Managing exposure in AK's investment portfolio: Examples.

I received a few emails and comments both in my blog and on my FB wall regarding Yongnam and Marco Polo Marine. In the wake of their dismal results, some are wondering if they should stay invested. Of course, I won't tell people what they should do but I can share with them how I manage my portfolio so that I do not lose sleep over it.

 

Regular readers and attendees of InvestX Congress a couple of months ago might remember the graphic of a pyramid which I shared. In case you do not remember, it is found in this blog post: Motivations and methods in investing.

Many know that I invest primarily for income and these investments form part of the wider base of the pyramid. It is about investing for a predictable and, ideally, sustainable flow of income. Such investments provide my portfolio with a measure of stability that I desire.

I also invest for income and growth. This is about investing in companies which have the potential to grow and have shown some promise through their track records. On top of this, I like for them to show a commitment to pay dividends. Of course, I said before that both Yongnam and Marco Polo Marine were in this category.

I also invest purely for growth but this is higher up in the pyramid and such investments, without any dividends, should form a smaller portion of my portfolio.

So, for example, I reduced my exposure to Marco Polo Marine as it would probably struggle to pay a dividend now because not all its businesses are doing well but I am still optimistic that the company would see impressive growth if the purchase of the oil rig should work out the way the CEO thinks it should.

Now, what about Yongnam? They announced a bigger loss than expected in its latest results. A question to ask is whether this weakness is enduring or is it temporary? I am inclined to believe that it is temporary. So, I am staying invested.

With Yongnam, it is about securing more projects and, hopefully, those with higher margins. Although I am optimistic that Yongnam will do better in future, in the near term, the thesis for investing in Yongnam for both income and growth has been shaken. So, I might reduce exposure, similar to what I did with my investment in Marco Polo Marine.

Now, some might ask if I would lose money by reducing exposure. I might.

Might? Yes, might, not would.

It is good to remember that in all my investment decisions, it is partly about getting in with a margin of safety. Of course, with trading decisions, it could be quite different.

Also, because I usually invest with an income angle in mind, losses, if any, are less daunting, taking past dividends into consideration.

If I had divested some of my investments when stock prices ran up, then, I could actually end up with a gain even if I were to reduce my remaining long positions at a loss later on. I did this for Yongnam before but, unfortunately, I did not do so for Marco Polo Marine. Why?

Yongnam's share price ran up because of speculation regarding its chances of getting that big job in Myanmar. Marco Polo Marine's share price ran up, I believe, because it was undervalued compared to its peers. So, a partial divestment in Yongnam's case when prices ran up was only reasonable to me but not in Marco Polo Marine's case.

We don't always do well in our investments as conditions change and these changes might throw a spanner or a few in our analyses. However, if we

1. Invest cautiously, always demanding a margin of safety,

2. Take some gains off the table when given the opportunity,

3. Stay invested if the investment still holds promise,

Over time, we won't do too badly.

Finally, it probably pays for some to remember that my investments in Marco Polo Marine and Yongnam are bits of a bigger investment portfolio. They are not my only investments. Remember the pyramid. Know what we are after and our methods should reflect our motivations.

Related posts:
1. Yongnam: DPS of 0.6c.
2. Marco Polo Marine: Reason for weakness.
3. Portfolio review: Unexpectedly eventful.

What to do in Singapore on National Day?

Oh, my aching legs! Oh, my heels! Aching!

Aiyoh, it is National Day and AK is in pain?

I went walking with my mom in the neighbourhood this morning. We walked for more than 2 hours! 

OK, excluding time taken to explore surroundings new to me, to have brunch and to do a bit of shopping, maybe, 1 hour 30 minutes. 

Still, to out of shape AK, adoi! Sakit lah! It will probably be worse tomorrow.

Anyway, I remember a reader asking me to share photos of my daily life other than the food I eat, if possible. So, here are some photos I took this morning:


Anyone knows the name of this flower? Firecrackers?
Don't look impressive but when in large numbers
and from a distance, they look like fireworks.

