The more you learn about investing, the scarier it gets.
I've been reading about stock market bubbles and trading psychology - the Tulipmania of 1636, the South Sea Bubble, the Great Depression, Black Monday 1987, Asian Financial Crisis and the Dot.com Bomb of 2001 - and my god, I've never been more fearful of the present state of things.
We're not just talking about market corrections here, we're talking of stock prices going down for long periods of time. Stock markets are also a leading indicator of economic activity and if the stock market points south, the entire economy is likely to go down as well!
Its easy to pick a winning stock during a bull market, but what happens in a bear market? Every stock is going down and they're all equally likely to keep going down.
Sooner or later, there'll be a major stock market correction. And I need to be prepared.
My investment focus right now is to increase income (for future investments) and protect net wealth against losses. I should look for companies that pay high dividend yields. I should stick the money in the money market or t-bills to protect. Since I am on the lowest tax bracket, I should be earning as much as I can.
Monday, October 30, 2006
Monday, October 23, 2006
Sharejunction.com
I was checking out a company which I felt had good prospects. However, I felt that the prices it is trading at today is nearing its peak and I want to get in at a lower price. I don't want to be logging on every other day to check on this stock. I want a service that sends me an email when the price hits a certain low.
So I figure surely my online brokerage service would offer me this service for free. I was wrong. They want me to pay SGD$52 for Stock Alerts which I feel should be given away for free. I say screw them.
A fellow blogger recommended sharejunction.com. Its Singapore's First Online Stock Portal and I must say, they've got a pretty sweet setup. It has useful contents (active forums with lots of people talking about this or that share), userfriendly features, clean and simple design, easy to use. I love it.
They offer a comprehensive list of Financial ratios and Technical analysis snapshots of all the company's listed on the Singapore Stock Exchange to help you figure out if the stocks are worth buying or not.
Their online portfolio valuation incorporates brokerage fees so that you're always aware of how much the middleman is getting from you.
I'm signing up only because of their free Stock Alerts via Email feature.
Best thing is: Its all Free. Thats money saved for the next stock buying spree my friends!
Snapshots:
So I figure surely my online brokerage service would offer me this service for free. I was wrong. They want me to pay SGD$52 for Stock Alerts which I feel should be given away for free. I say screw them.
A fellow blogger recommended sharejunction.com. Its Singapore's First Online Stock Portal and I must say, they've got a pretty sweet setup. It has useful contents (active forums with lots of people talking about this or that share), userfriendly features, clean and simple design, easy to use. I love it.
They offer a comprehensive list of Financial ratios and Technical analysis snapshots of all the company's listed on the Singapore Stock Exchange to help you figure out if the stocks are worth buying or not.
Their online portfolio valuation incorporates brokerage fees so that you're always aware of how much the middleman is getting from you.
I'm signing up only because of their free Stock Alerts via Email feature.
Best thing is: Its all Free. Thats money saved for the next stock buying spree my friends!
Snapshots:
Tags:
Friday, October 20, 2006
How to develop a penny stock portfolio
1 way to get started in stock investing on a budget without a huge capital outlay or having to borrow money is to develop a penny stock portfolio.
I recommend developing a penny stock portfolio because its a good way of developing your instincts as an investor and business acumen. The aim is to make consistent and sound investment decisions that allows you to grow your money over time.
Small Stocks are very sensitive to the Market trend. They have among the largest Betas in the market. Betas are a measure of uncertainty - it also measures the tendency of a stock to move in relation to the market. A positive beta means the stock moves with the market. The size of the beta determines the magnitude of the move. When Market is up by 1%, a stock with a beta of 2 would deliver 2% return. Conversely, when the Market is down by 1%, small stock would be down by 2%.
The rules are:
1. 3 - 5 year time frame.
2. Buy and Hold strategy.
3. Dividends to be retained and accumulated for future investments.
4. Preference for Value over Growth. Defensive. Be very defensive.
Portfolio Performance Measurement:
1. Year-on-Year returns
2. Year-to-Date returns
3. Because your holdings are so small, you could have put the money in a money market fund and earn on average 3% return. You win if your portfolio returns more than 3%.
Stock Selection Criteria:
1. Share Price: $0.01 - $0.30
2. History of Dividend Payments
3. Dividend Yields: 5% - 20%
4. Operating Margin: More than 20%
Valuations:
1. Good management.
2. 'Deliverable' Earnings - that means they've got customers, and income booked.
