AK's simple strategy.

What is my simple strategy?

按兵不动

- Hold our troops; bide our time.

Collect regular dividends and wait for opportunities.

We want to be in a position which would allow us to benefit from market weakness as well as strength. The way to do this is to stay invested in the market and also have a war chest ready.

Opportunities to accumulate will always show themselves but without a war chest, it would be difficult to take advantage of them.

Sometimes, doing nothing is also doing something.

So, as I wait and do nothing, I might have mostly nothing to blog about. ;p

Related post:
To be richer, be comfortable with being invested.


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Singapore REITs yield world’s best returns: Southeast Asia
Wednesday, 05 September 2012

© 2012 - The Edge Singapore

Tea with AK71: Funny!

I was sent this and found it amusing:

I hope this has coaxed a chuckle or even a hearty laughter from you, no matter what your personal beliefs might be.

Life is short. Don't take it too seriously. ;)

This is funny! I really laughed very hard!

I don't know who are responsible for these works but kudos to them for bringing fun and laughter to our lives. :)

I know I need some cheering up as I will be sending my car to the workshop for major repairs early tomorrow and will be carless for a week or more. :(

See: Traffic accident with a Malaysian vehicle.

Wilmar: Should we be buying?

A reader asked me if I am buying more shares of Wilmar as I said before that the time to buy is when the selling has dried up. Has the selling dried up?

Well, the trend is still obviously down and my investment is in the red. My long position in Wilmar is my biggest money losing investment on paper this year.

However, I have bought more shares of Wilmar as the MACD is rising while share price declined. Momentum is still negative but with a rising MACD, the negative momentum is weakening.

There is no obvious sign of accumulation or distribution with the OBV flat as the share price languished more or less at the 61.8% Fibo line.

Volume has been relatively low as the Bollinger bands begin to squeeze, confirming the picture of low volatility. A big move in Wilmar's share price could be on the horizon. Which direction? That is anybody's guess.

If the move is to the upside, overcoming the 20d MA on high volume would signal a breakout. If the move is to the downside, the low of $3.04 touched on 15 Aug is the support to watch.

A sign that things might have bottomed is when there is massive pessimism and no one is interested in buying anymore. In fact, there would be more who would sell even at a big loss because they believe the share price could move much lower over time. Then, there are the increasing number of "sell" calls by the research houses all offering much lower 12 months target prices.

The relatively low volumes, the gently rising MACD and the flat OBV tell me that there is currently a stalemate between the bulls and the bears, pending a possible big move in price with the constriction seen in the Bollinger bands. The trend is, however, still in the bears' favour.

Now, no one should tell you what you should do. You have to decide for yourself.

Related post:
Wilmar: Touched a new low.

Tea with AK71: Quick, buy a new car cheaper now!

It is reported that last weekend saw 5 to 20% more new cars sold in the showrooms here as COE premiums declined for the first time in months.

We probably have friends and family members who are looking to buy a car for a host of reasons. Although some might think that cars are not necessary in Singapore, many would beg to differ.

Finance manager Lionel Ng, 58, and his wife, 53, a homemaker, own a MPV vehicle which will be 10 years old in October. Yesterday, they took advantage of the lower COEs to purchase a Toyota Altis which will replace their current car.

Mr. Ng said: "The COE is still very expensive but we cannot wait anymore - I feel a car is a necessity in Singapore but right now, it's priced like a luxury item."

Ms. Evelyn Tan, 36, self-employed, upgraded her vehicle from a 3 year old Toyota Vios to a Mercedes Benz C-Class. She said: "With the trade-in and lower COE, I'm getting a very good deal on my new car." (The Straits Times, August 27, 2012).

I bought my current car about two years ago and I have not really been looking at cars or tracking their prices. A quick check online revealed the following:

1. New Toyota Altis 1.6 Classic (A) @ S$ 123,988
2. New Mercedes Benz C180 (A) @ S$ 214,888

Wow! WOW! WOW!!!!!!

I am used to driving around and would find it hard to adapt to a carless lifestyle. However, to pay so much even for a new Toyota Altis is simply mind-boggling.

