my hp. The rest are just too shaky to be publicly displayed.

Since Sat was the NDP rehearsal at the Padang, there were plenty of fireworks to be seen. I can't really see them from the hotel room (not dying to see them anyway) but I can definitely hear them. During the evening, as I was waiting around in the swimming pool (it's open air), I managed to spot a few soldiers parachuting down from the sky too. Quite interesting because I've not seen them except on television.

We asked from room service dining. It was quite a good experience because usually when we dine in the hotel room, I was just given a tray with the food. For Fullerton, they did the entire table routine with proper tablecloth and setting, complete with glasses of water and napkins. I was suitably impressed with this, being the mountain tortoise that I was. You really don't know what is good until you've encountered it.

 Erm...it looks more impressive when you're there, with the sight and smell thrown in

Even though one night is a tad short to me, I thoroughly enjoyed myself there. I was watching television, reading and basically just resting my entire weekend. I even managed to sneak in a lunch appointment with the brothers here, so it's definitely one of the most memorable weekends that I will remember. I cannot recall when I have my weekend totally devoid of work. Definitely worth it.

That's how life should be right? Spending money to buy back happy memories to savor forever.

## Thursday, June 17, 2010

### The forgotten habit of reading

** "BIAS" is a special feature in my blog where I get to say whatever I want with scant regards for your feelings. I'm not politically correct in this feature, so go ahead, judge me."

In my job, I talk with many young people. I walk away with the grim knowledge that most of them do not have a habit of reading. I'm not just talking about reading textbooks for academic purposes, but also reading for the joy of doing so. From what I observed, girls read more than guys, though it might be mainly fashion magazines or other lighter fair like 8 days etc. I think one of the main contributing reason is that there are many distractions that are far more exciting than just plain reading.

I was just telling one of my students that I had just bought a kindle dx just three weeks ago. He asked me how much it costs and I told him it's a few hundreds. To this, he exclaimed that he would never spend such money on books. I guess that pretty much sums it up about the youth these days. They would rather spend money to engage someone to teach them then to read it up themselves. It's quite horrifying when I heard that most of them will just throw away the manual for any gadgets they bought and just jump straight into it. Perhaps they are so confident of their ability to trial and error any functions that their gadgets possess (they are afterall, the IT generation).

But why are they so disgusted with reading? I've no idea, but I guess it's good for my job. Most of the stuff I teach can be found in the examples given in the textbooks, so I suppose that if they do read it up, I might not be that busy anymore.

To me, reading is the best way to gain the knowledge and experiences of those that came before us. Culture is retained in the literature and passed down from the past to the present. If you would just read, you'll find that you do not have to keep re-inventing the wheel. I remembered when I was learning FA, I had a goal of reading one finance book per week - that makes it 52 books per year. That was back in 2008. I was reading voraciously on accountings, financial statements analysis and those books by guru investors, and I was greedily lapping it all up. It was until I had finished most of the shelves in the library that I slowed down. These days, I am much more selectively in what I read, choosing instead to re-read some of the best books that I had filtered down through the years.

 My gf always wanted shelves of books occupying an entire wall in our home

Just for the records, here's the books that I devoured from 2007 to 2009. I'll highlight the ones that I would want to re-visit again and again.

