11 February 2016

10 Traits of Top Stocks

Came across an old issue of "Money" magazine (I think it's a Aussie edition) with an article titled "10 Traits of Top Stocks". The 10 traits connect well with my thoughts on what constitutes factors for a good stock to invest in, when it is at the right price.

[Note: 10 traits are from the article, but comments are mine.]

1. Rising earnings. It's been making more and more money. Provided it's real and not fraudulent accounting!

2. Profits cover dividend payout. It's not paying out dividends from borrowings/debts, so the dividend is sustainable.

3. Capital raising aren't needed. Doesn't collect money from shareholder - i.e. the reverse of dividends! REITs tend not to do well in this regard when times are bad though.

4. Debt is minimal. I take that to be debt-to-equity at less than 40% (<0.4) - i.e. not overly leveraged.

5. Plenty of cash for interest bill. Has the cash flow to pay the interests on their debts - i.e. wouldn't default.

6. Profits are rising. Suggests an ability to price a premium in its product and services. Either that or it is increasingly more efficient.

7. Profitability strong and rising. Makes good use of its equity.

8. Cash flow exceeds profits. Cash is king! Best is a business that doesn't require a lot of capital expenditure.

9. Value has been rising. Has a business that has been of value.

10. Value will keep rising. Has a business that will continue to provide value. The boring stuff that provides bread and butter products and services that everybody require all the time are my favorite.

[Reference: "10 Traits of Top Stocks", Money magazine, by Vanessa Gilbert.]

09 February 2016

To Toto, or to Toto not?

So I speculated over Chinese New Year (see What is it with Chinese New Year?), throwing good money over the wall, hoping to strike a million or two. Of course, I came away empty handed, again. Even with a couple of System-7 bets, I came away with only 3 pairs of hits. Not even the lowest of lowest prize. "Phooi". As an old friend would have said, "Ka na sai!"

Oops, not supposed to say such things on Chinese New Year eh? If it's any consolation, nobody came away a millionaire on Chinese New Year either. But that's just equal misery. Not helpful.

The prize money has snowballed into a $7 million affair for the next draw on Thursday. Looks like another series of long snaking queues at Toto shops over the next few days. Shall I? Bad for productivity.

Just out of curiosity, where do all the profits from Singapore Pools go to anyway? I don't have certainty but it looks like it ends up with the Tote Board. As do all those casino levies and Turf Club and such. Tote Board then donates to numerous social beneficiaries, such as the arts, sports, education, health and communities. Sounds like a good thing, worthy causes. Guess we're contributing to social good.

Oh, my earlier bet was $35. Guess I could have had a good high tea instead?

What is it with Chinese New Year?

08 February 2016

What is it with Chinese New Year?

What is it about Chinese New Year that I will most certainly lose my inhibitions and gladly pass my hard earned money through a window to a stranger in return for a piece of paper with a couple of numbers on it?

We know when such things happen, it's called a fool's transaction. Indeed it is. It's a disease. It's called Toto. But I can't help it. I have to do it. Hard to say no to the potential of a few million $$$.

Years ago in an office far far away, my boss told me, "If you guys are buying, count me in. I don't want to come back to an office to find that everybody's won the first prize and I'm the only person left working when that happens!"

Toto has evolved over the years. I have a funny feeling I might have thrown away a winning ticket or two in recent years. Seems like 3 numbers is all that's required to win a prize ($10). I used to think we needed 4. I'm out of touch.

The Rules to Toto are available online. It's not long. But it's complicated enough. They even facilitate by having Group Toto. How about that? Clean out the whole office. Naw. The more people that pool together, the less per share. They'll continue working. But maybe they'll be taking more leave for that dream holiday?

The latest draw on Lunar New Year (today!) is estimated at $4 million. And the upcoming annual Hong Bao Draw is Worth $12 million. Attractive right? Rare it is for a single winner. Chances are, there will be several millionaires.

I wonder what happened to all those overnight millionaires? Did they live a meaningful life of contentment and fulfillment? Or did the sudden rich became quickly poor?

Anyways, I couldn't help but dream of what to do if I hit a million or two. Would I 'retire' from work? A million, maybe. Two millions, most certainly. What does $2 million get me? About $100,000 of perpetual income per annum by my estimate.

And how do I achieve that? Perhaps:
- $750,000 in bonds or perpetual bonds (from Bondsupermart.com) @ 4-6%
- $1,000,000 in shares @ 3-4% dividends and 4-6% growth potential
- $200,000 as cash reserves for 2 years' income
- $50,000 to pay off outstanding liabilities

How about you?

p/s: Toto tickets ain't free! There's an opportunity cost involved.

10 daily purchases that hurt your budget

04 February 2016

Boredom Amidst a Dreary Market

Boredom, that perhaps describe how I feel. For some, it must be heart-wrenching, watching the drop day after day? But I go with "Boredom".

Drop, drop, drop. For me, it has been a "Buy!" opportunity. It didn't take very long for me to empty all my cash hoard to buy more shares as they dropped more with each passing day.

I soon used up the cash holdings in the trading account.

Then I emptied the reserves sitting in a money market fund. That was soon used up.

Then I received some bonus due to pay adjustments. Lucky me. That was invested. Gone.

Then I received a year-end bonus. That was invested. Gone.

Then I reduced my excess cash in my savings accounts and placed them into the trading account. [Excess being that beyond Emergency Fund holdings. I'm not going to mess with that!] That was invested. Gone.

Then I cashed out one of my insurance policy. It was planned for, so it wasn't an impulsive action. That is being invested. Will soon be gone.

How long more is this "Bear" going to last? I'm going to run out of cash hoard soon. *wail*

Bore. Meanwhile, let's celebrate Chinese New Year! Happy New Year!

03 February 2016

The Gahmen Gives Away Money

Kids grow up real fast. It seemed like it wasn't so long ago that I witnessed the little one being pulled out from wifey, all bloody and blueish looking. I didn't faint. Guess I'm a steady father?

And now she's already 16 and done with the GCE 'O' levels. Sheesh. Time flies.

Unfortunately for wifey and me, my daughter was born long before the introduction of the Child Development Account (CDA) where the government matches contributions, up to a certain limit. Missed the boat. The newborns are so lucky.

Over time, there's also the Edusave Account. These provide various top-ups and subsidies that really help offset the cost of bringing up the kids, up through secondary (and Junior College) education.

Recently, I came to realise there's something else called Post Secondary Education Acount (PSEA). Actually, I've been receiving letters from MOE on these accounts for my kids for some time, but I had not bothered to read and thought they were the usual EduSave updates. Dah. *roll eyes*

Apparently, the CDA account gets rolled over into the PSEA, and if the top-up limit to CDA had not been met yet, parents can continue to top-up into the PSEA and receive the matching contributions by the Government.

The PSEA can be used to pay for education in local tertiary institutions (e.g. Polytechnics and Universities).

I checked with the MOE helpdesk. No luck. My kids are not entitled to CDA. So I couldn't make any voluntary contributions to increase the PSEA funds.

By the way, these accounts earn the prevailing CPF-OA interest rate.

Interest free student loan for tertiary education
Building kids education funds with Unit Trust
Endowment plans for child education
Kids education revisited