Sunday, June 26, 2016

Thoughts on Brexit, affected SGX counters and updates

What an eventful Friday morning (SG time)! I was home all day (due to a bad flu) watching the election returns and financial markets. The outcome of the elections was pretty apparent and obvious to a seasoned political observer (a.k.a. myself) within an hour the first votes were announced (SG 8am++), especially when the Newcastle results were announced. However, the financial markets were not as responsive and aware until 11am when the markets started plunging really badly (STI down 50 over points). In short, financial markets are slower to react than political markets, or maybe the STI is behind the curve compared to other markets. It is my strong belief that a good, basic political understanding is important for investors as political events and changes can affect government and business policies which will in turn affect the companies we are invested in.

Brief Recap for the uninformed: As most would know, the United Kingdom (or Divided Kingdom) voted in favour of Brexit 51.89% to 48.11%. This results reflects a divided (non-united) kingdom with Scotland, Northern Ireland and London voting against Brexit. The British Prime Minister has set out a timetable for a transition of power (a.k.a. resignation). The Scottish First Minister has hinted that a second Scottish independence referendum is on the table. All European markets closed in the red (FTSE down 3.15%, DAX down 6.2%, CAC down 8.04%). And the DJIA closed down 610 points/3.39%) last Friday. The only winner is Gold (up 4.43%).

*Note: I am not asking people to buy Gold, although it is true that Gold prices tend to increase when there is fear/uncertainty

As for the impact of this Brexit on my personal portfolio, I remain largely unscathed. In fact, my portfolio is slightly up on Friday. I am glad that after last year portfolio review and performance, I have taken on a more conservative approach. And, I am thankful that ahead of the Brexit vote, I have re-balanced my portfolio towards safer investments and out of more volatile ones. So again, being politically aware does help! My portfolio performance since the start of this year is positive by double digits (unlike STI which is down). I do hope I can sustain (and improve on) my portfolio out-performance and we shall see how it fares at my year-end review.

As for which counters might be affected by this Brexit vote, I think that Comfortdelgro (which has transport operations in UK), property counters like Ho Bee, City Developments (which released an announcement about impact of Brexit on SGX online), Hwa Hong, Guocoleisure with exposure to the UK property markets would be impacted. This is because as the value of pound would likely fall, the earnings and valuation of these properties denominated in pound would be lower, and adversely affect the dividends and NAV of the companies when the pound is converted to SGD.

Personally, I am interested in taking a stake in Guocoleisure, but I am glad that being a politically aware person, I have put off my purchase till after the Brexit referendum. And I am glad I did that, Guocoleisure was down 5.52% on Friday and closed on a YTD low of 82cents.

Conclusion: To be a good investor, we cannot just solely be focused on the share prices and financial reports, we should at least have some awareness of financial markets, business and political, economic and social environments that our invested companies are operating in!

Friday, January 1, 2016

Happy new year 2016 and review of 2015

First of all, happy new year to all my dearest readers! May 2016 be a successful and rewarding year for all of us!

As many of my readers would know, the equities market did not fare too well in 2015. The local STI fell -14.3%. Having asked and looked around (the various investment blogs and forums), I daresay a large majority of investors lost money last year 2015. So, how did I fare? I would like to say that my portfolio grew y-o-y but unfortunately, I lost money too. For year 2015, my portfolio shrunk -0.6%, my worst yearly performance since inception, with the only consolation being I did not do as badly as the STI.

My Portfolio
+11.7 (annualized)

Looking at my portfolio performance over the years since inception, what a dramatic turn of fortunes it has been! I recall writing this post last year, ecstatic and jubilant that I have had my best performance/personal record and that my portfolio broke the 6-digit mark... and then in 2015, I recorded my personal worst performance. Admittedly, I am severely disappointed with my portfolio's performance this year. Yes, the market was bad and it moves in cycles (up and down) but to be very honest, I made many, many unwise decisions in 2015.

