Tag Archives: STI

Starting 2018 positively

Despite closing the year 2017 with an 18% upside in the Straits Times Index (STI), we saw another 90 points increase in the STI to end at 3489.45 in the first week of 2018. For myself, I am happy to have seen many days of advances last year. In the week that just passed us, like many investors out there, I have enjoyed a 5-digit figures climb a day in the three out of the four trading days. In a market like this, it is probably difficult to lose money. Maybe everybody has become an expert in their own rights. But going forward, it is unlikely that things would be repeating at this rate. Complacency may have already started to build in the minds of investors. The advances in the Dow Jones Industrial Index (DJII) has become such a norm that any retreat is seen as an abnormality. Given that DJII has some bearing on the STI, the advance in STI is also becoming more and more of an expectation.

While I am personally enjoying the ride on this wave, I beg to be now more on guard than I had been last year. From the past experience, market crashes came when we were least expected of them. The global financial crisis struck when many Americans were chasing the American Dream. The Nikkei-225 fell when property prices in Tokyo had to be paid by three generations. The Asian financial crisis hit when property prices were around their highest level in the 90s. The DOT-COM bubble burst when there was extensive euphoric belief that any company registered as a DOT-COM was a pot of gold in the making. The list goes on.

In line with the rapid advancement of the STI, many would have agreed that it is getting more and more difficult to find gems that would potentially bring 30%-40% upside to their stock portfolio. On the whole, Mr Market has been quite generous in rewarding the true blue investors due to the extremely low interest rates after the global financial crisis. Going forward, the low-lying apples are no longer there for cherry-picking. In fact, the climb in the recent months has been quite confined to the banks, perhaps manufacturing and possibly some REIT counters that generally offer higher yield. Many of the STI constituents in transports, properties and conglomerates did not really move the STI very much, further weighed down by their lower weightage compare to the banks.

 

As a matter of opinion, the STI should still remain buoyant due to the spill-over effect of last year and playing catch-up with other financial markets, and very importantly, the economic performance of the local economy. But, whether this year is going to be as good as that of last year remains to be seen, particularly in the second half.

Happy investing!

Brennen has been investing in the stock market for 28 years. He trains occasionally and is a managing partner for BP Wealth Learning Centre. He is the instructor for two online courses on InvestingNote – Value Investing: The Essential Guide and Value Investing: The Ultimate Guide. He is also the author of the book – “Building Wealth Together Through Stocks” which is available in both soft and hardcopy.

 

Final post for the year 2017

Yesterday marked the end of the last trading day for the year. On the whole, it has been a great year even though the advancement of STI could not match that of the other markets like Dow Jones, Nikkei 225 or Hang Sheng Index. Still, it has been a decent climb of about 18%.

Looking back, it has been a good year in the backdrop of the stock market performance. It is also a year that 2x baggers or even 3x baggers touch-lines were crossed after having invested and accumulated those stocks for some time. Apart from the need for good stock selection, other essence such as patience and mental fortitude to act against times of adversity are also the necessary ingredients to make them happen. But again, life has not been without woes. Comfort Delgro did not perform as expected as it tussled between the bulls and bears the whole year long. The only saving grace has been that a huge percentage of this stock holding was purchased at an average cost of about $1.50 level many years ago and partially sold around its all-time high 2 years ago, thus providing a good cushion as the stock price fell from about $2.48 to $1.98 this year. Another was Midas Holding, which perhaps, was one of those things that we act out of character from time to time.

Taking a longer term snapshot of my stock investment journey, I would have considered that it has been a great blessing. Despite the close to nothing active income for the past 9 years, the stocks advancement had well-compensated for it. The focus on long-term goal has worked well for me to continue to accumulate stocks slowly. It has also taken a lot of pressure off unlike the younger days. This has enabled me to do and develop things that we do not have opportunities to lay our hands on while working full-time.

Perhaps, the generally low interest environment, coupled with the generally mild inflation, in the new millennium has benefitted stocks. By this time, many of us would have forgotten the hardy times when the fixed deposit (FD) rates of around 5% in the late 90s and around 10% in the early 80s. Going forward, I believe going back to the days of FD at 5% could still be some way off, but still, 2% or even 2.5% could be within striking distance in the next 2-3 years barring unforeseen circumstance.  So, to expect the stock performance for the next 2-3 years to be as good as this year would probably be too far-fetch. It could even be down significantly if the unexpected happens.

