MIIF: Realising value.

The last time I blogged about MIIF was more than two years ago although I would reply to readers' comments or emails about the counter from time to time since. I have a long history with MIIF. It was recommended to me by a friend and I got in at a unit price of $1.00. Yes, no kidding.

See the elusive Mt. Fuji?
It seems that MIIF's value will elude unit holders no more.

Through the GFC, MIIF's unit price sank and the lowest unit price I bought some at was 29.5c on 6 January 2009, if my records are accurate. I bought more over a 6 months period from then as its unit price rose to 35.5c. Coming out of the GFC, MIIF strengthened its balance sheet through certain divestments, rationalised its portfolio and concentrated on Asian assets. Its DPU also improved.

As I was convinced that S-REITs were deeply undervalued and, for me, they are also easier businesses to understand, my investment in MIIF was not nurtured further.

By middle of this year, undervalued S-REITs were hard to find except for a small window of opportunity when Saizen REIT's unit price sank 15% in May/June. As regular readers know, I was also putting money into stocks looking for possible capital gains by then since it was harder to expect that from S-REITs going into the future.

It was around the same time that I increased my investment in MIIF at 51c/unit. Relatively strong balance sheet, NAV/unit at about 70c and a DPU of 5.5c per annum. Frankly, if not for the lack of options in S-REITs, I would probably not have increased my investment in MIIF as the fund owns myriad businesses in various countries and it is not as easy to understand as the S-REITs in my portfolio.

Today, I received an email from MIIF:

The Board of Macquarie International Infrastructure Fund Limited (MIIF) today announced the completion of the Strategic Review which was initiated in June 2012.

The Strategic Review, which included an assessment by CIMB Bank Berhad, Singapore Branch (CIMB) and consultation with a cross section of shareholders, generated a number of key observations. After considering these observations and assessing the alternatives available to MIIF, the Board has concluded that in order to maximise value for MIIF’s shareholders the strategy for MIIF should change.

As a result, the Board has decided to undertake the following initiatives:

• Distribute existing excess cash to shareholders as a one-off special dividend;
• Commence a joint process with Macquarie Korea Opportunities Fund (MKOF), MIIF’s TBC co-shareholder, to realise maximum value for their investment in TBC;
• Pursue the orderly divestments of MIIF’s interests in HNE, CXP and Miaoli Wind;
• Distribute proceeds from any divestment to shareholders as soon as practicable; and
• Allow MIIF’s corporate-level debt facility to lapse upon maturity.

These initiatives have been formulated with a focus on maximising and returning value to MIIF shareholders. The Board will endeavour to execute these initiatives in a timely manner; however, these initiatives involve complex processes which will require active management and prudent actions to safeguard the interests of MIIF shareholders.

Good news for unitholders. Well, Mr. Market seems to like it anyway.

Related post:
MIIF: Seeing value.

Never lose money in real estate and REITs?

I have cautioned people that we are likely to see a decline in prices of residential properties in the next few years. Unless we are sure that we are looking at an undervalued property, we should think again about passing that cheque to the agent. After all, it is a big financial commitment.

The government continues to make more land available for new residential developments. Already, there is a rising vacancy rate in non-landed private residential properties. This would likely worsen as more developments are completed in the next two years. We could have the perfect cocktail for a deep correction in the market if interest rates should head north come 2015.

We retain our negative view on the Singapore residential sector as we continue to see a rising threat of vacancy with an acceleration in physical completions in 2013-15.

Vacancy rates for non-landed private units had increased from 5.9% to 6.1% qoq in 3Q12 as take-up continued to lag physical completions. URA estimates that completions will rise from 16.1k units in 2013 to 23.1k units in 2015, 2-3x more than the historical average occupancy rate of 8k units per year.

We forecast that physical residential prices will fall by 5% by end-FY13, with vacancy rates for private units up from 6.1% currently to 7.2%. (CIMB, 11 Dec 12)

With industrial properties, the government has also made more land available in order to keep the cost of doing business down in Singapore. With investors channelling their funds into commercial and industrial properties due to cooling measures imposed on residential properties, prices of commercial and industrial spaces have sky rocketed.

In all areas, how much of the demand is, therefore, user demand? How much of the demand is from property investors and speculators? The end result is the same. Prices are pushed up which leads to more building. We don't need a degree in Economics to know that oversupply will bring down prices. People who bought at high prices should have deep pockets to avoid foreclosure.

So, how will my investments in industrial S-REITs be affected? They will not escape unscathed, for sure. This is where the quality of the management will be called into question. Quality of management?

For example, Saizen REIT has been able to maintain occupancy of 90% or so for their properties in Japan despite the difficult conditions and much lower occupancy levels of competing properties. I believe in their management's quality.

