Feb 2015 Portfolio

This month, we see oil price recovering and making new high in 2015. Above US$50. Ths stock also follow through with a rally. We see a little rally just before CNY but overall market was quite good after S&P 500 made repeated highs and Japan announced that they are just out of recession.

This month I added my first blue chip SIA Engineering into my portfolio.
SIA Engineering had been sold down recently together with alot of those S companies such as ST Eng, SPH, SATS, Sembcorp Ind, Sembcorp Marine. It forms part of the Straits Time Index (STI). I always wanted to get one of those. Due to its recent poor results, it has fallen from grace. Used to be around $5. This buy I am not so confident because being a blue chip the PE 18 and 3.71 PBR ratio is not so good but it has practically 0 debt and is a branded stock. Based on past dividends I shouuld be getting around 5%. Pretty good for a blue chip huh? :)

This month I also added SPH which is also a consistent long time dividend blue chip stock. SPH has fallen quite alot from its $4.40+ to current $4.10. Just found out that SPH also activated their share buy-back program buying around $4.09 on the same day that I bought mine. This is a show of confident from SPH mgmt that the price is quite low already. So am proud to add it into my portfolio.

Blue chip month for me as I collected my third blue chip dividend stock Sembcorp Ind. It is usually hovering around $5 but have fallen alot due to low oil prices. This is a very diversified business just like Keppel Corp where they deal with energy, water and marine industry with its presence felt almost worldwide. It is also the only blue chip beside Keppel Corp whose PE ratio is below 10. So just added it into my portfolio.

This month is also the month which I bought the most stocks. Just really want to take advantage of the sharp drop in prices to accumulate these quality stocks that have been in my watchlist for a long time. Really glad and proud to welcome them into my portfolio :)

STI vs my portfolio

This month, I lost to STI by just a bit. Maybe better luck next month :)

Period	STI	My Portfolio (Realised)	Verdict
Jan 2015	2.71%	3.21%	I win
Feb 2015	2.41%	2.16%	I lose

Total 12 stocks in portfolio

Dividend
This month I pocket a little dividend from Sabana Reit
Checkout my Dividend history

Happy New Year 恭喜发财! 三羊开泰! 喜气羊羊!

Wishing everyone a Happy New Year!
恭喜发财!
三羊开泰!
喜气羊羊!
Huat ah!

My Motivation - Fellow SG Financial Bloggers

The journey to financial freedom is a long and lonesome journey. It would be entertaining and enlightening to have some like-minded companions along the way. Just like the movie Lord of the Ring - the fellowship of ring, a party of human, elve, dwarf and hobbits was formed but along the way, Bolomir got lured by the magic ring and was killed by the Orcs. In our world, some people will throw the white flag and surrender or some just want to take a rest and recover before continuing the journey. Its important for us, fellow financial bloggers to interact, encourage and help each other out by sharing useful tips so that we can all complete our journey to financial freedom.

Just want to pay special tribute to some of the SG Financial bloggers that in one way or another motivate me to start my own investment plan and be financial free! It has now been a daily routine for me to read through the blogs with my ipad, lying on my soft bed to give me some investment ideas every night before I sleep. If anyone ask me to recommend a good investment book to start off with, I would encourage them to read your blogs *serious*. Its definitely worth more than anything else because they are written and shared based on real life investment experience and real monetary stock transactions.

These are the 2 blogs which get my engine started:
http://ghchua.blogspot.com/ - a full time investor who was a moderator of sgfunds.com
http://sanye-investmentportfolio.blogspot.com/ - a disciple of ghchua

Thanks to the following financial aggregators for adding me into their list and get me exposed to hundreds of readers. At least I know I will not be talking to myself and some real people are reading my blog posts.
http://sginvestbloggers.blogspot.sg/
http://thefinance.sg/

These are some of most active and wise bloggers who never fail to entertain me and give me investment ideas :)
http://singaporeanstocksinvestor.blogspot.com/ - a investor living a frugal life
http://foreverfinancialfreedom.blogspot.com/ - a young daddy with an impressive portfolio
http://gotmoneygothoney.blogspot.com/ - a young man with a good start
http://createwealth8888.blogspot.com/ - a uncle who achieved financial freedom with his cheeky and sometimes very chim posts eg pillow concept, freehold stocks etc
http://www.investmentmoats.com/ - a very detailed and thoughtful investor
http://sginvnote.blogspot.sg/ - a investor named Richard :)
http://sreitsysteminvestor.blogspot.com/ - a very detailed and REIT focused investor
http://passiveincomefarmer.blogspot.com/ - a modern dividend farmer
http://ladyyoucanbefree.com/ - a rich lady investor
http://singaporemanofleisure.blogspot.com/ - our joker and outspoken Jared
http://diyvalueinvesting.blogspot.com/ - a investor
http://boringinvestor.blogspot.sg/ - a dog lover cum investor, describe stocks as dogs and puppies ... kidding
and many more others

Please do not be too disappointed if you did not appear in my list as it could be that I haven't stumble upon your website yet. Just drop me a comment and say Hi to get things going.

