Cats or Dogs?

I made a poll not too long ago, so I think it's appropriate to conclude it after 1-2 weeks. After a turnout of 11 responses, here's the results:

It's quite surprising to me because I thought more people would love dogs, judging by how people treat dogs as a better companion than cats. Nevertheless, cats win this time round!


In my line of work, it's more usual for me to encounter dogs than cats. I've only have 1 household that keep cats (but they also keep dogs)...1 out of so many many household over so many years! But pets are cute actually, I've befriended quite a few dogs. Whenever I go over to the place, they would recognise me and greet me in the usual dog fashion :)


Here's some cute and funny pictures that I snapped using my lousy hp camera:

Erm...let sleeping dogs lie?

The above picture is a very funny picture I've seen of Mikey. When I first met him, he was growling at me. But after getting to know each other for sometime, he would greet me by grabbing his favourite toy and follow me around, before lying down to sleep near me (and the student). This is one of the funniest pose I've seen Mikey do. I thought cats would do this kind of funny pose, apparently I'm wrong :)

A bundle of fur in a corner of the lift

This is a very very interesting cat. She would follow people to the lift and would stay in a corner to sleep, riding the lift up and down. I call her the lift cat. She had caught me off guard twice, when after a tiring day of work, I entered the lift and see a bundle of fur all cuddled up in the corner of the lift. How can my heart not melt and give it a cat's rub?


Ah...the simple pleasures of life.

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The Lioness

Recently I had put the ebook Aesop's fables into my hand phone to read during those little bits of time like waiting for buses and mrt. Since the stories are pretty short (most are around one paragraph) and full of meaning, I can spend the time reading a few stories at one go and reflect on them as I travel (I can't read while travelling on buses...makes me giddy).

Here's one that is striking to me. It's called the Lioness. Here goes:



A Controversy prevailed among the beasts of the field as to which of the animals deserved the most credit for producing the greatest number of whelps at a birth. They rushed clamorously into the presence of the Lioness and demanded of her the settlement of the dispute.

"And you," they said, "how many sons have you at a birth?" 

The Lioness laughed at them, and said: "Why! I have only one; but that one is altogether a thoroughbred Lion."

The value is in the worth, not in the number.

One good one is sometimes better than many lousy ones

It's particularly striking to me because it reminded me of the past folly that I've made when I'm a newbie in the market. I used to associate more with better value. Since I have limited capital, I would want to buy as many shares are possible with my capital - that would mean the shares I bought almost always pennies. The underlying thought process is very simplistic - why buy 1-2 lots of blue chips whereas you can buy 10-20 lots of pennies.


I did not see the worth of the stocks in its intrinsic value. Hence when I was introduced to the concept of value investing, I was suitably intrigued by it. It was easy to understand but I didn't think of it that way. It took several more losses in penny counters  before I was convinced that pennies are just not suitable for my liking. I prefer the relative stability of blue chips these days and am wary of anything less than 50 cts in price.


Of course, pennies appreciate much faster when it's their turn to dance. The flipside is that they depreciate much much faster too. It's a peace of mind choosing blue chips as you can really put in a large chunk of your capital and sleep soundly. However, among the pennies, I really hate the ass-chips. Personal feud....No more of such nonsense for me, haha!

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Kindle firmware updates

Amazon's Kindle DX or Apple's ipad?


I had a kindle dx and I saw the ipad in action (I've played with it for a while), so I think I'm in a good position to comment on both. The most important thing I want to say is that the ipad is not the 'kindle killer'! Both of them serves a different function, I must stress. If you prefer to read books, the kindle is the only choice that you'll want to get because of the screen. The ipad uses backlighting LED screen to light up, so it's like reading off a monitor. Actually, if you have the iphone, it'll look exactly like that - a very smooth and clear display with adjustable brightness. I've not tried reading a book off an ipad but I can imagine after staring at it for 2-3 hrs in one go, your eyes can feel the strain even if you turn down the backlighting. Kindle uses a e-ink technology - it's hard to describe but it looks very good, almost like reading newspaper. Usually I forgot that I'm reader off the kindle and just read pages after pages for hours in one go with no strain. Unfortunately, you need a light source like a table lamp or natural lighting, just like reading a normal paper book.