If I were to buy a car now, I would look at pre-owned cars.

A 2006 registered Mercedes Benz C180 would, for example, set us back by S$60,000. This means saving S$154,888 for losing 6 years of use. This is rather simplistic, of course, as we would be buying an older car with older technology which would probably cost more to maintain with the wear and tear accumulated over 6 years. However, we would be saving ourselves some hefty depreciation.

Although I would always argue it is not a matter of affordability but a matter of value for money, consumption is always more of an emotive activity for most. So, happy, buy lor! ;)

Related posts:
1. Tea with AK71: A new car for $75,000?
2. Tea with AK71: The price of my car now.

Saizen REIT: 2H FY2012.

Thanks to its recent acquisitive activities, paying down of its loans and a strong JPY, Saizen REIT is able to declare a higher DPU of 0.63c for 2H FY2012. This is payable on 18 Sep.

Therefore, the expected reduction in DPU of 10+% with the conversion of its warrants did not materialise and Mr. Market has shown his approval in the usual way as unit price of the REIT climbed higher today.

Net gearing: 24%
Interest cover ratio: 6x
NAV/unit: 30c

Annualising the DPU of 0.63c would give us 1.26c or a distribution yield of 7.875% at a unit price of 16c. Everything remaining constant, the DPU is likely to increase as the REIT's management continues to look out for apartment buildings to acquire and pay down its loans which are amortising in nature.

I have mentioned before that if the REIT's loans were not amortising in nature, its DPU could be some 50% higher than it is now.

The management has also indicated it could buy back units from the open market if unit price should be depressed. This would also improve DPU if it should happen.

All in all, I am very pleased with Saizen REIT's results.

With numbers very healthy and operations stable, Saizen REIT is very much undervalued. I believe a 30% discount to NAV/unit is closer to fair value. That would be 21c per unit.

Assuming that there is no new acquisitions from here on and everything else remains constant, at 21c a unit, we would be looking at a distribution yield of 6%. Bearing in mind that this would likely improve in time due to the amortising nature of the REIT's loans, everything else remaining constant, makes Saizen REIT a strong value proposition for anyone investing for income.

Results presentation slides: here.

Related posts:
1. Saizen REIT: Why did I buy and would I buy more?
2. Saizen REIT: Beefing up distributable income.

Have a plan, your own plan.

"As always, invest based on your risk comfort level. 

"Remember that media headlines should not be what is driving your overall strategy and, instead, thoughtful analysis of your goals (and willingness to absorb pain in market down periods) is what is necessary for a successful investment strategy.





"Decide which type of investor you are before you invest and make sure the overall strategy reflects your view of the world as well as the degree to which you can afford to be completely wrong. 

"And always remember that no matter what you read, opinions change and strategists are fallible.





"It's a mistake to believe that anyone has all the answers; if they did they probably would not be sharing their secret with the world."

Michael Yoshikami





Related posts:
1. Sleep well at night with a plan.
2. Roads to wealth creation in the stock market.

The very first step to becoming richer.

Singaporeans have a reputation for being very good at complaining. This is not a bad thing per se. 

After all, if some things are really bad and in urgent need of correction, we should complain. 

How else would the relevant authorities know about the problems and to take action? 

I draw the line at taking videos and photos of minor incidents and posting it on Stomp!





However, what I really find unacceptable is perfectly healthy and whole people complaining about how they do not make enough money. 

I have blogged about this before and I must say this again: If we feel that we are not making enough money, ask ourselves if we are being shortchanged.

Are we being paid fairly? 

If others in similar position are being paid more, hey, we got a raw deal! Negotiate with our employer. 

If we are really good workers, our employers would want to keep us and give us a much deserved raise. 

If we are sub-par workers, we should keep quiet if we want to keep our job (and, hey, stop complaining). 




We have a choice if we want to do better or to remain sub-par, of course.

Would you believe me if I were to tell you that it is always harder to keep really good workers in any company? 

Sometimes, even with above market rate compensation, it could be difficult to retain really good workers. Why? 