Until today, I still lament over the first 10 years of my investing journey. It all started even without knowing that a cheque-like paper attachment on a perforated A4 paper was indeed dividend from this company call Singapore Bus (a predecessor of Comfort Delgro). Unfortunately, it had been trial-and-error methodologies that lasted a good 10 years until the Asian financial crisis struck in the late 90s. The greed in me then was trying to chase every single so-called money-making opportunity that came along, attending countless hours in seminars on Saturday afternoons and weekday evenings. Still, I did not make good money in the early nineties when the stock market was red-hot and end up incurring losses when the Asian financial crisis swept across Asia in the end of 90s. In hindsight, I could have probably done much better if I had sought proper guidance and adopting strategies that suited my personality. By today, I do not attend any of these seminars or even some annual general meetings (AGMs) anymore. I think I could have spent those times to learn and improve other skills and to develop things that I can leave a legacy. That said, that was also the time of awakening that had helped laid the foundation stone that enabled me to rely on this investment mode to this day. After all, we cannot learn how to swim without drinking some pool water or learn how to cycle without falling off from a bike. There are always learning lessons no matter where we are in this journey.

Going forward, maybe it is also time to tone down on stocks and focus on other developments as stock investing may become a weary chore.

Brennen has been investing in the stock market for 28 years. He trains occasionally and is a managing partner for BP Wealth Learning Centre. He is the instructor for two online courses on InvestingNote – Value Investing: The Essential Guide and Value Investing: The Ultimate Guide. He is also the author of the book – “Building Wealth Together Through Stocks” which is available in both soft and hardcopy.

Any time is a good time to invest

We often heard colleagues or friends mentioning that they were right now on the sideline waiting to pounce aggressively into the stock market when the stock market crashed. It was as though they were seeking a revenge that the stock market owed to them for the past 18 years. There were also individuals trying to study the leading signs of past crashes as they were trying to draw parallels from the past crashes in hope to find a coming one for them to punt on. Then there was also another group trying to discourage the others from investing, quoting the reason that most of the major markets are trading at around their all-time high. Over the past few years, it was also quite common to come across people who mentioned in social media that they would get into the stock market only when the STI hit a low of 1,800 points. If all these people have been staying out of the market due to their respective reasons, they probably have missed out big time.

An article featured on the Sunday Time last week entitled “The time to invest is now.” As I read through article, I must say I agree with the writer 110%. The article revealed that a famous investor said the market was going to crash within a year in the midst of European crisis in 2011. Should we have followed that call and stay in cash, we would have lost plenty of opportunities hiccupped by stock markets from time to time in this relatively long rally from then till now.

One noteworthy point in the article is the following

a.       If $100k were to stay in cash since 2011 till now, the return would have earned $300.38.

b.      If the $100k were to invest in ST index, the return would have been $46,243.36.

c.       If the same $100k were to invest in MSCI All-Country World Index, it would have made a return of $111,869.96 or a return of more than 110%.

 

Speaking from my own experience, we often thought that the timing was not right to invest, but after a few months, we regretted for not investing because stocks that we were interested in simply got higher. I cannot agree more with the writer that stock investing is not a binary decision, that is, to be totally in the market or to be totally out of the market, and not somewhere in between.  But essentially, in stock investing, it should be somewhere in between. Periodically, we should put some percentage into stocks while another portion to remain as cash depending on our comfort level. It is this periodic allocation that probably wins the race even if one is just a medium performer in stock picks. The cash portion, by itself, is a good cushion against any crashes or significant meltdown that can occur from time to time.

 

People who are serious about in stock investing would agree with me that it is like managing a business. And like in a business, we simply do not get into it because the time is good and out of it when time is bad. Most of the time, we have to steer the business as it moves through the good and bad times. In the past twenty years, we witnessed at least two major stock crises that saw the STI tanked 60%. Apart from these major crises were numerous smaller ones that had depressed the STI of somewhat between 15% and 30%. If we look back in history, the time period between all these crises was not that long, at most 3-4 years in between. Each time when it occurred, we do not know the real bottom until it had passed us convincingly. Only then, we start to regret in hindsight. 

A very good example was the marine and offshore industry. Just 18 months ago, we saw everywhere is bad news and the two major oil rig producer SembCorp Marine and Keppel Corp were hitting their lows. But by today, the share price of the two stocks has already past their lows. For those companies whose stocks have been either suspended or still struggling to get out of the problem that plaque the industry, it is because they had over-stretched themselves during the good times.