Go on and zoom into the picture, it looks even more fantastic in your hands!

Kindle dx cost around 530++ SGD while the cheapest wifi, no 3G version of ipad cost around 760++ SGD. Kindle dx actually has a free 3G network worldwide (not sure if Singapore has it since I had the US version), so it does allow limited but free access to certain websites, though in black/white only. It's not meant for surfing the net, but it does allow for a very good exploration of certain things from wikipedia. Ipad is superb for surfing the net and I've not had such a pleasurable experience doing so from other devices. It's very intuitive and very visually stunning. It's really hard to let it go after playing with it as the colours are very vibrant and sharp. Really got to use it to feel it.

People will kill for this baby. The allure of apple.

Actually the main purpose of this post is to give back to the community that allowed me to know how to 'hack' my kindle dx. Amazon had a new firmware update which had the features that I always wanted (pdf zooming, if you want to know) in my kindle. However, since amazon did not officially launch the kindle in Singapore, I can't register it and hence cannot update the firmware. I searched for a way to register the kindle and found it here. It was a great sharing by 'Nifty' and I'm sure a lot of people would have thanked him tremendously, like I do.


The instructions are clear already enough. For those who had a kindle but wanted to register the kindle under your name, just follow the instructions clearly. I had problems downloading the files so I took the liberty to download it and upload it to another site myself, in case anyone had problems like me. The two files needed to make it work are found right here.


Would I get an ipad? I might. Sure, it's expensive, but it surely expands my fun :)

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How to catch the bottom?

It's hard to buy right at the bottom. From personal experiences, if I ever bought a counter right at the bottom - the elusive inflection point just before it turns up - it's just due to sheer luck rather than any godly skills in technical analysis or fundamental analysis. And because it's just luck, it's hard to replicate it consistently.


Reflecting from previous years in the market, I spent quite an amount of time and effort to learn the how to catch the bottom and sell at the top. Why the obsession over this? Don't the masters say that one must "Buy low and sell high"? Yes, they did, but they didn't say specifically that it must be the bottomost trough and the peakiest peak. Takes me some time to realise that... and I was wondering why I didn't come to realise it sooner. Silly mistakes made in the past are just that, plain silly. But at that moment of time, you wouldn't have the wisdom and experience to know otherwise. Optimistically, I take it as a learning process.


Knowing is quite different from doing, however. We all know that we have to lose weight but all the best laid plans set in the night before the morning jog will be laid aside when the alarm rings at 6am the next morning. Doing something requires more than just knowledge - it also requires a suitable dosage of motivation to start the engine going and another dash of determination to carry it through. But human beings being humans, there are always those who are good at starting things and bad at finishing them and vice versa.

Nah, there are perfect cubes around, like 8, 27, 64, 125...

Take the example of the very recent British Petroleum (BP). The oil leak incident at the Gulf of Mexico causes the share price to plummet. If you're interested in BP, and you're very convinced that the incident is just one-off (never mind the possibility of BP going belly up due to the sheer amount of compensation that is to come in the near future for the cleanup and claims), are you able to put down all your fears and buy it? Lingering at the back of your mind will surely be the formidable 'but' word - "the price is low down but...", "the oil leak is under control now but...", "the dividends are great at the price but....".


I think what I would do are the following steps:


1. Do a FA on the company in question. Read read and read reports on it and try to come out with a numerical value to the company, with the pessimistic scenario in mind.


2. Do a TA on it. Check for signs of bottoming and possible reversal signals before committing your capital on it.


3. Most importantly, start a chihuahua position on it, not a whale-size position straight away. A chihuahua position is just a small 'testing' point. Following the price after this initial position, you can choose the average up or down when the situation becomes clearer.