So, if the management is up to scratch, we could see above average occupancy levels even as more supply comes on stream. However, in a situation where there are many alternative offerings, to retain tenants, rental rates would probably come under pressure.

Although we could continue to see some yield compression in 2013 as money seeks out higher returns in industrial S-REITs, I would be surprised to see unit prices rising by more than 10 or 15% next year. If people ask me if this is still a good time to invest in industrial S-REITs, I would say it is still good if we are investing for income but, perhaps, not so good if we are looking for capital appreciation.

My two largest investments in industrial S-REITs are:
1. AIMS AMP Capital Industrial REIT
2. Sabana REIT

Of the two, I am more impressed with the former's management quality. AIMS AMP Capital Industrial REIT's management have renewed many tenancies ahead of time while Sabana REIT which has almost 48% of its tenancies expiring next year is slow to show results.

So, do we press the panic button? I think not. Sabana REIT would probably be able to renew most, if not all, of its expiring tenancies as the full impact of the new supply coming on stream would not be felt in the very short term. Nonetheless, the impression I get of a management that seem to be dragging their feet nags at me.

I have stayed positive on S-REITs for quite a while now. It is now prudent to turn more cautious on S-REITs although it is too early to turn negative.

Supported by lower than average completion of new industrial space over the past few years, vacancy levels for all industrial segments (Business Parks, Multi-User Factories and Warehouses) have hit record lows. This had led to a strong surge in industrial capital values and rents by 6-26% since the start of 2012. Looking ahead, we see market dynamics turning given that close to 49.7msqft of industrial space currently under construction will be completed over 2013-2015. This, on an annualised basis, represents more than twice the annual supply over the past decade.
(DBS Group Research, 6 Dec 12)

Related posts:
1. AIMS AMP Capital Industrial REIT: 2Q 2013.
2. Sabana REIT: 3Q 2012 DPU 2.34c.
3. Staying positive on S-REITs.
4. AK71's simple strategy.
5. REITs: When to buy?

A letter from a 66-year-old retiree.

I have received many emails in my three years as a blogger. Of course, there were some unpleasant ones but, fortunately, most of them are not. Many are questions which I would try to answer to the best of my knowledge. As I am not a trained financial adviser, however, I am not allowed to give advisories and I have refrained from doing so.

 

 

Sometimes, I would share readers' emails here in my blog, especially those which I think are inspirational or those which I think readers might find beneficial in some way. Today, I received a bracing email from a 66-year-old retiree. 

 

Blogging is a very time and energy consuming activity but if I have been able to make a positive difference in the lives of people through my blogs, then, it is definitely worthwhile.

 

hi AK,

i am a 66 yr old retiree who came upon your blogpost ASSI about a year ago quite by chance.

i had dabbled in shares many many years ago and having been burnt i swore i wont touch the SGX ever again.

However, after selling off my apartment and cutting off the rental income last year i was in a bind

as there was no more income and saddled with cash earning practically nothing and being retired....

until i came upon your blogs on the REITS and especially AIMS and SABANA. i have vested in both since end of last year and have been comfortable with the passive income without the hassle of tenants , repairs , maintenance fees and taxes.

i do not think you fully realize how your intelligent, knowledgeable, and objective views have helped

people like me who previously only depended on tips and rumours with disastrous results.

not only have i benefited from your analysis but i have also learned alot from your gems

like 'i have begun not to be bothered with price movements and be more focused on passive income (something to that effect)'

most of all you come across to me as very sincere in wanting to help those who want it.

therefore i urge you to ignore those who are critical of you and yet devoid of any alternative views. (like those comments of your recent yahoo finance reprints)

.....

yours gratefully,

.......

Related posts:

1. A letter from a reader in his early 20s.

2. Article published in Yahoo! Finance Singapore (2).
3. To be richer, be comfortable with being invested.

Unrelated post:
See photos of my staycation in MBS: here.

Request for sponsorship.

"Astonished, we were."

Recently, I received what I thought to be a rather bizarre email.

As someone who is blogging for fun and making a bit of pocket money from ad placements etc, I never would have thought that I would be asked for a monetary sponsorship. Well, I was recently asked!

Apparently, the event will have:

1000 delegates:

• Age between 28 to 55
• Annual income more than $40,000
• Professionals, Managers, Executives and Businessmen (PMEBs)
• Entrepreneurs
• High Net Worth individuals

"There would be abundant opportunity to gain exposure for your site during the event."

The proposal listed various levels of sponsors. A monetary sponsorship of $500 would qualify for the Bronze Level while $10,000, the highest, would qualify for the Platinum Level.