They keep improving themselves and would try to look for better paying positions which could even be in a totally different industry. Jobs could even come looking for them! 

These people are dynamic and driven. It is not surprising that they are usually able to earn higher incomes. One day, they could even strike out on their own and run their own businesses.




Very few things in life are free. 

To earn money, we must give something in exchange. 

To make more money, we must give more in exchange or give what few could give as it would be more highly valued. 

If we have a relatively low income and would like to have a higher income, complaining is unlikely to help make us more money.




Now, I always say that we are all made differently and some of us are just comfortable enough doing what we are doing, feeling that there is no reason to change. 

Is there anything wrong with this? 

Well, if by keeping the status quo, we become wage slaves, yes, it is wrong, very wrong.

The last thing we want to be is to be a burden to people we love or, indeed, to society as a whole. 

Well, I could be generalising too much but common decency would require that we think this way. 

Taking affirmative action to plan for self-sufficiency, avoiding dependency, is not only financially prudent, it is the responsible thing to do.




Think of our lives like how we would think of a business. 

Healthy personal finances would require us to, firstly, increase our revenue and, secondly, to keep our expenses prudent. 

OK, not necessarily in this order.

If we feel that we do not make enough money, look at our revenue and expenses. Something must be wrong with one or both. 

Unless we are severely disadvantaged in some way, there is no reason why we cannot do something about one or both.




With such people who are always complaining they do not have enough money, naturally, I would not even talk to them about investing in the stock market. 

They have to seek freedom from their mental shackles first. Otherwise, they are just wasting everyone's time.

Do you know of anyone like that? 

If you do, try reaching out to them. 

You would be doing them a big favour.

Related posts:
1. Do you want to be richer?
2. Wage slaves should be fearful.
3. Money management: Needs and wants.
4. A common piece of advice on saving.

AIMS AMP Capital Industrial REIT: Scrip dividend II.

I have been asked online and offline if I would be taking part in the Distribution Reinvestment Plan (DRP) offered by AIMS AMP Capital Industrial REIT.

The price is $1.2421 per unit. This is at a slight discount compared to the closing price of the REIT in the last session which was $1.27 per unit.

The last DRP offered unitholders a price of $1.1622. Shortly after, the unit price plunged to hit a low of $1.085. Could we see a repeat of history? Could unit price plunge lower this time as well?

I did not take part in the last DRP and was waiting to accumulate closer to S$1.00 a unit. Unfortunately, Mr. Market was hungry for AIMS AMP Capital Industrial REIT and buyers overwhelmed sellers after unit price touched a low of $1.085.

So, if we put these pictures together, we could see the REIT's unit price plunge below the DRP's offered price again. How low would the unit price go? This, no one can say for sure but if the opportunity should present itself, for anyone who would like to increase exposure to the REIT, buying then would make sense.

So, am I taking part in the DRP?

Related post:
AIMS AMP Capital Industrial REIT: Scrip Dividend.

Tea with AK71: Kwan Im Thong Hood Cho Temple.

As a boy, I used to visit the temple dedicated to the Goddess of Mercy on Waterloo Street regularly with my parents. During the very difficult years of the 1980s recession, we were even more regular. Till today, my dad would still visit regularly.

Personally, I have not been to the temple in years. Today, I made use of the public holiday to visit the temple. I went through the usual routine of prayers and making a donation to the needy when I got there.

A visit to the temple always sets my mind at ease, not because I think the Goddess of Mercy would make things right but because I would reflect on my life and realise that things are not too bad. Sometimes, life gets a bit choppy but we have to count our blessings. Remember to be humble and remember to help the less fortunate.

As I was leaving the temple, on impulse, I took a photo with my Samsung Galaxy Ace. It was hastily taken and as it was very sunny, I could not see the photo taken clearly then. I looked at the photo when I got home just now and I was really amazed by it.

佛光普照

May the benevolent radiance of the Lord Buddha shine on all of us.

Good debt is always good?

I look at debt as a necessary evil. Sometimes, I need that extra help in order to buy something.

