Monthly Update 6

The update for the month of June was a tad late, due to my involvement in the SMU Freshmen Team Building (FTB) Camp. Imagine not checking the quotations of my securities holdings on the Singapore Exchange (SGX) website and conducting any analysis on company fundamentals for three days straight. Even though the Oracle of Omaha, Warren E. Buffett, "wouldn't mind if markets are closed for years", keeping track of the movement in stock prices can actually inculcate a nonchalant attitude towards stockmarket fluctuations.

After the longish introduction, I hereby present the update for June:

STI, 31 December 2009: 2,897.62

STI, 1 July 2010: 2,820.35

Profit/Loss

Virtual Portfolio: -3.27%

Market Average: -2.67%

This is my first underperforming month after beating the Straits Times Index (STI) consecutively for five months. As I am adopting a long-term business outlook for my portfolio holdings, there isn't really a cause for concern, unless the situation persists over a longer period of time. Meanwhile, it would be more rational and sensible to observe the recent market decline and if possible add to my holdings at more advantageous prices.

Commentary on 'Warren Buffett' Post

My friend, Diana Goh Chern, has posted an e-mail writeup she received on Warren Buffett and I would like to add a few points so as to bring the message across in a clearer manner. Consumerism seems to be the order of day, especially among the increasingly affluent younger generation. Some people appear to have a special affinity for luxury goods, and while a healthy dose of consumption benefits the general economy through stimulating demand, excessive spending has its own pitfalls. Like what we all have studied in Economics, a government which runs budget deficits consistently may find itself faced with staggering amounts of long term debt that can threaten the workings of the economy (take Greece for example). Likewise for individuals, practicing fiscal prudence is the key to financial sustainability. Without any further delay, let us move on to her post.

1. He bought his first share at the age of 11 and he now regrets that he started too late!Things were very cheap that time, encourage your children to invest

The stock he bought was Cities Service Preferred, which plummeted shortly after he bought it. Nevertheless, he did not let the temporary plunge affect him and held on the stock before liquidating it for a small profit after the price rebounded. After which the stock rose to multiples of its original purchase price. Warren Buffett first learnt about patience from this experience. In addition, he bought the stock with his own money and his sister's, hence he had instilled a strong aversion to loss and sense of responsibility in taking care of other people's money.

2. He bought a small farm at age 14 with savings from delivering newspapers. One could have bought many things with little savings.
Encourage your children to start some kind of business

Warren Buffett was involved in other small businesses as well, which included pinball machines in barber shops (Wilson Coin Operated Company), collecting unwanted golf balls from golf courses and selling them for a small profit. His favourite book was '1,000 ways to make 1,000', which refers to making a million dollars. He pledged to become a millionaire by the age of 34 as well or he would jump down the tallest building in Omaha, where he lives in (he was one way before he reached 34).

3. He still lives in the same small 3-bedroom house in mid-town Omaha that he bought after he got married 50 years ago. He says that he has everything he needs in that house. His house does not have a wall or a fence. Don't buy more than what you really need and encourage your children to do and think the same.

His house looks like what a typical middle class family would stay in. The only addition was a racquet court, a spending which was insignificant compared to his wealth. He loves making money, and not hoarding wealth and hence he did not see any need to erect a wall or fence around his house. Interestingly, his lifestyle remains very much the same over the years, preferring to drink Cherry Coke and eat at McDonalds - not what you will expect from someone of extraordinary wealth. (Though not a very healthy diet haha)

4. He drives his own car everywhere and does not have a driver or security people around him. You are what you are.

He's brutally honest with his identity, even saying 'I buy expensive suits, they just look cheap on me.'

5. He never travels by private jet, although he owns the world's largest private jet company. Always think how you can accomplish things economically.

Buffett also abhors corporate CEOs who enjoy special privileges at the expense of the shareholders by flying first-class and indulging in other excesses. Thus he named his private jet 'The Indefensible' after he bought it, expecting criticisms from naysayers.