 

At the Bronze Level, ASSI will get our "corporate logo" into the event and will be eligible to insert a "voucher" into the 3,000 goodie bags.

 

I was truly flabbergasted.

 

ASSI doesn't have any logo, let alone a corporate one and I would have to provide 3,000 vouchers on top of the $500 monetary sponsorship? Wow!

 

A friend told me in jest that I should be happy because it means that my blog has moved to a higher level. What higher level? People actually think that I am making serious money from blogging now? That is the higher level? I almost fell off my chair laughing.

 

Gaining more exposure for my blog would be good. If I am able to reach out to more people, sharing my ideas on financial freedom and my methods, why not?

 

If every reader would share my blog on Facebook, Twitter etc, I think it would be more than enough.

 

After all, I blog for free. Should I pay to promote my blog? I think not.

Where to buy silver bullion coins?

I have been asked by many people where to buy silver bullion coins in Singapore. My standard reply has always been for them to perform a search online with the same words as the title of this blog post and they will have a list of companies which sell the coins here.

Recently, a reader asked me not where to buy the coins but whether it is cheaper to buy the coins online than buying the coins from a seller in Singapore. I thought I should share my reply to him here with anyone who might have a similar question.

Email from reader:

I'm your blog new follower about 1 month, thanks for sharing all the great info.
Regarding the canadian maple leaf silver, can I get it in Singapore for a cheaper price or I have to buy it online?

1.  (SG company)
2.  (Online overseas company)

Please advise me the above 2 sites or your own views to get a cheaper price.

My reply on 01 December 2012:

I buy from Singapore sellers because I do not buy in large enough quantity to make any cost savings from buying online significant.

For example, if we buy a tube of 25 1oz silver bullion coins from (SG company) today, price is S$1,187 or S$47.50 an oz.

Spot silver is at US$33 an oz or about S$41. (SG company) brings in the coins in bulk and by ocean freight. So, their cost of freight is quite low. If we were to buy only 25 coins from Canada, we would have to use DHL Express Worldwide or Federal Express which would be expensive and could easily cost S$80 to S$100 for a 1kg parcel.

Anyway, (SG company) probably makes some S$6.00 per coin or 15% gross profit. I feel that it is fair. The biggest advantage for buyers is being able to bring the coins home with us immediately after making payment.

Note: I have replaced the names of the two companies the reader mentioned in his email with generics so as not to appear partial to any party.

Related posts:
1. Silver bullion coins.
2. Buy gold and silver as insurance.

Dungeons & Dragons: Druid/Wizard.

I used to play Advanced Dungeons & Dragons, never mind the claims by some religious groups that it was Satanic. Those were the days when we had to have a Dungeon Master (the guy who would tell the story and throw monsters and puzzles our way) in order to play. The rest of us players would role play certain characters and try to stay alive and complete the quests. We had to be imaginative, attentive and co-operative to succeed in the game.

These days, things have gone digital and the visuals could be quite stunning, leaving little to the imagination.

You know, I still have my 20 sided, 12 sided, 10 sided, 6 sided and 4 sided dice.

20 sided die.

Anyway, the blogmaster of Bully the Bear told me about this site which is a must visit for die hard D&D fans. Go try it out for yourself: What Kind of D&D Character Would You Be?

In the fantasy world of AD&D, I played a Chaotic Good Human Cleric. In real life, it seems that I am a True Neutral Human Druid/Wizard (3rd/2nd Level).

Ability Scores:
Strength-10
Dexterity-9
Constitution-12
Intelligence-13
Wisdom-13
Charisma-13

Alignment:
True Neutral A true neutral character does what seems to be a good idea. He doesn't feel strongly one way or the other when it comes to good vs. evil or law vs. chaos. Most true neutral characters exhibit a lack of conviction or bias rather than a commitment to neutrality. Such a character thinks of good as better than evil after all, he would rather have good neighbors and rulers than evil ones. Still, he's not personally committed to upholding good in any abstract or universal way. Some true neutral characters, on the other hand, commit themselves philosophically to neutrality. They see good, evil, law, and chaos as prejudices and dangerous extremes. They advocate the middle way of neutrality as the best, most balanced road in the long run. True neutral is the best alignment you can be because it means you act naturally, without prejudice or compulsion. However, true neutral can be a dangerous alignment when it represents apathy, indifference, and a lack of conviction.

Race:
Humans are the most adaptable of the common races. Short generations and a penchant for migration and conquest have made them physically diverse as well. Humans are often unorthodox in their dress, sporting unusual hairstyles, fanciful clothes, tattoos, and the like.

