Croesus Retail trust preferential offering

Those holding Croesus retail trust needs to fork out money again. This was after their most recent rights back in Oct 2015 which I've blogged about here, here and here. There is now a preferential offering exercise going on, and in all respects, we can treat this as a rights exercise.

Here's the details:

The dilution isn't that much. It's an offer of 10 new shares for every 259 shares held before it goes XR, priced at $0.797 for every new shares. Why 259? I've no idea, must be the doing of their financial wizards. If you own 10,000 shares of Croesus before XR, you'll need to fork out $307.72 to subscribe to the new shares. It's not that much, really.

The price went up to a high of 0.82 today strangely, but perhaps not surprisingly. It wouldn't look too good if the new shares is priced at $0.797 but the share price is trading below that.

I'll be subscribing to it, and applying for excess if available.

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The Animal School

Thanks to sillyinvestor for egging me on to write something in my blog. Been a busy June for me and I'm still recuperating lol! But here's a very good story inspired by an article I read recently here. It's a very good article but also a sad one for me. I'm not sure why though. It's like something is lost and yet nobody knows it. Imagine losing a precious thing to you, but you didn't notice it because you had forgotten the thing was once precious to you. It's a doubly sort of loss.

Here's the Animal School by George Reavis:

Once upon a time the animals decided they must do something heroic to meet the problems of a “new world” so they organized a school.

They had adopted an activity curriculum consisting of running, climbing, swimming and flying. To make it easier to administer the curriculum, all the animals took all the subjects. The duck was excellent in swimming. In fact, better than his instructor. But he made only passing grades in flying and was very poor in running. Since he was slow in running, he had to stay after school and also drop swimming in order to practice running. This was kept up until his webbed feet were badly worn and he was only average in swimming. But average was acceptable in school so nobody worried about that, except the duck.

The rabbit started at the top of the class in running but had a nervous breakdown because of so much makeup work in swimming. The squirrel was excellent in climbing until he developed frustration in the flying class where his teacher made him start from the ground up instead of the treetop down. He also developed a “charlie horse” from overexertion and then got a C in climbing and D in running. The eagle was a problem child and was disciplined severely. In the climbing class, he beat all the others to the top of the tree but insisted on using his own way to get there. At the end of the year, an abnormal eel that could swim exceeding well and also run, climb and fly a little had the highest average and was valedictorian.

The prairie dogs stayed out of school and fought the tax levy because the administration would not add digging and burrowing to the curriculum. They apprenticed their children to a badger and later joined the groundhogs and gophers to start a successful private school.

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Bullish / Bearish divergence

I thought I'll never write another article on technical analysis again. But here I go again. I trade on divergence, so it's a counter trend trading, if you want to classify which school of TA I'm into. Divergence means that there is a pair of things moving in opposite direction. One of the pair is invariably the price of the counter. The other pair could be any indicator, but the one I'm using is MACD histogram.

Bullish divergence happens when the price reached a lower low but the indicator reached a higher low. It's easier to explain this with a diagram.

Points A, B, C are the price points of the counter. a, b and  c are the indicator points. As mentioned, it can be any indicator but I'm using MACD histogram.

A and a - The price reaches a first deep low and the MACD histogram follows suit and reaches a first deep low.

B and b - The price went up and the indicator moves up accordingly too. It's important at his point that the MACD histogram point b moves above the 0 level, indicated by the dotted line.

C and c - The price reaches a lower low than A, thus establishing a lower low in price, but the MACD histogram at c did not reach a lower low than a, thus establishing a higher low.

Bullish divergence happens when price reaches a lower low (C lower than A) but MACD histogram reaches a higher low (c is higher than a). Thus a divergence between price and MACD histogram happens and the price is set to move up higher. The psychology behind this is that the indicator tells us how strong the movement is. When the price A moves down then MACD histogram a moves down accordingly, forming a benchmark for us to compare. If price C moves down even more than A, we will expect the MACD histogram to show us that the movement downwards is a stronger one than at a. Since we didn't see that happening, the second selldown in price C is lacking in strength, indicating that the price will move upwards, forming a bullish divergence.

Real examples:

UOB (weekly)

Price A moves down to a first low of about 17.95. Then it moves up to B at about 20 before coming down to a lower low C at about 17. While the price at the second low C is lower than the first low A, the MACD histogram shows us a different picture. Point c is higher than a, so we know that the second selldown at point C is a fake selldown. Price resumes upwards to about $20.

Ho Bee Land (weekly)

Again, you see the that the price C moves lower than A, but the indicator c did not move down lower than a, forming a bullish divergence. The price went up from the low of C at 1.80 to a higher of 2.35+ recently.


Can we go reverse and have a bearish divergence?

Bearish divergence happens when the price reached a higher high but the indicator reached a lower high. Again, let's see the diagram below to illustrate the scenario:

A and a - The price reaches a first high and the MACD histogram follows suit and reaches a first high.

B and b - The price went down and the indicator moves downwards accordingly. Make sure the the part b is below the 0 line of the MACD histogram mark.

C and c - The price C reaches a higher high compared to A, thus establishing a higher high in price, but the MACD histogram did not reach a higher high than c, thus establishing a higher low.

Thus a bearish divergence forms and the price goes down lower. The reasoning behind this is that the price movement upwards at point C is not accompanied by a stronger push by the indicator c, hence the upwards movement is 'fake' and a downward pressure in price ensues.

Real examples:

UOB (daily)

Price moves up to a first high at A at about 19.5, then moves down towards B at about 18.4 before going upwards again to a new high at C at about 20. While the price at C reaches a higher high than A, the MACD histogram shows us a different story. Point c is at a lower high than a, thus showing us that the 2nd upward movement at C is not real. A bearish divergence happens and the price goes down to about 17.6.

UOL (monthly)

This is a very important example. There are three common time frames that we can use to check for bearish/bullish divergence. They are daily, weekly or monthly. A divergence happening in a monthly timeframe is more powerful than one that occurs in weekly and in daily. A monthly chart shows one bar of candlestick every month, so there are 12 candlesticks in a year. A divergence occurring at monthly timeframe would be a multi year movement, resulting in huge movement.

UOL had a higher price point C near 8 but not accompanied by a higher high c of the MACD histogram. A bearish divergence happens and the price slides from 8 to the current 5.40, dropping nearly 30% from it's high. We could still be in the 'slide' of this bearish divergence right now.


DBS (daily)

Lest anyone thinks it's easier to do divergence, let's present a complex case of a bearish divergence. Here we see three peaks starting from A and ending with C. The second peak is accompanied by falling MACD histogram, which is itself a divergence (though not by my definition). Point C reaches a higher high but not accompanied by a higher point c. This is a complex bearish divergence because it's not the standard A-B-C-a-b-c model, and this is certainly not the most complicated ones. There are others that look like a divergence but it's a fake. Divergence trap, so to speak.

Like investing, it's a science as well as an art, so we do need certain experience (i.e. make mistakes and lose money) to spot and know which is which. I did not come up with this method. Dr Alexander Elder did, so if you want to find out more, go read his wonderful books.

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Are we there yet?

Having read Kyith's post here and 15hww's post here about financial security, I thought I should try it out for myself and see the necessary figures needed to reach financial independence. It's not so much as a fixed set of goal to reach by certain age, but more like a milestone or achievement kind of thing. It's like you play games and when you collect 999 of each items, or you pass through each stages of the games without losing any health, you get an achievement medal. Gamify the journey, if you will.