6. His company, Berkshire Hathaway, owns 63 companies. He writes only one letter to the CEOs of these companies, giving them goals for the year. He never holds meetings or calls them on a regular basis.Assign the right people to the right jobs.

Berkshire Hathaway is the only US public listed company which trades for over $100,000 a share, and the annual Berkshire shareholders meeting is dubbed as the 'Woodstock of Capitalism' where numerous investors flock to Omaha every year to listen to Buffett's (together with his Vice-Chairman Charlie Munger) teeming wisdom and quirky humour.
He actively seeks for managers who are honest, competent and shareholder-oriented.

7. He has given his CEOs only two rules. Rule 1, do not lose any of your shareholders' money. Rule 2 remember rule number 1.Set goals and make sure people focus on them.

Buffett has a deep sense of trust in his managers to do what's best for the company and gives them free rein in daily operations so that they can concentrate on running the company successfully, free from distractions. The managers align their interests with the shareholders' by having a substantial amount of their net worth in the company. Buffett himself has 99% of his net worth in Berkshire.
‘We eat our own cooking’

8. He does not socialize with the high society crowd. His past time after he gets home is to make himself some popcorn and watch television. Warren Buffet does not carry a cell phone, nor has a computer on his desk.Don't try to show off, just be yourself and do what you enjoy doing.

A famous technophobe, Buffett avoids investing in high tech companies simply because he feels that they are not within his circle of competence. What matters in investing is realistically defining what you don't know, rather than what you know. By following this principle he managed to avoid the Dot Com Bubble of the late 1990s and the resulting crash. Observing that he does not use computer or fanciful economic equations to analyze stocks, one should wonder the utility of the complex financial theories taught at Business schools today, especially Efficient Market Hypothesis.
'If markets are always efficient, I would be a bum on the street holding a tin cup.'

9. Bill Gates, the world's richest man met him for the first time only 5 years ago. Bill gates did not think he had anything in common with Warren Buffet. So he had scheduled his meeting for only half an hour. But when Gates met him, the meeting lasted for ten hours and Bill Gates became a devotee of Warren Buffet.

Gates is also well-known for his frugality and generosity, hence Buffett donated a staggering amount of his wealth to the Gates Foundation to serve worthy causes. The two men have many in common than most people thought. Despite Bill Gates the man himself explaining about computers and the Internet to Warren Buffett, the latter still stuck to his investment knitting. Warren later remarked that he would only be successful in the investment arena, whereas Gates can achieve similar success in virtually any field he chooses to embark on.
That's the former No.1 and No.2 world’s richest men for you.

In conclusion, Buffett loves his life simply because he is doing what he loves, which is allocating capital and establishing meaningful working relationships with his corporate managers.
‘I feel like tap dancing to work everyday.’

How many of us can face work with such a cheerful attitude everyday? We must discover what we truly love to do, work hard towards the goal and like Goh Chern said, appreciate the opportunity given and meanwhile enjoy the process. Buffett is a great role model, and I have learned much from him. I sincerely hope others can do so as well.

Monthly Update 5

Greetings to all, update for May:






STI, 31 December 2009: 2897.62
STI, 31 May 2010: 2752.60

Profit/Loss
Virtual Portfolio: -2.62%
Market Average: -5.00%

This too, shall pass.

Montly Update 4

Hi to all, here's an update for the month of April:





STI, 31 December 2009: 2,897.62
STI, 30 April 2010: 2,974.61

Profit/Loss
Virtual Portfolio: +10.26%
Market Average: +2.66%

Although the virtual portfolio has outperformed the market average for four consecutive months, it it still too short a period to warrant any reliable conclusion with regards to the soundness of the common stock selection principles practised here. Nevertheless, sound principles have consistently produced generally sound results and hence the intelligent investor must assume that they will continue to do so.