Primary Class:
Druids gain power not by ruling nature but by being at one with it. They hate the unnatural, including aberrations or undead, and destroy them where possible. Druids receive divine spells from nature, not the gods, and can gain an array of powers as they gain experience, including the ability to take the shapes of animals. The weapons and armor of a druid are restricted by their traditional oaths, not simply training. A druid's Wisdom score should be high, as this determines the maximum spell level that they can cast.

Secondary Class:
Wizards are arcane spellcasters who depend on intensive study to create their magic. To wizards, magic is not a talent but a difficult, rewarding art. When they are prepared for battle, wizards can use their spells to devastating effect. When caught by surprise, they are vulnerable. The wizard's strength is her spells, everything else is secondary. She learns new spells as she experiments and grows in experience, and she can also learn them from other wizards. In addition, over time a wizard learns to manipulate her spells so they go farther, work better, or are improved in some other way. A wizard can call a familiar- a small, magical, animal companion that serves her. With a high Intelligence, wizards are capable of casting very high levels of spells.

Detailed Results:
Alignment:
Lawful Good ----- XXXXXXXXXXXXXXXXXXXXXXX (23)
Neutral Good ---- XXXXXXXXXXXXXXXXXXXXXXX (23)
Chaotic Good ---- XXXXXXXXXXXXXXXXXX (18)
Lawful Neutral -- XXXXXXXXXXXXXXXXXXXXXXXX (24)
True Neutral ---- XXXXXXXXXXXXXXXXXXXXXXXX (24)
Chaotic Neutral - XXXXXXXXXXXXXXXXXXX (19)
Lawful Evil ----- XXXXXXXXXXX (11)
Neutral Evil ---- XXXXXXXXXXX (11)
Chaotic Evil ---- XXXXXX (6)

Law & Chaos:
Law ----- XXXXXXXXXX (10)
Neutral - XXXXXXXXXX (10)
Chaos --- XXXXX (5)

Good & Evil:
Good ---- XXXXXXXXXXXXX (13)
Neutral - XXXXXXXXXXXXXX (14)
Evil ---- X (1)

Race:
Human ---- XXXXXXXXXXXXX (13)
Dwarf ---- XXXXXX (6)
Elf ------ XXXXXXXXXX (10)
Gnome ---- XXXXXXXX (8)
Halfling - XXXXXXXXXXXX (12)
Half-Elf - XXXXXXXXXXX (11)
Half-Orc - XXXX (4)

Class:
Barbarian - (-4)
Bard ------ (-8)
Cleric ---- (-2)
Druid ----- XXXX (4)
Fighter --- (-2)
Monk ------ (-17)
Paladin --- (-19)
Ranger ---- (0)
Rogue ----- (0)
Sorcerer -- XX (2)
Wizard ---- XXXX (4)

Article published in Yahoo! Finance Singapore (2).

Each one of us will have to find our own way to cross the Eastern Sea. As long as we get across safely, who can say we are wrong in our methods?

Another old blog post of mine has been edited and published in Yahoo! Finance Singapore.

Link here: http://sg.finance.yahoo.com/news/debt-always-bad-071329360--sector.html

The original blog post (unedited):
Good debt is always good?

For sure, my way is not the only way and, indeed, it could even be unsuitable for some. I have always said that there is room for diversity in this world. As long as people are taking action to improve their financial health in a legitimate and effective way, can we say that they are wrong? No but we could possibly say they are not doing enough which becomes more subjective an exercise.

I only find those who wallow in self pity and entrap themselves in holes of their own making, blaming everyone else for their problems, unforgiveable. Worse, they might find comfort in the company of their own kind, going in a downward spiral. Could they help themselves? Yes, I believe.

I like to help myself by keeping an open mind and listening to what others have to say before I draw my own conclusions about things although I cannot guarantee that my personal bias would not color my decisions. This is probably as good as it gets.

Still, dare I hope that the response to this article would be more positive and civil than the last one?

Related post:
Article published in Yahoo! Finance Singapore.

Yongnam: EXPIRY OF WARRANTS - W121214.

Warrant Holders are reminded that in accordance with the terms and conditions of the Warrants, the rights to subscribe for new ordinary shares in the capital of the Company (the "New Shares") comprised in the Warrants will expire at 5:00 p.m. on Friday, 14 December 2012, after which time, any subscription rights comprised in the Warrants which have not been exercised will lapse and the Warrants will cease to be valid for any purpose whatsoever.

Read the full notice: here.

I wonder if anyone would actually bother to go through with this.

See my blog post of 14 July 2012:
Yongnam: Worried about warrants?

See photos of Marina Bay Sands which Yongnam had a big part in building. Photos were taken during my recent "staycation":
Singapore: Marina Bay Sands.

