Smaller apartments' prices more resilient.

Predictions such as the recent one by Barclays for a significant correction in housing prices in Singapore by 2015 are getting rather common.

"We believe the risk of a residential property market correction in the next two years is rising, as expected higher interest rates look set to coincide with a large increase in housing supply over 2014-15," Tricia Song, analyst at Barclays wrote in a report on Friday, 27 Sep 13.

In such a situation, can we expect certain segments of the housing market to weather the decline better than others?

In The Business Times today, I read that "prices of small completed private apartments (up to 506 sq ft) climbed for the second month in a row to hit a new peak in August."



SkyVue

CapitaLand's latest project "SkyVue" in Bishan saw 410 of the 505 units released for sale snapped up on the first day with smaller formats being the most popular. One bedroom units at 484 sq ft in size averaged $750,000 in price (or $1,550 psf).

It is all a matter of affordability now. How many buyers questioned if it is value for money? How many have questioned the risks involved?

Almost 95,000 private units are expected to come on stream over the next five years, alongside 25,000-27,000 public housing flats per annum, according to the Urban Redevelopment Authority.

"Total housing supply could average 40,000 units per annum and peak at 47,000 in 2015 - significantly above the historical average annual supply of 12,300 units," Song said.

"Assuming occupier demand of 15,500 units of private housing per annum, we expect the private vacancy rate to rise from 5.6 percent currently to 9.9 percent in 2016," she added, noting that historically when vacancy rates hit 8 percent, rents and prices start declining.
(Source: CNBC)

Bearing this in mind, in a situation where overall housing prices experience significant declines, smaller size apartments' prices could remain more resilient. This is because of their relatively smaller price tags and, usually, higher rental yields.

For people who are adamant about buying a condo as an investment property, shoebox apartments or mickey mouse apartments would, therefore, seem like safer choices. Right or wrong? Time will tell.

Related posts:
1. How big is a 452 sq ft apartment?
2. Will CapitaLand build "almost inhuman" size apartments?

Best deal for Snickers in town!

One of my weaknesses: chocolates!

$1.95 for 124.7 grams of Snickers! Best deal in town!

If you enjoy Snickers like I do, go find this in any ABC Bargain Centre.

Mini size = eat without guilt (unless you eat a few/half a packet/the whole packet* at one go).

*delete inapplicable options (honestly)

Related post:
Cheap Ferrero Rocher!

Tiger Balm Liniment by Haw Par Corporation.

When I was a boy, I used to wonder why older folks liked to rub medicated oil on their temples. I didn't like the sharp and stinging scent.

You know what they say about how only time can teach us certain things. This is one of those things.

For about 10 years now, I have been using medicated oil regularly. 10 years? Do I keep a record? No, I kept the empty bottles:

First bottle on the extreme left was manufactured in 2002 while the one on the extreme right which is the one I am using now was manufactured in September 2011.

Two lessons from this:

1. Often, we can only really understand why older people are the way they are when we grow older ourselves. We should be more patient when interacting with our elders.

2. I could have bought shares of Haw Par Corporation in the past when it was much cheaper but I did not. A pity. It last traded at $7.45 a share.

Based on its financial statements, I am estimating a PER of almost 15x at current share price. It seems to have a fixed annual DPS of 20c which gives a dividend yield of 2.68%. The stock has a NAV/share of some $10.71 which means it is trading at a discount of 30.5%. Its balance sheet is very strong too.

Some might ask if it is better to invest in SPH. Well, if SPH were to pay a DPS of 21c, at $4.10 a share, we would get a yield of 5.12%. From this angle, SPH wins hands down.

However, if Haw Par Corporation were to pay out all its earnings as dividends, we could see a higher yield of 6.7% or so. Of course, I am not suggesting that it would but, comparing it with SPH thus, it seems stronger compared to SPH.

It is probably safe to say that anyone investing in Haw Par Corporation probably looks at it as an asset play. It does not seem attractive in any other way to me as an investor at its current share price.

Remember, "you could sit on an undervalued situation your entire adult life and the stock wouldn't budge a nickel." (Peter Lynch, One Up On Wall Street.)

