Friday, March 27, 2020

Random Reflection: Sell actions?

This post is a think-aloud post. Readers feel free to poke fun. I need to crystallize my thinking through writing, and reading about your persepectives is nice.

Market is going up more than it is going down this week, so I sold some counters which I managed to buy at a low price. However, I didn't really plan this. So I am confused.

Reasons to sell
1) I believed this is not a bottom, and I get it back cheaper, perhaps even cheaper than my third tranch buying price.
2) I wanted to reduce the size of counters which I have already activited 3 rounds of buying. The third round of buying allow me to sit on profits on 20% for CSE and close to 40% for First Reit, I thought it is too good a chance not to do some rebalancing.
3) With this Sell, I increase cash, have more ammo to do third round investing.

Why I suffer from cognitive dissonance:
1) While 20% and 40% profits are rather nice profits in such market, they are not above my average purchase price.
2) If I bought earlier, thinking that I have got a price that in intrinsic higher than what the market it pricing, barring my company going kaput, then what the rush to sell?
3) If I sold to protect profits and adjust portfolio, why did I buy at the first tranche?

Some answers that still leave a nagging feeling:
1) I did not know when is the best price, so I want to have a good average price with a good size, hence I buy the way down, and sell the way up, trading buy and sell, and having lower lower average price with the same ammo.

2)  If I sell thinking that the market will fall again (Another post to explain why), why not sell more? Sell all the counters that are sitting on profits? I would think the reason for selling some and not others, it's due to the quality of companies and the projection of earnings, assuming the Covid 19 dun drag beyond 2020.

Friday, March 20, 2020

Random thoughts: Reflection of bear market investing.

Just a log to write down my thoughts. None of these are analysis stuff, just my thinking 

1) I cannot prepare for both a bull and a bear, or can I? I am kind of preparing for a bear, I hold 60% cash and keep telling myself not to go below it unless there is a correction (10%), I wasn't even thinking about bear a month ago. 

On hindsight, for those who took advantage of a bull, they would have piled up on the investments on their way up. But, as u sell you way up, buy high and sell higher is risky business. If u refuse to buy high and sell higher, u restrict your gains in a bull. 

U could also have offload bulk of your winnings earlier, say when market just correct 10 percent and now u huat, bull I win, bear I win. But that is easier said than done, it"s almost like striking lottery. Let us not forget the last 2 years are full of false bears, and a panic of losing out. I am not sure if anyone can convincingly sell out. Also, no one knows if a sell out decision is right or wrong except on hindsight.

Now, I have took the middle approach of investing in tranches... That means as market increase, I sell more. (Was 80 percent cash at one point of time), as market drops, I buy.

However, a company could already drop by 20 to 40 percent because of it"s industry cycle and not due to general market fall. So, I continue to buy when I see such companies, just that I am mindful of the cash level of portfolio. This bear shows me, even those which has already went south by 50 percent, can go further south by another 50 percent. So having the cash to accumulate at 80 percent discount is rather important. Your cost of purchase went down 80 percent, and the cost of AV. Down becomes a lot cheaper. 

As I buy, and accumulate shares, drawing down my cash, CPFand Srs fund on a almost of a daily basis, I realise I will slowly sell when market rebounds upwards ( risk management as the size of investment will be smaller, with better margin of safety), doing this will prepare for bear, but reduce the profits if bull returns. 
* I have no such chance yet to do what I plan. 

Assuming100 percent of your counters fall at least 20 - 25 percent, and 75 percent of your counters fall 35 - 45 percent and 50 percent of your portfolio fall 50 - 60 percent eventually. 

U cannot be more than 30 percent vested before bear starts. Is this an easy call when u see all your friends and bloggers say u are hogging too much money and they are making a splash? 

Also, when u are only 30 percent vested, are u going to sell further ??  My best investment before this covid 19 is MIT and A REIT, MIT is still above waters but A REIT is already in red, (SMOL, if u are reading this, u will say see, never sell), but when u sell to increase cash and left only 30 percent, will u really continue to sell? 

Hence, I think, many theories doesn't really work in real life circumstances. I have no regrets buying and extending my loss, because I believe I could not have done better with portfolio cash level manGement. I could have done better with my entry and exit. But that is second part.

2) I didn't keep to rule of 20 percent fall to accumulate. I bought QAF at 76 cents, just weeks before they announce positive profits guidance. Within days, I sit on 15 percent gains. When the correction starts, I accumulate more at 78 cents, thinking what a steal it is, as I dun think bakery business is going to be badly affected by Covid virus. Supermarket is still doing brisk business. Bread is a staple. 