Tea with EY: Money talk, money laugh!

One of the most rewarding things about blogging is getting to "meet" people online. Reading comments from readers and replying to them is the most rewarding bit about blogging, I feel.

Don't just take my photo. Talk to me! ;p

Blogging is a form of social media and it is interaction with readers which makes it enriching for me as a blogger, not the paltry income from ads. Do you feel that other bloggers would agree with me? OK, there are XiaXues and Mr. Browns in blogosphere who are more likely to be enriched by income from ads but I wonder how common are they.

In recent weeks, a reader, EY, has been very regular in leaving comments in my blog. A great sense of humour and a sparkling style characterise her writing. Her comments are little gems which never fail to make me smile or chuckle. After my many requests, here is her first and, I hope, not last blog post as a guest contributor in ASSI.

In case you are wondering, no, I did not conduct an interview. The entire episode was conjured up by EY. I hope you enjoy reading the following as much as I did:

Money talk, money laugh!

All things are not created equal. Money too. In our complicated world, discrimination has to have its way. So money can’t just be money. It has to be good or bad, smart or dumb, clean or filthy, quick or slow, or simply put, it has to be juxtaposed. Money, in all its forms, has the largest contingent of believers and is capable of capturing the imagination and the souls of the young and the old, the hot-blooded and the bold. So for this first guest post (and maybe the only one!), AK and I should have a no-holds-barred money talk. I’ll be brutally honest and unabashedly irreverent, just so you would walk away with the last laugh.

AK: What are your views on money?

EY: Money is the loot of all beavers. Everyone would like to have some stashed away and all of us would love to have them grow on trees!

AK: Is there a difference between good money and bad money? How to tell them apart?

EY: Of course, there is.  Good money is the tragic hero that dies young. For no fault of his, he is often thrown after bad money and always dies an untimely death. While both are in the gaseous state after evaporation, good money tends to have a few more water droplets crystalising from the tears of the heart that has gone chilled.

AK: Which kind of money is most sought after?

EY: This is a difficult question. It depends on individual preferences, I guess. But there is no dispute that hot money goes places, for sexy is hard to resist.  It loves attention and has earned the celebrity status. Just be mindful it always sings to the tune that nothing lasts forever. On the other hand, money with hygiene issues is frowned upon by most.  But it is adored no less by opportunists looking to indulge in their washing fetish that would make it cleaner than clean. And then, there are many who think that size matters.  Big money beats small money hands down.  But big money is said to belong to the losers for every one claims he has lost it before. Borrowed money is the most learned of them all.  It chooses to work only for the rich to get enrolled into every asset class. Coffee money is the most eloquent and it speaks the hardest truth. But it has the bad habit of tooting the loudest under the table too. Quick money has its appeal if it is not always in a rush. It promises many spins like the roller coaster and never fails to take you back to where you begin. Then there is also this one kind that plays hard-to-get. It has no charms whatsoever and is only good at making you sweat and toil. It used to be faithful but now, it is only honest, at best. But if you ask me, I find prize money most attractive. I love its effortless beauty and the big bow that steals the show!

AK: So, what would you do to accumulate more money?

EY:  Buy more clothes with deep pockets and more shoes to walk the talk.

AK: What are your parting words to the readers of ASSI?

EY:  Thanks a bunch for the air time and I’ll like to share my favourite quote. Live every moment, laugh every day, and love beyond words. And in this context, it can be interpreted as live every moment for money to find you anytime, laugh every day to the bank, and love beyond words because money is on the other end!

Tea with AK71: 12-12-12.

Today is supposed to be an auspicious day according to the Chinese Feng Shui masters. Well, my day was filled with little hiccups and bumps. So, it was only so-so for me.

I was going through photos in my IXUS and watching the news on my old 14" CRT when this flashed on the screen. 

Perhaps, the day is only auspicious for weddings and car rental companies.

Many couples have picked the date 12-12-12 to tie the knot... such a special date will not come by for another century.

Based on statistics on the Registry of Marriages website, the number of couples that chose to get hitched (on 12-12-12)  is about four times more than the usual number seen in a weekend in December.

The auspicious date is also driving up demand for car rentals. (Channel NewsAsia, 9 Dec 12).

OK, finding out that my Mazda 2 is finally managing 15km/litre after a bit more than 2 years made me smile. Yeah!

Related post:
My new car's fuel consumption.

Be a real estate owner the easy way (2).

Two years ago, I blogged about someone telling me that there was a way to own properties with very little money or no money at all. Two months ago, I updated in the comments section of that blog post that he lost quite a bit of money doing it.