Monthly Update 3

Apologies for the late reply, here's an update for March:

STI, 31 December 2009: 2,897.62
STI, 1 April 2010: 2,943.02

Profit/Loss:
Virtual Portfolio: +10.24%
Market Average: +1.57%

Just for more info, the amount of absolute return is slightly above two thousand dollars since the virtual portfolio's inception on 31 December 2009. Pretty neat work, if you ask me. Still, I am always on the lookout for more bargain opportunities.

Monthly Update 2

Here's an update for the month of February:







STI, 31 December 2009: 2,897.62
STI, 28 February 2010: 2,750.86

Profit/Loss
Virtual Portfolio: +0.32%
Market Average: -5.06%

So far so good, but always be prepared for the worst.

Montly Update

How did my picks fare after the first month?

Here are the following results:







I will compare with Straits Times Index (STI) as the benchmark.

STI, 31 December 2009: 2897.62
STI, 31 January 2010: 2745.35

Profit/Loss
Virtual Portfolio: -0.64%
Market: -5.26%

That's about it.

Virtual Stock Portfolio

In order to apply the security analysis techniques which I have learnt, I have decided to construct a virtual portfolio on 31 Dec 09 and observe how my picks fare in 2010 and beyond. As I was unable to find a website which offers a virtual trading account for the Singapore Exchange, I suppose I will track my own performance using price quotes from the SGX website. The details are shown below:

Starting amount: S$100,000

Stocks selected: Capitaland, GoldenAgri, Keppel Corp, UOB-KayHian

Cash in Reserve: S$79,923.84

Amount in Equities: S$19,959.00

Transaction Costs: S$117.16

Total: S$100,000.00

This portfolio will be updated monthly until the author decides he has better things to do haha, so feel free to check for updates.

Disclaimer: The above information is for reference purposes only and should not be taken as investment advice to execute the respective trades. The author does not bear responsibility for any consequences on the reader's portfolio holdings if he or she chooses to act upon the information given. Thank you.

Goals for 2010

E-Prep Course

I have already started on my E-Prep course conducted by Nanyang Technological University on Business Finance and made some progress:
Chapter 1 - An Overview of Financial Management (Completed)
Chapter 2 - Time Value of Money (Completed)
Chapter 3 - Financial Statements, Cash Flow and Taxes
Chapter 4 - Analysis of Financial Statements
Chapter 5 - Financial Markets and Institutions
Supposed to finish the module within 3 months and so far 2 weeks have passed, thus it's going at a relatively fast pace:)

Driving

Must obtain my driving licence before August, managed to clear all the theory tests and all that's left is the practical part.

Temporary Job

I must make a decision on which job I am going to take up after my ORD; my priority is to gain relevant experience in Banking & Finance and currently I have four options to choose from. One of them may offer the experience but I will not put my hopes too high and instead opt for the better-paying ones in case if things don't work out as well as I have expected.

Investment Analysis & Portfolio Management

Being a defensive investor, I have allocated a substantial percentage of my net worth in Singapore equities after my analysis has shown that the stock is trading at a discount from it's intrinsic value. In addition, I am psychologically prepared in the event that the market price of my holdings has declined on a temporary basis. One should never be forced to sell. Thinking of branching out into other assets to diversify away the risk after receiving income from the temp job(s).

Youth Investor Stock Challenge

A competition organised by OCBC Securities and SIAS which I have taken part and will commence at mid January. Due to the short time frame, a value approach based on fundamental analysis may produce limited results in the short term and therefore I am 'forced' to pick up some technical analysis tools. Guess I will be looking at more and more charts...

Fitness

It's important to be proactive and maintain a healthy lifestyle after NS, otherwise it's really easy to gain all the weight back in just a few months. Morning run everyday and gym sessions on every Monday, Wednesday and Friday. Will consider picking up another new sport if time permits, perhaps tennis or golf.