As a newbie in the past, I almost never follow point no. 3 - money management. Why is that? I was trying to save some brokerage fee by buying in one tranche rather than firing sparingly in several bullets. Don't the masters say, "More action, less wealth" or "Frequent in and out generates frictional cost"? Yes, but there's another group of masters saying that if you do a dollar cost averaging, your average buy price for the stock will be cheaper.


Aiya, so confusing...who to follow?

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Ramblings

** "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."


Most of the time, my thoughts are on various topics. It's not enough to blog a full article about it, hence there will be times that I would have to 'discharge' my thoughts out so that I can stop mulling over it. This is one of the times. I wonder what is the reason for me to start this blog. I looked back and see if my initial reasons are still the same. It's still the same reason - it's for my own record. I needed the blog so as to channel my thoughts into written words (actually, 'cyber' words). If it helps me defray some of my costs for maintaining it, that's good. I'm definitely not going all out to make passive income from blogging. This principle will prevent me from blogging 'commerical' stuff to please sponsors or to attract higher viewership.


For those who had been my avid reader, I thank you for reading my ramblings.  Here's more ramblings:


1. I thought it's very interesting to see that parents are wishing that exams for primary 1 and 2 to be done away and yet there are other parents who signed their kids up for enrichment centres that have tests. I guess it all boils down to the perceived ability of the kid to perform well in exams. Why perceived? It's because when the kids are that young, there are no history to show that the kids can perform well academically, so it's all guess-work here. If I'm a parent who thinks that my kid is going to do well, I wouldn't want to do away with exams. Conversely, if I think my kid cannot do well, I would want to do away with it.


So what do I think about this issue, being no parent and having no kids now?


I think it's good that exams are done away. It'll really be sad if in the process of knowing your standing among your peers, you actually destroy the joy of learning. I don't mind so much if exams are easy, but if you looked at the recent primary 1/2 exams paper these days, you'll be in for a shock. It's definitely not easy at all. If that's the case, I do not see what's the reason for putting unnecessary difficult test to demotivate and demoralise primary school kids. But I think I can understand the parent's concern too - if there are no tests, then suddenly in primary 3 there's a major exams, how do you expect the kid to perform? Sigh...grades inflation - I think it's a structural problem in the education system, not something that can be easily solved. At one extreme, you do want to differentiate the good students from the mediocre, at the other you do not want to demoralise them.


We all tread a thin line of balance.

Good but useless advice

2.  I can think of many good but utterly useless advice. Here are some examples:


a. Buy low sell high
b. Do not spend money on unnecessary things
c. Do not buy stocks that are overvalued
d. Bring an umbrella if it's going to rain
e. Buy more in a bear market


Do you see the similarities between all these advice? They talk about a certain truth but they do not tell you how to recognise the truth and so it's becomes overly simplistic and utterly useless. Take the first one - "Buy low sell high". The problem is not with buying low and selling high as a concept, but rather how to recognize a low and a high. Take the second advice, "Do not spend money on unnecessary things". Again, the concept of not spending on unnecessary things is sound and good advice, but pray tell, what exactly are unnecessary things?


If you read enough books on financial stuff, you can recognise a good and useful book from a good and useless one from the amount of such advice dished out in the pages within.  At best, the former serves as a good reminder not to do foolish things, but at worst, it makes you read a lot without knowing anything.

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When to buy?

I happened to see my buddy unicorn78's comments that he wanted to get some reits/divy counters but is not sure if now is a good time to get in. I gave that question a fair amount of thought because I've asked myself that question a few times too. So, instead of sharing with him alone, I thought it'll be good once I posted my views, the other more experienced market practitioners can share theirs in the comments.


As we learn more and read more about the market, I've no doubt that you'll definitely come across conflicting advice. One camp would say you should never average down your losses just to get out as it is more risky, the other would say you should buy more as the price gets lower to get a lower average price. Frankly, I've done both before. For longcheer, I averaged down as the price gets down until finally I can't take the losses anymore and cut off that gangrene in my portfolio at a huge loss. For HSBC, I average down and bought even more as the price falls, reducing a huge potential loss and it is now sitting around at breakeven level.