Today, I came across a blog post by Gerald Tay in Propwise.sg on "No Money Down" properties. His family is in property development and he shares his views on the claims by "gurus" that people could own properties with no money down at all.

I am recommending the blog post as a must read although it is a little bit of a teaser because there is a Part 2 yet to be published.

"Would you like to discover “Secrets of how to own properties with little or no money down?” or “How to own three properties with just one property?” The “gurus” will have you cough out thousands of dollars just to attend workshops or seminars that teach questionable investment techniques, claim you can own properties with no money down, pepper you with lots of crappy motivational talk, then sell you properties at the end of the workshop saying you must take action now and can soon be millionaires upon graduation."

Read blog post by Gerald Tay in Propwise.sg:
http://www.propwise.sg/no-money-down-properties-legit-scheme-or-scam/

Money is hard to make. We must make it hard to lose.

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

Duck 2 Tee 2 T-shirts for US$6.00 each.

I have found another value for money deal. :)

6DollarShirts.com sells high quality, silk screened T-shirts to happy customers all around the globe.

We offer hundreds of pop culture and topical designs on dozens of colors for both guys and girls. We keep overhead and prices low as consumers are looking to stretch their dollar farther.

Despite the global economic downturn, our sales have actually increased. Why? Because US$6.00 for a silk screened t-shirt is very attractive; 10 shirts for US$50.00 is irresistible!




Duck 2 Tee 2.
US$6 for a 100% cotton tee. Designed and printed in the USA.

See:
All Printed Tees $6
Yes, for real. Get 10 Tees for only US$50.00!

No longer dependent on monthly wages. (To be a happy "peasant".)

When I was in primary school, I enjoyed reading Aesop's Fables. 

One I remember is the story of the grasshopper and the ant.





The fable concerns a grasshopper that has spent the warm months singing while the ant (or ants in some versions) worked to store up food for winter. 

When that season arrives, the grasshopper finds itself dying of hunger and begs the ant for food. 

To its reply when asked that it had sung all summer, it is rebuked for its idleness and advised to dance during the winter.

The story has been used to teach the virtues of hard work and the perils of improvidence. 

Some versions state a moral at the end along the lines of "Idleness brings want", "To work today is to eat tomorrow", "Beware of winter before it comes". (Source: Wikipedia).





It is easy to be lulled into a false sense of security when everything seems to be going our way. 

We must always save and make contingency plans for when things go wrong. 

When things go wrong, they often do without much warning.

This is one way I like to approach the topic of savings and investment whenever I get to talk to anyone about the importance of financial planning. 





Unfortunately, there will always be some who say that life is short and they should enjoy it while they can. 

If things go really bad and they have no options left, they could always end their lives. 

Really, I have been given such a response before not by one person but by a few people.





In a recent study, it was found that suicide rates often spike during economic downturns, and recent studies of rates in Greece, Spain and Italy have found similar trends.

Every rise of 1% in unemployment was accompanied by an increase in suicide rate of roughly 1%. (Source: The Business Times, Nov 6, 2012.)

We should all be ants instead of grasshoppers. 

Work and plan for the future.





Related to this, I just found out that I have been labelled a person with a "peasant mentality" when it comes to wealth building. 

A peasant "is a member of a traditional class of farmers, either laborers or owners of small farms... The majority of the people in the Middle Ages were peasants." (Source: Wikipedia)

Unfortunately, I was not born with a silver spoon in my mouth. 

Well, I could have had a silver spoon in my mouth but two generations ago, that spoon went to another branch of the tree. 

So, I am definitely of the masses and I can only do what I can with my limited resources to move upwards.





For me, to move from a time when I was dependent on my monthly wages to meet my living expenses to now when I no longer have to is an achievement. 

It could be a modest one in the eyes of "noblemen" and "aristocrats" but I will be happy enough to own a fully paid apartment, a fully paid car and to be free of all debt.

So, to the people who called me a "peasant", you are probably right in your description. 





I am a "peasant" and will probably remain a peasant but I hope to be a happy "peasant".

Related post:
Wage slaves should be fearful.

Don't be a yield pig, be a hardy pig.

We have heard or read in personal finance matters that we should not be a yield pig. Indeed, promises of very high yields in instruments which we could hardly understand should be looked at with great suspicion.

This does not, however, mean that we simply brush off high yields. After all, certain S-REITs were offering very high yields at the depths of the GFC a few years ago. People who sniffed at them in disdain back then could be sniffing for a different reason now.

We have to be courageous and careful at the same time. What my driving instructor told me years ago just came back to me. In driving, we have to be 胆大心细. So, if we wished to change lanes and we were only 胆大, we might end up in an accident. If we were only 心细, we might never make the change!