Still, all investments are good at the right price and if PER were to decline to 12x or if the stock were to trade at a 40% discount to its NAV while maintaining a DPS of 20c, it could be a very compelling buy! Well, I can always dream.

Related post:
How to be "One Up On Wall Street"?

Hunter X Hunter (2011): Snowballing towards bankruptcy.

I am still watching Hunter X Hunter (2011) and here are a few screen captures (with English sub-titles) from the last episode I watched:

Cool, isn't it? Wasn't expecting anything like this in an anime of this genre.

Related posts:
1. Get on top of your finances!
2. Don't think and grow rich!
3. Not enough money to be married.
4. Good debt is always good?
5. AK71 is watching Hunter X Hunter (2011).

The last bit of moisturiser wasted.

I prefer tubes to tubs because there is less exposure of the content to air. However, I really dislike how some of the content will go to waste.

Front.

Back.



Side. How to squeeze anymore?

If this were a plastic tube, I would have cut the tube in half to get the last bit of moisturiser left in it. This is, however, a metal tube.

Oh, well.

Related post:
Shea Butter Cream.

Don't waste the last bit of jam (and almond butter).

This is my favourite brand of jam:

There will always be some jam left at the base of the jar and on the inside of the walls. I hate to waste. So, I would fill the jar with water, cap the jar and shake vigorously (yah, I am a closet bar tender).

Voila! Atas looking fruit juice (with bits of real fruit)!
--------------------
Update:  15 June 2016.
I haven't had any jam or peanut butter in a long time since I started on healthier eating.

Instead of peanut butter, I take almond butter which is a healthier alternative. Almond butter is pretty pricey but my health is worth it.

No matter how I scrape the inside and base of the jar, there will be always be a bit of almond butter left. What to do?

Scoop in some steamed rice and stir things up a bit.

Yummy almond butter rice.

Very little is wasted.

Voila! Have some almond butter rice for dessert!

Related post:
Waste not, want not, save lots.

What can investors learn from assassins?

I am spending quite a bit of time watching Hunter X Hunter (2011) now.

In the latest episode I watched, Killua thought of the advice his father, a professional assassin, gave him:

"Listen to me... Never take risks.

"Act only when success is guaranteed.

"Otherwise, wait.

"Waiting is our most crucial job.

"If victory isn't assured, revealing your strength is the most foolish move to make."

What can investors learn from assassins? I wonder.

Related posts:
1. Hunter X Hunter (2011).
2. AK71's simple strategy.

Genmaicha.

I drink green tea regularly. It is an inexpensive and healthy drink with antioxidants, not the sweetened types sold in cans and bottles, of course.

Then, I was introduced to Genmaicha a few years ago at Coffee Bean and Tea Leaf. Very nice!

What is Genmaicha? Green tea with roasted brown rice.

This type of tea was originally drunk by poor Japanese, as the rice served as a filler and reduced the price of the tea; which is why it is also known as the "people's tea." It was also used by those persons fasting for religious purposes or who found themselves to be between meals for long periods of time.
Source: Wikipedia.



Today, instead of buying my regular OSK green tea from NTUC Fairprice, I bought a box of Genmaicha. 50 satchets for only S$5.95.

Made in Japan and not by its neighbour.

Individually packed.

Nice color.

Will provide me with weeks of drinking pleasure without the atas pricing of Coffee Bean and Tea Leaf. That makes me happy!

Marco Polo Marine: Exciting times ahead!

Today, Marco Polo Marine's share price rose significantly on the back of much higher volume and the recent visit by a group of investors to the company's yard in Batam could have something to do with it:

Last week, we brought a group of investors to MPM’s Batam yard. We saw all three drydocks busy with repair operations, and the construction of a third-party 8,000bhp AHTS vessel and two similar vessels for its own fleet. In preparation for better shipbuilding times, a new slipway is almost complete. Investors were most interested in the company’s 20% net margins.

 

 

MPM and associate PT BBR are on the cusp of renewing their AHTS charters, with current contracts expiring in September to November. With AHTS supply still trailing far demand in Indonesia, we are highly confident that each vessel will be re-chartered immediately at prevailing market rates, which are 33% higher.