Then, do I take as long as I can to repay the debt? Well, in this environment of very low interest rates, the concept of good debt has gained traction. Why not?

The idea of good debt is appealing because it gives us more funds which could possibly generate higher returns than the interest paid on the borrowed funds. What is the catch here? Yes, only if we can use the funds to generate higher returns.

The late Dennis Ng said that the rich always take on debt while the average man tries to be debt free. This is not always true. I know of rich towkays who have so much money in their bank accounts that they would pay for a luxury car in cash instead of taking a car loan! No matter how low the interest rate is on a car loan, it is still some 10x more than what a savings account pays in interest. I also know of average people who are leveraged to the max to capitalise on good debt.

So, who is right and who is wrong?

Recently, UOB came up with a 50 year home loan offer. Khaw Boon Wan has called this a gimmick, advising people not to fall for that and that it doesn't make sense. Now, does it make sense? For someone who is financially savvy and who is able to make his money work much harder, it could possibly make sense.

Personally, I am rather apathetic about the whole matter. There will always be people who are more comfortable with debt. Hey, ask the Americans. Then, there are those who are less comfortable with debt. I have heard of mainland Chinese buying condominium units with cold, hard cash.

Again, who is right and who is wrong? It is really subjective, isn't it?

For people who are proponents of good debt, the pertinent question to ask is whether our money can always make higher returns than the interest paid on the loans? For now, it looks that way. What happens the day the party ends? Are they getting drunk on debt?

For people who are more conservative, the pertinent question to ask is whether they could be short changing themselves by being debt free in this environment of very low interest rates. Of course, if the most sophisticated wealth building tool they know is fixed deposits, staying debt free is the way to go.

Like a friend told me, I have a choice. His intended message was that I have a choice whether or not to embrace good debt. Personally, I understand the concept but I am more comfortable being debt free.

I feigned ignorance and replied: "People who do not have a choice should not be investing in property." With this, I deviated from his line of reasoning that good debt is always good. Instead, I insinuated that people who do not have a choice but to borrow to invest in properties just because of the very low interest rate environment and the perceived future returns should think twice.

Of course, the choice is theirs. ;)

Tea with AK71: Climate change.

Let us take a break from all the hustle and bustle of our lives. Let us think about the world and if we are helping to make a difference.

Beijing was hit by the worst rainfall in 60 years last month.

The relentless, weather gone crazy type of heat that has blistered the USA and other parts of the world in recent years is so rare that it can't be anything but man-made global warming...

The research says that the likelihood of such temperatures occurring from the 1950s through the 1980s was rarer than one in 300, Now, the odds are closer to one in 10...

The increase in the chance of extreme heat, drought and heavy downpours in certain regions is so huge that scientists should stop hemming and hawing... AP



Mother Nature will find a way to right the imbalances. In Beijing, the official pollution index, which had showed an unhealthy rating before the storm hit, registered “excellent” after the storm, with the air noticeably free of its normal acrid smell. Full story: here.

If we do not make changes, Mother Nature will change things her way.

Related post:
Tea with AK71: Just storms?

Wilmar: Touched a new low.

In the last session, Wilmar's share price touched a new low of $3.18. Many market participants are wondering if they should go long here. Of course, conventional wisdom would say wait for the sellers to be done selling.

So, are the sellers done selling? The OBV shows that distribution activity has not ceased. However, both MFI and MACD have not formed lower lows as compared to May 2012 when share price was higher but declining. Together, the technicals tell me that there are still sellers around but demand has picked up if only barely so.

Technically very weak, we could see lower prices for Wilmar's shares if the current floor fails to hold. Immediate support is at $3.18 while immediate resistance is at $3.54.

Although we could hope for a gap fill at $4.65 which is also where we find the declining 200dMA, that is a long shot and unlikely to happen in the near future.

After such a massive selling down, market participants are likely to take whatever gains they can and run for the hills if there should be any run up in share price. So, adopting a trading mentality could be fruitful for anyone interested in going long here.

Related post:
Wilmar: Not a time to sell.