So the first thing is to get the past data of expenses tracked to see what are the ones needed for survival. I listed out them below, not in any order of importance, but left out tax. Not because it's not important but it's sensitive. The expenses here are solely my own, not my household. If it's a household item, then it's my share of it. Some items that I paid in full but it's meant for the household, I'll use an asterisk (*) to mark it.


Average monthly expenses in 2015
------------------------------------------
Hawker/food court - $340.14
Restaurants - $193.20
Utilities (nett of subsidies and rebates) - $51.85
Parents (excluding bonus and ang bao)- $336.67
Mobile phone - $37.36
* Internet - $45.58
Mortgage (including all fees) - $1036.69
Insurance (1 whole life, 1 limited whole, 1 term, 1 disability income and 1 decreasing term) - $500.85


Here are some comments regarding the above items:

1. Hawker/food court - Usually this involves tze char shared with my wife, with one drink shared. We seldom cook, so groceries expenses are not significant. We usually order 2 dishes - one meat and one vegetables. If she's not around with me, I usually order economic rice. It's 1 meat and 1 veg again, with no drinks. It works out to be about $11.33 a day, or about $5 per meal.

2. Restaurants - Always with wife. I don't eat restaurants alone as my primary aim is just to feed, not to dine. We always go restaurants (mid-tier ones) every weekend, occasionally there'll be trips during weekday to take advantage of the lunch discounts. On average, it's $48.30 per week, or about $24 per weekday. That's about right for the restaurants that we visit. Very infrequently, due to some celebration we'll go for higher tier restaurants that costs about $50 per head and above. Rare though.

3. Utilities - I was quite surprised by that amount. It must be the subsidies/rebates that the govt gives to each household that reduces that amount. On average, I would say our household bills is about $110 to $140, and that range will cover almost 95% of all bills. Since I worked mainly at home, and I switched on the aircon in my work room almost 8 to 10 hours a day, I will say it's cheap, haha!

4. Parents - Usually I give a monthly, then during special occasion (like CNY or birthdays) I'll give them an angbao. I've a brother to share the load too. Their mortgage is already paid for long long time ago, so this is more for food expenses. They almost always eat at home, and even if they are out, the expenses are paid by us. I think this amount is just about right, and I don't think I'm going to change it anytime soon.

5. Mobile phone - This is set to be reduced in the near future once my contract ends. Mine is with starhub 4G-300Mb, which I hardly use. My fibre plan with M1 gives me a free 1Gb data sim that I'm using in my dual sim phone. My future plan will reduce this cost to about $15 or so per month. I've not exceeded my data plan at all, but I think that's normal since I'm mostly on my home wifi most of the time.

6. Internet - Fibre from m1. I think I can optimise this further by consolidating my mobile phone plan with my fibre plan. My wife's bills is still paid by her parents (lucky!) so it's never in the picture. I depend more on a good and stable internet connection for work, so I rather be stingy on my mobile data plan and make sure I have a good connection at home. I'm footing the whole bill of the internet, so my household internet cost is NOT 2 times of the figure stated above.

7. Mortgage - The big bugbear. This is theoretically higher than it should be, since my plan is to make partial capital repayment to reduce the absolute amount per month. So far, I'm just choosing the option that allows me to keep the same mortgage payment per month but reduce the duration of the loan. Once I reduced that amount further, I will switch to keep the duration constant but reducing the monthly payout. Hopefully it'll drop down to $500 per month, making it much much more manageable in terms of risk of loss of employment.

8. Insurance - that's for 1 whole life, 1 limited whole, 1 group term, 1 disability income and 1 reducing term for property mortgage. Will be intending to increase the term part when I have a kid, but till then, things are likely to remain like this.



Okay, so having listed out the items, I have to arrange them in order of importance, with the 1st being the most important and so on. The order is based on what is most urgent and most important first. What can I not pay but would drastically change? What can I not pay but wouldn't result in any drastic changes? It's subjective of course.


In order of importance, with 1 being most important:
---------------------------------------------------------------
1. Hawker/food court
2. Utilities
3. Mobile phone
4. Insurance
5. Internet
6. Restaurants
7. Parents
8. Mortgage


The first 3 choices are immediate problems. Without it, I can't function and I can't work. Number 4 is important in the med to long term. If there's any problem, I want my immediate family to be able to survive and perhaps thrive. 5 and 6 is more entertainment, but without them it's going to affect how long I can work. 7 is the second least important because they have buffer and will still do well without my contribution. 8 is least important because I have a buffer in my CPF-OA account that can last for a year or so without active work. That gives me some buffer already. Besides, if push comes to shove, I borrowed from HDB so hopefully they are not as heartless as banks are, reportedly.

To gamify this, there are stretch goals to be met if 1 to 8 are all fulfilled. Naturally, all these stretch goals are good to have, but not really necessary. Wants, rather than needs. Here's some of them:

1. Hawker/food court
2. Utitlities
3. Mobile phone
...
...
8. Mortgage

----stretch goals-------

9. Travel/vacation
10. Play fund
11. Car expenses


Financial security milestone
---------------------------------
After listing the items in order of importance, it's easy now to see what are the incremental expenses needed to be covered by income, preferably passive. That's for the second column for the table below. The 3rd and right most column is the amount of capital needed to reach that level of expenses per month. It's based on 5% returns pa, meaning that if I need to get $100 per month, I need $24,000 in capital.

I'm currently at the mobile phone to insurance level. It's a huge jump! This means that my passive income stream can cover my expenses for food per month, my share of the utilities bill plus my phone bill. It's not much, but at least I know where I stand now.

Currently, I'm more interested on the 3rd column on the right, because that represents the amount of savings I need to accumulate in order to cover the expense on the left. If things don't change (but they do all the time, don't they?), I'll take about 9 to 10 yrs to reach the last level. Okay, maybe 12 years to be trotting along at a real comfortable pace. I know I'll reach there, it's just a matter of time.

Maybe when I'm nearer the end boss "MORTGAGE", I'll talk more about the stretch goals, haha!

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It's good to be inefficient

We always try our best to optimise things and make things more efficient. Even in finance, to optimise is to eliminate waste and to streamline all the financial process to produce the least waste and maximise the most returns.


But we don't always have to be like that. Inefficiency creates redundancies. It creates a space where there are excess capacities that can be tapped when the norm is changed, sometimes drastically so.


Take for example our local MRT transportation system. Before the NEL is up, I fondly remembered that there are buses ferrying passengers from the north-eastern part of Singapore to the central region. For a long while, that was the only way in which northeasterners can get to central regions. The MRT network is much simpler in the past and there is always the reliable bus system to fill the transportational 'needs gap' that the MRT couldn't fill by itself. The moment the NEL is stabilised and running, the bus system is removed totally, all in the name of efficiency. This suddenly places huge stress on the reliability of the NEL system to not cripple the entire transportation network in Singapore.

That's the complete opposite of anti-fragility. If everything goes smoothly, then all is good. But one day, when the all critical NEL line breaks down, everyone gets stuck in the bottleneck because there simply isn't a backup system. We only have emergency buses that tries to defuse the hot situation by channeling passengers in stuck MRT stations away. Too efficient until we are not longer robust?


I suppose if we run our financial lives based on the same concept of eliminating waste and stressing on efficiency, at the hidden expense of making ourselves more fragile, we might run the same problem should something happen to us. Here's but a few examples where we could have been too efficient:


1. Channeling all our CPF-OA into CPF-SA to capitalise on the higher returns, especially when you haven't been hit by the financial bombs.