Just to let you know I am a big fan of Lord of the Ring (LOTR) and Hobbit movies so will use some of the annotation from the movie to describe how you guys motivated me

If I am Frodo Baggins

You are Sam who is ever so loyal to accompany me in my long and treacherous journey towards financial freedom (Mordor)

Please do not be Boromir and try to steal the magic ring from me :)

If I am Bilbo Baggins

You are Gandalf, the grey wizard who is always looking out for me by telling me which stocks have value

If I am Gollum

You are my preciooous magic ring that I can always use it to make me invisible so that I can be safe

If I am Gandalf

You are Galadriel, the beautiful elve queen who always appear in the nick of time, sending giant eagles to save me from danger

Mitigate Risk By Diversification

Putting our hard earned money in the stock market is a risky business. We may have put in our best research effort to ensure that all the financial, valuation and management factors are tip-top but there will be some hidden or external factors which investors do not know. We all do not want to see our portfolio lose money. It's risky to invest in stock market. We cannot eliminate risk but we can reduce our risk. So what do we do? We buy more individual stocks :) Study has shown that as we diverisified by buying into different stocks, our portfolio risk reduces. So when a particular sector or single stock is not doing well, it will not have a big impact on your portfolio as a whole. However, when there's a systematic risk of a global crisis eg the Great Financial Crisis in 2008, every stocks in the stock market will fall. That will affect your portfolio too.

The following will be what I will be doing.

Stock Diversification
Keep to the 5% rule. Try not to have more than 5% of the individual stocks in your portfolio. So that any bad things happening to your single stock is only 5% of your overall portfolio. It will not caused a dent in your portfolio. In order to get the magic 5% figure, you need to invest at least 20 different stocks so that they will make up 100% of your portfolio. Basically, I will be trying to build my own ETF with 30 to 40 stocks for a start.

Sector Diversification
Currently we have oil price dropping from US$100+ to below US$50, this has caused O&M related stocks such as Keppel Corp, Sembcorp, CH Offshore, etc tumbling down as much as 27%. Do be careful not to keep picking up these stocks from the same sector and over exposed yourself to the O&M sector. Keep to the 20% for each sector.

Geographic Diversification

We are lucky to be in Singapore while it strived to be a financial hub, there are lots of companies listed in SGX with foreign investments such as Saizen REIT (Japan), Mapletree Greater China REIT(China), Hutchison Port Trust(HK), Ausnet(Australia), etc. Many of our stocks in SGX have investments in different countries such as Hong Kong, China, Japan, Indonesia, US and Malaysia. These are the countries which most of the SGX stocks are vested. It's about 15% in each countries so pretty much diversified already. At this moment, I am concentrating on building my portfolio buying local stocks in SGX. In the future, I may want to buy stocks from US or Hong Kong to spread out my geographical risk. However, it seems quite expensive to buy foreign stocks as we need to pay extra handling fees for our overseas dividends which I do not find it worthwhile. I may be considering buying high dividend ETFs which consists of a list of 30 to 40 dividend stocks. Any good idea on buying foreign stocks please share :)

Asset Diversification

Just now we mentioned about global stock market crisis, so how do we reduce our risk when that happens? We diversify our assets namely stocks and bonds. I am treating my CPF savings as bonds currently earning 2.5% and 4%. If you have read my profile, you would have known that I have maximised my SA savings so I have a pretty build-up bond asset in my portfolio. In this blog, I will be focusing more on my stock asset.

Jan 2015 Portfolio

Well, its the first month of 2015, STI started the new year 2015 with a big bang! And its not good too, on its first trading day, STI was -40 points. That was caused by oil price dropping below US$50 and Euro crisis with Greece threatening to exit Euro. And adding more oil to the fire, Switzerland suddenly announced that they are not pegging Swiss Franc to Euro, causing a big hoo-ha in the market. Well, not a good start for the stock market if you ask me. And that's just the beginning of the month. Near the end of the month, we have ECB announcing their QE plan which send Euro down and stocks up as investors are busy snapping up stocks. Pretty volatile month for the start of 2015. What a roller coaster ride, not for the faint hearted :)

This month I added Sabana Reit into my portfolio.
Sabana Reit has high dividend yield, low PE 9, below NAV. It was being sold down quite a lot when they issue placement share at below $1, this caused their stock price to plummet down quite alot. I think it is looking attractive now with its high dividend payout and low PE and below PBR. So let's include it into my portfolio :)

I now have 2 REITs in my portfolio which form about 18%. The next stock I am going to buy will be a non-REIT so that I will be getting my ideal sector diversification of having 20% REITs and 80% other stocks.