I could have save some ammo and average down at more attractive price. The same with DFIH, althought it is just a few percentage point off 20 percent. 

As I drawn down my cash, I ask myself to pull the trigger with bigger drop of 25 percent or even 30 percent. That seems to work better. 

Hence, if I ever get a chance at bear again , I will do 20.percent, 25 percent and 30 percent drop accumulation for companies with business visibility and 25 percent and 30 percent drop accumulation with hazy business visibility. 

3) Business analysis is important, as it gives u conviction that the company can survive. Of course, business conviction is based on assumptions and projections, but price fall is not a business assumption. 

What I am fearful, I ask myself, if I get it wrong, do I accept zero, permance loss. What is the odd of that happening based on your analysis. 

Once I have the answer, I realise is still have the balls to squeeze the trigger to buy when the counter has fallen some 50 percent ...

I bought first tranch when it fell 30 percent, and it feel another further 30 percent in 2 days and scare the shit out of me.

I ask myself to calmly think through whatever factors I knew affect the stock. I bought more.

For transparency, that stock is first REIT. I believe the parent company Lippo and Siloam hospital have the financial strength to survive the currency run on rupiah, which is the main factor costing the fall. 

As for 2021 renewal of contracts, those contracts not pegged to SGD doesn't mean they no longer need to pay rent. Assuming they need not pay rent, the loss is 25 percent revenue for the 1 flagship hospital and 3 mature hospitals ... But the fall in price is... ... 50.percent from my purchase price of 96 cents and 70 percent from its peak. Ridiculous.

If they no longer pay in sGD means savings of 30 percent, the fall in revenue for 2021 will be even smaller. 

Ok. That's all for my thoughts.

Finally, u just need to be lucky in stocks. My friend who didn't buy anything until now. Yes the best stock performance than 90.percent of investors lol

Wednesday, March 18, 2020

Random thoughts: Being thankful in a crisis

Not sure if some will find this post insensitive, but here goes.

In this crisis period, I am thankful that I am reasonably safe with my job. I might get a pay cut if this crisis drags on, but it is still less painful than what is going on with many sectors. I was taking taxis today, as my car was sent for repair. The uncles all told me earnings are halved. 

I am glad that I am not fearful of this Covid19. I am not sure how this sound to u, but I have cut off completely any entertainment or meeting of friends. I dun really eat out, except for wee hours in the morning, where I indulge in a hot bowl of noodles before I go to school. There is hardly any crowd in the morning.

I washed my hands frequently, and has a santitizer bottle with me. I avoid air-conditioned staffroom and usually mark around the study areas of the school. 

I did these to be responsible to my family and also to my kids. If despite my best intentions, I am infected by it, I leave it to fate/god to go through it to the best of my ability. 

I was rather panaroid and fearful at the beginning. I do get a bit worried once in a while, but I am rather at peace now. I know there are many around me who do might not feel the same way. Perhaps it was a defiance trait, and I think somewhere is February, I suddenly heard a loud internal voice, " F*@ it, living in fear us worse than dying", thereafter, I try to focus on my work and enjoy my work.

My work has become more enjoyable. I enjoy the company of my P6 pupils. My P5 pupils did not do well in the CA test, and some parents are losing confidence in me. I was demoralised but it is just a passing cloud that I know will not pull me down beyond one day. 

Financially, I have only about 30 percent cash left. My portfolio is 12 percent in the red. I could pump up the cash to 40 percent if necessary but I do not really wish to activate my reserves. ( Reserves are not emergency fund,these are No-No) I am thankful that as I look at my bleeding portfolio yesterday, I could think clearly and objectively which companies are my priority to buy if prices continue to head south, how much sizing is too much of a risk, which counters to use CPF to stagger the buying etc. I was not so Zen in the 2008 bear. Maybe that is because I know I have some funds to tap into if markets really continue to go south and I have already built up a reasonable emergency buffer. 

I am thankful that my family are still in good health. 

Lastly, I am not sure how true the reports are, but with the drastic reduction of human activities, it was reported that pollution has decreased and mother earth is healing itself. Protests in Hong Kong has died down. I am under no illusions that the problem will resurfaced after the virus, but I think this cooling off period might actually increase the number of people willing to take the middle ground, and reduce plain exploitation of certain interest groups that are too radical.

Covid 19 is a mirror. I saw the ugly side of me. Its fine, I can live with being ugly. 