See what I mean? Pretty!

Pretty bougainvillea flowers growing in planters above an expressway.
I have never seen them in these colors before, I told my mom.
My mom thinks I am a mountain tortoise now.

Wah! Suspension bridge in Singapore! So cool!
The last time I walked across one was in Canada almost 20 years ago!

Aiyoh, I know. Another photo of the food I eat. LOL.
Good wanton mee. About $3.40, after discount.

Oh, I said I went shopping, right?
Bought these. Really good and cheap super glue.
Used them to fix broken umbrellas, shoes, sandals and cups before.
Extended the lifespan of my sandals by 2 years already,
using a tube every few months.
Now, the soles of my walking shoes are beginning to detach.
It is going to be a 13c quick fix.
Waste not, want not.

Want to spend quality time with family? We don't have to spend a lot of money going overseas or visiting theme parks. 

There is so much to see and do in our neighbourhoods. We just have to be more aware of our surroundings. 

There is good and inexpensive food and great shopping too.

Money is just like any other resource. If we spend less of it, we will have more of it. If doing so makes us happier in the process, we have ourselves a bonus.

"Every man is rich or poor according to the proportion between his desires and his enjoyments." (Samuel Johnson)

Related posts:
1. Two questions to help build wealth.
2. Save 100% of your take home pay.
3. 5 points you ignore at your own risk.
4. Have money must also have a heart.
5. Tea with AK: 3 point turn.

Yum cha sek jiu with AK.

Quick upload:

One week old banana in the fridge.

Chinese tea.

Would you like to guess how much did my tea break cost?

What did you have for tea break?

How much did it cost you?

With that, HAPPY NATIONAL DAY!



Related posts:
1. Afternoon tea break with AK.
2. What did you drink for tea break?
3. Think we can't save $400,000?
4. Lunch made with love.
5. Gourmet sandwich by AK Deli!

Returning trays in food courts and having financial security.

I spent quite a bit of time penning a long email to a few friends recently and I would like to share a few paragraphs here because it is something I feel strongly about:

"As for the belief that many people think that they might not live long enough to see the first payment from the CPF Life, it is a pertinent concern. Personally, I also do not think that I will live very long because I am not very healthy. 

"Then, why do I bother planning for retirement? Why do I bother doing the kind of things that I do? It is all about taking responsibility for our own financial futures. It is about being socially responsible and not be a burden to society. I blogged about this before too.

"Unfortunately, it is not so easy to get everyone to think like this. 

"Just look at the campaign to get people to clear their own trays in the food courts and fast food outlets. How many people actually bother to do that? I was in McDonald's recently and I saw 12 JC kids who left their tables in a mess after eating there. These kids are our future. Socially responsible, anyone? I like to think that the next generation will be better at this and I still hope it will be so. 

"Again, education is important.

"I don't know if the government has tried this angle before but planning for a financially secure retirement is a socially responsible thing to do. Don't expect society to pay for our retirement unless we are severely disadvantaged. Is this worth mentioning? I think so."

I don't know about other people but in my extended family, there are people who are not financially prudent and think that it is only right that others in the family should help them if they run into financial difficulties. Why? Blood is thicker than water.

Yah, wait till the blood clots and we get a stroke or deep vein thrombosis.

Be educated financially.

Be socially responsible by planning well for retirement.

As a nation, I believe, we have some distance to go in these areas and those who know more should help those who know less so that they can help themselves. The government must do more in this respect and I believe that they can and will do more.

Related posts:

1. The very first step to becoming richer.

"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."

2. We are not perfect but we can improve our lives.
(A letter from a reader.)

"On the part of feeling very pessimistic, I can understand that... when they start thinking about retirement or old age it can look very bleak for our current generation. The government may look rich but they have other issues to think about as well. The countries around the world may not be as friendly as they seem to be.

 

"But through proper planning and use of excess funds, however little, or to restructure the way their resources are being used or allocated, I believe people can improve their lives. The problem is, I feel, nobody told them how to do it. So, since no ideas were planted, nothing can grow."