Also added CDW which is a semiconductor company with low PE 7, low debt and below NAV with high dividend. I have been monitoring this stock for a while and seems like there was some interest lately with a sudden increase in volume. Could be some smart money buying. Anyway it has been in my watchlist for a while so decided to buy first. Also with the rising USD, this stock will benefit because it is paying out dividends in USD. Overall it seems like I am quite heavy in the semiconductor sector. Will be taking note not to buy too much into this sector to reduce my risk.

STI vs my portfolio

This month, I beat STI! Just 3 months time haha. All thanks to my newly added CDW which surged up by 13%. No thanks to 2nd Chance which was bought last month. Right after I bought it, 2nd Chance released news that due to some issue, they have to terminate the disposal Of their properties To Celestine REIT. What was supposed to be a good news just turn out to be a bad one. This caused the stock price to drop by as much as 16%. Bad timing :( Or rather can anyone time the market? Looks like we are in a bull run now after announcement of ECB QE, there was a broad based recovery at the end of Jan 2015.

Period	STI	My Portfolio (Realised)	Verdict
Jan 2015	2.71%	3.21%	I win

Total 9 stocks in portfolio

About me

At this time of writing (Oct 2014), I am a 41 years old male, married with 2 beautiful daughters. I am not new to investing. In fact I have been investing throughout my life. My mum introduced stock investing to me. She still do stock investing sometimes buying at ridiculous time during bear market and penny stocks. Sometimes I would give her my puzzled look with her calls haha. But overall she did better than me, collecting dividends and win some tikams. I first started mine when I was doing my NS dabbling with IPOs and buying stocks etc. Now I still do. Just some of my ups and downs of my investment journey:

Downs:
1. Bought lots of Creative Tech stock when Creative was fighting with Apple iPod. The stock fell from $20+ to $12+ and I thought that was very low already and got in. Dividend wasn't very good and now its only $2. :( And no diversification of stock :(

2. Worked in StarHub when I was younger, late 20s, early 30s, I was the pioneer batch and was proud to be involved in StarHub's start-up. I was offered stock options at $0.88. ex-CEO, Terry Clontz, told us not to sell and to collect dividends. At this time, dividend collection was not in my investment mindset, only capital appreciation. I sold all 20 lots of them at $1 :( Imagine if I still have it now and collecting dividend? haha

3. I am quite adventurous in trying out new things to earn money. Tried Forex, CFD trading not once but 3 times and all failed. I used to be fascinated by the beautiful dream of easy money day trading at home and earning big bucks. After 3 tries, I finally concluded that its not my cup of tea :(

Ups:
1. For the past years, after recognising the risk free and high interest CPF SA of 4%, I have been diligently putting away $7k into my CPF SA and enjoy tax relief at the same time. My wife thinks (and still think so) that I am crazy locking up my cash into CPF haha. Proud to say that 2 years ago my CPF SA has reached the limit and CPF wrote to me that I am not allowed to top up my CPF SA anymore. CPF also very smart has a limit for this to prevent people like us from over-contributing to our CPF account. I thought they encourage us to contribute more to our CPF ? But I am happy to know that my CPF SA is compounding and rolling my CPF contributions and interest every year :)

2. 2008 to 2009 was a very fast market recovery caused by the fall of the Lehman bro. I still remember how we made the first decision to buy an extra property. I was driving home with my wife and I heard the radio saying the stock market crashed and things wasn't looking very bright. So I asked my wife, 'Hey I think its time to buy (property)'. She replied 'ok lor'. Wow, so swift and decisive I suan her haha. Its a big ticket purchase and we have been saving up for years, waiting for this opportunity. Bought our first investment property in 2009 and is still collecting rental up to today. About 6% return :)

3. In 2012, interest rate was low and many people switched from HDB loan 2.6% to floating rate bank loan such as SOR, SIBOR rate. At that time, there wasn't any opportunity on the market so we decided to clear our owner occupied HDB loan in 2012 (but still paying for investment property loan) and announced bad debt free. We got no owner occupied housing loan and car loan at all :)

Dividends