Yes, you do get higher returns but SA is not good for much use until years later down the road. In the meantime, there is the present to deal with. What happens if you run into employment issues and have problem servicing your loan? The transfer is irreversible. You can run a very tight and efficient ship but you need to be a very experienced captain who can foresee problems years before they crop up. If not, you sail fast but the moment a severe storm hits you, you're going to have a big issue.


2. Eating cheap (but unhealthy) food.

Food is one of the biggest cost that we can't do without. But there is a difference between food that you need to eat and food that we want to eat. I can live on a $5 every day and spend a total of $150 per month on food, versus about $600 for what I'm spending now. 4 times difference is a significant difference. A savings of $450 can be squirreled away every month, and before you know it, you'll have an extra $5400 per year.

Cheap hawker fare that cost $2.50 is usually mostly carbs, and we all know what excess carbs can do for our body. There's a future health cost attached to that cheap meal that we're having right now. That means the money we're saving right now is really just going to pay for the future health cost. It might not even be enough, depending on how serious that health issue blows up.

Efficient? Hardly.


3. Hunting for cheap bargains

In the recent years, I realised I was spending too much time saving money on things that doesn't count. I could be hunting for a cheap pen that cost 80 cts instead of $1.20. These are important habits that brought me to where I am now, but I realised I was still in survival mode. I was efficient in the past when money is tight and time is plentiful, but now, the opposite is true. I could have spent less energy searching for that bargain buy and just get it over and done with by spending a little more. Pen is just an extreme example, but it could have been a graphic card for my desktop, searching high and low in sim lim square for that 20 or 30 dollars off.

This is the pen that I bought for 80 cts. I was proud and happy I could save for something as trivial as a pen, at least in the past. I wouldn't do such things now.

Is it efficient? Subjective, but I must say I've loosen up on such things. It's now more important to save on time and energy.


I think efficiency can mean different things when we have very limited resources or when resources are not that bad. As I find myself not caring about the dollar or two that I could have saved if I searched harder, or not caring so much about the prices on the menu when I order, I think I didn't slacken off. In fact, I have progressed a lot. When I have a much broader base, I don't have to do all the nitty gritty stuff that I had to do when my base is smaller.

Now that's progression, isn't it?

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Your 3 buckets of time

Each day there are 24 hours, no more no less. There are 7 days in a week too, so in total, there are 24 x 7 = 168 hours per week. If we divide 168 hours into 3 buckets of 'time', we will have 56 hours in one bucket, with a total of 3 such buckets.

Let's look at the first red bucket. This is meant for sleep. If we have 8 hours of sleep per day over 7 days, we'll need 8 x 7 = 56  hours. This is exactly the number of hours we have in each of our bucket of time. So our first bucket of time is completely used up, just like that.


Let's look at the second yellow bucket. This is meant for work. If we each work from 9am to 6pm, we'll work for a total of 9 hours a day. Plus travelling time of maybe 2 hours to and fro, we'll perhaps hit 56 hours a week. This is another full bucket of time used up. For me, I work 7 days a week, so it'll average about 8 hours per day. Just about right. So our second bucket of time is completely used up, just like that. We only have the third bucket of time left.


Let's look at the third blue bucket. This is meant for our leisure, our self improvement, our time to be spent on family, friends, and community/religious events, exercise and our hobbies. Basically whatever free time we have comes straight from this bucket. This bucket is present in each and everyone of us. We can't say we have no time to do this or do that. Most likely, it's due to the fact that you might have overspent your bucket of time for work or for sleep, so you have to 'borrow' some time from the last bucket to make it up.


You can use this last bucket of 56 hours to improve your lot in life, or you can spend it on family and friends and live an active social life, or you can just watch television or your favourite drama series. Either way, we only have 56 hours to spend on such leisure activities. Well, more or less. I know some people sacrificed their sleep bucket so that they can top up their time on their work. Or some people might prefer to reduce their bucket of time spent on work to focus on their family in the last blue bucket. No matter what, we still have 3 buckets of roughly 56 hours of time in each bucket.


What are you doing to spend your last bucket of time?


Note: I did not come up with this wonderful concept. I copied it with pride from the mind-blowing book, "The Happiness Equation" by Neil Pasricha.

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Triangle of success

I am reading this book by Neil Parischa, called the 'Happiness Equation'. I'm about 25% done and I thought it was a brilliant book - brilliant enough to share some of the stuff here. One of the interesting things I've read in the book is the concept about success. Any kind of success. It's really a triangle formula depicting the elements of success.

Sales success is about sales. Able to sell multiple copies if you're selling something. Able to get promoted if you're talking about career. I think this is what we see as tangible results based on common markers of success. Even a counter telling you how many visitors came to your blog is about sales success.

Social success is about being successful among your peers or people that you respect. If your co-workers think you are successful, you're likely a social success as well. The industry that you're working in gives you compliments and look up to you for advice.

Self success is about being successful in your own mind. It's not tangible and only you will know it. Self success means you had achieved what you set out to do and is genuinely proud of your accomplishment. Even if nobody knows it, you know it and you're happy. Some people think success must have self success to feel meaningful to yourself.


The trick is that you can only take 2 corners because while not being mutually exclusive, they kind of hinder each other. Let's apply it to my work as a private tutor.

Sale success - 8/10

I have a waiting list of students if they want to join my lessons. Every year there'll be recommendations by ex students or parents for the past 12 yrs so I think I did my marketing and soft sales pretty okay. There's only 2 years where there haven't been as many students as I would have liked, but on average I think I am pretty okay in this department.

Social success - 1/10

I don't have industrial recognition, nor colleagues praising me. It's just the nature of my job that isolates me from my peers. Technically, we're all competitors, though I feel that the pie is large enough to spread to everyone who is serious about their work. I'm unlikely to receive any recognition from the industry too, haha

Self success - 10/10

I'm very happy with the achievement and the progress that I have. The autonomy and the independence I have in this career is fantastic, and I tap dance myself to work everyday (okay, almost everyday). I can see a project from birth to end and take part in all the steps, so there's a lot of meaning and significance in the work I do also.


Try thinking of anything in this framework. It might open up your eyes to why you are not getting the kind of happiness from it OR why you are so happy with the kind of thing you're doing.

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Half year review 2016

I had a very productive half year 2016.


From the 1st Jan, I had already started the year running. With the most heartfelt gratitude towards my ex-students and those parents who recommended friends to me, I spent very little time catching up on my income to bring it near to where I had left it last year. As a private tutor, every year I will have a mini 'retrenchment' exercise, where the graduating students leave and a new batch of students come in to take their place. It's the time waiting between the leaving and the coming that is most anxious to me, because I will have low income during that period. It's all part of the job that I've been doing for the past 12-13 years.


The variation of the work I'm doing this year also increases tremendously. I'm teaching 2 new modules - one is a new option topic for IB, the other is a university engineering math module. Both took me to new realms of business maths/statistics/discrete mathematics that I had to spend a lot of time researching and studying. I practically spend my free time reading up on the notes and materials to prepare for my lessons. If I want to be calculative, it's not worth the effort taking up the assignment because of the sheer amount of preparatory work needed. But it expanded my mind tremendously. Some work you do it to pay the bills, some work for the sheer satisfaction of a job well done. Fortunately for me, these new modules I'm doing falls into the latter. My university student eventually got a B+ for his effort and was extremely delighted. He had initially just wanted to just pass it.

Due to the amount of work needed to prepare for the course that ended around April, I had been lacking in my reading. I'm in the midst of reading my 15th book. Based on my target of 1 book per week, I should have been on the 20th book now, so I'm like 5 books behind time. All in good time, I think I'm starting my reading habit now. I don't think I'll be that far behind when the year ends. I can't wait to give my year end review of the mind blowing books that I've read this year. I already did one book review of this book in February here.