I think advice is one thing but the more important point in making the advice work for you is wisdom. You need to know when the advice is suitable. I believe all the advice works, given the correct condition. Thus, the hardest part is to know when to use which advice. So, that is my disclaimer for all my blog articles.


Here's what I will consider when answering the question of whether this is a good time to buy reits/divy counters:


1. For dividend yielding counters, I would want to look at yield of course. Once it hits a certain percentage, I would nibble a little. I never buy the exact number of shares I want in the first try, always in bullets. I've learnt enough in the market that there's no point timing the exact bottom - it's an exercise in futility. Follow snr bro's advice - buy slowly sell slowly. Depending on market condition (check TA), I'll break down the total batches in 2-3. Once I got in the first batch, I'll be a lot more stingy when entering the second batch, always preferring to look for the right TA set up before entering again, so you can say that my first batch is a test batch. Don't ever worry about transaction cost when buying in batches. I'll treat it as an insurance cost to prevent more capital loss than the minimum $25 paid for brokerage.

Personally, 5% is not enticing enough. There are banks preference shares that are a million times safer than reits/dividend counters with 5% yield. 7% is what I'm looking at. 10% (at suitable gearing) would be what makansutra would say, "Die die must try!"

What's the similarity between this picture and a 10% yield counter? Both have a "Die die must try!" stamp of approval on it

2. I find that reading up extensively before you buy can give yourself peace of mind when you are averaging down. The more you understand the situation, the more you can assess it and you can decide your course of action without fear. If I buy a counter which I did even know much, I wouldn't have the courage and conviction to buy buy to average down when the prices go down. So FA to me is just that - for the courage and conviction to buy when others are fearful.

Once you've read enough about the ins and outs of the counter, I'm sure it'll be easier to hold even when the market crash. In fact, I think you'll be wanting the market to crash to load up another bigger batch after your smaller tester batch.



3. The problem can be looked at in this way - if you wait longer, you miss out on the potential rally and perhaps several batches of dividends coming your way. Conversely, if you buy now, the market might crash and you might lose a lot of capital (albeit paper losses) but you get to have the dividends while waiting. Let's break down the problem:


a. Check the potential downside from the charts. Look at the possible support points. If the price is too far from support, maybe wait at support before buying a batch. Make sure the price at the support level satisfies the yield that you plan for. I don't compromise on yield because if I have to hold a dud for long, I would want to be adequately compensated for in terms of dividend.


b. How much is the upside? Again, look at the charts for possible resistance. Don't ever get near resistance level (unless you want to buy on breakout....I don't do breakouts anymore) because the possible downside risk to the nearest support might not be worthwhile.


c. How much dividend are you going to get? If you know your downside risk to the next possible support in (a) level and how much dividend you are getting in (c) plus the upside you might get from (b), I think you can get a risk/reward calculation whether to get it right now or wait. Especially useful when combined with the bullet system of buying any counters in batches.

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To be a cat

I realised that I have a very relaxed stance towards investing my money these days. It's not a lack of interest on my part - I mean who wouldn't want to make more money right? It's more of a change in attitude in me. Perhaps it's the general lack of emotions towards my profits or losses that accompanied this change in attitude. This didn't happen overnight. It happened in bits and pieces over the years, accumulating perhaps like water dripping into a cup until the final droplet of water pushes the surface of the water beyond the boundary of the cup.


In place of viewing my charts and reading up religiously on annual reports, instead of discussing fervently about the entry positions and the merits and demerits of a particular company, I chose to rest and relax. Initially I felt guilt, like I wasn't doing my part in making the best out of my available time on earth. But as time goes, you see life and death of counters in the stock market and you see life and death of people on earth, and you cannot but realise that there must be a better use of time than being obsessed over all things financial. This epiphany must have hit me quite hard, because I always had a tight rein of things on monetary matters - trying to find the best deals, trying to make the most of my time, trying to beat this beat that...

This is not my cat. Though I say that, both have this seen-it-all behaviour typical of cats

...and then I looked at my cat, lazily grooming itself by licking her paws before snugging up her tail as a pillow and drifting into a comfortable nap in the afternoon. Loving cats makes me love watching time goes by, doing nothing.