I am thankful, I am not blind 

Friday, March 13, 2020

Random thoughts: How are you coping with the bear?

The bear market has brought intense reactions. Everyone has different plans or coping mechanisms.

My friend ask for divine advice. I am not kidding. The advice he got is stay out of the market for the time being. That is when I started buying when STI is at 3000. 

The way I see it, there are a few ways.

1) Exit to a level of comfort, taking some loss if necessary and stay out of the market 

2) Accumulate at various points and continue buying

3) Short the market

4) Rotate your holdings, buy and sell at the same time and liquid some bonds (if u have)

5) Look at signals (whatever sect u below) and trade in and out of market

If u have a different option that I have not heard of, please leave a comment below.

The point I am trying to make is, no matter which path u take, u will most probably be bombarded by views of people walking different paths. They might claim how dangerous it is to walk a way that is different from theirs. 

My advice is: walk your way. It is ok to do a U turn. But it is really not a good idea to run around various paths, fudging in and out of different routes because you wil end up going nowhere.

Before u start, have u plan your path? Why are doubting your own plan now? It is ok to discard a plan due to conviction but rarely it is a good idea to fudge between one path to another. Is the grass greener on the other side? Really? If u have done due diligence in peace time, now is the time to execute your plan and see if it works. Use your own metrics to determine your own success.

I am taking path 2. People who are on different paths, feel free to share why u choose your path, but rest assured I will not listen. LOL. For those taking the same path, I hope my post provide some company in this lonely walk.

First of all, let me explained I have been waiting for this Bear for years. So much so that I admit I might have squeeze the trigger too early. I am climbing up mountain, and have been persuading myself not to go below 60 percent cash before the covid 19 crisis, even though there were many counters I have wished to owned. If I do not accumulate during a bear, when do I do it then? During a bull? 

As the market tanks, I went on a buying spree. I have calculated that I can enlarge my portfolio in 3 tranches. I have fired off the second round for about half of counters in my portfolio. A few counters have been holding up rather well such that I have not yet had the chance to accumulate. I usually wait for a counter to fall 20 percent before I consider if I would enter again, if the counter does not have strong earning visibility after my analysis, I will waited for a bigger drop of 20 to 30 percent, but I usually pull the trigger at 30 percent. At 30 percent fall, I ask myself why I refuse to buy, and will seriously consider selling that counter. So far, I have not made the choice to sell. 

As of now, I still has 35 percent cash, down from the peak of 60 percent. It can be raise further if I choose to redeem my cashback of my policy (no impact on termination value or risk of loss) 

As of today, my portfolio is about 11 percent in the red. Although there is some apprehensiveness, I still lookout for valuable buys. Of course, I am also slowing down my purchases but selling is hardly in my mind - not because I am a stamp collector but because I believe in the businesses that I bought. 

I am sharing what I am buying to remind myself what I have done in a bear market and review what I could have done better after this covid 19 blew over. (for better or worse)

For cyclical play, I am betting that they can survive this crisis. They might make smaller profits but will unlikely go into loss and when better returns, hopefully I will be reward with better valuation. The counters I have accumulated or initiated are:
1) Silverlake Axis
2) Sembcorp Ind
3) Diary Farm
4) Hong Kong Land
5) SIA engineering

For dividend yield, counters accumulate include:.
1) CSE global
2) QAF
3) DBS
4) Cosco 517 (HK)
5) GA pack 468 (HK)

On watchlist for this category
1) Singtel
2) Taisin Electric
3) YZJ

For earning growth. Under current environment, this group is highly unlikely to perform
1) Koufu

On watchlist for this category to accumulate of initiate position 
1) Capitaland
2) Raffles Medical
3) Pan United 

Contemplating Sell counters
1) Singpost

Do nothing counters
1) MIT
2) Ascendas REIT
3) Singapore Shipping 

As I buy DBS from 23 to 22 to 21, etc, the term used by others not in the path is "kena burn" etc. In my mind, I am expanding the weightage of dividends counters in my portfolio. 

As people talk about preserving cash and sell, I ask myself if the company is going to see better days and survive this without going into loss. If the answer is yes, I will hardly sell. The next question I ask is whether the counter is a market leader that has the competitive edge to ride the way up with lesser competition after the blood is shed? If the answer is yes, I ask for a lower mangnitude of drop before I buy. I am telling myself that I must be prepare to see my portfolio go down 30 percent if I manage to use all 3 tranches and market really go down 50 percent . The more u buy the more you lose. But I am planting the seeds for harvest when autumn comes.

