China Hongxing: Pushing upwards.

On 3 Sep, I suggested that China Hongxing might be taking a break with the near term resistance at 18c. Today, volume expanded significantly as the 18c resistance level was demolished.

Momentum oscillators are trending higher, forming higher lows.  The MFI's rise shows strong demand while the OBV's upward climb shows accumulation continuing. The MACD is still rising above the signal line in positive territory and the distance between the two is growing, a sign of strength.

On the flip side, the RSI is going into overbought territory, suggesting that the buying momentum is getting somewhat overdone.  Jumping in at this juncture to go long might be a risky proposition as the immediate upside target identified some time back at 19.5c seems within reach.

If price action starts detaching from the upper Bollinger and if the MACD's distance from the signal line starts narrowing, we could be seeing precursors of a reversal. So, we have to stay cautious and keep our eyes peeled.

Related posts:
China Hongxing: Taking a break.
China Hongxing: Retesting resistance.

Blog statistics: January to August 2010

It has been more than eight months since I started this blog and I am still blogging away. By now, regular readers could probably read me like a book.  I am, after all, almost forty and probably quite set in my ways.  The following is a summary of how my blog has performed in the last eight months:

The number of monthly unique visitors reduced dramatically in the month of June, from 19,449 in May to 15,500. That's a 20.3% decline!  The number of returning visitors fell from 10,297 in May to 8,173.  A 20.6% decline!  Terrible.  What could be the reason?  Well, I had the least number of posts in June, relatively.  Only 46, to be exact.  So, maybe, that has something to do with it.

The numbers recovered modestly in July and improved dramatically in the month of August when the number of monthly unique visitors formed a new record at 19,578.  This trumped the high formed earlier in May which saw 19,449 unique visitors.

I have no doubt that I have some very loyal readers who are spreading the word.  Your support is encouraging and you can bet that I will continue blogging!  Thank you. :)

Related posts:
Blog statistics: January to April 2010.
Alexa.

A minimum of $50k in annual passive income.

Anyone who has been reading my blog would know that I seek to build a strong stream of passive income through my investments in the stock market. On 29 May 2010, more than three months ago, I mentioned that "between LMIR and AIMS AMP Capital Industrial REIT, the annualised income distributions I receive could be as much as 4x my monthly salary".  In aggregate, this has not changed.  However, I have made some changes in allocation and shifted funds from LMIR to AIMS AMP Capital Industrial REIT.  This is because I am a little disappointed with the former and at the same time, I am feeling more optimistic about the latter.

In my post of 29 May 2010, I also said that "things should get better from here as from the month of September, income distribution from Saizen REIT would add to my passive income stream. I might just stop trading the market and sit back, relax and let the passive income stream in.  Of course, it remains to be seen if my calculations as to Saizen REIT's potential income distribution would come to pass."

I was pretty confident that things would go the way I think they would but we can never be too sure of anything. As things turned out, happily, Saizen REIT's results and DPU were better than expected.  It seems that their CEO is much more astute compared to LMIR's and did not engage in any 100% currency hedging.  To recapt, "LMIR announced a DPU of 1.04c payable on 27 August 2010.  This is lower than the 1.2c paid in the last quarter. This is due to a higher realised loss on the foreign exchange forward contract."

I did some back of the envelope calculations as to the passive income I would be receiving from my investments in Saizen REIT, AIMS AMP Capital Industrial REIT and LMIR in future:

Assuming that all of Saizen REIT's warrants are converted to regular units and assuming that YK Shintoku's CMBS is successfully refinanced with a conventional bank loan with an interest rate of about 4%, I estimate the DPU to be about 0.4c per quarter or 1.6c per annum from December 2010.

As for AIMS AMP Capital Industrial REIT, with the impending rights issue, I would probably increase my investment in the REIT by at least a third and enjoy a higher yield at the same time.  This would increase the amount of passive income I receive from this REIT from December 2010.  DPU is estimated at 0.52c per quarter or 2.08c per annum.