1. Five point something – Chetan Bhagat
2. How to become stupid – Martin Page
3. The curious incident of the dog in night-time – Mark Haddon
4. The stupidest angel – Christopher Moore
5. The way of the cockroach – Craig Hovey
6. Legally correct fairy tales – David Fisher
7. It’s kind of a funny story – Ned Vizzini
8. Jacob’s ladder – Brian Keaney
9. Politically correct bedtime stories: Modern tales for our life & times – James Finn Garner
10. Cathy’s book – Cathy
11. Metamorphosis – Franz Kafka
12. Label – Louis de Bernieres
13. The successful investor – William J. O’Neil
14. Rich dad poor dad – guide to investing – Robert Kiyosaki
15. Do you want to make money or would you rather fool around – John D Spooner
16. Vault career guide to investment banking
17. Financial Statements - Thomas R. Ittelson
18. The four pillars of investing: lessons for building a winning portfolio – Dr William Bernstein
19. Accounting Demystified: A self teaching guide – Loita A.Hart
20. Five rules for successful stock investing – J Wiley, Joe Mansueto, Pat Dorsey
21. The little book of value investing – Christopher H. Browne
22. The little book that beats the market – Joel Greenblatt
23. The unwritten law of business – J.W. King, revised by James.G.Skakoon
24. Stone age company – Sally Bibb
25. The rules of wealth – Richard Templar
26. The laws of simplicity – John Maeda
27. The 5 keys to value investing - Jean Jacques

1. Warren Buffet Speaks - Wit and Wisdom from the World's Greates Investor - Janet Lowe
2. Winning - Jack Welch/Suzy Welch
3. The Dividend rich investor - Joseph Tigue/Joseph Lisanti
4. The little books of common sense investing – John C bogle
5. Everyman and his common stocks – Laurence H. Sloan
6. Investment madness – John R. Nofsinger
7. Lessons from the legends of wall street – Nikki Ross
8. Understanding comics – Scott McCloud
9. Free cash flow and shareholder yield – William Priest/Linsay McClelland
10. The ultimate dividend playbook – Josh Peters
11. The five rules of successful stock investing – Pat Dorsey
12. Why smart people do stupid things with money – Bert Whitehead
13. Building the perfect portfolio – Curtis J. Montgomery
14. A concise guide to macroeconomics – David A. Moss
15. Little black book of connections – Jeffrey Gitomer
16. The little book of value investing – Christopher H. Browne
17. The Tao of warren buffet – Mary buffet
18. Monopoly rules – Millind M. Lee
19. Buffettology – Mary buffet / David Clark
20. Common stocks and uncommon profits – Phil. A. Fisher
21. One up on wall street – Peter Lynch
22. The Warren buffet way – Robert G. Hagstrom
23. Anyway – the paradoxical commandments – Kent M. Keith
24. Cut to the chase – Stuart R. Levine
25. The Intelligent investor – Benjamin Graham
26. The bull hunter – Dan Denning
27. The black swan – Nassim Nicholas Taleb
28. The market guru – John Reese/Todd Glassman
29. Liar’s Poker – Michael Lewis
30. Confessions of a wall street analyst – Dan Reingold
31. The Citibank guide to building personal wealth – Leo Gough
32. The essays of warren E. Buffett – Lawrence A. Cunningham
33. Morningstar guide to mutual funds – Christine Benz
34. Benjamin Graham on value investing – Janet Lowe
35. A random walk down wall street- Burton G. Malkiel
36. Even buffet isn’t perfect – Vahan Janjigian
37. Origins of the Crash – Roger Lowenstein
38. Reminiscences of a stock operator – Edwin Lefevre
39. Killing sacred cows – Garett B. Gunderson
40. The real warren buffet – James O’Loughlin
41. 100 cats who made a difference – Sam Stall
42. The little book that makes you rich – Louis Navellier
43. Debt – Juliane Otterbach
44. Saving – Juliane Otterbach
45. V for Vendetta – Alan Moore, David Lloyd
46. Full of Bull – Stephen T. McClellan
47. This is not a book – Michael Picard
48. My Formula! – Thomas Matthew
49. Value Investing – Sebastian Chong
50. Financial statements for non-financial people – Ron Price
51. A primer on money,banking and gold – Peter L. Bernstein
52. The little book that saves your assets – David M. Darst
53. The Joseph cycle (2004 edition) – Simon Sim
54. Animal Farm – George Orwell
55. I.O.U.S.A – Addison Wiggin, Kate Incontrera, Dorianne Perrucci