I am also telling myself I am accumulating a portfolio at low prices and not at market high. This enlarged portfolio should yield 4 - 5 percent with some safety of margin when the black swan sail away.

There might be a better path. I wish sincerely all those in other paths the best. That path might also be more rewarding. But similar to life, we walk the path we want, and most importantly, we be at peace as we walk, since it's our choice. If someone walks with us, great. If someone walk another way, say hi and may we meet again. 

How are u doing ??

Monday, March 9, 2020

Random story: Bear hunting

The bear is out.

No one knows the size.

Some were asking their loved ones to stay at home and avoid going out. The covid 19 only affect human and not the bear.

Before sightings of the bear, many hunters were thumbing their chest, talking about their hunting skills, advising others to have the right weapons, store the right traps, so that that could have a bear feast and sell bear paw, a delicacy to Chinese at a high price. However, all these hunters are finding excuses not to go hunting now, the most common one is that China has banned wild meat and bear paw can't fetch much anyway.

It wasn't like that initially. When sighting of bear first surfaced, people were clamouring "bear bear bear" or "feast feast feast". It is only when the first blood spill on the street and not one knew actually how big the bear is or how many bears there are, that many bear hunters change their tune, saying defensive is the best offense.

There is another sect of bear hunters, who are very frequently impersonated. The value hunters, with another branch call the business hunters. Many claim to be their disciples, some even spring off different sects of their own, claiming mastery of their hunting skills.

They forgot hunters from this sect are also  zen masters who don't calculate their hunt every day using a scale.

These people trace their ancestors roots to China Sun Family during the spring autumn warring periods. They knew building up a army takes a thousand days, but the useful deployment of it could take only a day or two. They also knew Victory or Loss, is just another day affairs if we are fighting a bear. Some bear hide in ambush and even renowned members from this sect get mualed at times.

Yet, they are courageous, and in moments like this, they execute what they have learn and went Bear hunting. May God bless these warriors. Some will not return.


Some will return, bearing battle wounds. Yet, they have no regrets. They are true warriors from the sect, descendants of Sun Family.

Sunday, March 8, 2020





你的 “bro"





Saturday, March 7, 2020

Cosco 517

This is my second overseas investment. However, it is my maiden investment into Hong Kong exchange, my first is GA pac,which is also in Hong Kong and both were purchase within the same fortnight. 

I shall let pictures tell the story of why I bought. Maybe u can pinpoint the main reason why I think it's a good deal.

This is the story or business part. 

The numbers part is below. Which numbers do u think catch my attention?

....... ......

The numbers is interest income or finance income's proportion to operating income, and u can understand the risk of this business. Unlike YZJ whose finance income come from riskier HTM investment, 517 income come from bank deposits.

Shipping is a scary industry, but 517 is the back support service of this industry, sparing it from the vaguarlity of containers rate, port utilization, etc.

Also, one way to play this company is waiting for a special dividends when the holding parent need cash to help other brothers and sister. 

Yield is respectable, decent. U can't find a 6% thereabout counter that is net cash in Singapore.

Dividend policy is minimum 50 percent payout, although they have been paying 75 percent for the recent years. If they go back to 50 percent, yield will not be that attractive. 

The oil trading division has run into troubles recently but they manage it without big impact to bottom.line. Topline is affected because oil supply is low margin high turnover kind of business. 

I am no insider for shipping industry. But if u see the oversupply of ships, bulk etc, it has been around for quite a while and 2017 is a very short respite for new build orders. The bottom will turn sooner or later, although it is likely later due to trade disruption from US China spat and Convid 19. China has promise to buy more from US if this covid 19 has not draw a spanner to this arrangement. The new sulphur threshold for marine fuel might accelerate the decommission of older ships earlier once the threshold is reinforced more rigourously. 

Friday, March 6, 2020

Buy on a story, sell when plot turns bad

This will be a short post.

I believe in investing, we need the connect the numbers to a story to make better sense of a business. U can call it growth modeling or revenue projection, but I feel both u can't really make it buy or sell call without both.

For a stock that I owned, I usually sit up when it falls 20 percent. I will ask my self to do 3 things. 1) Buy more, 2) Sell some or all, 3) find out more so that I can do 1) or 2) within days or a week.

This approach has mix results but it keeps me sanity and allow me to sleep well. I will share examples and what I have learn from them

A few examples. 

