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Tea with Matthew Seah: Same stock, different results!

Saturday, March 8, 2014


Recently I met up with a friend. Naturally being me, as we conversed, we veered more toward talking about investing. As we talk, I found out that this friend of mine had invested in the same US company as I did back in August 2011.

Back then, he had asked me what company I was investing in. At that time Gap Inc (GPS) was falling some 32% from its high of US$23, to below US16. Of course after doing much due diligence, I deemed that GPS was undervalued (I shall spare the fundamental analysis portion), and I told him I just bought GPS and told him the reasons why I think this is a good company to invest in. And without doing due diligence, he bought…

Coincidentally he had bought at the same price as me – US$16.16, although the exchange rate and broker fees might be slightly different. After 2 and a half years, how does each of us fare?

Friend: loss of S$65
Me: sitting with a 100% return of investment, with some 54% of my original shareholdings earning residual dividends + capital gains!
Apparently, right after he invested, the price of GPS went up and down several times. So much so that he could not take the emotional strain and he sold his entire stake in early October, 2013. He didn’t even manage to receive a single dividend during the time he was invested and made a small loss. The chart below shows what happened.
As for me, I have been holding since I bought it till June 2012, when I sold 46% of my shares for a total return of my original investment capital, plus a bit more. My remaining stake has gained some 163% In value and I have also received some dividends every now and then from the company. The chart below gives a pictorial view of what I have described.

Why such a big discrepancy?
I’m sure readers of financial blogs would know that emotions affect one’s decision in investing and trading. Emotions and personality can often get in the way of successful investing. As a result, many people have tendencies to:
1. Buy on tips from other people
2. Buy on a whim
3. Buy the hype
4. Ride a winner till it goes bust
5. Fail to exit a loser

As an investor, we should recognize our own emotional strengths and weakness, and approach investing in a way that is more suitable to our investing style. It is paramount that you know what type of investor you are and not follow other investors blindly. Their investing style might be very different from yours!

Read other guest blogs by Matthew Seah: here.


The world is full of nice people.

Friday, March 7, 2014


I shared this on Facebook earlier:


As I was also filling out a donation form for Singapore Children's Society, I asked readers who are following me on Facebook to make a donation as well, if they can afford to.

See what $10, $25 or $50 can do for needy children:



Yes, just $10 can make a difference to a child's life.

Donate online at:
Singapore Children's Society.

Thank you for your kindness. :)

Related post:
An appeal by AK for funds.

Saturday morning with Victor Chng: Level Up!

Thursday, March 6, 2014

My blog about how AK feels like Bilbo Baggins might still be quite fresh on your mind. In case you are wondering, I am still meditating on the issue and wondering what kind of disguise would work.

While I am still meditating, the boat has to leave without me. Well, it can't be helped, I guess. There is always another boat and, maybe, by then, I would have made up my mind.


However, quite honestly, I didn't know about this particular boat until 2 nights ago.

Well, at least, I can help spread the word about this event which is happening very soon:

Venue:


 
SPH News Centre, Auditorium
1000 Toa Payoh North
Singapore 318994
 
Date:
 
15 March 2014, Saturday
 
Time:   9:00am - 1:00pm
(Registration starts 8:30am.)

It is just slightly more than a week away. Rather short notice.

Hear from one of the brilliant analytical minds I mentioned somewhere in my blog's comments section before. I spoke with him at length again recently and I was really impressed. His name is Victor Chng and he will share with you his insights on what is currently unloved by Mr. Market.

Click to enlarge.

Someone else whom you might learn something from is Chris Chan. I learned quite a few things from him about insurance in his presentations before. Get the right kind of insurance at the right prices. Although I have taken his advice to heart, I have yet to defrag my insurance policies. Maybe, one day, I will have a chat with Chris.

I was told that there are only about 200 tickets available for sale. So, if you want to attend the event, you have to be fast.

Oh, I haven't told you the ticket prices:

$9.00 for one ticket.

Bring a friend and you pay only $15.00 for two tickets.

Here is the link: Level Up Life Series.

If you are a student, just show up at the venue and flash your matriculation card. Why? You get to go in for free! This is the promise my friends made. So, go early and get your free seat!

Remember, go with an open mind and I think there will be plenty of useful knowledge to take away.

If you do not think you need more guidance or the services offered, don't sign up for anything. This is the same thing I said about attending Value Investing Summit in 2013 and 2014.

However, if you feel that you need more guidance or if you feel that you do not have time to do due diligence, then, consider signing up with Victor for his discussion forum!

The forum will not cost you thousands of dollars. It will not cost you one thousand dollars. It will not even cost you half a thousand dollars.

Victor has put a lot of thought into the design of the discussion forum and I believe that it will be truly value for money.

My friends are taking baby steps to fulfil their vision of promoting financial literacy without charging high prices and to channel a percentage of their earnings towards charitable causes at the same time.

If you have the time and a few dollars to spare, spend a Saturday morning with Victor Chng and see for yourself this young man in action (and you will know if AK had postage stamps over his eyes).

Related post:
AK feels like Bilbo Baggins.

Invest $10,000 and get a 24% yield in 24 months.

Wednesday, March 5, 2014


I received an email from a reader regarding an investment opportunity and he asked me for my opinion:

Hi !