Source: OSK-DMG, 25 Sep 2013

 Good things come to those who wait.

Related post:
Marco Polo Marine: Will FY2013 better FY2012?

AK71 is watching Hunter X Hunter (2011).

I watched Hunter X Hunter more than 10 years ago! Those days, I would buy the VCD box sets from Poh Kim or was it Laser Flair? Hmmm, maybe TS Video? I cannot remember exactly.

Well, I didn't know they had a remake a couple of years ago. I like it!




Love the music!

Rediscovered a time guzzler.

Related post:
AK71 is watching Fairy Tail.

Rice flour and chopped turnip.

I have not had these in a long time. What? Look like slugs?


Food!



Food?

And it is the first time in my life that I am having them without any sweet sauce or chilli sauce!

This is definitely food!

Actually, they are already quite tasty without any sauce. The filling on the inside is peppery, slightly sweet and slightly salty. Goes well with the bland wrap.

I decided to be brave and chose a healthier option by not adding any sauce. Thankfully, they still taste good without sauce. In fact, I think I like them without sauce. Older people like food to be more bland, I suppose. -.-"

In case you are not a local and do not know what these are, they are Soon Kueh, 笋粿, a local steamed dumpling of rice flour skin and chopped turnip filling. A delicacy! Kidding!

OK, time for some hot green tea. Perfect!

Be a real estate owner the easy way (4).

This is on the front page of The Business Times today:

"Authorities urged to act as investors are lured with no-cash outlay claims, fee waivers.

"Bold claims by property experts of wielding the secret technique of buying homes with no cash outlay or owning multiple properties have proliferated in recent months, as investors look for ways to circumvent the successive rounds of cooling measures.

"... generating high returns, having the right opportunities identified and served up on a platter, and gaining financial freedom are some of the enticements dangled by newspaper advertisements on a daily basis.

"... Investors .... are not only drawn in by claims that these experts, who range from authors to enterprise award winners, have made millions from the property scene, but also that they get to waive the registration fees which can cost a few hundred dollars."

I believe that there is no free lunch in this world. No one is going to be altruistic enough to help us if there isn't anything in it for them. How to buy a property with no cash outlay? I wonder.

So, if I had gone for a free seminar, told them I was interested to make money from investing in property but I had no money, would they still welcome me? Again, I wonder.

Perhaps, there is such a thing as a free lunch.

Related post:
Be a real estate owner the easy way (3).

A meal with numerous benefits.

What did I have for lunch?

Add some soy bean milk:

Yummy, nutritious, filling and inexpensive too!

If you are wondering what might the health benefits be, here is a list:

May Boost Nutrition Profile of Gluten-free Diets

... adding oats to a gluten-free diet may enhance the nutritional values of the diets, particularly for vitamins and minerals, as well as increasing antioxidant levels.

Increase Appetite-Control Hormones

... researchers studied 14 people who ate a control meal and 3 different cereals with different levels of oat beta glucan. They then collected blood samples for 4 hours after each meal, and found a significant dose response between higher levels of oat beta glucan and higher levels of Peptide Y-Y, a hormone associated with appetite control.

 Improve Immune System Defenses

... researchers ...  found that, in addition to reducing cholesterol and blunting glycemic and insulin response,  beta glucans boost defenses of the immune system agains bacteria, viruses, fungi, and parasites.

May Help Reduce the Risk of Type 2 Diabetes

...  patients were introduced to a diabetes-appropriate diet containing oatmeal during a short hospital stay, then examined again 4 weeks later. On average, patients achieved a 40% reduction in insulin dosage – and maintained the reduction even after 4 weeks on their own at home.

Lower Bad Cholesterol

Researchers ... randomly assigned 36 overweight middle-aged men to eat either an oat or wheat cereal daily for 12 weeks... the men eating the oat cereal had lower concentrations of small, dense LDL cholesterol (thought to be particularly dangerous) and lower LDL overall, compared to those in the wheat group...