Sembcorp Industries, SIA engineering etc. Both I have been accumulating as they retreat. SIA engineering has rebound from a low of near 2 dollars and to a high of close to 3 dollars before this covid 19 wreck havoc on the aviation industry again. My story then was, supply of planes has been increasing year after year, although new design of planes lengthen the time before a D check is required, it is cyclical and the market demand will return, as long as SIA Engineering is competitive enough in the demand side of the equation. ST engineering aviation seem to turn earlier than SIA engineering, but I kept faith as long as they dun go into loss. If there is no loss, where is the chance of permanent loss? 

Sembcorp industries as a whole is still profitable. O and G has reached bottom although no one knows how long the bottom will last. Recently there is some question mark on the competency of management having gotten the UK electric demand wrong. But since Sembcorp is a cyclical play story, and that the story is intact without high risk of  permanent loss, I am still accumulating. The story of Sembcorp industries is it has skins in both traditional and renewable utility business capability. Wind farms, solar, coal fired plants, etc... The question is whether the management will continue to dig holes for themselves. I am also still waiting for a potential catalyst to spin off their mature utility business into a trust which will usually yield better valuation than the holding company itself. At 0.5 to NTA now, I dun see why white knights will just let this company go the way to the dodo.

Net link
The story is that their growth will offset the 40 Mio loans taken to push up their dividends, and I am happy to sit of a 6 percent yield for a defensive business. 

There ahould also be more demand due to starhub cables being phase out, and 5G innovations ( longer term ) 

When the growth didn't materialize, I sold at a 10 percent profits. On hindsight, that 10 percent will.have become a 40 percent capital gain have I hold on to it.

From a low base in 2018, I correctly projected it earnings could double in 2019 and is sitting on almost 40 percent gain at one point of time. I did sold some to locked in profits but the 40 percent gains has  turn into 30 percent loss.

In 2020, I no longer expect doubling of profits but I am expecting around 10 percent growth. Yet the last 2 quarters disappoint. Given that SLA project earnings could be lumpy, I waited for clarity and the price continue to slump.

Recently SLA trigger that 20 percent fall decision time. The story of high demand for digital platform for fintech and existing financial companies is still intact, but it seems the good year sof SLA is over. They do not seem to be able to capture the market, and the injection of Goh companies did not improve topline. 

Yet, SLA is still highly profitable. The mix signals that affect my decision is that SLA is on a shares buyback spree for quite a while and since GOH owns more than 65 percent of the company, I am.also speculating if he intent to bring the company private. 

I did make another bid to accumulate the shares but I didn't manage to get any. I seem to be quite luckless with this counter as the counter rebounds after that failed bid. I would think the next quarter will be decision time to really halve the investment or even divest completely if the company still do not show that the plot of story has not done bad, by either showing they can get good contracts or that their lumpy recognition is at work and next quarter is much better than previous. 

QAF, HK land, Koufu, DFI, Cosco 517, GA pack

All these are recent buys for the month of Feb or March. They all have turnaround story to tell. I shall not go into individual companies but cash flow is good and except QAF, they are all sold down due to a event, back swan or not. As someone said, events pass. Covid 19 will not be a structural disruptive event. People are not going to stop taking cabs or visit restaurants once this is over.  All have maintain their dividends and if their balance sheet and cash flow continue to hold up, I will accumulate as they fall. The only counter nearing the 20 percent fall threshold is DFI, the rest are holding up well or are already above purchase price.

1) always continue to look forward the next story, SLA after the doubling, does not have a projection number although the number is intact. When the quarter is bad, they should have been some aggressive trimming of position. While I gotten Netlink wrong, my portfolio is not hurt in anyway by my quick decision. Have I been equally decisive in triming, I could have gotten out at break even price and collected dividends for free. 

2) the stronger the projection of numbers, the better it is to guage whether the plot has turned bad. Pan United is just like SLA, having already double its earnings, and increase its dividends. However, what is different is the 9 billions construction demand from IRs is still not in the picture. I believe Pan united can have a good 2020 given RMC price is on a roll. I should have the same level of story to tell when I make my decision about SLA.

3) Its damn dumb luck.
Hahahahahah the best anticlimax of the story. Could I have guess what will happen? I already said, I connect story (frictional) with numbers (a pack of lies) and hope to do well. This is because I simply enjoy doing it. I have not the slightest idea that QAF will turn this quarter. I just feel that their bakery business is still doing very well and Riviera should turn given beconan prices have improved and feed price has stabilized.