I heard about your blog from my father and I am very impressed! I would like to ask you if you know about the German Real Estate Investments through XXXXXXX Wealth Holdings. The minimum cash in is $10k and the yield is 24% over 24 months. Is it too good to be true? Is it a scam? Could you help me look into it please and give me advice on whether to cash in or not. Thanks!!
IL





My reply:
Hi IL,

Ask them how is that 24% return on investment over a 24 months period achieved. If they cannot explain it to your satisfaction, don't touch it with a 5 feet pole.

If an explanation is given, see if they are paying you from cash flow generated by the properties or are you simply taking back some of your own money.







I visited their website.

Their "dedicated and talented management team" has over 25 years of combined industry experience. I wonder how many people are on their team?

At the bottom of the page, it says that they are not regulated by the Monetary Authority of Singapore. That doesn't sit well with me.

I don't know if it is a scam but when in doubt, I stay out. :)

Best wishes,
AK








Apology: Due to an administrative oversight regarding an advertorial earlier, I had to take down this blog post and re-publish it today. Very sorry for causing any discomfort to some readers. :( - AK, 4.52pm, 6 March 2014.

AK will always be AK.

Tuesday, March 4, 2014

Apology: Due to an administrative oversight regarding an advertorial earlier, I had to take down this blog post and re-publish it today. Very sorry for causing any discomfort to some readers. :( - AK, 4.50pm, 6 March 2014.

My reply to a reader's email:

Thank you for taking the time to write to me. I appreciate it. :)

Do you trust me when I say that I will not do anything which I think is against the interests of my readers? Please tell me you do. -.-"

I will stay true to the spirit of being AK (which always has an element of fun and laughter)! AK is a just a regular guy who shares what little he knows and loves value for money. AK believes that luck is important in everything he does. AK believes in being charitable. None of these will change. :)

I am more comfortable being anonymous and will probably stay so for some time to come. One day, when I am brave enough and ready to deal with the consequences, I might let it go. However, there is no saying whether that one day will ever come. ;)


AK is but a frog in a well.

Win a car in the Phillip-Macquarie Warrant Challenge!

Regular readers know that I won a car many years ago. Quite lucky, that. I always say that luck plays a part in the grand scheme of things. This is true in our efforts as investors too.

Now, there is a chance that you could win a car and unlike lucky draws at NTUC Fairprice, Harvey Norman or Courts, for examples, I suspect that there will be less participants in this lucky draw and your chances of winning are higher! Why?


This car is the grand prize in the Phillip-Macquarie Warrant Challenge and I don't think this is something that will have a big following of "shoppers". So, chances of winning are higher, I surmised.

You know what is the best thing about this Challenge? You don't have to use any real money!

If you have some experience trading warrants before, you possibly have an advantage over the rest. However, if you have no experience at all, you won't lose any real money anyway.

Like they say:

"It’s the perfect way to get started if you’ve never traded warrants before but always wanted to, and you stand to win your share of the $30,000 in cash prizes. Overall prize winners will also be entered into Phillip Capital’s Grand Lucky Draw to win a Mazda 6 worth S$90,000*"
*Terms and conditions apply.

To learn more or to take part now, go to:
Phillip-Macquarie Warrant Challenge!

Have fun and good luck! Hope one of my readers win! Huat ah!

Saizen REIT and Croesus Retail Trust: Much ado about Yen.

Monday, March 3, 2014

A reader sent me an email and expressed worry that the JPY might weaken further against the S$. With exposure to Saizen REIT and Croesus Retail Trust, he is worried.

For sure, the JPY has weakened dramatically in the last 2 years (and a few months) against the S$. By now, it has weakened some 25% or so. It might weaken further or it might not. I am sure there are arguments made in favour of both cases.

I think, as investors, we have to know clearly what is our motivation for investing in Saizen REIT and Croesus Retail Trust. If we are investing for income and if we have not overpaid in either case, I feel that we have little to worry about.

Luz Shinsaibashi, Osaka.

Both Saizen REIT and Croesus Retail Trust hedge exchange rate risk. So, even if the JPY were to weaken another 10% in the next six months, their next income distribution in S$ will barely be affected. Similarly, if the JPY were to appreciate significantly in the next six months, don't expect any big gain in DPU, everything else remaining equal.

Of course, the income distribution after the next could be hedged at an even lower exchange rate if the JPY is weaker by then. Yikes! Yes, this is one of the risks that comes with investing in anything that receives income in a foreign currency.

With Saizen REIT trading at 88c a unit and giving a DPU of about 6.5c, we are looking at a yield of 7.38%. Croesus Retail Trust is trading at about 89c and will offer an annualised DPU of about 9.3c, by my estimate, or a distribution yield of 10.44%, after its recent acquisitions. Double digit yield, anybody?

Of course, we have to remember that Saizen REIT has a much stronger balance sheet compared to Croesus Retail Trust and that they own different types of properties.

In the event that the JPY weakens another 5 or 10%, what would the impact be on the distributable income in S$ terms? Yield falls to 6.64% for Saizen REIT and to 9.45% for Croesus Retail Trust? Is that so unpalatable? Is that a catastrophe?

Photo of the Great Buddha in Kamakura I took on a trip in December 2011 when JPY was at its highest against the S$.

Investing for income is supposed to give us some measure of equanimity even if the equity market sails through a storm. If the slightest hint of choppy waters scares us to bits, we might want to look at our motivation for being invested again and also check to make sure that we have not invested with money we might need in the next few years.

There must be a reason for our fear. Find it.

Related posts:
1. Saizen REIT: Is the DPU sustainable?
2. Croesus Retail Trust: Recent acquisitions.
3. Motivations and methods in investing.
4. Be comfortable with being invested.


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