I broke my own record for the most number of hours worked in a day this half of the year. 14 hours a day! That took me from 8am to 11pm with half an hour of lunch and another half an hour of dinner. It was crazy, and I'm unlikely to repeat it again, but hey, one more notch on my belt that I've been there done that. With this new perspective, I broke another self imposed limit. In the past, I used to work 4 hours a day and thought that was hard work. Eventually it progressed to 8 hours to 10 hours per day and I thought that was it. Never in my wildest dream/nightmare would I think I'll be working 14 hours a day! An easy day is now 6 to 8 hours for me. This goes back to my philosophy of life - growing bigger than your problems. I blogged about this theme here and I still think it applies to my life right now.


I saved a good part of my income too and I've stashed about 35k. I'm not sure if I can hit my target of 60k, but I believe 50k is goal that can be reached. Again, I'm grateful for the opportunities presented to me. This year, I experimented with my own style of social work too in the area that I'm specialised in. I started giving very low rates for students who are from financially poor background. Some are struggling single mums, some have kids who have special needs while others have kids who have a lot of problems in school. It took all my creativity and *ahem* charm to negotiate something that works out well for 4 of them and also won't be financially too disadvantageous for myself. I think I can see myself doing this when I truly reached financial freedom. Once I've settled myself and my immediate family, I'll work hard for others.


I'm still doing my chin ups and push ups. I think this had been going for maybe 1 year or more and I can see the results for myself. I failed miserably at waking up to jog, and I'm still thinking of starting some cardio exercises. I have many more reasons and motivation to do that now. I'll work on that aspect.


Spiritually, I've started and stopped my 100 day meditation exercise. Mind blowing! It has tremendous impact on my mood and sleep patterns. I know it increases my mental strength and thought-reality manifestation (don't ask). I'm also doing intermittent fasting every now and then, sometimes eating just fruits for lunch. Again this broke my concept of how much food one actually needs, and I'm very happy with how things progressed.


Looking forward to the next half year 2016, which promises lots of exciting events and progress in my life.

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3 simple steps to start stock investing

I seldom have guest post in my blog. In fact, almost never. But since I'm using Investingnote as my preferred charting platform and Evan who is our guest writer below is from Investingnote, I don't mind sharing this space with him.

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In a previous article titled ‘5 reasons why stock investing is so difficult to start’, I’ve mentioned the reasons that often become excuses, serving as inhibitions to the journey of stock investing. Many people have asked me how to address these reasons and the answer is simple: confidence.

However, not many people notice that it is their lack of confidence that affects their first step to investing, as opposed to risk appetite.

These are the 3 simple steps to boost your confidence, which will help you make your first investment.

1.Acquire financial literacy

Financial knowledge and literacy is essential for anyone to start investing. The fundamentals of stock investing are best found in their original state: books. Learn financial terms, explanations, logic and theories traditionally at your own pace. Grab a coffee and start hitting the books like you’re a student again. 

The only drawback? There are many financial books out there that are similar but different. In that case, maybe just textbooks will suffice? 

Alternatively, you can also go for courses conducted by stock educators. Most courses require a fee to attend, but some are free. The SIAS and SGX Academy both provide some basic investing courses for free. You can check them out here www.sias.org.sg or www.sgxacademy.com. Otherwise, there are many organizations and stock educators out in the market that charge a substantial fee for advanced courses. 

Also, start reading business and financial news that often highlight the more important things. For example, what affects the distribution per unit (DPU) for Real Estate Investment Trusts (REITs)? How do companies restructure in recession to sustain equity value? How does economic data like purchasing managers’ index (PMI) and non-farm payroll affect markets and stocks? What stocks are most affected by currency and interest rates?

News will highlight the important things that every investor should know. While saving you a fair amount of time, it also lets you familiarize with the myriad of financial terms and jargons, and keeps you updated on market happenings. 

2.Practise through simulation

Regardless of whether you choose to get the basics via the traditional way of reading books or by attending some courses, the overall learning process is incomplete without practice. What better way to practice other than simulation? 

Simulation boosts your confidence by allowing you to mimic the actions you would take in reality, without having to bear the costs. 

Practising through simulation is also particularly useful to gauge your own investment decisions. If you’ve predicted the stock price to either go up or down, simulate the trade. This way, you can know how accurate your analysis is. 

3.Learn from experts

The last step for your journey in learning how to invest is to learn from professionals or experienced investors themselves. Start attending free talks, seminars and fairs. Invest Carnival, Invest Fairs and private seminars are often held by ShareInvestor, SGX and brokerage firms like PhillipCapital. Attending such talks and seminars given by experts will give you a better idea of the significant things that are relevant to beginners.

If you’re the keen learner who’s always asking questions, try leveraging on the experts found on social networks like Facebook discussion groups or the social trading network InvestingNote. Being within a social network not only allows you to see what experts are thinking when they post, but also includes you as a part of the stock investing community. Never be afraid to ask questions and interact with the experts and the experienced. Learning is at its best when transformed into a two-way interaction. Information becomes communication and it empowers personal learning. Also, keeping up to date with the latest financial news and trending insights will give you that edge which traditional textbooks won’t. 

It becomes a virtual classroom. It’s almost like you’re having a tutor at your fingertips, except that there isn’t only one but many. By tapping on social networks, it will expand your personal network and interaction with experts and the experienced who are otherwise remotely located. 

If you’re lucky, you just might find an expert whose investment style suits you the best and doubles as your mentor. Mentorship is equally as important when it comes to stock investing. 

After you’ve taken these 3 important steps, you will gain more confidence to start investing, and build good investing acumen.

At which step are you currently at now?  

Written by Ethan Ho 

From InvestingNote

The social network exclusively for stock investing, InvestingNote is a free, social network platform designed specifically for crowdsource investment ideas, news and interaction for the stock investing community. Besides having access to stock data, users can upload research reports, utilize technical charts and make stock price targets that will be visible to the entire community. Users can also gain reputation points when they have followers, likes and posts. 

www.investingnote.com

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I've been using investingnote for some time and I still think their online charting platform is still the best out there that is not tied to any brokerage. And of course it's free. Personally I'm using the charting services only and not so much about the social trading. But I must say, the community there is actually quite friendly. I'm sure there are people out there who will help you if you genuinely seek their help. Just do yourself a favour and don't just trade on the recommendations there. Trading ideas and talk are free, so do your own due diligence. If you can't make money, at least learn some lessons. 

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How I reduce counterparty risk in my work

I was reading Investment moat's article on recent soilbuild's issuance of writ of summons to Technics Oil & Gas Limited. Soilbuild is seeking to claim back about $2 mil in rent plus an additional $12 mil in deposit for the second year of rent, with interest owed during the period where they didn't pay the rent. Counter party risk is hard to account for, but it's something we need to pay attention to in the real world.

As a private tutor, I have to deal with counter party risk as well. When I was a newbie in my first few years of work, I had issues collecting my fee from students too. One is recommended by a tuition agency, so it's subjected to terms and conditions that I had not read in full. Since it is the first month of tutoring that student, the student had to make payments to me as well as the agency separately. Apparently the agency do not trust the tutors they recommended to collect on their behalf, which is usually the norm. Anyway, the student refuse to pay the agency but he did pay me, but due to the contractual terms that I've signed but not read, they have the right to claim it from me. I continued giving lessons without getting paid since he is doing his O'lvls. On hindsight, that's just stupid. The thing just bounced back and fro and got real ugly, and I do not wish to revisit this again.