Organisation

It's certainly a positive sign that several of my buddies share similar interests with me, it would be great if we can work together and conduct some insightful research. Besides that each of us can also have our own specialisation - equities, bonds, real estate and options trading. Leveraging on each other's knowledge can definitely achieve synergy:)

I must, and I will achieve all these goals in 2010.

Financial Literacy

Financial Literacy

Managed to read the following books during my spare time or leisure:

Security Analysis
Rich Dad Poor Dad
One Up on Wall Street
The Intelligent Investor
The Essays of Warren Buffett
The Theory of Investment Value
Benjamin Graham on Value Investing
Common Stocks and Uncommon Profits
The Five Rules for Successful Stock Investing
The Neatest Little Guide to Stockmarket Investing

What is financial literacy, and why is it so important? I acknowledge the fact that people address and view this issue differently, however, a low perceived importance regarding financial affairs does not necessarily diminish its influence on our everyday lives. The old paradigm of achieving success has placed a flawed emphasis solely on intelligence quotient and emotional quotient, while these vital elements are indispensible, a new component has emerged - financial quotient.

While attaining excellent grades and studying at a prestigious institution used to provide a ticket to a life of luxury through high earning power, times have changed. The rules of the game have changed, just as how our economy has transformed to what it it today. Playing the new game using an old set of rules produces unthinkable consequences. We must learn to adapt to this changing world, for those who don't will eventually fail and face the fate of elimination.

Conversely, the shrewd few who invest their time and money to master the rules of the game will thrive, grow and prosper for generations to come. It is the survival of the smartest, the ones who are intelligent enough to recognise the effective means to achieve what they want, typically in standard Machiavellian fashion.

Shamefully enough, I have yet to gain a thorough understanding of the ideas expressed in these famous works. Nevertheless, I have already embarked on a financial journey and reached to an end of the NS stage. Results are mixed, but overall there is an improvement in my position and I am thankful of that. No one can predict what will happen in the future, but throughout passage of time we can still reasonably expect that generally sound principles produce sound results, and we must act on the assumption that they will continue to do so.

Asset Allocation

Everything which has a beginning also has an end, this statement can be soundly applied onto my National Service, which started 20 months ago on April 2008 and is coming to a close in Feb next year. Through disciplined saving and prudent spending (though there were occasional self-pampering involved), I find myself in charge of a modest amount of capital to allocate and manage.

Indeed, I have explored a great variety of financial instruments, which can range from the "safe" corporate bonds and governmental obligations to "speculative" options and futures trading. I found many of their concepts and characteristics interesting; but when it comes down to selecting one to build a portfolio the choices are pretty much limited.

Graham's philosophy resonates well with me, and thus I believe the first question one should ask is to elect to be a defensive or aggressive investor. Defensive means freedom from concern, annoyance, the need for making frequent decisions. Conversely, aggressive suggests the willingness and the ability to spend time searching for the ever present bargain opportunities.

Attaining the average result requires a minimum effort, but to achieve superior results, even of a slight magnitude, is much harder than it looks. Due to my limited knowledge and experience, it is probably wise to select the defensive (non-enterprising) path.

As Graham stated, percepts crystallised out of experience may run the risk of not withstanding the test of time. Understanding this inevitable development can well reduce the risk. While sweeping statements or easy generalizations (eg any bond is safer than any stock-try not to tell this to a bondholder full of defaulted bonds) do not retain its validity through the passage of time, the enduring principles are the ones which are closely relation to human nature and behaviour. A leopard never changes its spots. Concepts of behavioural finance such as overconfidence, loss aversion and mental accounting are useful ideas which offer explaination for some of the financial phenomenon we witness today.

Never stop thinking.

Update

Alright since I have received comments that I should update my blog, I shall gladly do so:) As a matter of fact, I don't even think that people actually read my blog. My sincere apologies for blurting out this comment, since I seldom do extraordinary or significant activities. I am worried these mundane events might bore my reader to death. So let's get back to the story, then.

