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How did AK71 overcome his losses and grow his portfolio?

Wednesday, November 30, 2011

I get quite a few comments in my blog and some comments require more detailed replies than others. I have decided that for more detailed replies, I should put them up as blog posts from now. This one is in reply to Ray's comment here.

Hi Ray,

Actually, when I finally fully divested from CitySpring, I did not lose money.

See: CitySpring Infrastructure Trust: Thoughts on divestment.

I was also spared the subsequent rights issue.

See: CitySpring Infrastructure Trust: Rights issue.

Up till now, for me, the trusts which I count as heavy losses are MPSF and FSL Trust. For REITs, I lost on FCOT (the former Allco REIT) and Saizen REIT but these were not heavy losses if I take into consideration dividends received and trading gains, if any. I would consider 5 figure losses as heavy losses. That's just me.

All other REITs I am vested in are in the black. Many, like AIMS AMP Capital Industrial REIT, were in the red but recognising the improving fundamentals, I used the weakness in the last crisis to add to my investments. Such decisions have been rewarding and I am likely to repeat such decisions if history should repeat itself.

The value of my stocks investment portfolio practically doubled as we emerged from the last crisis. Many investments were divested as I moved most of my funds into high yielding REITs resulting in what I have now.

The divested investments were growth stocks mostly. The one which was not was Hyflux Water Trust and that was privatised. So, it was a forced divestment but at a premium of 150% to my purchase price, I couldn't complain.

See: Hyflux Water Trust: Privatisation.

Overall for me, in the last three years, trading gains outweigh trading losses 3 to 1 but in the last one year, all the gains to my portfolio of stocks were from the hefty dividends received as circumstances did not and still do not favour long investors. Honestly, I booked some paper losses trying to trade the market in recent months. The decision to focus more on investing for income, however, paid off.

Dr. Marc Faber said the last crisis was a once in a lifetime opportunity to make a lot of money in the stock market. Is it likely to be repeated in the near future? I do not know and, hence, my current strategy of being partially invested.

Generally, how did I grow and manage my wealth? I have shared my thoughts here in my blog but I have left out the specifics because I care about my privacy and I believe it to be extremely unlikely that two unrelated persons would have the exact same path anyway. For anyone who might be interested, the relevant blog posts are in the right sidebar under the headings of "Passive Income Journey" and "Wealth Creation".


There are many roads to wealth creation and each of us should choose our own path. Some well known bloggers like Musicwhiz and Createwealth do not invest in properties, for example, and they are doing well following their own paths.

Personally, I invested in properties and their recent divestments gave me some handsome gains which are now in my warchest awaiting deployment.

Know what we want. Know ourselves and what we can deal with given our circumstances. Finally, strategise and work towards a target.

It is the toughest at the beginning and this I can say for sure. However, whichever school we decide to follow, it gets easier with time. So, do not lose heart. There is no short cut but do not cut short your journey towards financial freedom.

40 comments:

Ray said...

Thanks for sharing AK..

I too have been losing abit trading in recent months.
All my anticipated gains from what I thought were favourable news coming from Euro, didn't really sit well with the investors in SGX.
Maybe I'm just not reading the news right... :(

Setback setback setback...

AK71 said...

Hi Ray,

To be a good trader, I realise, we have to be good at Technical Analysis (TA). Go learn TA. :)

In recent weeks, I stop trading the market because consecutive losses suggested to me that I should take a step back and see what's wrong.

For long traders, we really want to see clear signs of a market bottom before going back in. Has the trend reversed and has it turned up? I can only say that the downtrend seems to have found a floor for now.

So, I will continue to lookout for signals to go long once more. However, I know I am a mediocre chart reader. So, I might just miss the boat. ;p

Ray said...

Hi AK,

Yeah I have tried to learn TA as well as Swing Trading.
But I supposed subconsciously I think TA cannot predict how market will react from a sudden injection of good / bad news. e.g. candles patterns can be so bullish one minute but if Italy PM say something tonight, no amount of TA will predict a sudden up or down turn. YEah, but I know where you're coming from with respect to learning TA. But like you said, I may lay off trading for a while. Warchest is slowly leaking...

AK71 said...

Hi Ray,

Must remember that TA is about probability and not certainty. Using TA as a predictive tool is like reading tea leaves. Haha.. OK, this criticism is for me too. ;)

Ray said...

Actually I have always been a FA person. In fact I passed CFA level 1 and 2 (but I never invest much myself, all head knowledge, no real experience). When I first knew TA, I thoughts its like reading tea leaves but after reading more, it actually makes sense.
It's more about understanding the investors as a whole and trying to understand their psychology. It's really more scientific than some FA people give them credit for :)

AK71 said...

Hi Ray,

You are more qualified than I am. So, you are a banker?