We must have the courage to be a contrarian when everyone flees a genuinely rewarding proposition and the courage to say "no" to something which seems too good to be true in the absence of a logical explanation.

This blog post is a reminder to myself as well. Money is hard to make and we have to make it hard to lose.

When I was in the USA, I saw this poster and it has nothing to do with personal finance. The only thing it has in common with this blog post is the word "pig"!

“Be a hardy pig, an income-generating vegetable garden, or an essential and productive tool.”

Anyway, it intrigued me enough to go online and read more about Oxfam. What they are doing is very meaningful and I would encourage you to read more about Oxfam and why "be a pig" at: Oxfam: Working together to end poverty and injustice!

In case you are wondering, no, this is not a paid advertisement. :)

More photos of my U.S. trip here:
Travel Photos and Videos.

REITs: When to buy?

This is taken from the weekend edition of The Business Times:

Simon Rudolph, Franklin Templeton Investments' portfolio manager for global equities: "We invest in REITs when we can buy them with good yields, but most importantly, at a good discount to the NAV. Real estate has to be about total return and not just income."

"When you buy something at 30% premium to NAV, unless there is a reason it is trading at a premium, it can still go back to par."

This is something that I can identify with and it is something I have always talked about in my blog as something to look out for when deciding which S-REITs to invest in.

Off the top of my head, my investments in AIMS AMP Capital Industrial REIT and First REIT appreciated some 40 to 75% in value in the last 3 years. This is on top of annual distribution yields of 13 to 17%. Readers who have walked the walk with me the whole time could possibly verify this.

So, if we believe Simon Rudolph, does it mean that now is not the time to buy into S-REITs? Well, not the best time perhaps but, for some investors, being able to secure an annual yield of >7% is considered very attractive in the current low interest rate environment. Even a 6% yield could be considered attractive.

We could possibly see yield compression to continue in S-REITs as money continues to search for places where it is treated better. Another 10% appreciation in the unit prices of S-REITs cannot be ruled out in 2013.

A few days ago, a reader made a comment regarding Saizen REIT which is still trading at a significant discount to its NAV. This is a REIT that was unloved and ignored for a long time. It was still the case when I decided that it was terribly undervalued and bought into it. What about now?

Well, being a REIT with properties in Japan and its income in JPY, the bug bear is forex risk. The JPY has been on a decline. It has weakened against the S$ by about 10% in the last 12 months. So, this will affect its NAV and distributable income in S$ terms.

Even so, we could be looking at a NAV of 27c/unit and a DPU of 1.134c a year. A unit price of 17c means a 37% discount to NAV and a distribution yield of some 6.67%.

If we were to factor in a worst case scenario of a further 10+% decline in JPY against the S$, we could expect a NAV of 24c/unit and a DPU of 1.01c a year or a 29% discount to NAV and a distribution yield of 5.94%.

It is perhaps worth remembering that Saizen REIT owns freehold properties and that its bank loans are amortising in nature. The relatively lower distribution yield could be acceptable, therefore.

REITs, when to buy? Obviously, there were better times and there could be better times again but is leaving most or all our money in savings accounts which pay almost nothing in interest a better choice when inflation of 4% per annum is set to be the norm? You decide.

Related posts:
1. Saizen REIT: 2H FY2012.
2. REITs: Simply explained?
3. Inflation is not going away.

Tea with AK71: Manbags!

In the weekend edition of The Business Times, guess what is on the front page? It is the "Rise of the manbags and the $2,500 shoes!"

It reports that men are splurging on themselves and they "buy the bigger (Celine) bags and use them as document bags, gym bags..." Wow! I am still using whatever free bags I get.

See: My briefcase.

Prada's men's shoes range from $800 to $1,500. Not atas enough? Why not customise your shoes from a minimum of $2,500 a pair?

Yikes! My shoes usually cost $30 to $60 a pair and I wear them till the soles are worn out which usually takes 2 years or so.

The latest Bain & Company study found that men now account for 41% of the global luxury goods market, up from 35% in 1995, and in a market that is almost 3 times bigger!

I learn something new this weekend...


UP TO 70% DISCOUNT!

Related posts:
Parting with an old friend.

Wilmar: Smart money outflow is reversing?

Anyone investing in Wilmar for the longer term would be encouraged by the counter's weekly chart.

Even as share price continues its basing process which has been going on for months, Chaikin Money Flow (CMF) shows that the outflow of funds has ceased. With bearish pressure dissipated, any positive news could send share price up quite abruptly.

Bollinger bands are also constricting to a point where we could expect a violent movement in share price. So, which way? Up or down? Based on the CMF, dare I hazard a guess? I would guess "up".