One of the most enjoyable activities one can do in the army is to clear leave, and I shall state some of the things I have done:

1) Signed up for an E-PREP course, namely 'Business Finance' conducted by Nanyang Technological University. Well since I am going to study finance or finance related topics at the undergraduate level I guess it's a pretty safe bet to attend an introductory course to get a hang of what Finance's all about.

2) Registered myself as a student member of Securities Investor Association of Singapore (SIAS) as soon as I have collected my SMU student card (I matriculated just a couple of weeks ago). The logic behind this move driven by the need to attain more sophisticated financial statement analysis methods, my current superficial knowledge of accounting is very much limited; and to tear the annual reports of various companies apart I will need to acquire more information and practice more.

3) Last but not least, create a trading account at Central Depository Pte Ltd and most probably with PhilipCapital as my online brokerage. When I look back at that time when I just enlisted in the army, I was just a regular young kid with no serious goals or ambition. The thoughts of pursuing my interests and cultivating my passion didn't really cross my mind yet until after NJC. Perhaps all the studying there kind of buried my desire to achieve what I want.

"So what do you want to do in the future?"

"I don't know, maybe business?"

Now I know.

No, I have not forgotten you...

And I am referring to this blog. Too busy with work lately, but can't really elaborate here in order to prevent necessary trouble. Kinda felt that the previous blogskin was kind of dark and gloomy, even though there's Jay and Hebe in it. So I switched to this blogskin which is more light and cheery haha:)

Really didn't get to spend much time with my family and friends during the past few months, must really make it up to them when time permits me to do so. Anyway just don't expect me to blog every now and then, though you may have grown accustomed to it. Sometimes guys serving their obligation (notice that I try to avoid any related terms) really get cropped up in their work so much that they don't even have time for themselves.

Looking forward to the time when I regain my freedom and can accomplish what I really desire.

Choice of CCA?

Choice of CCA?

Got to know two SMU undergraduates taking double degree (Accountancy and Business) during their ICT and they recommended me to join them in SMIF (Student-Managed Investment Fund!;) Went to conduct some research and discovered the following information:

Fifty Singapore Management University (SMU) undergraduates are, however, going through this learning process in a substantially less painful way: they are gaining this invaluable experience by administering their school's Student-Managed Investment Fund (SMIF), which conducts 'paper trading' using a mock portfolio. In FY2008, SMU-SMIF outperformed the Straits Times Index (STI), which it is benchmarked against, by 10 per cent.'This is a return which compares favourably with some professionally-run funds. We even outshone some of them in terms of performance,' enthuses Mr Lim. 'We feel a great sense of achievement and personal pride at this, especially because it was done under such an adverse economic situation and amidst the demands of school life and academia - bt.com

https://secure.fundsupermart.com/main/community/forumPosts.svdo;jsessionid=HCW7K9lKNvJ1MbWCvyb0Qh32v1GQQCycg2JRktJJGqLTq7KWhgWF!274546672?page=401&pid=000433

Looks like I know which CCA to join in SMU already.

Surprised

Surprised

Never expected myself to attain the highest score, especially when there are people from Hwa Chong and Victoria among the class...

Sometimes I just feel that when things turn out this way, it may be... destiny.

Its something like you know what you are going to do in the future, what you are going to become and how you are going to achieve it...

Just Do It.

Same Old Thing Again

Same Old Thing Again

Can you believe it? I have to burn a weekend to study for my Combat Intelligence Test. I think people in the intelligence vocation tend to age the fastest, considering the amount of thinking and analysis that must be done before the commencement of any operation. Still, I kind of... enjoy it.

Its because the outcome of a battle is decided even before a single shot is being fired.

But seriously mugging is really not my cup of tea. I know some people think that being able to mug is extremely important in the sense that it allows them to get the fantastic grades and serve as a stepping stone towards earning big heaps of cash or the social status of being an elite scholar. More often than not, they also like to associate themselves with people of the same breed to feel that they are "a cut above the rest".