 

To date, the Dow hit its all-time high in 30 of the 54 months since the global financial crisis. Within a year since Donald Trump was inaugurated as the president of US on 8 November 2016, the Dow advanced more than 5,000 points to 23,400.86 as of market close on 26 October 2017. Whether we are trading via HKSE, Nikkei 225, any European markets or the STI, we are either at the respective all-time high or near to it. Perhaps, I may have selected a wrong time to write about this because all these markets are at their all time high, and may be in for a huge fall in the near term. However my personal experience in my investing journey showed that cashing out can sometimes be worse than simply stay on course. My ill-timed sell-out and inability to carry out a re-purchase program during the Asian financial crisis was a costly mistake that I wish to forget. In the other 4-5 crises into the new millennium, it seemed that I had done better. True, when a crisis was in the midst of gyration there was a lot of fear, but it seemed that things got better than it originally started when things were over. So, actually anytime is a good time to start our stock investing journey.

   

Brennen has been investing in the stock market for 28 years. He trains occasionally and is a managing partner for BP Wealth Learning Centre. He is also the author of the book – “Building Wealth Together Through Stocks” which is available in both soft and hardcopy.

SPH – At its lowest for now?

When a spring is hammered very hard, the spring back tends to be very sharp. This is probably the best description for SPH this week.

In the last few days, most of the news or discussions related to this stock appeared to be bad, or at best, neutral. Being a by-stander watching from the sideline, it appeared to me that nobody seemed to have anything good to say about this stock. Indeed, it was hammered very hard for the first 3 days of the week hitting a low of $2.54 per share on Tuesday and Wednesday. In the last two days, however, it seemed to have rebounded quite strongly to close at $2.68 by Friday, though it is still lower than the last week’s close at $2.74. Perhaps, these were some opportunistic purchases made by contrarians. After all, it SPH has never experienced this low except during the global financial crisis in 2008/2009.

 

For the last 5 quarters or so, most of the news related to the stock were generally not positive. Pessimism over this stock grew in every release of quarterly results. Perhaps, the sell down this week was in anticipation of the poor results for the coming quarter as well. So if the quarterly result is not as bad as expected, then maybe we can expect a small price re-bound. (I say small because SPH’s economic moat is not strong at this moment for a significant turnaround) Of course, the other way also holds true. If the result is worse than expected, then perhaps we should expect a further sell down.

    

(This was the abstract taken from a Facebook post in April 2016 for past students. At the time of writing the Facebook post, things were still not as bad. So the expectation was that it probably should stabilize at around $3.70. News turned out to be very bad for the next 5 quarters. Yesterday, the share price closed at $2.68.)

Here is the dilemma. It has been a happy situation to have unloaded all my SPH stocks in anticipation that SPH would face hard times ahead. It has been too heavily dependent on the print business. Since then, I was on a stand-by mode, waiting to buy them back at a lower price. It should not just centres itself around the print business. It has to lay out a sustaining business proposal on the table before the share price can turn up convincingly. Now, with the bad news already significantly discounted in the share price, it may be the time to re-consider buying some back as ‘insurance’ in case it really made a turnaround or at least stabilized after more than a year of battering. Hopefully, it is at least a breather for now. It had lost one-third its value from an average price of about $4. For all we know, the share price always lead the actual company performance. So buying back may be a good idea if we believe that something magical can happen in the future. Let us see what happens in the next few weeks.

 

Brennen has been investing in the stock market for 27 years. He trains occasionally and is a managing partner for BP Wealth Learning Centre. He is also the author of the book – “Building Wealth Together Through Stocks” which is available in both soft and hardcopy.

 

 

Remember that money is made when we buy during pessimism

In the last few months, the stocks markets in many regions were reeling down from their highs around April. Several months have passed and many investors seemed to have distanced themselves from the stock market. Some even vowed not to come back again. Just a few days ago, the STI hit below 2800. it had fallen more than 20% from its recent high, putting it in a bear regime. But, then the question is why so downbeat when these may be  opportunities that we can buy back stocks that we had sold off during the highs. If the stock prices did not drop and remains high, it would be impossible to pick up the stocks again. Yes psychologically, we tend to be more pessimistic when the market goes down and less optimistic when the market goes up. But isn’t it that we have often been told and be reminded that stocks can go up and down. It’s only that we accept that there is volatility and willing to embrace this volatility that we will become more emotionally detached when dealing with stocks. Frankly, it’s not easy in the beginning of my investing journey, but over the many years of investing, after going through many cycles of ups and downs, I start to detach emotionally from the stock market volatility as I know I have no control over it. I just continue to focus on my long-term goals irrespective of the market conditions. Instead of crying over the losses, we should focus our attention on things that we can control, such as doing our day jobs, completing our projects and working on something productive and enlightening. That’s essentially why I am never in trading and, very embarrassingly, I have never had the first-hand news of the stock market. And, very certainly, I admit that I can never be a good trader.