Help Control Blood Pressure

The oat group enjoyed a 7.5mm Hg reduction in systolic blood pressure and a 5.5 mm Hg reduction in diastolic blood pressure, while the wheat group was unchanged.

Read article: here.

Want to give it a try? How to cook oatmeal?

See AK71 the cook in action:
A healthy, low cost meal.

What should I do when I'm down 25%?

If you can't convince yourself "When I'm down 25%, I'm a buyer" and banish forever the fatal thought "When I'm down 25%, I'm a seller," then you'll never make a decent profit in stocks. (Page 246, One Up On Wall Street)

If we are holding stock of a good company and if the price should decline, the logical thing for us to do is to buy more since the stock has become cheaper, especially if there is a good margin of safety. 

Why sell?





Remember that Peter Lynch is all about FA and I have no doubt that TA practitioners will be able to explain why selling might be a good idea based on chart action. 

Peter Lynch doesn't believe in stop loss, by the way.

I think, as retail investors, we have to take the middle ground. 

We probably do not have the financial muscles of a fund manager like Peter Lynch and to do what he advocates, we must always have a war chest ready.





How to have a war chest ready? 

Well, we should save as much of our earned income as we could from employment, for a start. 

However, this could be painfully slow.

So, we have to be pragmatic and take some money off the table when prices run up significantly once in a while. 

We have to grow our war chests ourselves since we cannot get fresh funds from new unit holders like fund managers can. 

This way, we would be able to buy even more if prices were to plunge significantly for some strange reasons.





Obviously, there are always two sides to a coin. We could decide to sell and prices could go higher after we have sold. 

Prices could also go lower after we have bought more. Well, that is the way Mr. Market is.  

He doesn't care what we have done. He will do what he will do.

This is why many people focus their attention on asking what might be or could be happening in future. 

They try their best to guess what Mr. Market will do.





Indeed, questions in the form of "Will the price fall/rise in the next month/quarter/year?" are quite common in some quarters.

To me, the important thing to know is "What should I do?" given a certain set of circumstances. 

So, what should I do when I'm down 25%, for example?





Related posts:
1. How to be "One Up On Wall Street?"
2. A common piece of advice on saving.
3. When to BUY, HOLD or SELL?
4. Be prepared for war!
5. Risks and rewards: TA and FA.
6. Where did I go wrong?

Manchester United Football Club's Asian snack!

I went and bought one of my favourite snacks today and I found out that it is actually a Global Snack Partner of Manchester United Football Club's!

So, which snack is it? You might be amazed:

Really! No kidding. Then, I decided to check on the manufacturer which is based in Malaysia.

Unfortunately, it is a private company.

Oh, well, I tried. Time for a snack. Have a break, have a Mamee. Sedap!

Old Chang Kee: Peek-a-boo!

Have you had yours today?

Come, come. Don't be shy.

I think someone just went "bo liao". LOL.

Related post:
Old Chang Kee: Lessons from Mr. Han.

Buying property in Iskandar, Johor.

Singaporeans are pouring money into the Iskandar region in Johor, buying up real estate.

"Singaporeans make up 74 per cent of foreign home buyers in the Nusajaya township in Johor's Iskandar region, according to Malaysian property developer UEM Sunrise." 

Read story: here.







(Added in November 2016.)

Anecdotal evidence shows that most are buying for investment, hoping to rent out their properties or to sell for a profit later on. 

Few are entertaining the possibility of staying there.

I have spoken to friends in Malaysia and some of them stay in Johor. 

They told me that the optimism is just scary and they really cannot see how Johor would have so many renters to rent from enthusiastic (and, in their words, naïve) Singaporean landlords.





One told me that he now stays in one of these new townships and the neighbourhood he is staying in is not even 50% occupied. 

Yet, there are new neighbourhoods being constructed around his.

"This is not Kuala Lumpur. You Singaporeans are crazy."



I think people are optimistic about property in the Iskandar region because of the proximity to Singapore. 






So, if anyone is thinking of buying a property there for investment, it makes sense to buy one that is close to the proposed link to Singapore's MRT line. 