3. Competitive Advantage.
4. Promising future.
5. Transparency in business activities.
6. Business is linked to major market trends - aging population, growth of China, increasing energy and oil demand, Integrated Resort development.
7. Determine share price Fair Value (Take Company's Market Cap (printed in end of year report) divide by Outstanding Number of Shares. Use this Price as Default Price. Buy the stock when it is trading less than this default price.
Timing:
1. Buy when everybody else is selling - usually in December or June! Identify the trend, determine market sentiment and be patient.
When to sell:
1. Definite sell: When a better investment arises.
2. Maybe sell: When you lose confidence in Management.
A business is only as good as its Leaders. No matter how good a product, or profitable a business is, or how smart the managers are, if the bosses are unethical, and behave inconsistently with how good business leaders should behave the earnings stream becomes very questionable.
Think Long Term. Form your own judgments. Trust your instincts.
I recommend developing a penny stock portfolio because its a good way of developing your instincts as an investor and business acumen. The aim is to make consistent and sound investment decisions that allows you to grow your money over time.
Small Stocks are very sensitive to the Market trend. They have among the largest Betas in the market. Betas are a measure of uncertainty - it also measures the tendency of a stock to move in relation to the market. A positive beta means the stock moves with the market. The size of the beta determines the magnitude of the move. When Market is up by 1%, a stock with a beta of 2 would deliver 2% return. Conversely, when the Market is down by 1%, small stock would be down by 2%.
The rules are:
1. 3 - 5 year time frame.
2. Buy and Hold strategy.
3. Dividends to be retained and accumulated for future investments.
4. Preference for Value over Growth. Defensive. Be very defensive.
Portfolio Performance Measurement:
1. Year-on-Year returns
2. Year-to-Date returns
3. Because your holdings are so small, you could have put the money in a money market fund and earn on average 3% return. You win if your portfolio returns more than 3%.
Stock Selection Criteria:
1. Share Price: $0.01 - $0.30
2. History of Dividend Payments
3. Dividend Yields: 5% - 20%
4. Operating Margin: More than 20%
Valuations:
1. Good management.
2. 'Deliverable' Earnings - that means they've got customers, and income booked.
3. Competitive Advantage.
4. Promising future.
5. Transparency in business activities.
6. Business is linked to major market trends - aging population, growth of China, increasing energy and oil demand, Integrated Resort development.
7. Determine share price Fair Value (Take Company's Market Cap (printed in end of year report) divide by Outstanding Number of Shares. Use this Price as Default Price. Buy the stock when it is trading less than this default price.
Timing:
1. Buy when everybody else is selling - usually in December or June! Identify the trend, determine market sentiment and be patient.
When to sell:
1. Definite sell: When a better investment arises.
2. Maybe sell: When you lose confidence in Management.
A business is only as good as its Leaders. No matter how good a product, or profitable a business is, or how smart the managers are, if the bosses are unethical, and behave inconsistently with how good business leaders should behave the earnings stream becomes very questionable.
Think Long Term. Form your own judgments. Trust your instincts.
Tags:
Monday, October 16, 2006
Keeping track of investments.
To track the performance of my stock investments I need to know:
I've also got a spreadsheet to capture all of the above information for easy reference as well as to track the cash inflows and outflows. I also note down the following in my PDA Calendar function:
Next time I'll blog about the spreadsheet functions you can create to keep track of all this data in a coherent manner. Very useful if you need to make a snap decision as to which stock to liquidate in the event of a real need for immediate cash or to pursue new investment opportunities.
- The price I paid for the share
- The amount I paid in brokerage fees
- The date when I bought the share
- The amount of dividends I received
- The date when I was paid the dividends
I've also got a spreadsheet to capture all of the above information for easy reference as well as to track the cash inflows and outflows. I also note down the following in my PDA Calendar function:
- The company's financial year
- The release dates of their quarterly and annual reports
- The forecasted dividend payment dates
Next time I'll blog about the spreadsheet functions you can create to keep track of all this data in a coherent manner. Very useful if you need to make a snap decision as to which stock to liquidate in the event of a real need for immediate cash or to pursue new investment opportunities.
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Sunday, October 15, 2006
Need data? Join a library!
Members of the general public have a very difficult time gaining access standardized financial data for companies.