This could simply be a rebound if it should happen, a rebound which could see price capped by the declining 50w MA which is currently at $4.00. Immediate resistance is at $3.20.

Related post:
Wilmar: A rebound or something more?

SoundGlobal: Breaking out of resistance.

I last added to my long position at 49.5c on 5 November 2012. For the reasons why I added to my long position then, please see my last blog post on the company.

Today, Sound Global's share price broke resistance and formed a long white candle on relatively high volume. A long upper wick was formed towards the end of the session. This tempers the bullish picture somewhat.

On the daily chart, the positive divergence which was spotted earlier is playing out. So, we had an early indication of a possible uplift in share price. Therefore, it should not surprise us that resistance was finally taken out although it was anyone's guess when it was to happen.

On the weekly chart, the MACD, a pure price momentum oscillator, looks to be on the verge of a bullish crossover with the signal line in negative territory. A rebound in price could meet with resistance presented by the flat 50w MA at 56c and the declining 100w MA which is currently at 60c.

Now, whether the counter's share price is able to finally form a higher high is anyone's guess although the higher lows formed in the MACDs of both the daily and weekly charts are very encouraging.

Fundamentally, SoundGlobal's valuation is undemanding. Technically, it does seem as if its share price has bottomed although we cannot say that for sure until a higher high in price is seen.

Related post:
SoundGlobal: Smart money is buying.

China Minzhong: Gap down black candle day.

China Minzhong's share price gapped down today and formed a long black candle on the back of very high volume.

Apparently, "one party sold 57.23 million shares at S$0.80 each.

"A trader said one of China Minzhong's shareholders had sold its entire stake in the company through a private placement.

"According to Thomson Reuters data, Olympus Capital Holdings Asia, is the company's third largest shareholder, with 57.23 million shares or a 10.3 per cent stake.

Franklin Templeton Investments Corp is the second largest shareholder with a 12.2 per cent stake, or 68.13 million shares." (Source: REUTERS, 6 Dec 12.)

I do not know why the investor decided to sell especially when the fundamentals of the company have been improving. However, if there is no material deterioration in fundamentals, this correction is an opportunity to accumulate shares of the company cheaper.

Technically, the negative divergence between the share price and MACD is playing out. So, it is not as if we didn't get some kind of warning. However, the intensity of the decline has been stunning.

I decided to draw a Fibo Fan and it is interesting to see how nicely the 38.2% Fibo line approximates the rising 100d MA. 38.2% is a golden ratio but with such a high volume sell down today, we could see persistent weakness tomorrow. If immediate support should be compromised, then, we could see a test of the next two golden ratios of 50% and 61.8% for support.

Related post:
China Minzhong: Accumulate on weakness.

Inflation is not going away.

Between inflation and deflation, governments would rather have the former. However, if inflation remains elevated over a prolonged period, then, we will have problems aplenty.

I am not an economist and this is not going to be an economic essay. This blog post is inspired by a report by Bloomberg which says how elevated inflation in Singapore is persistent and unlikely to go away. The repercussions are real and grim.

As the negative effects of inflation would affect middle to lower income earners more than the rich, it is even more urgent that we do something to at least protect our wealth.

Sections from Bloomberg's report:

Singapore is grappling with the elevated inflation that comes with years of economic growth and population expansion on an island smaller than New York City, with rising demand fueling record property and car prices.

Singapore has the highest inflation rate among 27 economies with GDP of at least $100 billion and classified by the International Monetary Fund as advanced. The island’s inflation has exceeded 4% every month but one since November 2010, more than double the 1.9% average in the past two decades.

Singapore, which uses the exchange rate to manage inflation, unexpectedly refrained from slowing the pace of its currency’s appreciation in its October policy review even after the economy contracted last quarter. The Singapore dollar’s 6.4% gain this year has done little to damp inflation stemming from domestic price pressures.
Higher car and property prices and the measures to tighten rules on hiring overseas workers are driving up the “overall cost structure” of the economy, spurring inflationary pressures that are a result of “self-imposed” policies, according to DBS Group Holdings.

I have shared my thoughts on wealth creation here on a regular basis. We want to grow our wealth but for many, taking the step to at least protect their wealth from being eroded by inflation would be significant and, in certain cases, it would be quite an achievement. All of us have different circumstances, after all.

It is more important now than ever before that we make sacrifices and put in place plans to secure our financial future in a world that is increasingly uncertain. People who still think Singapore will continue to do well simply because we are in Asia, the future global growth engine, should hedge their positions. Things could get worse.

Read Bloomberg's report: here.

Related posts:
Go to the right side bar and look for the box with the label "Wealth Creation: Beating inflation" for my earlier blog posts on the topic.