For LMIR, although I believe in the strength of the Indonesian economy and the strength of its currency, the management's decision to continue using foreign exchange forward contracts is likely to limit any DPU growth.  In fact, it has led to a DPU reduction in S$ terms so far as the Rupiah strengthened against the S$.  However, I expect the S$ to appreciate more robustly in future and it is unlikely that the DPU would reduce much more.  Conservatively, I estimate the DPU to be 1c per quarter or 4c per year from December 2010.

With Saizen REIT's contribution, I would probably exceed the target I have set for myself which is "to create a minimum of $50k in annual passive income from investments in the stock market alone."  I shared this aim here in my blog on 27 Feb 2010, more than half a year ago. Like with everything, however, this needs confirmation. Let us see what happens in December 2010.

Related posts:
Create more passive income with limited capital.
LMIR: DPU reduced 20%.
AIMS AMP Capital Industrial REIT: Steady performance.
Saizen REIT: Better than expected DPU.
Seven steps to creating passive income from the stock market.

Building and preserving our wealth.

When I was a secondary two student, I had to write an essay on whether television had brought more harm than good to our society?  The internet did not exist then. To own a 25 inch CRT TV set was a BIG thing.  I doubt school teachers would set an essay question like that today.

Well, I remember giving it much thought and decided that the television was just a tool and whether it did good or harm depended on how we used the tool.  This is true with any other tool as well.  A tool is just a tool.  How we use the tool is the important thing.  Similarly, in the world of investment, there are many tools at our disposal. All these tools, if used appropriately, could boost our wealth.

Human society has grown more complicated from the days of Socrates and Plato.  In those days, scholars were learned in different aspects of life.  As our knowledge base widened over time, we built colleges and universities. Within these institutions, we find different faculties and within faculties, we find different departments and within departments, we find different subjects.  Scholars have become specialists and not generalists in modern society.

We classify things, putting things in neat boxes with labels, to manage the complexities of modernity. This promotes efficiency as it helps us know exactly where things are and what they do.  However, compartmentalising also masks finer details which could set apart one item from another in the same box.

Two of the boxes in the world of investment are labeled "Blue Chips" and "REITs". 

Some prefer Blue Chips, believing that these are strong companies with stable dividend payouts with a nice possibility of share price appreciation.  I have been a shareholder of SPH and ST Engineering for as long as I can remember.  I was also a shareholder of Chartered Semiconductor and, unfortunately, I remember this too.  Certainly, not all Blue Chips are created equal.

Are REITs then all created equal?  Most certainly not. Some are stronger and better than others. REITs are primarily income instruments but they are not just income instruments.  Like any counter traded in the stock market, REITs have the ability to appreciate in price.  If they have the ability to appreciate in price, are they beginning to sound like certain entities with stable dividend payouts with a nice possibility of share price appreciation?  In fact, many S-REITs are now trading above their NAV.  There are still many S-REITs out there which offer value as they are still trading below NAV, have high yields and relatively low gearing levels.  The attraction of high yields coupled with the possibility of capital appreciation is universal.

Any undervalued counters could appreciate nicely in price once discovered by enough people who believe in them.  It does not matter if they are REITs or companies. The risks and rewards of investing in companies and REITs are similar, if we think of it less dogmatically.  Invest in the right ones and we could be rewarded. Invest in the wrong ones and we're sunk.  There are certain characteristics of a REIT which make it a REIT and not a company, for sure, but I would stop there and not over read.

Some might say that REITs are for the rich or the rich and old because these people don't need to grow their wealth aggressively, that they just need regular passive income since their wealth is sizeable already. I do not think that this is entirely correct as there could be the not so rich or the not so rich and young who just want to make sure that their wealth is not being eroded by inflation.  Choosing the right REITs could do this for these people. So, REITs are not just for the rich or the rich and old.  What we choose to invest in would depend on our motivations for being in the stock market in the first instance.

Finally, most wealthy people are wealthy because they run successful businesses. For most of us, having a well paying job and having good money management habits are the bedrock to building our wealth. Whether we choose to invest in Blue Chips or REITs later on could then build and preserve our wealth at the same time. Indeed, why not invest in both? I am not religious about either one.