23 November 2010

Stock down, more buyers than sellers

Ok, so there're several key events these few days.  Incident in Korea.  China imposing further controls.  Ireland forced into securing a bail-out. Thanksgiving holidays on Thursday.  US floods the market by printing more bills.  My cable box reboots itself again.

Is there enough to cause the overall drop in the market?

Mysteriously, I noticed many SGX stocks went down today, yet the Buy volume exceeded the Sell volume.  What does this bodes?

DBS Bank 4.7% NCPS - The Aftermath

So, the IPO outcome is out.  And the way DBS did it, everybody who applied got something.  I guess that's one way to secure 100% good feelings from all parties?  DBS has certainly lived up to the intent to make this available to retail investors.

There are naysayers who argued that it's bad idea to go for this though. Their argument stems from a sense of conviction that they are good stockpickers and can secure a better rate of return from their investment.

I belong to those who would readily admit at not being able to see the future, and would rather hedge my bet.  At $10,000 capital and $470 of annual returns, that gives a steady stream with fairly good assurance for the next 10 years.  Something I can sleep easy with.  [One is reminded of course of Lehman Brothers.]

Good enough for a trip to Bangkok annually for one?  Or a day out to Universal Studios Singapore annually?  Or 20 meals at Burger King for the family?

It's all about cashflow.

17 November 2010

A weekend at Resort World Singapore and investment cheese

It was a most hectic, satisfying and yet tiring weekend as my wife and I (and the liabilities known as kids) celebrated our wedding anniversary at Resort World Sentosa (RWS), including a day out at Universal Studios Singapore (USS) and a night stay at the Hard Rock Hotel.  It was a pretty expensive but most worthwhile affair.

While queuing up for a ride at USS, my son told me why when he was much younger, he had this perverse fear of entering rides that involved 'scary' tunnels.  He said that he used to see people on the rides going into the tunnels and then when they reappeared, the rides came out empty.  He thought that something bad had happened to those people. He thought they had died and had been whisked away somewhere!  No wonder we had to drag him screaming into those rides in the past. Revelations!  Now, he's the one who want to go for those rides, and I'm the one being dragged screaming into them.  *giddy spells*

Cheesy Lesson: It's the same fear when most people think about investment, that it's so high risk they do not dare to get into it.  It's simply the fear of the unknown and the lack of financial education.

The Waterworld show was the same act we had seen before at other Universal Studios.  The pre-show 'entertainment' served its purpose well in rousing the crowd.  Consistent with the theme of waterworld, water was a-plenty.  Kids just love to get wet, so they were all game for the front row seats which were guaranteed to be wet affairs.  Following the show at noon, you could imagine where the big flow out crowd would head to - lunch!  And so, the restaurant just outside the show venue was full and overflowing.  We took a longer walk to the next zone and came to another restaurant where there was still substantial capacity.  I'm sure if we were to walk further, the restaurants would be even emptier.

Cheesy Lesson: When money flows out from one market, it just goes to another.  As the US market sinks with its monetary policies that investors find unattractive, the money flows to another market.  Like the number of people in the park, and at the show, the nett numbers remain the same.  Demand has to be satisfied.  And if one were prepared to look hard enough, there will be something somewhere to satisfy the demand.  Look further afield.

On the way, we walked past "Revenge of the Mummy", the sign at the front said "05 min queue".  We had lunch at a restaurant serving Middle-eastern and Indian food.  So it was wraps, humus and such.  Done with lunch, we backtracked past the "Revenge of the Mummy" ride but decided to skip it for later.  The sign said "30 min queue".  We figured it would be a bit too much to take this ride immediately after lunch.  Probably there would be a family of merlions had we done that.  We queued up for a tamer ride to let lunch 'settle down'.  It was a lengthy queue though.  I think the ride was called "Treasure Hunter".  But we didn't find any treasure.  Following that, we finally proceeded to "Revenge of the Mummy".   Strangely, there was no apparent queue.  As we walked closer, we found the reason why: "Ride temporarily closed due to a technical problem."  Duh.

Cheesy Lesson A: When the price is low, nobody goes. When the price goes up, everybody wants. But by then, it may be the wrong time to do so.  It may already be a dead beat.

Cheesy Lesson B: If you missed an investment opportunity (like a wonderful IPO), there will be a sense of regret, or missed opportunities. But, move on.  There is no point standing around waiting for it, the ride has moved on.

We checked in to Hard Rock Hotel and took turns to shower.  With 4 persons, that took awhile.  In the midst of this, there was a knock on the door.  Wo and behold, we were served a chocolate cake, compliments of the hotel, in view that it was our wedding anniversary.  Impressed we were.  The cake was exquisite!  Yum.

Cheesy Lesson: It's good to invest in a good stock (hotel). And it feels good to get a bit of surprise along the way, like a good dividend payout (free cake).

Dinner was a lovely affair at Starz Restaurant, which was located within Hard Rock Hotel as well.  So it was convenient.  The seats were comfortable, the service attentive and friendly, the food was ... just ok lah.  I probably wouldn't pay that kind of price for a buffet dinner for this kind of spread.  There are probably better choices elsewhere.  But, what the heck, the location, the occasion, satisfaction.

Cheesy Lesson: The jury's out on this one. If a stock looks good, seems good, but the price is high, is it worth a buy?  I'm not sure.  If it is indeed a 'good' stock, it could well be.  On the other hand, if it turns out to be a dud, it's all downhill.

