"Noble Group will be worth $7.00 a share."

Reader says...
I followed the call of a famous trader in Singapore and bought Noble in May.

He drew a chart and said it will go up to $7.00.




I am still holding but the price keeps falling. I put in a lot of money. I don't know what to do now.

Should I cut loss?

AK says...
When was the last time I did a TA on Noble Group?

See the blog: HERE.

I always say that TA is about probability and not certainty.





It is too dangerous for me to suggest if you should hold, cut or add.

However, I would suggest that you pick up TA if you want to be a trader.

See recommended books for TA: HERE.

Regular readers know that I used to do quite a bit of trading and I said as much in this year's "Evening with AK and friends".

See the blog: HERE.






If you want to start a zhi char store, make sure you know how to handle a wok.

If you don't know how and pay a shi fu to do it, you are at his mercy.

So, if you want to trade stocks, make sure you know how to read charts. :)




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In case you just dropped in, there was a blog published earlier today:
Investing in high yield Asian bonds.

Investing in high yield Asian bonds.

Reader says...
I am in my early 40s, and do active investing on my own.

Recently I was contacted by an agent, who shared about investing in high yield Asian bonds.




I was initially sceptical but it seems that these are very different from mini bonds, and the failure rate has been historically low.

I am thinking of investing about 10% of what I usually invest in the stock market in these bonds.

The main catch is that the investment commitment is over 10 years (i.e. cannot sell for the first 10 years), which seems fine to me, and after that, I am able to decide whether to continue investing or not.

Would you be so kind to share your thoughts please? 

Many thanks.

AK says...
High yield bonds are a nice way of saying junk bonds.

They are junk bonds for a reason and you should be wary of the financial strength of the issuers.

It depends on how much risk you are comfortable with taking and if you think the potential returns justify the risk.




I wouldn't buy these myself and also because there is a strange thing here about not being able to get out of this for 10 years.

Whether regular bonds or bond funds, we are allowed to get out whenever we want, accepting whatever price Mr. Market should offer at that point in time.

10 years is a very long time and with no escape clause, it is either we swim or sink with the issuer.




Another thing is that with interest rates rising, if the issuer does not default, these bonds could be worth much less 10 years later assuming that interest rates become elevated then.

So, in such a scenario, if you do decide to sell the bonds, you might get back less than your initial investment.

Of course, the decision is yours.





You might want to read the blogs listed below and I hope they are helpful to you:
1. Why have bonds in our portfolio?
2. Nobody cares more about our money.

Have a savings plan and invest fearlessly!

Reader says...
Recently, an agent came to me asking me I should get a saving plan.

As she said that people can invest fearlessly is becos they have a saving plan (safety net) if anything to happen, there's still a saving account.





The saving plan is like pay for 5 years then after 15 years can take the money out with interest.

She says the money can be used for my baby education funds or my personal funds after 15 years.

What r your thoughts on saving plans?

AK says...
What is the guaranteed return?

See for yourself if it is worthwhile.

As a guide, Singapore Savings Bond (SSB) pays 2.16% p.a. guaranteed if held for 10 years.

This is a AAA rated sovereign bond.





So, this savings plan which the insurance agent is trying to sell to you must return much more than this to make it worth considering.

1. 15 years is a long time to hold. You will be sacrificing liquidity for a very long period of time.

2. Insurance company is not a AAA rated country like Singapore.








If you want a similar safety net, locking up some money in SSB for 10 years could be the answer. 🙂

(Unlike a savings plan from an insurance company, you will not suffer any monetary loss for early withdrawal for SSB although the returns would be lower if not held for 10 years.)

15 years is a very long time and in that time, there could be a stock market crash (or two) and I would rather have more money to invest with.

So, with this consideration in mind, putting the money in SSB is a better option for me. 🙂







To be fair, such products (i.e. savings plans) are useful to some people.

These people probably have lots of spare cash and are probably not interested in investing in stocks or hard assets.

These people might not be financially savvy and just want somewhere relatively safe to plonk their money.







If you are financially savvy, buy term and invest the rest. 🙂

Related posts:
1. Insurance weakened family's balance sheet.
2. 2.02% interest attractive? It depends.
3. Singapore Savings Bond good or not?

See this month's Singapore Savings Bond: HERE.

Reducing investment in Accordia Golf Trust.

I am sharing this conversation which I had with a reader which took place in the comments section of my last blog on Accordia Golf Trust because I feel that it is important enough to share as a proper blog.





csky said...
Redemption of the deposit means the member has cancelled their membership. But non-members can still play but at a higher play fee.

The large redemption for FY17/18 was unexpected as the previous years’ redemption averaged about 20%. They think it could be because this batch of redemption included 2 golf courses that had much higher membership deposit fees than other golf courses.

The cumulative amount of membership that has yet to be redeemed is shown in the dark grey bar on top of the chart. Which is 11,215 (JPY million) for FY17/18 and it is also reflected under liabilities in their balance sheet.

This membership deposit is an old scheme. The last batch of this old scheme is reflected by the grey bar of 750 (JPY Million) for FY18/19 as shown in the chart. So new members who join now, they no longer has to place any such redeemable membership deposits.





AK said...
Thanks very much for sharing this. :)

These old members who redeemed their deposits can rejoin as new members without having to make any deposit under the new scheme.

Realistically, we should expect deposit redemption to continue to impact distributions in future and, in time, cease altogether.





csky said...
Most welcome ;)

AK, all of their loans will be due in either August 2018 or August 2019. Is this normal? I am assuming they will try to refinance the loans, but it sounds like they are not giving themselves very much time. What if there is sudden financial crunch? And it certainly does not seem like they have enough cash to make repayment of the loans too.

Term loan A ($15,000M) and Term loan B ($15,000) are both due in August 2018. Term loan C ($15,000) is due Sep 2019. Term Loan A has already been extended once (from August 17 to August 18), no mention of them refinancing it again. The report does say they are refinancing Term Loan B with banks.





AK said...
Yes, I was a bit surprised that they extended the loan for one year only.

Now, together with the risk of membership deposit redemption, it looks like they might have too much on their plate.

Although I think that AGT can be a good investment for income, with all the uncertainties, to add to my investment, I would demand a lower unit price as compensation for the risk I would have to undertake.

With this in mind, I think it might actually be a good idea to reduce my rather big investment in the trust.





I will talk about this again in my regular full year passive income report next month.

Related post:
Accordia Golf Trust DPU plunged.