As for TA, I agree with you. My own discovery of TA was similarly an eye opener thanks to a good friend, the blog master of Time to Huat.

However, to use TA as a predictive tool is still like reading tea leaves. ;p

TA provides a peek into the psychology of market participants. Charts give signals and signals could fail. Even signals which have been confirmed could fail. So, we must not take it as the Gospel truth. :)

Ray said...

haha, I wished.
I had no finance foundation really. Took CFA because at a moment in time I wanted to see if I can change career. Didn't really work out and I also realized Finance isn't my cup of tea.

I'm in IT actually, working for govt now. Salary wise, not as fantastic as bankers but ok lah, comfy enough.

Bad thing is, I have car, house, baby coming soon etc so my warchest isn't that big :)

Qualified? Nah, just head knowledge (which I returned to teacher already anyway), I still think experience is important so am thankful seasoned investor like you dont mind sharing and chatting with newbies like me late into the night :)

AK71 said...

Hi Ray,

Well, knowing what is our cup of tea is important and since you decided finance is not it, you did the right thing. :)

You have a house, a car and a baby coming. Of the three, I only have a car and it is fully paid. Our circumstances are different.

Setting realistic targets given our individual circumstances would encourage us to continue soldiering on.

OK, I am gonna get some dinner now before I soldier on. :)

Anonymous said...

Reading your blog is really refreshing. Gives me hope :-)

Jaime

Ray said...

Dinner at 10pm. Not a healthy lifestyle :) watch your wealth but also watch your health :)

AK71 said...

Hi Jaime,

I am glad. Never lose hope! :)

AK71 said...

Hi Ray,

I don't usually eat after 8pm but my last blog post took a bit more time to compose. Once in a while is OK. Thanks for being concerned. ;)

In case you are wondering what I had for dinner: a can of baked beans and an apple. :)

Ray said...

oh dear... sorry to make you answer my question in such a long post.

I try to ask shorter questions in future :D

AK71 said...

Hi Ray,

Haha.. No, no. Don't say that. No one can make me do anything. I could have just given you a reply like "Sorry, no comments." ;p

I don't eat very much these days and on some days, I go without dinner too. A sedentary lifestyle doesn't require much food. :)

Anonymous said...

Are you the writer of The Finance too? And are you Dou of Singstocks.com?I don't mean to be rude so please disregard my question if it sounds nosey. Just want to thankyou for your frank sharing of your initial loss in AIM Reits. Unfortunately I did not subscibe for excess rights and am atill losing a lot for my 2 initial IPO lots. I think this is one of my worst investments but not able to cut loss as my average price is 34.05 cents for 14,000

financialray said...

Yes, the Eight Immortals again.

Fortune god has started smiling on those born in the year of the pig.

WHile we plan our investments for financial freedom, do also take some time to plan for career advancements.

Jade Emperor has decided to promote me but like the Monkey God, I am actually pondering....lest I have no time for doing things I like....this is a dilemma when I am counting on being financially free in 2-3 years' time.

AK71 said...

Hi Anonymous,

Nope. TheFinance is a blog aggregator run by a fine young man called Derek. Dou is the blogmaster of Singstocks. AK71 is the blogmaster of ASSI. We are three different people. ;)

As for AIMS AMP Capital Industrial REIT (the former MI-REIT), as investors, we must realise one simple rule in life and that is the only constant in life is change. Things are always changing, for better or for worse. So, we just act accordingly.

We learn from our mistakes. :)

AK71 said...

Hi financialray,

Congratulations! Things are looking up for you. :)

I actually do not want more responsibilities if I can help it. I want to spend more time with family and doing my own things.

Anonymous said...

Hi AK
Have a proper meal first before you answer those people. I do not want you to report sick and disappear for a few days without any posting in this blog.
You always have something for us to read everyday.
Cheers

CSTan

Anonymous said...

We seem to be going into the lunch hour with a nice rally, my little punt is looking much better. Is anyone smiling yet? :)

Clueless Punter

AK71 said...

Hi CS,

Well, not everyday anymore. The frequency of my blog posts are becoming irregular. I am powering down. I do, however, still try to reply to comments promptly. :)

Thanks for being concerned about my health. I will try to have regular meals. ;)

AK71 said...

Hi Clueless Punter,

Sounds like you are going to make a bundle. Congratulations! :)

Affordable items said...

hyflux trust :( if it still exist now i would buy them if the price is right.

AK71 said...

Hi Affordable items,

I do miss it. One of my little triumphs in the last crisis. :)

Ray said...

You know, it really beats me why SGX investors are more pessimistic than European and USA investors.
The Dow soared so much yet SGX stocks briefly soared but are falling back now to form Dojis.

Is this uniquely Singaporean? :)

AK71 said...

Hi Ray,

Haha.. I have absolutely no idea. What does TA tell you? ;p

Personally, I am just quietly waiting for signs.