Discarding the Casino, since I derive no joy from paying $100 for entry and so didn't bother, RWS and USS provide enough for a worthwhile vacation weekend. Joy.

As to who moved the cheese, go ask my son. He's busy moving the cheese in "Mousehunt".  Gen Y.

10 November 2010

DBS Bank 4.7% Non-Convertible Preference Shares

DBS has announced its new NCPS at 4.7%. Application is open to retail investors from 11 Nov, 0900H, and closes on 18 Nov, 1200H.  The 4.7% perpetual payout would be distributed on 22 May and 22 Nov annually each year, and is callable in 2020.  Minimum application is at a value of $10,000.  At $100 per share, that means 100 shares.  More details at DBS Announcement on 4.7% NCPS.

At 4.7%, that is lower than its current NCPS at 6%.  It makes sense that they will call their existing 6% NCPS which is callable from 15 May 2011.  Even then, 4.7% is still far, far higher than the current rates from equivalent SGS Bonds. 

At $10,000, that works out to $470 per year for at least the next 10 years (till 2020).  Seems like a good deal.  This is probably going to be heavily over-subscribed.  Hopefully it will encourage more such bonds being made available to retail investors. 

And at higher rates?  One can so dream.

See previous post on this subject: Non-Convertible Preference Shares.

05 November 2010

Pulses and the dearth of a heartbeat

It would appear that the monthly PULSES magazine (see on its origins: SGX to Outsource Pulses to The Business Times), published by SPH, and well helmed by Teh Hooi Ling will be closing shop after Dec 2010.  It's a pity that such a good quality magazine is closing down.  I suppose it is tough for a magazine on investment to survive in today's Internet with its myraid of information that are freely available, and the time lag in the relevance of the information offered given the fast moving investment market.

I typically enjoy reading the analysis and interviews with the companies, which offered deeper insights and understanding of what these companies do.  Fortuntely, The Edge is still going well and remains my regular reading.

I don't know if it is some rule that is perculiar in Singapore, or is it just the quality and style of journalism here.  But, I generally find that the local articles do not provide the readability and story-telling that one tends to get with US journals of a similar nature.  Magazines like Fortune and The Economist tell a lot more compelling stories, exploring far deeper into the historical background and thinking of the leaders of the companies, and how their business was actually evolving or remaining relevant (strategy) given the fast changing world around them (macro trends).

Is there an option out there that I've missed?  Pulses mark the third investment magazine that I've subscribed to, only to be informed that they would be discontinued.  Pity.

From timeshare to wine investment - A tale

A single lady I know of once bought a timeshare.  It was all the craze at one stage, and perhaps still is.  Heck, even I bought one.  The difference was that I've a family of four, and given that I do travel for holidays, timeshare does offer a lot of interesting opportunities, and potentially 'savings'.  I did a guesstimate and figured that a couple would not likely breakeven in most cases.  What more a single?

A couple of years after paying annual maintenance fees, which had been escalating year on year, the lady realised that it was beginning to be a financial drain, and sought to minimise the pain.  So she went back to the timeshare company and had it downgraded to an alternate year ownership (i.e. own a week on alternate year).  That reduced her maintenance fees by half.

Along the way, she was solicited by some other companies that offered to help her sell off her timeshare.  However, in order to do so, she would have to pay $500 for an administrative fee to advertise and market her timeshare for sale.  You can pretty much figured out what happened.  More money went the way of the void of infinite emptiness.  She was still stuck with the timeshare, and $500 poorer.

Alas, this coming from a lady who actually asked if an e-mail she received from UK could be true?  The e-mail said that she had won a million pounds and asked her to deposit a fee so that her winnings could be sent to her.  *sigh*

Soon after, she was invited to a free talk on wine investment.  Free food, no commitments and all that. So why not? After all, she was a lonely single who had nothing better to do on her weekends anyway.  Interestingly, it turned out that the wine investment company was prepared to offer her a most attractive package.  She could convert her timeshare ownership into a wine investment package!  Wow wee!  What a joy.  Get rid of a money sucking thing and turn it into a money making opportunity that offered wonderful returns.  Even Robert Kiyosaki ("Rich Dad, Poor Dad") might have been proud. 

But, and a big one at that, the lady doesn't know anything about wine!  She doesn't even drink, let alone trying to understand how wine investment would actually reap any returns. 

We can probably guess how this went.  The wine investment company disappeared one day (it was in the press), along with the tens of thousands that she had paid for her timeshare ownership previously, which she had turned over to them. 

So, from timeshare, to 'half-share', to wine investment, and finally to nothing to share.  Now that's what I call a zero return investment with zero capital protection.  Or, as Buzz Lightyear said, "To infinity, and beyond!"

The morale of this story?  There are plenty that comes to mind from the above.  I leave it as an exercise and an open invitation for readers to post comments here on this.  8)

04 November 2010

Structured Deposits and 1.5% annual returns

Of late, we are starting to see offers of Structured Deposits and such once again.  It's so pathetic.  At 1.5% return a year, wouldn't one be better off just keeping to Money Mkt Funds, SGS Bonds, or any of the Preference Shares that offer near-equivalent or higher yields, without the additional hard to understand risks?

Then there are those foreign currency deposits.  The unbeknownst looking for a better interest rate than parking in our local banks would find them attractive.  But, if the currency swings by a similar percentage against S$, any yield would be offset by currency rates.  In the worst case, even the capital would be eroded - i.e. no protection whatsoever (not capital guaranteed).

I just don't buy it.  Pun intended.