It's a Herculean task to standardize financial data. It takes a lot of time and energy to trawl through annual reports and translate those financial figures into an Excel spreadsheet for each company. Don't forget you also have to maintain the data for relevance and accuracy.
What I want is standardized financial data for the Asia Pacific Region done by people who know what they're doing cos they're getting paid for it. I found a data supplier: bvdep.com
They have this product called: ORIANA. Problem is they want you to pay per view.
The work around: I went to visit NUS Library website and did a search on their databases for standardized financial data. Voila!
The link: http://www.lib.nus.edu.sg/lion/hlb/companydata.html
Of interest is Orbis (Orianna Coverage)
"Orbis (Oriana coverage) provides balance sheet items, profit and loss account items and ratios, security and price data, ownership information of public and private companies in Australia, Bangladesh, China, Hong Kong, India, Indonesia, Japan, Malaysia, New Zealand, Pakistan, Philippines, Singapore, South Korea, Sri Lanka, Taiwan, Thailand and Vietnam."
There's one slight problem: If you're not a student of NUS i.e. if you don't pay fees at the Uni, then you're out of luck.
Not a problem... all you gotta do is pay $300 for annual subscription to the library. Small price to pay considering that you gain access to not only the database but also to technical search expertise and latest financial data.
If you're thinking of signing up, here's the [link]
Libraries are now my new favourite hang out places!
It's a Herculean task to standardize financial data. It takes a lot of time and energy to trawl through annual reports and translate those financial figures into an Excel spreadsheet for each company. Don't forget you also have to maintain the data for relevance and accuracy.
What I want is standardized financial data for the Asia Pacific Region done by people who know what they're doing cos they're getting paid for it. I found a data supplier: bvdep.com
They have this product called: ORIANA. Problem is they want you to pay per view.
The work around: I went to visit NUS Library website and did a search on their databases for standardized financial data. Voila!
The link: http://www.lib.nus.edu.sg/lion/hlb/companydata.html
Of interest is Orbis (Orianna Coverage)
"Orbis (Oriana coverage) provides balance sheet items, profit and loss account items and ratios, security and price data, ownership information of public and private companies in Australia, Bangladesh, China, Hong Kong, India, Indonesia, Japan, Malaysia, New Zealand, Pakistan, Philippines, Singapore, South Korea, Sri Lanka, Taiwan, Thailand and Vietnam."
There's one slight problem: If you're not a student of NUS i.e. if you don't pay fees at the Uni, then you're out of luck.
Not a problem... all you gotta do is pay $300 for annual subscription to the library. Small price to pay considering that you gain access to not only the database but also to technical search expertise and latest financial data.
If you're thinking of signing up, here's the [link]
Libraries are now my new favourite hang out places!
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Tuesday, October 10, 2006
Googling your Stock
Did you know that Google has a dedicated section for each listed company's finance? Its a beta version called Google Finance.
They offer a Summary, Key Ratios, News as well as related Companies.
Screen Capture:
They offer a Summary, Key Ratios, News as well as related Companies.
Screen Capture:
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Recommended Free Tools for the Beginner Investor
SGX and the Monetary Authority of Singapore have introduced a new feature on SGX.com called the SGX-MAS Research Incentive.
Clued-in investors can now gain access to the latest broker and financial analyst reports for free. Brokerages receive $5000 per company reviewed and in return they publish their findings on SGX.
All you have to do is register a USERID and password and you're all set. Here's the [link] to the Research Reports on SGX.com
The cool thing about it is that they offer RSS feeds of the latest reports.
Personally, I hate the layout and appearance of SGX website - its untidy and counterintuitive, so what I did was download an application for the Firefox web browser called Sage Feeds which automatically loads from my list of saved RSS feeds sources onto a single page. Here's the [link] to Firefox SAGE feed browswer.
Screen Capture:
Clued-in investors can now gain access to the latest broker and financial analyst reports for free. Brokerages receive $5000 per company reviewed and in return they publish their findings on SGX.
All you have to do is register a USERID and password and you're all set. Here's the [link] to the Research Reports on SGX.com
The cool thing about it is that they offer RSS feeds of the latest reports.
Personally, I hate the layout and appearance of SGX website - its untidy and counterintuitive, so what I did was download an application for the Firefox web browser called Sage Feeds which automatically loads from my list of saved RSS feeds sources onto a single page. Here's the [link] to Firefox SAGE feed browswer.
Screen Capture:
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