1. Investing against the tide - Anthony Bolton
2. Pit Bull - Martin Schwartz
3. Fooled by Randomness - Nassim Taleb
4. When genius failed - Roger Lowenstein
5. Real tips, real money - Leong CT/Leong SH/Dr David Tay
6. Candlestick charts - Clive Lambert
7. Sell and sell short - Dr. Alexander Elder
8. Come into my trading room - Dr. Alexander Elder
9. Trading for a living - Dr. Alexander Elder
10. Silver Surfer Requiem
11. Free market madness - Peter A. Ubel
12. Sales Bible - Jeffrey Gitomer
13. Avengers Disassembled - Brian Michael Bendis/David Finch
14. Successful Value Investing in Asia - Tony Measor
15. Where are the customers' yachts? - Fred Schwed, Jr
16. The little book of bull moves in bear markets - Peter D.Schiff
17. Keynes and the Market - Justyn Walsh
18. Warren Buffet and the interpretation of financial statements - Mary Buffet & David Clark
19. The physics of superheroes - James Kakalios
20. Motoring Basics
21. Your money or your life - Joe Dominguez and Vicki Robin
22. Bailout - John Waggoner
23. The Millionaire in you - Michael LeBoeuf
24. The 5 lessons a millionaire taught me - Richard Paul Evans
25. How to trade in Stocks - Jesse Livermore (& Richard Smitten)
26. The Wall street Self defense Manual - Henry Blodget
27. Teach yourself to Live - C.G.L. Du Cann
28. How to become a property millionaire - Azizi Ali
29. Cats - the book of the musical - Harvest books
30. The little book that builds wealth - Pat Dorsey
31. Success in the education business - Vincent A. Gabriel

So there!

With my Amazon Kindle, I'll be reading much more fiction and classics that I had always wanted to read, but had difficulty finding in the library. These days, it's hard to find new knowledge in the financial books that I read. After all, there's only so much things to learn about finance. Most of the books will be just talking about the same ideas but phrased in different forms.

## Friday, June 11, 2010

### The velocity of money

I was re-reading this book by Garrett Gunderson - Killing Sacred Cows. It's a very wonderful book with very refreshing concepts, so I make it a point to revisit some of the concepts espoused in the book every year when I have the time to do so. It's so easy to read that if you only have time to read one financial book this year, make it this one! You can have a sneak preview of the book here. Since it's the preview, not all the pages are shown, but I think it's enough to showcase it's attractive typesetting and page layout.

I remembered this particularly interesting concept, called the velocity of money. It is borrowed from the discipline of economics but in this case, it's applied to the field of personal finance. Basically, it's just an equation that is somewhat similar to the the mathematical form of efficiency. No wonder the concept feels similar to productivity.

 This is extracted from the book Killing Sacred Cows by Garrett Gunderson

Basically, the concept is talking about how to keep input at a minimum while increasing as much output as possible. The point here is how to continually extract more output and yet at the same time reduce your input. One example of this is to use the savings you had to buy into financial instruments that gives you a passive income. Then you use the passive income to buy more such instruments that will generate even more passive income. While the input remains the same (which is the initial amount of savings that you put into the instrument in the first place), the output keeps getting higher and higher. This is because the principal and the interest both earns you an interest, thus creating a self feeding loop - exactly how compounding works.

Another example will be a business like ebay. When it started, there are not too many buyer and sellers. An effort is spent to set up all the necessary infrastructure for the ebay business to begin. Once time progress, more sellers come into ebay to hawk their wares, which in turn attract more buyers. Seeing more buyers attract even more sellers and so on, creating a self feeding loop. The input is minimized but the output is exponentially increased.

I guess it works for the tuition business as well. As I begin the career, I have to read up on a lot of stuff to have the knowledge. All these are just one time effort. Once I get some students, a proportion of them will turn out to have excellent grades, which in turn will attract more students to come in based on recommendations and so on and so forth. These kind of network effect is not proportional to the initial effort that is put in, hence it's very powerful.