In view of my current change in attitude, perhaps it's time to look more into instruments with little or no maintenance. For observant readers, you would have noticed that the list of books that I've read or am reading (found on the lower right hand corner of the blog) are filled with books of various topics with the exception of financial stuff. I just can't bring myself to read one of these books nowadays, having read them religiously for so long.


I think I'm getting less practical and more human now. I'm loving every minute of it.

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Retirement

I was intrigued by a newspaper report that in Europe, the retirement age is pushed back to 70 yrs so that the pension scheme that they had there will continue to function fully. I guess with a aging population, it's harder to support with a diminishing working class as the birth rates cannot continue to support an inverted pyramid for long. It's just too unstable.


Retire.


If you break up the word it become two parts - Re and Tire. Re means to do it again as in retry and reboot. Tire means to be exhausted, to be fatigued. The word sounds bleak doesn't it? To retire these days is not to sit back in your home, blessed with people who would support you. I think the image is going to be replaced by one which you have to work to support your own subsistence. Thus to retire means that you have to work again (in an environment that you are not appreciated and are lowly paid) and be fatigued by it all. Gloomy, isn't it?

I don't want to have such a bleak future. Thus, I think it would do good to think about retirement. I think the main concern would be health and money. It's good to think about a time when you can not longer function as well as you do when you're in your prime days. A passive income stream to support your own keep is great. A healthy savings to last beyond what you can spend is a blessing. And most importantly, good health to make it all meaningful and worthwhile.


Got to start planning.

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After reading this again, I felt that I had left out something. I realised it now. It's no point having good health, good money for retirement. You need someone to grow old together too. May be your loved ones, may be your children, may be your best friends or even a cat :)

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To milk or to slaughter?

Having sold a dividend yielding counter recently, I was thinking about the age-old problems that plagued me. I was suitably reminded of someone's analogy (bro8888's?) that a dividend yielding counter is like a milk cow. Every other time, a milk cow will give off milk, so that you can drink some and sell some, thus giving you a good cash flow. Alternatively, you can sell the milk cow to someone at a good price and get several years worth of 'future' milk money now, so that if there's a mad cow diseases floating around infecting other herds, your future cash stream will be secured because it's in your hands now. This comes at a cost - you'll lose your future cash stream and possibly the price of the milk cow might also increase in the future.

To milk or to sell - that is the question

Quite a good analogy to stocks, no?


The counter I sold recently was singpost. This particular tranche I had held for quite some time - around 3 years in all. I had bought it at a rather high price of $1.18, something that I had regretted for an equally long time. However, I made good on the stocks when I sold it at 1.13, with my dividends covering all my capital losses and making up an 'okay' profit.


The thoughts that ran through my mind was if I should hold on to it longer to get more dividends or should I just sell to lock in my profits to get my hands on cash, and live to fight another day. Here's my reasons for divesting:


1. At 1.18 entry price, I was not doing as good on my yield. Singpost gives quarterly dividends up to a tune of 6.25 cts per annum, thus giving me a yield of 5.3% per annum. Not bad, but not fantastic either, considering other lower geared but higher yielding alternatives out there. Therefore, I was inclined to sell it to get the cash to get into the other alternatives.


2. A picture tells a thousand words. Let's see what this picture tells you:

Singpost - daily chart

I wanted to sell at 1.14 but after queuing for nearly a week, I couldn't get it done. I just opted for 1.13. This chart was not particularly bearish, but the overall market condition was, so I didn't want to risk what I had out there and just took what I can out of the table. The price dropped due to XD. On hindsight, I could have got the dividend, sell at 1.12 and have both my cake and eat it too. But alas, things are always much clearer after it had happened.


3. I told myself that I would want to 'trade' this counter again, with this as the second round. The time frame for trading this is actually quite long, which is fine for me actually. I'll want to trade it when the signal comes and to hold it for dividend yield when the price reaches around 90 cts level. At 0.90, the yield will be near 7% - that would be something worth holding for.

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