I only pray that they can leave me alone because the very thought of these empty pursuits disgusts me to the core. I believe being ordinary is also a form of happiness.

So please save me. I dun want to mug. I dun want to mug. I dun want to mug. I dun want to mug. I dun want to mug. I dun want to mug. I dun want to mug. I dun want to mug.

Is Competition Desirable?

Is Competition Desirable?

In the academic arena,

The scholars smile as they receive their excellent results

And the "commoners" cry when they dun perform up to expectations

So what's happened to the passion for learning?

Look at what our bell curves and GPA have done.

Funny Yet Scary

Funny Yet Scary



And after some thinking, I would like to share some of the possible ways to protect yourself in every week

Week 1
Birds of the same feather flock together, so try to attain reasonably good GPA to secure decent project mates (best if they are your friends to begin with)

Week 2
When this particularly irritating fellow is going to contribute non-constructive comments theres bound to be inherent flaws in his/her argument so shoot it down asap before any serious damage is dealt

Week 3
Sell instead of buy assignment answers and mock at the joker who just bought the wrong set of answers from you;p

Week 4
If someone spreads rumours about a person, say, A in front of B, B is getting the idea that he/she will do the similar thing in B's absence and be wary of him/her instead
Then can gang up with the "victims" and payback the liar during peer evaluation

Week 5
Dun be at the pub in the first place, prevention is better than cure

Week 6
Only stupid profs will be deceived by these petty tactics and probably can distinguish those who are genuine and those who are trying to suck up

Week 7
From a business/investing perspective, why believe your competitor is willing to share valuable tips with you for free? If you are not so intelligent enough to trust him/her then suffer the consquences of your naiveté

Week 8
Disappearing from projects or meetings will only result in a thumbs-down for peer evaluation, enough said

Week 9
Sucking up to people who are not close to you is a pretty obvious endeavor

Week 10
Sabo a group's presentation, and every group will sabo yours, being sabo by one or everyone is worse?

Week 11
Have a backup copy of your notes or guard your notes carefully shall do

Week 12
Telling people that you are at Zouk over the phone when in fact you are in the library/studyroom immediately gives the game away, assuming the other party is alert enough and of reasonable intelligence

Week 13
Come on the profs have got something better to do, besides its pointless to do all these if the fellow isn't providing the drinks and cigarettes

Week 14
He/she can claim to possess the same level of IQ as Forrest Gump but GPA doesn't lie

Week 15
Imagine what will everyone do to the only student with a calculator on the day of exam!?
Good luck to whoever he/she is...

In conclusion, I really wonder if the schemer who practises all these "strategies" can actually find the time and energy to study, inevitably he/she may be the one whos gonna end up with sucky grades

However, it is an undeniable fact there competition is intense there and that kinda makes me feel worried... While certain aspects may be exaggerated, it provides a warning regarding the intensity level of competition in the university. It also gives the student a taste of the workings of the corporate world, where the dog-eat-dog principle is the rule and not the exception. Still, I must applause the video for its high entertainment value. Well done!

Chances

Chances

What are the chances of meeting a NUS Law Professor+Law Consultant at one of Singapore's leading legal firm in a library on a Sunday morning?

Well, I have met one.

We actually spent the bulk of the afternoon discussing about Warren Buffett, whether to go long or short on bonds and the effect of macroeconomic trends on the market. Law undergraduates typically work around the clock to churn out reports for him, he said. To my surprise, he actually asked me if I was willing to assist him with his research:S

Unfortunately, my answer was no due to NS. In addition, I have still got my own research so I can't afford to be distracted now. At least we exchanged numbers and email.

What do I really want to do?

What?

What?

As it was told:


I know why you hardly sleep every night.

I know why you sit by your computer night after night.

You are looking for an answer.


And it will find me if I want it to.

If I want it to...