A train ride to Singapore's city centre then could take no more than 40 minutes assuming that there isn't a jam at the Customs checkpoints.

Am I interested? 

Well, there are too many optimists amongst Singaporean buyers now. 

I will wait until a time when they are mostly pessimists before looking. 



I could miss the boat but it is of no consequence to me. 

I rather miss it and still have my money than to join the crowd, buy in a mad flurry only to regret later on if I lose money.






(February 2014.)

2 February 2017

Related post:
Disastrous property investments!

Nobody cares more about our money than we do.

I read something by Suze Orman which resonated with me and I would like to share it here:

Right now, interests are still relatively low even though they’re headed up probably. We still have one of the lowest interest rate environments ever.




Everybody knows that when interest rates go up, the value of bonds go down.

If you are going to buy a bond mutual fund, you have to be very careful because if interest rates go up, the value of that bond mutual fund will go down. And, in a mutual fund, there is absolutely not maturity date.

So, what are you thinking? The worst thing you could do with your money right now is put it into a bond mutual fund.




Not too long ago, my dad came to me after visiting a local bank right here in Singapore. 

He showed me a few pieces of paper which a financial advisor at the bank gave to him. 

Basically, he was advised to invest in a unit trust which was invested in bonds. 

Luckily, he did not commit right away.

Bond funds are not the place to be now and I have said this in various blog posts before.

As I believe that the very low interest rates we currently see cannot persist for many more years, buying long term bonds is a risky proposition.
Why? See: CPF or SGS?

Now we have "perpetual bonds". What are these?  See:
Perpetual bonds: Good or bad?





We have to remember that nobody cares more about our money than we do. 

Don't take what "finance professionals" say as the Gospel truth, especially not when they want to benefit from our business.

This actually raised a question in my mind as to whether wealth managers are providing products which are fit for purpose or are they self serving sales people.
See: Be cautious even as we accept higher risks.






My parents have both been sold unsuitable products by "advisers" in local banks before. 

I tell them to remember that these "advisers" are just sales people and it so happens they work in banks and they sell financial products. 

The more they sell, the more they make. 

They are not altruistic or noble.




We have to look after our own interests. 

No one else would.

Related posts:
1. Unscrupulous and rude person from Prudential.
2. Inflation adjusted retirement income plan.
3. Know what is good for us.
4. Why a wealthy nation cannot afford to retire?

Eco Music Challenge : Vote for your Favourites!

Organised by the National Environment Agency, the contest inspires talented musicians to protect and care for the environment through music. 

Give your favourite song / singer some support by voting for them!

Show your support and vote! Details at:
http://sg.sharings.cc/AK71SG/share/neaecomusic

"Every small action contributes to reducing our energy footprint. Follow the 3Rs (Reduce, Reuse, Recycle) to bring down our overall energy use."

Marco Polo Marine: Employee Share Option Scheme.

One reason why I like Marco Polo Marine is the large stake which Mr. Lee Wan Tang has in the company. If insiders have a large stake, their interests are more likely to be aligned with those of minority shareholders'. Any action to hurt the interests of minority shareholders' will likely hurt their own.

I also like the fact that Mr. Lee Wan Tang's son, Mr. Sean Lee Yun Feng, who is also the CEO, and daughter were granted share options on 24 April 2013 with an exercise price of 41.5c. 30% of the share options are allowed to be exercised on the 1st anniversary of the date of grant, not earlier.

Anyway, it is unlikely that anyone would exercise the options now even if they could as the share price is currently quite a bit lower than 41.5c. By end April 2014, up to 30% of the options could be exercised if share price were to rise above 41.5c, I suppose.



Mr. Sean Lee

This tells me that there is an even greater incentive for Mr. Sean Lee Yun Feng to steer the company towards higher earnings in 2014 (which would likely result in a higher share price) if he were to benefit from these share options. If you think that this looks like a strong alignment of the management's interests with those of minority shareholders', I won't disagree with you.

All else being equal, favour companies in which management has a significant personal investment over companies run by people that benefit only from their salaries. Peter Lynch.
Read page 235, One Up On Wall Street.