The book mentioned that net worth is like stored potential, while cash flow is like a tap with running water. Having a high net worth does not mean that the person will have high cash flow, but the potential is there. It's like you have a lot of cash sitting in the bank, with little debts (high networth). Cash has low velocity because the output (the interest earned) is very little. If one just utilizes the cash to do create value (here, value is defined loosely as something that is in line with your Soul purpose), then it'll have a higher velocity of money.

 Again, liberally taken from the same book

Now, seriously, I think that is a refreshing concept. As of all good speakers and good books, it's not that you do not know the concept that is at work here. It's the flair and the way the concepts are illustrated that makes it refreshing. As of above, so shall below. While the velocity of money is essentially a concept used in the financial field, I guess one can equally apply it to life in generally. I think the concept of the velocity of money forces one to think critically on out to increase the output value of every dollar that is utilized, so as to increase productivity.

Food for thought... would you rather have a high net worth or a high cash flow?

## Tuesday, June 08, 2010

### Phillips MMF

It seems that Phillips Money Market Fund (MMF) is giving lousier returns as more people are aware of it, or simply because that they are fleeing the more volatile stock markets and trying to flock into the safer cash funds. I've been using it since May 2007 and I also tracked the NAV value of the fund since then.

The returns per month for the following years are as follows:

2007 : 0.167% per month --> 2.01% per yr
2008 : 0.111% per month --> 1.33% per yr
2009 : 0.087% per month --> 1.04% per yr

You can see that the returns are dropping. From the fact sheet, I also saw that it is attracting more and more people into the funds, so perhaps there is so correlation. Perhaps they are finding it harder and harder to get the yields as their fund size grew bigger, or maybe it's the fact that the general low interest rate environment makes it hard for them to give us anything more competitive (they invest in low volatility assets like sgd deposits, govt bonds etc).

 Can you see the obvious change in gradient over time?

Here's the figures for this yr, 2010:

Jan : 0.071% per month
Feb : 0.088% per month
Mar : 0.053% per month
Apr : 0.044% per month
May : 0.053% per month

The average monthly returns had dropped since the start of the year, giving an average of around 0.062% per month. This means that if all else remains as it is, I'll be looking at around 0.8% per year, which is under 1% per year.

Pathetic you say? Yes, it is. But I guess that's the price of 'safety'. It can't even beat inflation, which is at 3% per year. But for those who needs the liquidity (like me) and cannot safely put it into higher yield assets, I suppose this beats the even lousier interest rates for savings accounts. I think even for fixed deposits, you need a higher deposit amount and longer lock in period for this kind of returns. So, in comparison, it is still okay lah.

One thing about it is that it is not guaranteed, unlike banks. Given the low returns for the MMF, it's been a long while since I've put in any fresh funds inside. Most of my savings are put into my savings account now, because the higher returns is not worth the risk of Phillips going belly up.

## Monday, June 07, 2010

### A little reflection

These days I hardly look at the market. I remember when I started, I keep staring at the prices, as if by some eye power, I can change the prices of the stocks that I owned. These days, it's just a waste of time.

I suppose as I get more mature and hopefully wiser, my feelings and emotions are kept more constant. There are a lot of things that require my time and presence, and I certainly do not want to spend my life staring at numbers jumping on the screen. It's such a far cry when I first started (on the wrong foot obviously) in the market by trading with warrants. It requires so much time and effort, with my emotion going up and down according to the ups and downs of the ticker. It's very stressful, not to mention distracting, when you have a job to do as well.

I think going forward, I would reduce the time spent on looking at the watchlist. I foresee that I can only get more busy in my work, thus more of my stocks holding had been changed to hold more dividends. Basically I intend to hold more dividend yielding stocks, such as reits and the standard 'defensive' fare, and leave a few bullets here and there to either buy more upon crisis, or trade when I see the opportunities. Unlike in the past, I completely realise that the trading game is not for me, and that is after having experimented with it for myself. I also realised that I cannot be those steadfast investor as well, because it would have completely bore me to dig deep into the statements to find out the business.

