Tuesday, January 17, 2017

An Interview with "SG TTI"

As stated in the last post of 2016, I am restarting the interview series. I will try to have an interview with an interesting investor every month in 2017.

For Jan, I will start with interviewing SG Thumbtack Investor aka SG TTI. If you have yet to read his blog, I urged you to do so soon.

I only knew about his blog after he sent me an email to exchange on a guest post. Right now, I constantly read his blog posts. They always amazed me. I will always have new enlightenment of the particular company and industry due to the details he goes into.

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

1. Tell us more about yourself

SG TTI: I am a Singaporean male in my mid-30s, married with 2 young kids. I have a day job in the healthcare sector as a doctor. Concurrently, I am also the CIO for a privately held investment holding company that manages the assets of family and associates. When I'm not at my day job, I like to read about various industries and try to understand the world a bit more. I also love to travel, and make it a point to travel (for leisure) at least 3 times a year.

2. How did you get into investing?

SG TTI: I didn't get into investing, I think it got me. Initially I looked at investing as a way to get a nice passive income. Over time, my objectives have evolved and I'm no longer merely interested in passive income.

I'm interested in the feeling of going against the grain, finding something that the whole world seems to disagree with me on, and eventually and hopefully, being proven right. When a highly contrarian investment turns out to be successful, the feeling and positive energy I get from it is incredible.

This can only be achieved via a contrarian approach, and the confidence to stand your ground in the face of disagreeing opinions can only be attained by having a superior, in depth knowledge of the situation that most people don't have at that point in time.

3. Any thoughts about short term trading?

SG TTI: It's fun.

Not necessarily profitable on a ROI basis, but it sure is fun. The amount of research data that thus far proves that short term trading is unprofitable for the vast bulk of the participants over the long term, fails to recognize that it is a lot of fun and excitement. And when something's fun, people tend to pay less attention to the costs of doing it.

4. What your best investment and worst investment since you started investing?

SG TTI: My worst investment is in a HK listed company with Mainland Chinese management, Flyke International . It's the traditional Ben Graham type of company, valuations are dirt cheap. But I didn't count on the management to commit fraud and abscond with the company's money. I guess during Ben Graham's time, there weren't infamous Chinese management committing fraud to contend with. Or rather, he wouldn't be able to invest in any Chinese company in those days. I've written about this worst investment in SG TTI blog.

My best investment is always going to be the next one I'm going to make. I have to think of it this way. That's what will drive me to dig deeper and harder.

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

SG TTI: It depends on how confident you are in each of your ideas isn't it? If there's only 1 idea, but you've close to 100% confidence and the likely ROI will be extremely high, then the number of stocks you should hold is... 1.

That's the case for most successful entrepreneurs. They have the bulk of their net worth in the company or business they're managing.

For most other instances though, I think retail, active investors who spend a considerable amount of time managing their own money, should hold between 8-15 companies. Any more and it's a real challenge to manage your portfolio closely.

I'd also point out that the number of stocks you own is not necessarily a good barometer of diversification. I'd argue that 5 stocks across different industries and with different business cycles would be more diversified than 10 stocks of the same sector.

The other factor is of course, position sizing. You can have 100 stocks but if 50% of your portfolio is in 1 or 2 stocks, than it's hardly considered diversified.

6. What is financial independence to you?

SG TTI: Being able to live your life with a certain level of comfort that you want, without having to worry about how to fund that lifestyle. Unlike most people who focus on being frugal, saving up and investing to retire, I personally believe a balance is more important. Spending on certain luxuries (like travelling in my case) within your means, if you want them, is part of living. To me, accumulating wealth for the sake of it just makes life meaningless. I'd much rather accumulate experiences and memories.

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

SG TTI: It is usually updated here monthly

8. Finally, any advice for newbie interested to get into investing?

SG TTI: Don't jump straight in. Invest in your knowledge database by buying books, attending courses, learning from the mistakes of others and spend the time and effort to refine your thought processes.

In short, learn more, think even more, but do less.

"SG TTI"'s Blog, SG Thumbtack Investor, is also on the my blog list at the side.

Hope you like this interview series and please do remember to like our Facebook page (T.U.B Investing) and follow me on InvestingNote.

Sunday, January 15, 2017

New Explanation for PE and PB Ratios

So the morale of the Untold Story that I want to portray is that:

1) Please don't anyhow follow the trend, follow the people, follow the tips;

2) Do your own analysis and make your own decision.

I believe if you constantly make your own decision, you will slowly find the right criteria and start making gains!

To assist a newbie on making this decision, I suggest using these 2 ratios to see if the particular counter is TOO SIGNIFICANTLY OVERVALUED.

1) PE Ratio 

The first ratio is the regular Price to Earning Ratio. It is basically taking the Share Price divided by Net Profit per share (There maybe other calculations on the net, but I believe this is the most popular calculation of this financials). To understand this ratio further, it is good to get a counter with a low PE Ratio.

For this ratio, I interpret it as Price to Expectation Ratio. The higher the ratio, the higher the expectation of its up-coming earnings/net profit.

Therefore, if the net profit falls below investor's expectation, the share price will drop subsequently.

2) PB Ratio

The second ratio is the regular Price to Book Ratio. It is basically taking the Share Price divided by Equity per share (There maybe other calculations on the net, but I believe this is the most popular calculation of this financials). To understand this ratio further, it is good to get a counter with a low PB Ratio.

For this ratio, I interpret it as Price to Build-Up Ratio.

The higher the ratio, the longer the time is required to build up the company/balance sheet. For example, if the Price to Build-Up Ratio is 10, we can deem it as the company may require 10 years to build up its balance sheet that is similar to its share price. Therefore, the shorter the time is required, the better it is.

With the above new explanation of the old ratios, I hope it can help newbies to understand these ratios and, at least in future, use these simple ratios in their decision making of making future purchases.

Please do remember, like our Facebook page (T.U.B Investing) and follow me on InvestingNote.

Tuesday, January 10, 2017

The Untold Story Of The Stock Market

Before I start telling you the story, I just like to tell the readers that I am not "forgetting" about the Singapore Stock Market. Although I am starting to look at the U.S. Stock Market, but I will not forget my roots. I will be updating on my Sabana REIT journey soon...

So let get back to this "Untold Story".

Disclaimer: This is a work of fiction and any similar event/name/situation are just coincidental.

Tom owns some shares of Company A, which was listed. Company A has become a penny stock and no one has traded for a long time. So Tom decided to take action.

Tom had a huge network and told his network of rich friends, Peter, Dick and Harry to buy Company A. He started to accumulated more of Company A too. Furthermore, he advised his friends to buy in different tranches. Thus, the shares price did not increase significantly suddenly.

He also told Peter, who works in a stockbroking firm to advise his customers to buy as well. But Peter not only told his customers to buy, he also spread the news in his office.

Soon, Company A share price rises.

At this point, Company B, which is a huge fund management firm, picks up the algorithm of that Company A share price rises. Due to its system indicating a buy signal, Company B buy huge amounts of Company A.

Company A share price rises much more.

Jim, who is an analyst, saw Company A share price rises. He decided to call the CEO of Company A. The CEO tells Jim of the big plans that Company A decided to engage in. Jim decided the plans seems valid and decided to publish a "buy" report on Company A shares.

After reading the report, retail investor and traders pick up the signal and decided to buy too.

At this point, Company A's share price has rise much more significantly. Despite its initial illiquid nature, it has continued to stay in the "Top 20 Volume" and "Top 20 Gain List" for a few weeks.

Company A's share price is currently trading at triple its initial share price (at the start of the story).

Tom decided to sell his accumulated shares slowly over the period of 1 week. So no one will notice.

Then, he started to tell Peter, Dick and Harry to sell slowly over the week.

At this point in time, Company B's system picks up a "Sell" signal on the share price of Company A. Company B decided to dump all the shares of Company A.

The regulator noticed something is wrong and halted the trading of shares of Company A.

Thus, the victims of this event are eventually the people who are still stuck with Company A's shares.

So what's the moral of the story? 

I will be revealing my answer in the next post. Hopefully no one will ever be trapped in this kind of situation in 2017. 

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Sunday, January 8, 2017

My 1st Post of 2017

I will just like to apologize for the lack of post for the last 2 weeks.

Other than taking the holiday breaks, I am busy learning about US Stock Market. As I have emphasized so many times, I intend to invest in the US Stock Market in the very near future.
Many will ask why will I invest in the US Stock Market now, when Dow Jones Index is at all time high?

There are 2 reasons.

Firstly I want to have some distraction off Singapore Stock Market, I want to be less active in buying and selling in the Singapore Stock Market. I believe this will help in my goal of attaining a capital gain of 10% eventually at the end of 2017.

To explain further, there was a period I was so busy that I ignore the Singapore Stock Market for about 6 months. At the end of 6 months, I realised my portfolio rise more than 20%. Therefore, I believe I need some distraction to take my eyes of Singapore Stock Market and the value portfolio will need some time to be "found out".

Secondly, my friends and I believe there will be opportunity in the US Stock Market after Donald Trump take office. Furthermore, if you realise the Economic Advisory Council or Strategic and Policy Forum formed by Donald Trump, it is formed by major corporations' CEO. Thus, we can be assured these CEO will want to do something for their industry and even their own companies.

So when I started reviewing 2 to 3 weeks ago, I felt there is just so much to learn. 

Firstly, the number of stocks in the US Stock Market is like 10 times the amount in Singapore Stock Market.

Secondly, there are so many different stock exchange in US. You have to make sure the stocks are not OTC or for the Grey market. In addition, Nasdaq has a minimum $1 rule - Yet to even know the details of this rule.

As for value stocks in the US Stock Market, their share price will be "realise" faster than a counter in Singapore due to the numerous value investors and funds in the country. Thus, it is quite hard to find value stocks in the US Stock Market. Therefore, there is a need to really learn about the company business to see if they are worth premium amount.

In addition, there is another point about Institutional Investors. Up till now, I still do not know whether it is better for a company to have more or less Insider ownership or Institutional ownership?

Anyway I have tried to create an Enhanced Triple S Scorecard for US Stock Market. But it was done in vain. Till now, I am still unable to find a true value stock in the US Stock Market.

Please do remember, like our Facebook page (T.U.B Investing) and follow me on InvestingNote.

Thursday, December 29, 2016

Bye Bye 2016 ~ Welcome 2017!

This shall be the last post for T.U.B Investing in 2016.

This blog grew bigger in 2016 and I really appreciate everyone who read and commented. Without you, I will never be where I am today in this blogging journey.

To recap, here are some of the interesting things I did in 2016 as the writer of T.U.B Investing:

1. Started a Triple S Scorecard Online Course with Stockflock.

This was the initial start of the sharing sessions. Still remember the feeling I had when there were people who are interested in the Online Course.

2. Did an interview with "B".

After that, I never did another interview because I started to engage in other "projects". Will try to restart this in 2017.

3. A review of my Triple S Scorecard Stocks after almost a year and the enhancement to the Triple S Scorecard.

Up till today, I still believe the Enhanced Triple S Scorecard will have been the most important factor I have created during my investing path.

4. The start of the 1st Sharing Session with T.U.B and the success that came along with it.

I really have a lot of people to thank for this to happen. I also like to thank all the participants whom have paid and came to hear me share on my scorecards.

5. The start of another project - The search for dividend and the creation of the Dividend Scorecard Portion

For the Dividend Scorecard Portion, I will not say it has been highly successful in terms of usage and getting the results (less successful than Enhanced Triple S Scorecard). But I believe it has helped me in finding counters that give out high dividend yield.

6. The change in plan - from a focus on small/mid cap counters to also include blue chips.

7. Using of InvestingNote.

I was absolutely amazed with this app. There was a period I was almost like addicted with it.

8. Closing of all my positions using the Deep-Value Strategy.

Some people will say I do not have enough patience. Thus, I believe this is something I need to learn in 2017. Patience.

9. Year End Review of my Value Portfolio. 

Up till today, I am still displeased with how it performed. I am looking forward to the new year! And yes, I want to achieve 10% at the end of 2017. This comes with the plan of staying on the sideline more often.

10. The trial with Sabana REIT and rights issue.

If this eventually works out, this mean that I will have learnt something interesting for 2017 if other REIT release rights issue as well!

So that's all for 2016. As readers, what should you be looking forward to in 2017? 

(I did provide some sneak previews in previous post here and here)

1. Blogging and the write up of interesting counters

This is where it all started and I will definitely continue in 2017.

2. The restart of Sharing Session with T.U.B

I will definitely restart the Sharing Session with T.U.B in 2017. I am currently thinking of ways to make it more interesting to provide for the attendees. In addition, I believe it will also be longer, maybe 9 to 5 for each session. The location will most probably change as well and price may increase a bit. Nevertheless, I hope new participates will continue to come and support the Sharing Session with T.U.B.

3. The Launch of T.U.B Circle

I have yet to officially launch the T.U.B Circle yet. It will be a collection of Enhanced Triple S Scorecard with Dividend Scorecard Portion of, eventually, almost all the counters in SGX. I am planning to launch T.U.B Circle with a big group meetup as well.

4.  Start Small With U.S. Counters

I am planning to start a very small portfolio on U.S. counters (very low 4 figure sum) with a few of my friend. This will be a trial for me to try investing in U.S. counters. Thus, I may also start writing on U.S. counters (although minimally). Hope this will also provide new insights for the readers.

5. An Enhanced Triple S Scorecard for U.S. Counters

Additionally I will be trying to come up with an Enhanced Triple S Scorecard for U.S. counters. This will be tested over a period of 6 months. If successful, I will reveal the results here in T.U.B Investing.

With that, I will like to wish everyone - a Happy New Year - and hope everyone will be successful and have a "Huat" year in 2017!

Oh... and do remember, please like our Facebook page (T.U.B Investing) and follow me on InvestingNote.