Patience is sometimes the hardest part ... There is simply no way to know when a particular stock will appreciate, or if, in fact, it will.
From: http://singaporeanstocksinvestor.blogspot.sg/2013/02/little-book-of-value-investing.html

See:
Employee Share Option Scheme.

Related post:
Marco Polo Marine: It got cheaper.

Marco Polo Marine: A video.

See Marco Polo Marine's yard and some of their vessels in action.

Related post:
Marco Polo Marine: Will FY2013 better FY2012?

9M 2013 income from S-REITs and more.

Three more months to the end of the year. Lots of things have happened in the first 9 months of the year. I want to zoom in on the investment front and record some of my thoughts.

The strategy to be invested in S-REITs for income is still working. Of course, with the spectre of the Fed cutting back on QE and a possible increase in interest rates in the next 2 or 3 years, Mr. Market has turned cautious on leveraged investments like S-REITs. This is only natural. Unit prices of S-REITs have become more realistic as a result.

When Mr. Market is pessimistic, that is when we are likely to get good deals. As to what is a good deal, I am sure this is rather subjective. Every person would have a different idea of what is an acceptable margin of safety. Every person would have a different perception of a REIT's prospects.

Having built up a relatively large portfolio of S-REITs, I devoted more resources to investing in what I believe are undervalued stocks, something which I continue to do in 2013.

So, essentially, what I have done is to keep what has worked well for me thus far while expanding my investments in certain companies, recognising possibly more difficult times ahead for S-REITs. 

This is an approach that requires more work than simply getting passive income from S-REITs but the time when it was a no-brainer to buy and hold S-REITs probably ended sometime in the second half of 2012.

For 9M 2013, how much did I receive in passive income from S-REITs? 

$92,872.65

Full year 2013 income from S-REITs is most likely going to be lower compared to 2012 because I sold a significant portion of my investment in LMIR earlier this year and also because Saizen REIT distributes income half yearly (i.e. there is no income distribution in December from Saizen REIT).

Also, we might want to bear in mind that, although hedged, the weaker Indonesian Rupiah and Japanese Yen could result in lower income distributions in S$ terms for unit holders of these REITs in the year 2014.

With twice as much industrial space being scheduled for completion in 2014 and 2015 than any single year in the past decade, the possibility of stagnating or even a reduction in income for industrial S-REITs in future cannot be discounted. This is why looking at WALE (Weighted Average Lease Expiry) of industrial S-REITs is more important now.

Although I would have liked nothing better than to sit back and collect passive income regularly from S-REITs, doing very little else, I decided to move out of my comfort zone. For sure, there were bumps along the way but my efforts have generally been rewarding thus far. 

What did I do?

I increased my investments in stocks which are likely to be dependable passive income generators such as SPH and NeraTel. 

I also hold long positions in stocks which I believe would benefit from the Chinese consumption story such as CapitaMalls Asia, PCRT and Wilmar. 

Any dividend from investing in these stocks and any gain from trading would go towards cushioning the possible decline in income from S-REITs in future.

Up to 15 September 2013, the total gain from trading this year amounts to: 

$188,625.13

It was fortuitous the way the China Minzhong saga turned out. It preserved my trading gains and grew it rather significantly at the same time. Apart from my long position in Wilmar, all other investments are in the black. 

So, what is my plan for the future? 

Nothing profound really. 

If prices were to decline much more, I hope I would be brave enough to buy more. If prices were to rise much more, I hope I would remember to sell some.

The grand scheme is to augment and not to replace my passive income portfolio. 

For sure, it doesn't mean that I think S-REITs are going the way of the Dodo. Indeed, they are still good investments for income at the right prices. For me, passive income from S-REITs will still be an important pillar in achieving financial freedom. This is unlikely to change in the foreseeable future.

Remember, this blog is not meant to instruct but if anyone finds it inspiring, I will be happy enough.

Related posts:
1. 2012 full year income from S-REITs.
2. Never lose money in real estate and S-REITs?
3. Do not love unless it is worth the loving.
4. Motivations and methods in investing.
5. Be cautious climbing the S-REIT tree.
6. Be comfortable with being invested.