Rules for investing in difficult times.

There isn't very much that I want to say tonight because I have probably said all that I want to say in my recent blog posts. 

I just did some reading which is something I do every evening and came across an article by Aaron Task who is someone I enjoy watching on Tech Ticker.





Aaron shared 4 time honoured rules:

1. If you can't take the heat, get out!  

This is something I did not talk about but I have said time and again that investors should just do what they feel comfortable with. 

Anything we are not comfortable with, avoid. 

Aaron is quite specific in who are the people who should get out.






2. Don't panic! 

This one sounds very familiar. 

Aaron says that many investors simply cannot take the pain and are cutting and running. 

Historically speaking, many investors sell out of stocks at important market bottoms. 

This is a reason why I refuse to sell when prices are forming new lows and would only sell if they rebound to test resistance. 

Aaron is quite specific in who are the people who should not panic and should stay the course.

The 8 immortals each had his or her own way of crossing the sea.

3. Have a plan! 

Sounds familiar again. 

Aaron says it differently from me but the essence of the message is the same. 

We must understand our motivations for investing in the stocks we are invested in. 

The tools we employ and the attitude we have must be appropriate to our motivations. 

That way, we will stand a good chance of doing better with a consistent strategy and this is so both financially and emotionally!






4. Learn from your mistakes! 

Do we need to say more about this? 

Life is about learning and more learning. 

Regular readers would know that I am still learning and would have read my story. 





New readers might be interested in reading this: 

Excuse me, are you an investor?

Aaron ends his article by asking us to ask ourselves three questions, go read his article and see how you would answer these three questions. 

Could be revealing. 

Enjoy "4 rules for the see-saw market".




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STI drops 0.9% to 2,796.22 at closing Thursday, 11 August 2011

© 2011 - The Edge Singapore

Why do I not panic? Added Sabana REIT.

In my last blog post and probably a couple more before that, I mentioned that we should stay calm and rational, have a plan and act upon it. This is my personal mantra and it has not changed.

Some wonder how I could act so confidently and decisively. Here are some reasons:

1. I am not investing using borrowed funds or funds which I need in the near future for other purposes.

2. Of my total investible cash, only 50% or so has been deployed in the stock market. In the last few sessions, it could have bumped up by a few % points.

3. I am informed by FA on a counter's value and by TA on a counter's price. I buy when I see value and when prices are at supports.

4. 80% or more of my investments in equities are for passive income and I sleep well with the knowledge that I will have regular cashflow from my investments.

5. I know I will divest partially if prices should rebound to test resistance levels. Yes, I am not one to fall in love with my investments.

This list is probably not exhaustive but they are five reasons off the top of my head.

Today, the only counter that hit my target buy prices is Sabana REIT at 88c and 87c. At these unit prices, we are looking at distribution yields of slightly more than 10% per annum. My overnight buy orders at these prices were filled.

Some ask me if I will be buying more units of Sabana REIT if its unit price were to weaken. Looking at the chart and using three sets of Fibo lines, I have identified stronger supports at 83c and 80.5c. If the immediate support at 86.5c should break, those are the prices where I will be adding to my long position.

Related posts:
Seven steps to creating passive income from the stock market.
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STI drops 2.2% to 2,821.09 at closing
Wednesday, 10 August 2011

© 2011 - The Edge Singapore

Bloodbath continues and AK71 went shopping!

Another day of heavy selling. Lots of panic! Pandemonium even! What should we do? Stay calm and be rational. Have a plan and execute it. I took my own advice and did exactly that.

I am currently about 50% invested in the stock market. Of this 50%, about 80% is invested for income and much of this is from S-REITs. Currently, my five largest investments in S-REITs are:

1. AIMS AMP Capital Industrial REIT
2. Sabana REIT
3. First REIT
4. LMIR
5. Cache Logistics Trust

In my last blog post on AIMS AMP Capital Industrial REIT, I suggested that 20c would be a very strong support and that I expected many to want to buy at 20c. So, why not queue 1 bid higher at 20.5c too?

Today, my buy order at 20.5c was filled while the buy order at 20c was almost half filled. However, as my buy order at 20c was some 10 times bigger than the buy order at 20.5c (which was more of a hedge), I am quite happy that almost half of it was filled.

Regular readers would remember that I partially divested AIMS AMP Capital REIT at 21.5c/unit to get more Sabana REIT at 92c/unit some time back. So, buying at 20c today was a sweet moment for me. Having only bought back some 25% of what was sold at 21.5c/unit, I am fully prepared to buy more if price were to retest the REIT's historical low of 19c/unit.

Last Friday, I loaded up on Sabana REIT at 92c. Today, I loaded up again at 91c and 90c which were the two support levels identified in my last blog post on the REIT. 90c is the historical low and more than half of the total units that changed hands today happened at 90c.

There is some support, no doubt, but if support at 90c were to be compromised, we could see unit price hitting 88c or 87c if the Fibo lines are anything to go by. At 88c and 87c, we would be looking at a distribution yield in excess of 10% per annum and I would not be able to resist buying more.

Finally, I loaded more units of First REIT. If you refer to my last blog post on the REIT, you would see that I drew 3 horizontal lines at 77c, 76c and 74.5c. These were the supports I identified. The buy orders I put in at all three levels were filled today.

A these prices, we are looking at a distribution yield of about 8.5% on average. With more acquisitions in the pipeline, distribution yield could increase and the very low gearing the REIT currently has means a lower chance of equity fund raising.

Could we see price going lower to test 72.5c or 71.5c? We could. Then, I would buy again.

STI drops 3.4% to 2,891.86 at closing
Monday, 08 August 2011

© 2011 - The Edge Singapore