Of course, the signs I am looking out for might not come. If I miss out, too bad for me. :)

Ray said...

MY limited TA knowledge tells me market is very indecisive now so you sitting by the sidelines is a good move.

Lots of amateur longists and shortists got burnt try to predict a reversal. Me included. Ouch.

If you have lobang signs you are looking out for, do share :D

AK71 said...

Hi Ray,

I am waiting for textbook signs of bottoming and reversal before going back in. No point taking unnecessary risks. :)

I don't sense abject pessimism either which is a sign of bottoms. Well, I will wait and see.

Ray said...

Last week's 6 straight days of selling is almost as pessimistic as it goes I felt.

From FA p.o.v, I don't think the ECB, IMF will let any of the Euro countries fail. USA economy is recovering too.

Well, you're the experienced one... so I shan't make a fool of myself here too much :)

AK71 said...

Hi Ray,

Wah! You good! You just passed the ball to me!

Oops, clumsy me, I dropped the ball... Forgive me. I am old and clumsy. :(

INVS 2.0 said...

Hi Ak71,

Nice one, Ak71. Hmm, I haven't intro myself since stepping foot onto your blog? :D

I am in my early 20s and is going to complete my NS in a few days time. :) :)

I have been investing since early 2010. My early portfolio consisted mostly of growth stocks but made some losses after series of economic shocks rocked the market last year.

I found confidence and insights on REITs, which explains my presence on AIMSAMP (your favourite :D), Starhill and First. :)

Although these REITs are still in the red, I am getting back some decent dividends. With not much of personal expenses, I am comfortable with my investment. :D

Ray said...

No lah, not passing you the ball.
I just thought I shouldn't say say too much about my analysis for fear of appearing foolish in front of experienced investors :)

AK71 said...

Hi INVS2.0,

Thanks for the introduction. I don't know why but it feels good to learn more about you. :)

Some people would argue that a young person like yourself should not bother with REITs and that you should concentrate in growth stocks instead. Investing for income should be for people who are a bit older. ;)

Well, I have always maintained that everyone should have their own goals, depending on their circumstances. There is really no right or wrong.

You are one example of a young person who has decided that income investing is a comfortable way to grow your wealth. No right or wrong about it. :)

AK71 said...

Hi Ray,

Trust me when I say that I would love to hear whatever my readers have to say.

If we disagree, we might learn something from each other. If we agree all the time, things get boring. ;)

INVS 2.0 said...

Hi Ak71,

Nah, I will prefer growth stocks and fundamentally-strong companies when the market finally collapses next year (hopefully?). But keep REITs as another porfolio, a backup mainbase or something to ensure lower risk.

For the current situation, I will play defensive role and invest in REITs. :)

AK71 said...

Hi INVS2.0,

Ah, I see. Thanks for elaborating. Sounds like a plan. :)

Anonymous said...

Hello Ray,

It seems we are not that pessimistic after all. Today we seem to be seeing a spillover from yesterday's rally, albeit smaller.

Have a good weekend everyone.

Clueless Punter

Anonymous said...

AK71

For Aims Reits, will you keep averaging down when prices get lower? I bought some at 0.20 before it got consolidated. Just received the dividend.

Thinking of vesting more for dividend. Looking for some advise.

Thanks
PT

AK71 said...

Hi PT,

I did buy more of AIMS AMP Capital Industrial REIT at 93.5c.

AIMS AMP Capital Industrial REIT: Accumulate on weakness.

I would think that at 90c, it would be quite irresistable for me to add more. Haha.. Well, it might or might not hit 90c.

If you are investing for income, you have to ask if the current as well as the expected distribution yields (when 20 Gul Way's development is completed) are good for you. You also want to ask if you are comfortable with the gearing level.

It is all very subjective. What is acceptable to me might not be so for you. :)

AK71 said...

AIMS Property Securities Fund (formerly MPSF) on Thursday reported a 65 per cent increase in net income to A$8.87 million (S$9.46 million) for the half-year period to Dec 31, 2014.

Revenue rose 79 per cent to A$2.31 million. Revenue consists entirely of the fund's investment activities, namely distribution revenue from investment funds and interest revenue from its cash in banks.

The fund said 0.1088 Australian cent per unit was paid for the quarter of September, and announced a distribution of 0.1317 Australian cent per unit for the December quarter.

It added that it is in a stronger position compared to a year ago, with total assets of A$85 million and no borrowings.

The fund manager has invested in 14 listed and unlisted funds, which provide exposure across several property markets. As at Dec 31, 2014, the fund, which operates in Australia, has invested about 59 per cent of its total funds. It is listed in both Singapore and Australia.


Source:
http://www.businesstimes.com.sg//companies-markets/aims-property-securities-funds-half-year-income-rises-65-revenue-jumps-79

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