I think the self realisation of what you can do and what you cannot do is important, because that will shape your style of investing/trading. To find out the viscosity of honey,  you cannot look at a static jar of honey. You must tilt the jar to one side to find out the dynamic properties of honey. Likewise, you cannot know your risk appetite by filling out some questionnaire, you have to try it out for yourself in the market.

 You cannot discover the dynamic properties of honey by staring at it statically

My main income has been, will be, and will always be my main job. Knowing this, I think I would not spend so much time searching the ocean for that one multi-bagger stock that will yield me tremendous profits. Neither will I stare at the ticker all day just to get the perfect entry and exit. I simply do not have the time for such things. I realised that a day will come that I cannot work anymore, I would have to rely on secondary sources of income, and that will have to be from my investments. That will be my second line of defence. I think I would focus on building up a nice passive income to prepare for that eventuality.

It's very different when I first started out because I shun dividend yielding counters, thinking that I'm still young and I should aim for capital appreciation. I can afford to lose blah blah...how foolish of me and nobody told me so. Still, without the past me, there will not be the present me.

May fortune smile on you in the market.

## Thursday, June 03, 2010

I was reviewing some of my past trades. This is one of them. The counter here is SGX. It's not exactly good for trading because the cost of 1 lot is quite high, so while the absolute value might be the same, a higher amount of capital is tied up in case the trade goes wrong. But I do like the cannot-die type of company for trading, so SGX fits perfectly.

Here's my two trades all depicted in the chart shown below:

 What a roller coaster ride we have here...

I had 2 full round trips of SGX. The first was in 15th June 2009, bought at a price of 7.54 (the chart did took into account the drop of the price after its final dividend declared, hence it looks 'funny') and sold on 23 July 2009 at a price of 7.84 (again, the chart took into account the drop in price after its final dividend). Since the holding period is rather short, I did not get to enjoy any dividends declared.

Profit: \$0.30

The second trip was in 5th Nov 2009 bought at a price of 7.88 and sold on 14th April 2010 at a price of 8.05. I managed to hold for a round of dividends declared at 0.0375, hence it boosted up my profits a little.

Profit: \$0.170
Dividends: \$0.0375
Total: \$0.2075
Over profits for the 2 round trips:  \$0.5075

This is only round 2 and hopefully many more to come. As you can see, my TA skills is not sharp. My entries and exit are less than commendable, but that is the nature of playing a probability game. On hindsight, I should have entered and sold at so and so price, but trading on the right edge of the chart is more difficult than looking back at it after trading it.

The closing price of SGX is 7.33 as of now. So, if I had bought at 7.54 and kept it till now, this will be what it looks like:

Profit: - \$0.210
Dividend: \$0.2675
Total: \$0.0575

I'm not showing this to compare the buy-and-hold strategy versus the in-and-out strategy, because I know fully well that by selecting the appropriate time frames, both strategies will turn out to be winners. There are obvious advantages to both strategies and I would like to employ both of them. For example, if I had bought say 10 lots of sgx, I would have put half as a buy-and-hold positions and the other half as a trading position. The percentage can change according to the times, and need not be fixed in stone.

But I want to make it clear:

1. Buy and hold doesn't mean that you'll make money. Holding it long term doesn't mean that you'll make money. But if the company gives off a good dividend, it makes it that much easier to hold it longer. If the dividend is 10% per year, just holding it 10 yrs will recoup all your capital sunk in, never mind the capital appreciation or not. That's the wonderful thing about holding dividend yielding companies over the long term. But of course, there's a lot more things involved...10 yrs is a long time and they might not be around, that's why there's still a need to monitor the financial health of the company.

2. Using TA doesn't mean that you can catch the top and the bottom. If you can catch the approximate top and bottom, I think you'll boost your profit potential tremendously already. Of course, a lot depends on the person too - the mind, money and method. Fear makes you hesitant to buy when a signal presents itself while greed makes you hesitant to sell when the target price presents itself. These are all monsters that you have to face it if you're in the market.

Good fortune in the market :)