They chose financial independence over home ownership.

This is somewhat extreme but watch how this Canadian couple chose financial independence over home ownership.  They are in their 30s and,...

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"E-book" by AK

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Oh, in case you are new to my blog and still do not know, AK has been active in FB for a year now. An achievement for an IT dinosaur!


Richard Heng said...

hi ak!

i am a newbie into stock market or investment. may i know what is the meaning and effect of waiver to income distributions??

thanks :)

AK71 said...

Hi Richard,

All unitholders in a business trust are entitled to its regular income distributions, if any. Imagine if one of these unitholders should give up (waive) his rights to these income distributions for a time. It would mean other unitholders getting more in the meantime.

Now, what happens after the waiver period is over? I am sure you can tell. ;)

Such waiver is a form of financial engineering and is something we have to be aware of especially when buying business trusts or REITs at IPO or shortly after IPO. Check if the distribution yield has been bumped up artificially to make the trust look more attractive than it is in the short term.

seefei said...

LOL, "How do you know, the big funds are not smart enough?".

My friends ask this question a lot when i advise them to buy when the market is down. As it will offer a bigger margin of safety. I often tell them i cant guess the IQ of the fund managers by their market action as i can only control my own action and $$. If the business fundamental of the company i am interested in is in good health notwithstanding the price action of its stock, i will buy more.

AK71 said...

Hi seefei,

Yes, exactly. We can easily see prices but it takes some work to to see value or the lack of it. :)

All of us have our reasons for doing what we do. Fund managers might have to sell because their clients are making redemptions, for example, instead of buying more.

The best time to buy is when there is blood in the streets. You are correct. :)

"You're right because your facts are right and your reasoning is right." Warren Buffett.

la papillion said...

Some people believe what they want to believe, esp when facts are in opposition to what they think they know. That's faith. Good for them. But there's usually little incentives to argue to such people, since your arguments are based on reasons and theirs, on emotions and perhaps market conspiracy theories. I'll leave the debate to them and be contented with my own analysis, being aware that I too, could be a victim of exactly what I just described. Lol!

AK71 said...

Hi LP,

Oh, I am with you on this. I am sure I have my own bias too. Sometimes I am aware of them but most of the time, probably not. ;p

Richard Heng said...

hi ak71,

time for the explanation!

what happen after the waiver period is over? i guess this will reduce the total income distribution given to the shareholder, assuming all else held fixed. In return, it dilute the amount of dividend return % in the subsequent dividend payout.

AK71 said...

Hi Richard,

Total distributable income should remain the same but because of "dilution", DPU will reduce and distribution yield will fall, all else remaining equal.

I think you have got this cracked! Congratulations! ;)

seefei said...

If you really want to understand how the market work, you can watch the movie "The Wolf of World Street" or TVB series "The Ultimate Addiction - 點金勝手"

These two storylines are from the investment banker's perspective. As a retail investor myself, i have a good glimpse of the innard of the stock market with these two entertainment offering.

AK, sorry for the diversion.

Richard Heng said...

hi ak71,

thanks! i made a typo in my previous post, it should be thanks for the explanation haha..

seefei, thanks for the recommendation. i will check it out soon :)

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