Actually, during the middle of 2015, my portfolio registered a very healthy double digit gain. I divested some (but not all) of counter A, making a good profit on the shares I divested. Therein lies my mistake, if I had decided that counter A is fully-valued, why did I not sell all my shares in counter A? As expected, my remaining shares of counter A fell sharply in the second half of the year, and the unrealised profit diminished (it actually became a loss early this month but ended the year with a small unrealised profit)
*btw, counter A was a concentrated bet

Another mistake (a very terrible one) was to use the money made from mid-2015 divestment to make a concentrated bet on a fundamentally sound, conservative company B. And yes, I loss money on that company too. In such a broad-base decline, share prices of good companies drop too! I should have realised that it was a bad time to enter into equities (given the turmoil in the Chinese markets which I predicted correctly) and hold cash instead (even if the company in question was a fundamentally sound one..)

And the last big mistake of the year was to make (yet another) concentrated trade (this time short term trade) on counter C. I heard it was a good counter and my research somewhat (not fully) validated it..but it was a loss-making company! yes, it had strong hands, good prospects etc but it does not distract from the fact that this company C's earnings is inconsistent, lumpy and project-based - it makes good money on some year and loses money on other years. 

Why the penchant for concentrated bets? hmmm, I hope it's not the result of my increased size of my portfolio and my desire/ego? This year 2016, I need to set and follow a limit on my exposure to any counter. It might have worked nicely in the past, (it did give me great returns in 2014- my out performance in 2014 was achieved on the back of a few concentrated bets) but it might not be a good strategy going forward..

Also, there were very few IPOs (a number on the Catalist but only one on the Mainboard), so consequently I had very little "free money" unlike the previous years. Coupled with the mistakes mentioned above, my beautiful gains in the first half of the year were wiped out completely and I finished the year with a painful, miserable loss..hiaz

Nevertheless, on a personal front, I had some achievements. I went on a overseas exchange and made quite a number of foreign friends (real friends/pen-pals that I still keep in contact and have had numerous emails exchanges over many months)! I was actually brave and daring enough to travel solo in a far-away country, where the native language is neither English nor Mandarin/Chinese dialects. And I actually survived in a foreign country for more than a month! I also attained my best semester (not cumulative though) score till date this year! And voted in an election for the first time in my life! Hmmm, I guess in life there are bound to be trade-offs, isnt it? It cant be all rosy on all fronts all the time. Count your blessings, learn from your mistakes and grow from strength to strength :)

Last but not least, to all my faithful readers, I must apologise (yet again) for my inactivity. I know I have not kept my promise of blogging more (opps..) But, like I always tell people, it is the quality rather than quantity that counts. I believe many of us know (and dislike) people who talk incessantly but raises irrelevant points for class participation marks. I guess its the same in school and in the blogosphere right? Looking back, some of my posting have been rather helpful (I hope), like the warning I gave to my blog readers to avoid Chinese equities near the peak of the China stock bull run: 
Therefore, I hope I still get a passing mark as a blogger and that you guys will still support me! 

p.s. This post came rather late; I took sometime to write (it was twice as long) as I spent quite some time reflecting, spending almost twice the time needed. But, oh well, lets hope that 2016 will be a better year for all of us! :)

Wednesday, December 2, 2015

The 25-year-old with eight investment properties

I came across this inspirational story about a 25-year-old with eight investment properties. Decided to share this with my dearest readers! (even though it might be equities related, but then again my blog focus is on investments, not specifically equities) :)

"Iannuzzelli’s tips for young investors

1. Don’t be impatient

One of the biggest mistakes young investors can make is to enter into the market without having done their full due diligence and research. Don’t go buying based on median prices alone – research is critical.

2. Find an experienced mentor

Whether it’s an accountant, a friend who invests or a broker, build an experienced team of experts and spend time with them. Learn from them and ask questions.

3. Think outside the square

When Sydney isn’t providing you the opportunities you need, look elsewhere. Be ready to grab an opportunity when it arises."

p.s. I think these tips are applicable for all types of investment though

Full story at this link: