Thursday, August 17, 2017

My Greatest Invention - The Ultimate Scorecard

With the launch of the Value/Growth seminar and the up-coming database website, I believe many of you will want to hear me discuss about the new changes in my scorecard – Currently my greatest invention – “The Ultimate Scorecard”.



Seriously it is hard and harder to come up with new name for my scorecards, hopefully this will be my final enhancement.

Prior to elaborate further on the scorecard, it will be good to note that, in view of my up-coming database website, I will not be distributing any of my old or new scorecards anymore to members or non-members.

Lets' get back to the main topic...

What has changed in the Super Scorecard to have to rename it the Ultimate Scorecard?

1. Removal of Items in the Super Scorecard

Firstly, all the subjective questioning at the start of the scorecard has been removed. This will be eventually be up to individual understanding of the counter. 

For example, I used to remove China companies from my analysis. But I include them now. However it is still up to me at that point whether I want to buy a China company even if it passes the Ultimate Scorecard.

Secondly, I have also removed the Stable Stock Analysis. It is simply not accurate enough. Thus, the existing Super Scorecard users do take note.

2. A Special Return on Equity Ratio

While working on the Ultimate Scorecard, I wanted a ratio that tell me whether the management is doing well. Thus, I decided to fall back on the use of Return on Equity. However, being the contrarian, I believe comparing just this ratio is not enough. I believe I must be different to outshine, outlast, and outwit others.

Thus, I decided on combining 2 ratios to give the Ultimate Scorecard an advantage over others.

The final ratio is Price to Book to Return on Equity. I believe this encompasses the concept of value investing as well as good management.

At the end of the day, I expect this ratio to pick out undervalued counters with good management. Thus, buying this counter will be like, “BUY 1 GET 1 FREE”, getting 2 catalysts to push the share price higher.

3. Minor Changes Across the Super Scorecard

Other than the above, there are also many minor changes, such as which number to pick and which figure to obtain.

Thus, if you calculate and find that your ratio differs from mine in the Ultimate Scorecard, it is most probably because we picked the different figures to calculate.

What is the results from the vigorous testing?

Since I had enough data from Simple Investor SG, I managed to do a more thorough testing compare to what I did previously.

Do note that I randomly pick 40 counters with at least 5 years financial data and test them on how they will fare after announcing their 2016 annual report results (mostly done over 2017 which was a bull year) from 4 months to 14 months. In addition, do note that REITs, Business Trusts and IPO counters without at least 5 years data are not included.

The accuracy of whether the Ultimate Scorecard will provide an accurate judgement is only at 58%.

To investigate further, I focus only at the “buy” decision made by the Ultimate Scorecard and, to my own surprise, the accuracy becomes significantly high at 88%.

Counters which the Ultimate Scorecard returns with a “buy” decision (Share price information taken from Yahoo Finance):
Company
Date
Price
Capital Gain
% Gain
AP Oil
24/2/2017
0.260
0.010
3.85%
5/8/2017
0.270
Captii Ltd
22/2/2017
0.500
0.120
24.00%
22/6/2017
0.620
Ellipsiz Ltd
3/8/2016
0.360
0.255
70.83%
22/6/2017
0.615
Fisher Tech Ltd
1/6/2016
1.500
1.150
76.67%
24/6/2017
2.650
Global Testing Corporation Ltd
21/2/2017
1.150
0.220
19.13%
24/6/2017
1.370
Hongkong Land Holdings Limited
3/3/2017
6.740
1.060
15.73%
5/8/2017
7.800
Japan Foods Holding Ltd
31/5/2016
0.370
0.100
27.03%
27/5/2017
0.470
Keong Hong Holdings Ltd
1/12/2016
0.440
0.020
4.55%
24/6/2017
0.460
KSH Holdings Limited
1/6/2016
0.510
0.430
84.31%
27/5/2017
0.940
Lee Metal Group Ltd
22/2/2017
0.280
0.025
8.93%
24/6/2017
0.305
Micro-Mechanics (Holdings) Ltd
30/8/2016
0.800
0.420
52.50%
22/6/2017
1.220
PNE Industries Ltd
1/12/2016
0.770
0.310
40.26%
24/6/2017
1.080
Tiong Seng Holdings Ltd
25/2/2017
0.240
0.045
18.75%
24/6/2017
0.285
Valuetronics Holdings Ltd
1/6/2016
0.330
0.465
140.91%
2/7/2017
0.795

However, since the first test was done based on 2017 prices, which was a bull year, I decided to run another test on 15 counters on how they will fare announcing their 2015 annual report results (mostly done over 2016 which was a slightly-bear, stagnant year).

The accuracy of whether the Ultimate Scorecard will provide an accurate judgement falls to 43%.

But if I only focus on the “buy” decision made by the Ultimate Scorecard, the accuracy is still a respectable 75%.

Therefore, I came up with these observations:
  • The Ultimate Scorecard is not very accurate when assessing a counter. This is especially true if it makes a “FAIL” decision, as the counter may still increase in its price within the next few months.
  • The Ultimate Scorecard is more accurate in providing a “VALUE, BUY or DIVIDEND” result.
  • The Ultimate Scorecard will give up more “FAIL” decision in a bear year as compare to a bull year.
  • For any purchase of the counter due to the Ultimate Scorecard providing a “VALUE, BUY or DIVIDEND” decision, it should be held for at least 4 months.
In Short

With the above observations, my conclusion is that if the Ultimate Scorecard shows “VALUE, BUY or DIVIDEND”, you can just safely buy and should hold for at least 4 months.

But this does not mitigate the risk of a catastrophic event. But that will be for another discussion on diversification.

After all the explanation above, if you are interested to know more about the Ultimate Scorecard, please sign up for my latest seminar with Simple Investor SG at this LINK and you will get to see the launch of the up-coming database website too.

After the launch of the website, I believe I will be testing and maybe adding other features to the scorecard, such as possible selling price. The possibility is infinite! Bookmark this blog and continue to follow me!

Other than this seminar, I also have another market insight panel discussion with InvestingNote coming up! Do support me at this event too!

Please like our Facebook page (T.U.B Investing) and follow me on InvestingNote for the latest updates!

Monday, August 14, 2017

Our 1st Value/Growth Investing Workshop

Although I have already conducted a few seminars this year, it is been a while since I have an actual sharing session.

But with the creation of our upcoming database website, Simple Investor SG and I felt that we should not be just be marketing the website without doing more.

Thus, we will be conducting a Value/Growth Investing Workshop together with the launch of our database website.


This Value/Growth Investing Workshop focuses on  the core concepts of Value and Growth Investing.

By combining real life experience with the backbone of each investing style, this workshop aims to bring investors back to the basic and focus on what is really useful.

Furthermore, I am also glad to have my friend, Poh Lin, to share a useful topic on "What your insurance agents are not telling you".

The details of this investing workshop is as follows: -

Date: 26 August 2017, Saturday
Time: 9am to 12.30pm
Location: International Plaza, 10 Anson Rd, #36-05A, Singapore 079903

If you are interested in this workshop, do click on this LINK to purchase the tickets.

For those who had already purchase the tickets, thank you for your support!

The next post will be on the Ultimate Scorecard. Stay tuned! Please like our Facebook page (T.U.B Investing) and follow me on InvestingNote for the latest updates!

Friday, August 11, 2017

An Interview with a Financial Service Agent

Having done many interviews with bloggers and other exceptional retail investors, I thought it will be a fresh change to have an interview with someone in the financial service sector.

Furthermore, T.U.B Investing is always about stocks and investing, so talking about personal finance will be hopefully bring about something different.

Therefore, I decided to interview my friend, Poh Lin (Poh). Other than being my financial service agent, he is also my ex-colleague, a fellow investor and a very good friend.

Currently he is also a collaborator for my investing workshops, such as the one that will be coming up this month. Thus, do take note that the 1st 20 mins of all my future workshops will mostly probably be taken up by him.

When I knew Poh had become a financial service agent, I started asking him more about insurance.

The most interesting thing that happened was that I decided to have a review with him and end up cancelling some of the insurance I had instead of buying more! This allowed me to have extra cash for investing.

Another factor I like about the review was that Poh was also able to provide the full spectrum of insurance products from different insurance companies. He was also telling me why some premiums were higher than others. These "insider info" and increased number of choices made me even more intrigued.

It is just like investing - if you knew certain information that others don't of a certain counter, you will most probably have a higher chance of making a right decision on that counter.

Without further ado, let's get straight to the interview questions and his answers!

1. Why did you joined the financial services industry?

Poh: Having 4 years of experience with a global bank in risk management, I learnt that managing risks in a big company is extremely important on a daily basis. Ironically, while this is clearly recognized by companies world wide, many individuals do not realize the importance of managing risks throughout their lives. I came to appreciate the insurance industry through exchanges with my friends; how personal risk management through proper insurance planning helped families from spending all their money on medical expenses when their families became ill.

I happened to catch up with an old friend who headed an agency and after the discussion, I realized that I can make a career while helping people with proper insurance and financial planning.

2. What is the differences between you and other finance agents?

Poh: Two things mainly; firstly, my company Finexis, is one of the largest independently owned financial advisory firm in Singapore. What it translates to is that I represent the sole interest of my clients to find the best products for their needs. I strongly believe that there is no company that can have all the best financial products in different segments. Through a partnership with me, my clients get access to the latest product comparisons across the market along with sound advice which suits them the most.

Secondly, I have a consultative approach towards planning for my clients. I believe that planning cannot be done properly if you don't understand a person enough. And that's why in the first consultation session with my clients, I will not introduce any products, instead focusing on learning more about my client's needs fully. I treat all my clients as my personal friends, which is why it matters a lot to me that they receive the best planning.

3. How can I save money and insure myself and invest at the same time?

Poh: Do not over insure yourself and use the right products at different life stages. I've come across clients who have been over insured before and it upsets me that they had been overspending on insurance products before they met me. I believe that insurance planning must be personalized for each individual. 2 individuals of the same age might require different products because one is married while the other one is not. It really varies and that's why it's important to know my clients well first!

By freeing up cash flow from proper insurance planning, the remaining of my surplus can be planned for emergency funds and wealth accumulating through investing.

4. Understand you invest as well, what are your investing style?

Poh: I am a firm believer of diversifying my portfolio. You will find blue chips Singapore and US equities in my portfolio, monthly investing plans (offered by myself) and a small part of my portfolio in derivatives products. I believe investing is just like a forming a soccer team; you need to have defenders (low risk), midfielders (medium risks) and strikers (higher risk). This applies to my investment portfolio as well.

A majority of my monthly surplus goes into investing because;

1) I have my emergency funds set aside

2) If an illness happens, I am well covered by my insurances such that my investment portfolio will not be needed to fund for any medical expenses.

5. Can insurance be deem as a form of investment?

Poh: Yes of course. People always say, the best form of investment is in yourself. While we are trying to build up our wealth through our investments, all these may be lost the moment a health crisis occurs. Unfortunately, we cannot say that it will never happen to us. That is why I firmly believe that the right insurance products are equally important in a successful investment portfolio.

6. Finally, in this current market situation, will you be recommending to invest or to insure instead?

Poh: I'll say why not do both! As I mentioned earlier, it's all about good diversification and having a balance with your money. It does not have to take a lot of money to have a good insurance coverage in your investment portfolio. It's all about proper planning!

That's all for the interview. If you are interested to know more about Poh, do come to the upcoming seminar.

I knew I promised you the post on the Ultimate Scorecard. But I am currently still doing some checking. The post will be up next mid week, stay tuned. Please like our Facebook page (T.U.B Investing) and follow me on InvestingNote for the latest updates!

Tuesday, August 8, 2017

Want I Really Wanted To Do...

When I started this blog, I just wanted to share what I knew about investing.

But as I got more involved within the investing scene in Singapore, I felt that there was a lack of understanding towards investing.

Scenario that I came across resulting in me having these thoughts:

1. Investors start asking if a particular hot counter (that is no longer hot) can be invested, because its price has suddenly dropped.

2. Investors wanted more returns. This resulted in them getting scammed by others as they go for impossible guaranteed returns unless the person is Warren Buffett.

3. Investors just want hot tips - Buy or Sell. They just don't want to do due diligence.

4. Investors just follow others and buy the hottest counter at that time. Later not, they forget to sell and cannot bear to cut loss.

Therefore, being a more experience investor, I just wanted to find more ways to help others.

Thus I created my scorecards and upgraded them till The Super Scorecard I have today (A further upgraded version is coming up. Stay tuned! - The Ultimate Scorecard).

Then I setup my sharing sessions to teach people how to use the scorecard and to understand what the scorecard really means.

But then, I realize that I am still unable to satisfy a retail investor eventual requirement - There are still those that find a a scorecard method troublesome, those that have no time to do all these calculation due to work (Myself included at times) and those who just refused to understand and do more.

This led to me create T.U.B Circle. I thought this will be the final product - a website full of database of scorecards.

I REALLY BELIEVE this will be what the retail investors want:
- A place which remove the bias in choosing what to invest in,
- A place where it will tell you a counter is value counter and you can "feel safe" and go ahead to buy it.

But I forget I am a 1-man show who have a 9 to 5 job. I miscalculated and I am unable to create and update so many scorecards.

This led me to be unable to help others when I thought I could. With that, I started sharing less of what I felt I could and should have done.

Nevertheless, fast forward a bit, I met Simple Investor through InvestingNote. We had the same mindset about the investment scene in Singapore.

He had his Full Analysis V14 and I had The Super Scorecard. We just lack the back end data. So we pooled our resources and came up with a plan to collect all the financial data of the stocks in SGX.

With this issue solved, I strongly believe that I will be able to fulfill what I have always wanted to share with the retail investors. 

Currently we are in the midst of testing our website and it will be launched soon.

But Simple Investor and I do not just want to share our website. We also want to teach and explain about our methods. Therefore, we will be launching the website on our first collaboration course.


If you are interested, follow me on Facebook and InvestingNote for more updates! More information will be released soon!

The next update will be on the new Ultimate Scorecard. Stay tuned!

Saturday, July 29, 2017

An Interview with the Stanley of "Value Invest Asia"

I met Stanley at an meet up organised by InvestingNote previously. Both of us arrived fashionably late and I was quite surprised when he introduced himself.

This is because, at that time, I was already following Value Invest Asia Facebook Page and reading about their regular write-ups.

Through our conservation, I find out that he is also a CFA and is very knowledgeable about valuation techniques.

I also understand that he is also writing on a book - "Value Investing in Asia : The Definitive Guide to Investing in Asia" - that will only be launched in November. You can read all about it on Book Depository and Amazon. I can't wait to get my hands on it!

Let's not also forget - He has also just conducted a seminar with InvestingNote and I can't make it due to "permission not granted". Nevertheless, it seem like those that attended the session has found it to be fruitful.

Without further ado, let's get straight to the interview questions and his answers!

1. Tell us more about yourself and Value Invest Asia.

Stanley: I started out investing in 2006. I was working as an engineer during that time. But I was fascinated by the investing world and so I took the CFA course back in 2009. I then joined the finance industry in 2012. Since then, I have worked in both the buy-side (fund management) and sell-side (investment advisory) sector. My last job was with The Motley Fool Singapore as an analyst. 

Earlier this year, I officially launched ValueInvestAsia.com with my two co-founders, who are also working in the financial industry. Today, ValueInvestAsia.com has about 6 writers and analysts with us, both full and part time.

The idea we have is simple. Investment banks and brokerages want to make it sound like investing is very complicated should only be left to professionals. Plus, they always have a conflict of interests on the stocks they are recommending. 

Secondly, information about Asian stocks are too scattered and it is hard for investors to have a centralized place to find information about stocks listed around Asia. Many of the information about Value Investing is also skewed towards the US market. So we want to create a space that provides investors with independent research about companies and practical guides on how to apply value investing in Asia; to let you know that investing is not as difficult as what the "professionals" want us to think. 

We believe that our best fund manager is always ourselves. Thus, the mission of ValueInvestAsia.com is to provide all investors with the information and tools to enable them to be their best personal fund manager.

2. How did you get into investing? 

Stanley: I started working as an engineer in Malaysia after I graduate. My first job I have a salary of S$500.00 per month. I was working in a manufacturing plant. About a year into the job, I found a payslip lying on the office floor. I think my finance manager must have dropped it. So I pick it up to return to her but I also took a peek at it. It was the salary slip of my direct manager who has been with the company for 20+ years. His salary shocked me and I would not reveal it here but it confirmed my desire to change industry right there and then. That is when I started learning more about investing and the finance industry. And I grew to love the idea of investing and never stopped ever since.

3. What is your investing style? Any idols?

Stanley: I am mostly a bottom-up investor and very qualitative in my analysis. I connect mostly with Charlie Munger's ideas. I like to look at quality businesses and companies with a good moat around it. I also follow the works of great Asian investors like Dato Sri Cheah from Value Partners, Mr. Wong from APS Asset and Dr. Tan from Phiem Asset. These are great Asian investors who have proven to us that Value Investing works here in Asia as well.

4. What is your thought process when it comes to stock-picking?

Stanley: I always start with the business. Any company I look into, I will focus on what the business is, what is its growth potential and what is the moat of the company. Only when I am comfortable and positive about the business and its potential, then I look into the valuation and see if it is worth investing in. Because to me, the choices we have in the market is almost unlimited but our capital is always limited, so why should I waste my time with lousy businesses?

5. What is your best investment and worst investment since you started investing/trading?

Stanley: I guess best might not necessarily mean the one with the highest return. Maybe I see the best as the one that played out as closely to how I envisioned it. So in that case, the easiest and best decision I made is to just investing into Berkshire Hathaway back in 2011 when it was trading very close to just 1.0 times its book value. That was quite obviously a bargain and so it was a very easy decision to make. Today, it is roughly worth 3 times compared to when I invested in it.

The worst I would say it is also because of how I totally misread the company, rather than just based on how much I lost in the investment. One company was an S-Chip when I was still learning how to invest. It was Eratat Lifestyle. It just looked very cheap and so I bought into it. Of course, it turned out to be a fraud, which took me some time to see it. I didn't lose much on that as I escape before it collapsed but it taught me to always focus on the business of the company first, and not the valuation.
Companies I lost a lot of money in are companies like Hengdeli or Pacific Basin, both listed in Hong Kong. I just misread the macro-environment and that also taught me to not bet on a recovery of an industry, but rather just focus on great businesses.

6. How many stocks do you think one should hold for diversification?

Stanley: For me, I think at least 30 stocks is a well-diversified portfolio. I personally owned more but if I have to choose, I will keep it around 30.

7. Any thoughts about the current market situation?

Stanley: Personally, the current market feels quite high for me, I am not finding as many bargains now in the market. I am very careful on what I buy now. I am raising my cash position, just in case. 

8. Able to reveal which stocks are currently on your watchlist?

Stanley: We actually published our yearly watch list as an e-book. You can download our 2017 Watch List here: http://valueinvestasia.com/free-ebook/ 

9. Finally, any advice for newbie interested to get into investing/trading?

Stanley: I would say, start by learning about businesses first, rather than learning about the market. Read business magazine like Inc, entrepreneur, Fortune, Fast Company and Harvard Business Reviews. And also listen to business podcasts. Because as Graham said "Investing is most intelligent when it is most business-like". So the key first is to train ourselves to think like a business person. The investing part we can learn later, the fundamental is understanding what makes a business great.

As stated in the past few posts, there will be changes to T.U.B Circle and Super Scorecard. Please like our Facebook page (T.U.B Investing) and follow me on InvestingNote for the latest updates!