To me, stock investing should not be a standalone activity. It should be  part of personal finance that also embraces money management. We should ensure that we have sufficient liquidity such that we are not be put into a forced-sale situation or be missing buying opportunities simply because we do not have sufficient funds. Just 2 day ago, it was reported on The Straits Times that $40b have been pulled out fom the emerging market. Certainly Singapore is one of the discarded victims as well. As mentioned in my earlier post, due to the relatively small size of our stock market (and in fact regionally), just taking away a few billions dollars off the stock market could bring down our stock index drastically. Yes, there is going to be a technical recesson ahead. Yes, the China economy is not performing well. Yes, the currencies of our neighbours are hitting historical lows, Yes, the writing is on the wall that US is going to hike the interest rate. But then, aren’t these yesterday’s news that have already been priced in the stock index. So while some funds might have left us, opportunities may present themselves such that by the time when funds do come back again, we can ride on the rising tide. Of course, I have to qualify that I do not mean that we should buy aggressively starting today. What I mean is that after all these brawls, isn’t it time to open up our eyes to look at the stock market again? Frankly, I am not expecting that the stock market is going to turn sharply in the next 3 months or so, or perhaps not even two years down the road, given so many issues that we have no control of. Neither do I dare say that this is the lowest point and that the stock market cannot go further down. What I am saying is that to make significant money, we have to buy during times when there is extensive pessimism when everybody is looking away from the stock market, and sell during euphoria when even those who have never been in the stock market are in it by herds and droves, not the other round. Perhaps, look back into your stock portfolio now and try to recall when you had bought and sold those stocks that you had made big money (at least percentage wise). Very likely, those that you had made big money were bought during bad times and sold during euphoria, unless you are a big-time speculator trading $100k each time without a blink of your eyes.

Also read:

  1. Market psychology – Are we at the market bottom? – 19 Aug 2015
  2. STI – Is it better to be on selling mode now? – 9 June 2015

(Brennen Pak has been a stock investor for more than 26 years. He is the Principal Trainer of BP Wealth Learning Centre LLP. He is the author of the book “Building Wealth Together Through Stocks.”) – The ebook version may be purchased via www.investingnote.com.

 

 

It’s likely to be 3rd quarter window dressing

The stock market ended at 2787.9, a drop of about 4 points from yesterday’s close at 2791. Today’s trading range was drastic. At its lowest point, it was 2740.36 against the highest point of the day at 2790.60. The day’s range was a whopping 50 points difference. The climb started drastically only in the afternoon. But why did it made such a recovery after having dropped 50 points from yesterday’s close?

Chart

It likely to be an end of quarter window dressing. the climb is not likely to be sustainable. Perhaps, the STI may drop again once we go into the new quarter. Hold tight, guys.

(Brennen Pak has been a stock investor for more than 26 years. He is the Principal Trainer of BP Wealth Learning Centre LLP. He is the author of the book “Building Wealth Together Through Stocks.”) – The ebook version may be purchased via www.investingnote.com.

STI – Is it better to be on selling mode now?

The STI reached a high of 3549.85 on 16 April, only second to the all time high of 3899.29 made on 10 Oct 2007. This means that the recent high was about 350 points or 10% below its all-time high. Unfortunately, the STI seemed to be going downhill from 16 April reaching at 3295.13 the end of today’s trading day, a difference of about 255 points from its recent high. This means that between 16 April till today, the STI had dropped quite significantly by about 7.0-7.5%.

STI_6mths

Given the drastic drop, many people seemed to be looking into buying or bottom-fishing as some may call. In investing psychology, we call this anchoring because we tend to anchor or fixate the recent high of 3549.85 as an anchor point as if the STI will hit it anytime soon. However, in reality, is STI going to go up anytime soon? Personally, I am of the opinion that it may not. In fact, it may continue to languish for a while given the uncertainty in the US interest rate hike. Economy-wise, I do not think Singapore did well to enable the local stock market to roar. Currently, we are also facing structural and labour issues that will take time to resolve. Regionally, China is also not doing well economically, and the regional currencies are also getting weaker. Hence, it is unthinkable how the STI can tun-around anytime soon. In fact, may be weakening gradually or hovering around this level at best.

Taking history as a guide, in the worst-case, the STI was at about 2370.3 on 12 May 1996 when the government slammed the brakes by increasing property downpayment from 10% to 20%. It was just shy of the all time high then of 2493.7 made on 7 Feb 1996. After 12 May 1996, the STI started to tank accelerated by the Asian financial crisis. In the following two and the half years or so, the STI tanked all the way to 805.14 on 7 September 1998. In total, the STI sunk 66% within that period.

(Brennen Pak has been a stock investor for more than 25 years. He is the Principal Trainer of BP Wealth Learning Centre LLP. He is the author of the book “Building Wealth Together Through Stocks.”) – The ebook version may be purchased via www.investingnote.com.