How did AK71 overcome his losses and grow his portfolio?

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.

The Muppets movie!

Jim Henson created the Muppets in the mid-1950s and The Muppet Show ran from 1976-1981.

The Muppets have long been known for their big musical numbers and Disney’s The Muppets movie not only maintains the tradition but also takes it to new levels with original songs, audience favorites and signature classic covers.

This is the first Muppets movie in 12 years and throughout the whole filming process, the Henson family has been on board together with the cast and crew.

Find out more about the movie which will hit the big screen on 8 December:
http://sg.churpchurp.com/AK71SG/share/muppets

Enjoy the movie!

REITs and rights issues: A Singaporean tale.

Some readers told me I should let my hair down and try blogging with a more local flavour. Should I try to inject some local flavour into my blog? Hmmm...

REITs have been getting a lot of attention lately and, generally, I think it is a good thing. However, I would like to see more balanced write ups which would do the subject justice.




Recently, another article in the newspapers was brought to my attention. The article is by Teh Hooi Leng, titled "The REIT myth busted." With a title like this, despite any claims to the contrary, the immediate impression given is a negative one.

At least two bloggers I know of have referred to the article and one highlighted that "Whatever Reits pay out in dividends, they will take back a few years later in the form of rights issues". A statement like this is not just simple, it is simplistic.

Indeed, a reader commented on the same newspaper article and expressed his displeasure. I replied to his comment in my usual fashion. See it here.




Now, let me see if I could inject some local flavour into this blog post with a somewhat simplistic analogy since being simplistic seems to be in vogue:

Once upon a time in Singapore, there was a father and son investment team. They invested in a condominium unit next to Bedok reservoir. Every year, the father would distribute 90% of the income from the rental collected from the condominium unit.

Ten years later, the father told the son that he wanted to invest in another condominium unit and asked the son if he would like to put down some capital for this new investment. The son did some calculations and realised that he would have had to "give back" all the money his father had distributed to him from the rental collected from the Bedok reservoir condominium unit over the last ten years!




"Wah, lao peh, how can liddat one?! You taking back all the money you gave me in the last ten years! You cheat my money izzit?", the son was indignant.

The father smiled indulgently at his son and explained that, with the proposed investment, he would be able to double the income distributed every year to him from rental collected from two condominium units instead of one but, of course, the son could choose not to be a part of the second investment. The son had a choice.

The father was not taking back whatever he had paid out to the son in the last ten years as the father didn't have the right to do so. The father was offering the son the right to either accept or refuse a part in the new investment.




Remember: When asked for money, ponder on the reason why. This is more important than the money involved. Looking at only the money involved is myopic.

With so many voices against REITs and their rights issues, it is easy to sing in a choir but to sing solo, that is much harder. OK, what do I know? I am just a retail investor.

Related posts:
1. REITs and rights issues: Dilutive or not?
2. Investing in REITs: A flawed strategy?

-->

DBS cuts Ascott Residence Trust rating Monday, 28 November 2011

© 2011 - The Edge Singapore