To avoid this, I stopped giving lessons the instant I realise something is wrong. Cut loss, so to speak.


The second notable case is for a really really wealthy expat who lives around Orchard area. They just refused to pay me one day, and I'm not sure why. I cut the lessons and hounded them to pay me my deserved pay. They disputed the dates that I've recorded, yet they do not keep track of the dates that I gave lessons for their son. Eventually this ended well and I collected my fees after a few months in full. It could have ended badly too.


These days, I treat counter party risk like these by managing them. I think given time, it's bound to happen again. Thankfully, there's no third case of bad debts anymore after I've done the following:


1. For new students who cold called me, I collect fees in advance of 4 lessons. Fully refundable, should they give me notice of not wanting to continue. Since most students come over to my place for lessons now, I take more risk than them. If I'm going over, I'm more willing to bend and will try collecting fees in advance. If they hesitate, then it'll be 2 lessons in advance. I hate collecting after every lessons, though some parents insist.


2. For new students who are recommended by known others, I'm more lax. They are sort of filtered by existing contacts already, so they are less risky. I will collect 4 lessons in advance as a general rule, but willing to bend to collect the fees after the service is rendered. Usually credit term is for 1 month, and not longer.


3. For those students that have more than one lesson with me, meaning 8 lessons in a typical month, I will collect after every 4 lessons too. This is to reduce the absolute amount of the fees owed. If there is a default on payment for 8 lessons by 1 student, it's equivalent to a default on payment for 4 lessons by 2 students, and that is not good for me.


4. Some cases you just know that there something doesn't feel right. It could be the way the parents interrogate you when they are asking for quotes on the tuition fees. It could be the way the parents make some unreasonable demands when they call. Usually I will reject cases like this when my gut instinct tells me to. It's rare, but on occasions I didn't heed my instincts, the reward just didn't go along with the downside. In other words, it's a troublesome case that is not worth the effort. This kind of discretionary rejection is rare. Most people are nice.


5. I charge higher fees. It sounds weird, but charging higher fees actual reduce counter party risk. Maybe people feel they are dealing with more qualified tutors as opposed to the initial years when I'm charging like about $22/hr.


And these are just the way to manage default on payment of the fees owed. Who says a private tutor is having the easy way out? He has to manage his portfolio of students like how a reit manager would do to manage his tenant mix and occupancy!

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Hyflux 6% perpetual securities

This morning, I was quite excited to receive news of another retail bond. This time it's from Hyflux. The last they did that was in 2011 and I made a 4 part series on preference shares here. Back then, they are issuing 6% cumulative, non-convertible, non-voting and perpetual preference shares. This time, this issue seems more like perpetual shares than bonds. The difference is not significant though, given that it's a perp, so there is no maturity date even though there is a optional but not obligated redeemable date.

Terms of the security 

The terms of the perps is spelled out very clearly in the announcement here:


1. Public offer of up to 230 million (can go up to 250 million), out of total size of 300 million (can go up to 500 million) if oversubscribed


2. Opens on 18th May, close on 25th May noon


3. Min amount is $2k, thereafter in multiples of $1k.


4. This is the interesting feature about the issue. They are giving 6% pa, paid semi-annually (on 27th May and 27th Nov every yr) for first 4 yrs until and excluding 27th May 2020. From 27th May 2020 (inclusive), it'll not be 6% pa anymore, but will be at reset distribution rate.

Reset distribution rate = 4 yr SOR on the reset date + 4.2% pa, + step up margin of 2% pa

They gave excellent illustration for 3 different scenario after 2020 to 2024, shown below:

5. From 2024 onwards, the distribution will be reset again using the formula shown in point 3, but with a new 4 year SOR rate at the reset date in 2024.

6. Is there guarantee of payment if you're a holder of the security? The prospectus states that "each security confers a right to receive distribution on its outstanding principal amount from the issue date at the applicable distribution rate". The word 'right' doesn't sound right. It offers them a possibility to defer distribution under certain conditions and is no way guaranteed. Reading further from the prospectus, it mentioned that the issuer may elect not to pay a distribution (or to pay a part of) by giving ample notice. They may not elect to defer any distribution if 6 month before the scheduled distribution payment date, one or both of the following occurred:

a. A dividend is paid to its junior obligations. I take junior obligations as the ordinary shares of Hyflux. I may be wrong.

b. If the junior obligation is redeemed, reduced, cancelled or bought back.

This means that if they give out dividends in their junior obligations (I take it as the ordinary shares of Hyflux, which I may be wrong), and/or they did not redeem, cancel or bought back all the junior obligations in a period of 6 months before the distribution payment date, they cannot defer distribution to this security.

Don't ever think they are obligated to pay holders of this security. You have a right to receive but they are not obligated to do so under the stated conditions. But it's not as bad.

They have a feature in this issue that is quite similar to any cumulative pref shares or bond. If they did not pay out any distribution in full or in part, that portion that is not paid out will be placed under arrears of distribution. They will have to pay out the arrears, plus any distribution, by the time they redeem back the securities, or by the next distribution payment date, or before they wind up, whichever comes earlier. If not, they cannot declare or pay dividends to its junior obligations or to redeem, back buy, cancel, reduce it.

I think in simple layman's language, it just means that they must pay out the dividends on the distribution date, unless they are also not giving dividends to hyflux ordinary shares/bond/pref shares holders. That is your sort of guarantee that they will pay out what they should pay out.


7. First redeemable date is on 27th May 2020, which is about 4 years from now, at the par value. They have to redeem all the outstanding amount or none at all. Thereafter, on each distribution payment date, meaning 27th May or 27th Nov after May 2020, they have an option to redeem back too. As mentioned earlier, this is a perp, so there is no fixed maturity date.


Financial strength of Hyflux

Alright, so far that's just the details of the perp. It's quite a complex issue, if you ask me. My initial excitement becomes a lot more muted once I took a look at Hyflux results.

Debts debts debts. Just mountains of them. I think they are rolling about in their notes and preference shares debts, issuing new ones to redeem older issues. Even this current issue is to redeem back the older issued notes. Specifically, 91.66% of the proceeds is to be used for the repayment of the $100 million 3.5% notes done in July 2008 and updated on Jan 2016, and another $175 million 4.8% outstanding perps (this is not the retail 6% one).

I'm too lazy to dig out past 10 yrs of financial statements, so using the last 2 yrs should suffice:

With a ROE of 3.5% in 2015, this isn't a company that I would have invested. But the pref or bonds issued might be a different story. Are they highly leveraged? Below is the ROE for Oxley. They also recently issued a new bond less than a year after their had their first retail one.

Looking at their financial leverage (Assets/equities), Oxley is the more leveraged one, but they are different industry of course. There really isn't a direct comparison for Hyflux. The question is, can they survive for 4 years or more and continue giving dividends to their ordinary shares as well as their bond/perps holders? I'm not confident. Revenue is contract and order based, so a bit lumpy. Even with their leverage, their ROE is not fantastic too. Their free cash flow isn't exactly very stable, and most years are just negative. I suppose they will have to continue borrowing from Peter to pay Paul.


Existing Hyflux 6% CPS

Throughout their listing, the hyflux 6% retail preference shares had never once dipped below its par value of $100. May 2011 to the present time isn't exactly kind to the stock market, so having maintained its share price above par is a great comfort to its holders. It acts as a good place to store their cash - it's a good cash equivalent that pays 6% pa, if you want to see it that way.

