Thursday, July 10, 2014

Random thoughts: My route to Rome

There are more than one route to Rome. I think I have found mine. I am not sure if it lead to Rome, but I am quite sure I am going to take the path.

One paradigm shift:
Stop worrying about the value of my portfolio. Not that it is not important, but the cashflow of dividends and the robustness of underlying business is more important.

Second shift:
Only look at companies with yield of at least 4%. If u expect growth, 4-5% is ok, if u expect flat or zero growth, at least 6% will be appropriate.

Third shift:
Only buy companies that will survive the next downturn and emerge stronger. Trading of companies that are mispriced is permissible with 2 years horizon. Expect such counters to never recover, and be ready to take the risk, and be nimble. Such counters should yield more than 8% to justify the risk.

4th shift:
Do yearly reinvestment of dividends, there is no need to time the market for correction or bear.

5th shift:
Other savings go into cash. Only invest further with new capital injections when cash form more than 40% of portfolio, or
When market correct 10-15 % ( 30% of cash can be a activated )
When market correct 15 - 25% ( up to 60% of cash can be used)
when market correct 30% - 40% ( Up to 100% of cash can be used)
When market correct 40-50% ( cash backs savings from 2 of my endowments plans can be used)
More than 50% ( CPF money can be used )

Keep expanding radar...

10 comments:

  1. seems you have evolved abit. good to see. especially the fifth shift is rational. unless you find a great investment

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  2. Thanks kyith,

    Now I hope I have the temperament and mind to stick to it

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  3. Method is the least important.

    Good that you now realize that Mind and Money is the way to go.

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  4. Mind and money is more important, but nonetheless useless if u don't have the method.

    I think of the 3 M ( if u have not patented it) as not mutually exclusively but with a high degree of overlapping areas.

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  5. Hi Mike,

    I really like what I read here. It resonates with me. :)

    #1 This becomes easier when what you hold becomes free of cost.

    #2 SPH and Neratel just popped in my mind.

    #3 Sabana REIT in the past and Croesus Retail Trust now.

    #4 I would hold dividends in cash and wait for a good time to deploy, nonetheless.

    #5 Money in SRS account can be deployed too after cash on hand and before CPF-OA.

    Just thoughts that sprung up as I read your blog post. Hope they don't confuse.

    Gambatte! :)

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  6. sillyinvestor,

    I like the "keep expanding radar" part ;)

    This paradigm shift will not be the first nor the last (expand radar remember?).


    I see you have a Plan! Or a Method!

    Next time we have a more than 50% bear market like in 1997 and in 2008, you can stress test your Method/Path:

    1) Mind - Can you ACT out your plans or just freeze?

    2) Money - Can your stomach survive all the bleeding paper losses by the time you deploy your CPF funds? Your prior cash injections are all pretty much under water by now....


    I agree with you Method, Money, and Mind are all interconnected. If Method is not in harmony with Money and Mind, shit happens. And that can't be not important ;)


    P.S. The 3 Ms were coined by the Trading guru Dr Alexander Elder. Ignore the 3 Ms if you find trading concepts interfering with your investing ideas :)

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  7. #1 wow, free of cost. Maybe only after 1 bloodbath. Max I ever got was 70% gain, and that was when I trade s-chip gaoxian ...

    #2 yup. SPH too, but my examples would be CM pacific and Singapore shipping, and Lee metals. And venture

    #3 what I have in mind is APTT

    #4-5 I am quite poor .... So ... Sigh.... Hahaha just acting poor as my wife would say

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  8. Ya SMOL,

    Totally agree, distractions or temptations would be:

    I would have done much better had I sold and buy back now...

    Shouldn't I sold it now, the darkest hour seem far away.

    Oh no, the business is deteriorating fast, will the dividends go out in smoke ...

    Role playing further qns...

    2012, I stomach it quite well. But if I have a choice, I hope I never have to use CPF money at all.

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  9. Dear Sillyinvestor,

    I am sure that your path will lead to Rome, let's see if we can shorten it.

    First shift: If the value of your portfolio dropped due to the voting mechanism of the market, then there is nothing to worry about, however if it is due to the weighting mechanism then you would need to think twice.

    Second shift: I assume you are talking about dividend yields, there are too many multi-baggers giving less than 4%, to ignore them is unwise. For younger investors who do not need the money immediately as compared to retirees, you should focus less on dividends, too much investors are yields hungry and they miss out on the great returns.

    Ultimately what kinds of returns are you looking at per annum?

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  10. Actually I am just looking for 6% return. I did try my hand on growth companies, but realized I dun have the temperament for it, especially if there is no dividends.

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