Their terms is 6% pa, payable semi annually on 25th April and 25th Oct every year, with first redemption on 25th April 2018. Thereafter, they will step up the rate from 6% to 8% if they don't redeem back.

Based on current price of 102.2, the yield to maturity until first redemption date is about 5.8%. Maybe by then, Hyflux will issue another preference shares, either institutional or retail, to roll over the debt. Considering that their pref shares at this kind of environment is still 6%, I think it'll be cheaper than to pay a higher stepped up rate of 8%. Maybe that's why the price of the pref shares is dropping steadily to par value. We're about 2 yrs shy of that first (optional) redemption date.

Note that the price shot up 3% on the first day, and thereafter within 2 months, shot up to about 7%. Not too shabby for a pref shares with 6% yield.


Conclusion

In summary, weak company but strong pref shares and dividend paying record. But that's all in the past, will it continue in the future? I think so and the gameplan, like Oxley and Perennial, is to continue issuing such bonds in the future. This should be quite a hot issue, I suspect. Actually, anything that is higher than fixed deposit rate is hot in Singapore these days, lol


Good for a stag. I'll expect it to be very hot.

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Finding meaning in your suffering

Read the 4 paragraphs below and notice how you feel:


You work everyday until you cannot work anymore. Everyday you are suffering but you do not know why.

You work everyday until you cannot work anymore. Everyday you are suffering so that you can earn enough money.

You work everyday until you cannot work anymore. Everyday you are suffering so that you can earn enough money so that your family can have their 3 meals a day and a roof over their heads.

You work everyday until you cannot work anymore. Everyday you are working purposefully to achieve your goals, which is to earn enough money so that your family can have their 3 meals a day and a roof over their heads. Even though you are working hard, your work gives you great satisfaction and achievement. You can working until you can't work anymore because your client and your colleague still finds your contribution valuable.

If you read through the above 4 paragraphs, you'll see that the story behind our suffering is what enables us to live through it. Everyone can take suffering, so long as it has a meaning to it. It is meaningless suffering that is unbearable to all of us. While we cannot avoid suffering, we can always find meaning in it so that we do not suffer in vain.

Think of a soldier who died in a war. If he died in a war that he don't believe in, his death will be meaningless. But if he died to protect his comrades-in-arms, or more abstractedly, to protect his ideals or his way of life, then his suffering will be made meaningful. While the circumstances (that he died) is the same however you want to think of it, the mindset change makes all the difference.

Focus on finding meaning for your sufferings.

I think the same can be said for the journey towards financial freedom. There is certain short term suffering that one must endure, but if you think that life is so unbearable, think of the meaning behind it. If you can't find the meaning in it, maybe you shouldn't be doing it in the first place. I think after you tried a little suffering, you can even get used to it. Try not to drink any sweet carbonated drinks for 1 week. After that, try drinking some with less sugar in it, you'll suddenly find that it's so sweet. You can try it for food too. Try eating bland food for 1 week and then try eating fast food. You'll find that it's so salty now. Same food but different!

All about perspectives and meaning, isn't it? Haha

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Bigscribe's localized Crowdfunding guide

Bigscribe recently released a guide on crowdfunding which I thought was a very good introduction to this new fintech phenomenon. I don't think there's any guide out there that caters to the local context and introduces crowdfunding to Singapore's retail investors or lenders. You know how the internet disrupted existing framework when Uber started connecting passengers and drivers and bypassed the traditional method of getting a taxi. Well, in a way, crowdfunding seeks to connect investors or lenders to companies and bypass the traditional framework in which such things work.

I will highly suggest anyone who wishes to even dabble in crowd funding to at least read this guide to get the general inkling of what to do and what not to do. You owe it to yourself to find out as much information about crowdfunding before putting your money into it. Besides, the book is free to download here, and it's not a long read anyway. You can finish the entire ebook from cover to cover if you read it slooowly for an hour.

If you're even remotely interested in crowdfunding as an alternative way to get a better returns for your cash, you can read the interview of two persons who had actually particpated in crowdfunding as an investor and decide if it is worth the risk. I thought their sharing of the pitfalls and the maximum allowable percentage allocated to crowdfunding (and the reasons) is worth a read. They also shared their criteria to evaluate which projects are the best to invest and which are better left alone.


Wait for what? Go and download lah! Subscribe to Bigscribe!

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New perennial 4.55% 4 yrs bond - Goodbye or good buy?

Looks like yet another bond offering in the local retail bond market. It's always the same few players offering bonds, and this time it's by Perennial Real Estate Holding (PREH). They just offered a 3 yrs 4.65% bond in Oct 2015 that I blogged about it here and now they are back at it again.


This time round, it's a 4 yrs 4.55% bond. Let's see how it compares with the currently traded 3yr4.65% bond.

Last close price of 3yr4.65% bond: $1.012
Par value of bond : $1.000
Capital loss from buying above par: $0.012

Total no of coupon payments left: 5
Payout for each coupon payment: $0.02325
Total returns upon maturity: 0.02325x5 - 0.012 = $0.10425
Total % returns: 10.301%

Maturity date of bond: 23rd Oct 2018
Today's date: 20th Apr 2016
Total holding period: 916 days or 2.51 yrs
Average returns: 4.10% pa
Yield to maturity: 4.22% pa


Here's the chart of how it performed since listing.

Screenshot from Investingnote

The gap down around mid April 2016 is due to the XD for its first coupon payment to be paid out at the end of April this year. It didn't go below its par value at all since listing, even during the severe drop around the start of the this year for STI. The newly listed Aspial 5.3% bond didn't share the same fate - it's now currently traded below par. Even the older Aspial 5.25% bond is trading below par too.


Good bye or good buy? I wouldn't buy it. 4 yrs seem to be a little long given the potential increase in interest rate in the near future. In 4 yrs time, it's bound to be a certainty, just a matter of how much it'll increase, so for those who are buying, be prepared to hold till maturity. Your capital might not be preserved if you need to cash it out for stocks purchase, for example.


I guess you have to ask yourself whether there are better alternatives out there - like those stocks with bond like qualities haha

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Post-rights price recovery period for reits

If you get into reits, make sure that you have some spare warchest to prepare for rights issue. It's not a matter of if, but a matter of when. In the past, if you do not have any reits yet, I will recommend buying the mother shares during rights issue so that you have the ability to hack your way to capitalise on the excess rights application process. I blogged various articles in this blog but let's just put down the two most important ones:

1. How to get the most out of a rights exercise
2. How to hack AIMS AMP Capital Industrial reit Rights Exercise

But recently with the change of the board lot from 1000 shares per lot to 100 shares per lot, I think this strategy is getting outdated. The amount of excess rights will be based on the lower 100 shares instead of 1000, which means you won't get much out no matter how you hack it. It's about 10 times difference. Not very effective.


If you look back in the chart history of those reits that had undergone rights exercise, you'll see that the price will drop immediately following the date of announcement of the rights. Then, it'll start to rise up. This happens every single time - the key difference being how long the drop will be, and how long it'll take for the price to go back up to pre-rights price. This means that if you have not bought any reits yet and had intention to buy, buying during the rights exercise, specifically after the announcement of the rights, will be a good time to take advantage of a short temporary inefficiency to get some. You might want to ignore all the rights and just get it after the mother share goes XR. It'll be less troublesome and you'll likely get a lower price out of it anyway.

Take note that the price are all post rights price. It's too troublesome to convert back to pre and post rights price, but this doesn't dilute the force of the argument 

The table above shows the rights exercise I've taken part in recent years. Here are some observations:

1. It takes anytime between 1 month to 1.5 yrs to get return back to pre-rights price. This means you have plenty of chances after the announcement of the rights to get the reits, assuming that the fall of the price is solely due to the rights issue. In real life, it's most definitely not. There are macro trends and various other factors that contribute to the rise and fall of any stock prices. And, the sooner you get it, the faster you can be entitled to the stream of income from dividends declared. So wait, but not too long.


2. Aims took the record for waiting 1.5 yrs to recover. It may be an outlier, considering that from my limited list of rights exercise participated, most take about 1 to 2 months to recover back. Talking about reits or trust here, not companies. ARA is not a reit, though it's a reit manager, so probably will be more enlightening to compare the rights issue of non reits companies separately.


3. The other factor I didn't take into account is the dilution of each rights. Some are diluted more, some are less, and I think that might be a contributing factor in deciding how long duration before the price goes back up to pre-rights price. I'm not an academic, so I'm just interested in the final verdict of what to do.



And what do we do? If you haven't had any shares in a reit, consider buying after XR and skip all the excess rights and what not. The price is likely to be cheaper even with all the excess rights included in. If you already had shares and wanted to accumulate more, consider waiting for them to announce rights. The risk is that your cash will be rotting while you wait, and the other is that some reits just don't have a habit of issuing rights - like Suntec. So you can wait till the cows come home lol

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Ticking one box every week

I watched a ted talk recently regarding procrastination. We all do it in various degrees all the time. There are two kinds of situation where procrastination can be seen as a boon or a bane. The first kind is when there is a deadline, and when it's drawing nearer and nearer, the panic monster in us suddenly awakens and make us do the necessary things to get things done. Then there's another kind where there's no obvious dateline. This is where the panic monster do not appear.


A good example is like exercising or eating a healthy diet. There's no dateline for such things, and so we tend to procrastinate the good but painful life choices until well, it's too late. The speaker suggested we look at the picture that I've done up below.

Each box is a week of our life. There are 4,680 such boxes in it, enough to tick one box every week from birth till we're 90 years old. Some of the boxes are shaded and some are not yet. I'm sure you know why some boxes are shaded and why some are not.


Life itself is a deadline, and you can say it's the biggest deadline here. Live life fully and don't regret not doing the things you want to do. Create meaning in your life.


And start right now because we don't really know how many boxes we have left.

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China - the origin of the next crisis?

Financial times had a very good video that I thought will be good to share here. It's about 15 mins long and it talks abut the end of the China's miraculous growth which is fueled by the influx of migrant workers streaming into the factories and offering their labour for a low wage. This video shows the plight of the migrant workers as the economy slows down and what they intend to do when they go back to their rural villages.

As I watch this video, I was quite taken aback by some of the things in it - things that you don't expect to happen for China. They talked about the increase in the wages of workers there but factories not having enough orders, so a portion of the factories went bust and the workers have to seek employment elsewhere. They are not talking about Singapore, but about China. I mean, we have pretty high wages and fixed cost of rentals and so the cost of manufacturing in Singapore is considered high. That's why you don't see a lot of lower end manufacturing factories (making shoes, t-shirts etc) over here. But isn't everything made in China these days? If even China factories are facing a downturn in orders, then who are taking over the orders? Which country has even lower cost of manufacturing than China? You will have to watch the video to catch a hint of it.


The second thing that shocked me was how fast economically China had progressed since the last 30 years. I think they are currently facing the situations that many developing-turned-developed countries faced as they progressed - that of higher expectations by their labour force and also the higher cost of living and wages, which will mean that they are no longer attracting new investments that are okay in the past because everything is relatively cheap. As many countries around the world are annoyed by the influx of China migrant workers going into their country to seek better paying jobs, the Chinese are also facing cheaper and harder workers from other countries going into their borders to seek better job opportunities. I totally didn't expect that. But I guess globalization is like a knife - it really cuts both ways.


The last point I'm going to talk about is an interesting financial/investing topic - that of the impending failure of the Chinese economy as it heats up and bringing the world economy down with it. The talking heads had been saying that since I first started investing in the stock market in 2006. They had been speculating that China will be the cause of the next crisis. But it didn't happen and the great financial crisis happened over at US side as their mortgage-debt-housing market exploded. Then the Brazil/Spain/Portugal/Greece saga over at the EU side came to dominate the scene. And now we're back one full circle to point at China again? You really have to watch the video to find out a little more about it, or the link here to read up.


I think it's better to just know what we're going to do should something major happens, instead of debating to no end where the next financial crisis will originate. I know what I'll do. I'll freaking save up and build up my warchest now so that I can declare war! LOL

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Salted fish resurrected!

I blogged 2 years ago here that my salted fish have resurrected (咸鱼翻身). But shortly after that, it went limp and died again. It's only recently in 2016 1st quarter that I saw signs of life in the salted fish. By now, the salted fish is extremely fragrant because it had been salted for 6 long years!

Here's a chart to show you what's happening in the last 6 yrs. They had a consolidation exercise of 1:5, so the price is multiplied by 5 from my last posting. The chart is taken from Investingnote, a charting software that I really like very much.

I bought it at post consolidation price of $1.275 around april 2010, which is the nice little peak that you saw on the chart above. It's based on rumors of this company going to be taken private but obviously it didn't happen. So it went down to about $0.50+ before going to its first resurrection, which I didn't sell because I was greedy. It went down again and up for the 2nd resurrection and I didn't do anything also. Then suddenly this is all over the news, with several brokerage firms reporting on how well it is doing and so on.


A good company bought at the wrong price is still going to suck, so just shut up and give me back my money. I sold today at an aggregated selling price of $1.1395, making a loss of $0.1355 per share, but it is made better by the dividends received amounting to $0.165 per share.


Buy price: $1.275
Sell price: $1.1395
Profit: - $0.1355 per share
Dividends per share: $0.165
Total profits: $0.0295 per share

% gains (exclude brokerage): 2.31%
% returns (include brokerage) : 2.2%
Period of holding: nearly 6 years!
Ave returns per year: 0.37% pa


A few lessons to take away from this 6 yrs:

1. Don't invest based on rumors. This is the last straw, and I've never done it since.

2. Dividends is an important part of the returns while waiting for a catalyst to happen. In this case, it forms an overwhelming huge % of my returns. Without it, selling at my current price will result in a loss.

3. If you don't need the money, you might want to reconsider cutting loss. Salted fish might be resurrected! If you are going to sell, then don't look back and reinvest it. If you're going to sell it and hold the cash, reconsider. Basically there must be a better use of the money you are getting from selling it. Then again, if you're good at stopping your losses, you also won't reach this stage lol

4. A good company at a lousy price is a lousy investment. Conversely, a bad company at a great price might end up to be a great investment. Valuation and price matters.


With this, my last salted fish had either been eaten with plain rice or resurrected and released back into the big ocean. Old already, I hope I don't have to eat any more salted food because it's bad for health!

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My top 5 biggest expenses in 2015

Just out of curiosity, I wanted to find out what's the top 5 biggest expenses I had last year in 2015. I had been tracking my personal expenses for a number of years. Initially I was using excel spreadsheet but it progressed to YNAB (Why you need a budget), so exporting the data out to analyse didn't take long.

Before I embarked on this exercise, I tried to think of my top 3 biggest expenses. I knew that mortgage is definitely the biggest expenses. I kind of think that food and parents will take up the next two rankings, but let's have a look:

Top 5 biggest expenses in 2015 (excluding tax):

1. Mortgage - $12,078

2. Food - $6,263

3. Insurance - $6,006

4. Parents - $4,040

5. Transport - $3,632

Total: $32,019

Without doubt, mortgage is the number one expenses for me

I know the bulk of you will not consider mortgage because it's paid through CPF, but for me I pay them through cash. In fact, when I consider my expenses, I don't split up into CPF or out of pocket cash. Both are cash to me. This is relevant because my hospitalization plan is paid from my CPF medisave account, but I still included it as 'cash' expenses.

Mortgage taking the top spot is not a surprise. This is only my share of the mortgage, and I have to fork out 1k per month servicing the loan. Technically I paid up more since I do partial capital repayment every year end to shorten the duration of my loan and save up on interest. This one wins hands down. Is there any way I can do to reduce this? I don't think I can, unless I downgraded my flat. It won't happen, as far as I can tell, in the next 15 years. Since mine is an old flat more than 30 yrs, I think the chances of me cashing out to sell is greatly reduced as time passes. Have to suck it up, no choice.

Food is split up into hawker/food court/coffee shop type and restaurants type. The hawker variety of food amounts to $3,944 and the remaining $2,318 consists of restaurants. On a per month basis, it's $329 per month ($11 per day) for the former and $193 ($6.43 per day) for the latter. This is the area that I know I can reduce further, should I encounter difficulties in cash flow. I can reduce the restaurant trips to 0, and reduce the hawker food expenses down to $2.50 per meal, so it'll amount to $225 per month. This will drop my food expenses from $6,263 to just $900 per year. I'm obviously not going to do it unless necessarily, but it helps to know I have this buffer than I can cut down should I need to.

Insurance works out to be about $500 per month, consisting of:

1 x limited premium whole life plan $100k

1 x unlimited premium whole life plan 50k

1 x term plan $100k

1 x hospitalization plan (Private hospitals)

1 x disability income

1 x property mortgage plan (i.e. 30 yr decreasing term plan with 500k initial)

Can I reduce this further? I suppose I can. For example, I can stop my two whole life and surrender it, getting some money back and use that money to put it into a term plan with higher death coverage. Those two amounted to about 70% of the premiums paid for insurance, so possibly I can reduce the insurance amount from $6k to about $4.5k (probably less) with even more coverage. The reason I bought whole life plans is because I bought it before I knew I can save up the money myself. It's good as a backup in case my investment didn't work out as planned. If and when I have children, I'll have to boost my insurance coverage with term plan and that's about it. Again, it's good to know I can reduce some expenses should I need to, but seriously, I'll rather reduce other things than this unless absolutely necessary. It's like those last minute trump card encased in a glass container that I will break and throw in an emergency.

I gave my parents some allowance, amounting to about $330 per month. This amount varies every few years and I didn't include the bonus ang bao that I gave to my parents during birthdays and chinese new year. So, this is probably an underestimate, or more like a fixed 'salary' to my parents as opposed to the more variable 'bonus' given during big occasions. My sibling contributed another amount (I don't bother to ask) so we sort of share the monthly upkeep of our parents. For those who do no have siblings, I suppose he or she will have to step up and give a little more. Okay, maybe 100% more, to make up the income for the missing sibling. I compared with my wife, who don't have siblings, and indeed, she gave about 100% more than me. Ouch. 

Can I cut on this? Absolutely not. This is one of those expenses I'm adamant on having it regardless of my financial circumstances, so it's not negotiable. I'll have to cut on other areas to make up for this essential expense.

Lastly, transportation includes both the total expenses of owning a 2nd handed car plus public transport. These days I don't really take public transport much because I work at home, so it amounts to about $200 per year (based on ez link top ups), so it's about $16.7 per month. Really bare minimum already. The rest of the $3,432 is for the installment of the car plus all the running costs and maintenance. Since my wife is the one driving, she's paying the bulk of the cost. For my share, it's $286 per month or $9.53 per day. That was for last year, where I still have to pay $179 per month for the installment for the car. Should I need to reduce this expense, I can choose not to drive and just pay for the parking costs, which is about $70 per month. For extremely light driving, I think it's possible to keep the cost around $1,500 per year. Assuming my public transport cost will double to $400 (not really possible, but let's be conservative), my transportation cost will drop from $3,632 to $1,700 per year.

Interested to know what's no 6 and no 7 down my list? Here we go:

Top 5 biggest expenses in 2015 (excluding tax):

1. Mortgage - $12,078

2. Food - $6,263

3. Insurance - $6,006

4. Parents - $4,040

5. Transport - $3,632

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6. Gadgets - $1,354 ($112 per month)

7. Vacation - $788 ($65 per month)

Gadgets I admit is part of my play fund, where I allocate a small sum every month so that I can spend on unnecessary wants without guilt. This can obviously be cut down to 0 should the need arises. Vacation is not a big need or want item for me. I can camp in Singapore (or even at home) for a very extended period of time without becoming unbalanced or feeling deprived.

In summary, how much can I cut? To tally up, I can reduce my top 5 expenses from $32k to $23k, which is about 9k per year or $750 per month. And this is just the first round of cuts I can do without feeling much deprivation and suffering. That's good. I don't want to live just on the edge, I want to enjoy life a little to hedge against a short life and yet not derail from my long term plans to hedge against a long life. This little exercise allows me to see clearly what are the fat areas that I can bank on during lean times.

I realised I'm not that frugal afterall, haha! 

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Hedonic treadmill

I read this wonderful article here that talks about how we derive pleasure when we first upgrade our standards of living but eventually getting so used to the the experience through repeated use that it offers no more pleasure. In other words, you get back to the same pleasure level before you started this hedonic treadmill, and you have to go look for better and better pleasures, and yet getting nowhere. After reading the article, I learnt the name for such a vicious cycle. What an apt name!


But I say we can trick ourselves to hop onto the abstemious treadmill and derive greater and greater pleasure on the simple things. First of all, a dictionary definition of abstemious:

Abstemious (adjective)
1) sparing or moderate in eating and drinking; temperate in diet.
2) characterized by abstinence.
3) sparing

Abstemious, in other words, is the direct opposite of hedonistic. A hedonistic lifestyle would be to seek maximum pleasure, whereas a abstemious one would be to simplify and reduce. Now instead of seeking greater and greater pleasures and eventually getting numb to the new experience and thus hopping onto the hedonistic treadmill, I suggest we reverse the whole process.

I say we simplify our lifestyles and eventually we will get numb to the new experience of a simplified lifestyle, and we go on and simplify it further, leading to a virtuous cycle which I termed abstemious treadmill. I believe this is where we would really find a lot of pleasure in the little things that pop up because we're so used to so little. Imagine not having salt and sugar in your diet for 1 month. At first you'll feel that your food taste very bland, but after a while, you start tasting all the natural flavors of the ingredient. And once a while when you do eat food with just a little sprinkling of salt or sugar, you'll feel that it's very salty or very sweet. It's the same food we're talking about here but we're no longer talking about the same person tasting the food.


I mentioned this because there are people who thinks that living a frugal life is a very sad life. Earn and save so much money but you deprive yourself from enjoying the pleasures of life. Life is short, so YOLO-ing your life is not such a bad idea. But a frugal person is already jogging on a abstemious treadmill. He had reduced his lifestyle to something that is simpler than the people who are around him, and he is not suffering and yet he found great pleasures in it. How can the crowd who are invariably jogging on their own hedonic treadmill understand him?


Well, they can't. They will wonder what strange beast this frugal person is, and how different he is from the rest of the world, and how odd. Doesn't matter eventually, we're all running our own race.

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