Tuesday, February 7, 2017

Different Methods Of Investment

Although I stated that in this post and then this post that I will not engage other kind of investing (except for those written), but due to the buoyant state of Singapore Stock Market currently, I went ahead to try a few other methods - with some success.

1. Super Scorecard

For those that have read my articles, you will have knew that I have created my own unique way of investment. I started with Triple S Scorecard, then I improved it to Enhanced Triple S Scorecard, and I added Dividend Scorecard Portion.

So now, I have further upgrade it to the Super Scorecard.

In my opinion, this is an improvement because:
- The expected waiting time for a value stock to make a gain is shorten from 2 years to 6 months / 1 year.
- This scorecard also allows alternative valuation methods such as DCF method and Graham Formula Method.
- It encompass Dividend Scorecard Portion as well as a new session, the Stable Stock Analysis (discuss below).  

Anyway I will most probably write a whole new post on Super Scorecard by next week. Hope you will look forward for it.

2. Stable Stock Analysis a.k.a "The Warren Buffett Method"

This is a method I heard from a friend and then I realized I had been practicing it constantly too.

Basically, he talked about investing in SGX due to its monopoly situation in Singapore. It will never go bankrupt or without business. It is similar to how Warren Buffett will invest. Thus, he constantly buy and accumulate the counter at different timing regardless of the price. To him, SGX is a business with a moat that can almost last forever.

However, it will be very hard to find similar kind of business with such economic moat and allows us to have a "forever" holding period.

So I decided to do some amendments to this investment method by using financial figures and numbers to justify. This method will be meant only for Blue Chips with some form of competitive edge.

The method requires the investor to buy the Blue Chip in batches whenever it reaches or drop near its 52 weeks low price if it pass the following criteria:
- A market capitalization of $1.9 Billion;
- has a share price of at least $1.20;
- must maintain profitable for the last 5 years and the last 12 months.

In addition, for investors whom are using this method, there will be assumptions to this theory which investors must take note:
- We assume that this Blue Chip has some form of competitive edge and will be able to regain the share price in due time.
- We must also be prepared to hold these counters for a long time.

One example of investing using this method will be my purchase of M1 Ltd.

3. Bottom Fishing

Since the market is in such a buoyant mood, I an currently having a hard time finding good value counters. Therefore, during these happy times, I always screen for counters that are at their 52 weeks low price.

This is to search for counters that are battered down wrongly by investors, or counters that are already at very low prices but seems to be turning around soon.

These counters will most probably experience a temporary dip in performance or a continued long period of under-performance.

In order to justify the investment in the particular counter, the investor must be able to find enough catalysts or positive points in the company's business prior to investing in it.

One of this counter I recently found and made gains on is the Singhaiyi Group Ltd.

4. Special Situation

Special situations, such as rights issue and sales of core business, may allow a counter to be temporary wrongly price and allow investors to make a quick buck.

One scenario will be the recent right issues from Sabana REIT. With its excess rights being priced at such discount, any extra right issue received by the investor will reduced his average share price drastically.

5. The "it can never go lower" Investment

This is a special method that I found from an InvestingNote user. He only buys counters that are priced at $0.001 and $0.005.

This method stuck me at the core. Most of the stocks priced at such low prices are due to have many negative news or just VERY BAD NEWS.

However, the theory is that by buying a counter at $0.001, it is at a price that can never fall much more and any $0.001 rise in price will definitely be at least a 100% return. 

The main worry for an investor should be considering if the counter could eventually be suspended or even liquidation. Thus, it is very important to do your due diligence prior to your investment based on this method.

I have yet to try this method as I have yet to find a possible target at this moment.

In Short

Other than the above methods, there are most probably many other ways to invest in the Singapore Stock Market. I will sometimes use a combination of methods as well. Each method does not necessary run solo. 

So these are the methods that I have tried and tested and heard. Hope this article will give you some new insights to different investing methods.

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

4 comments:

  1. Nice, informative post.

    Thanks for the sharing.

    ReplyDelete
    Replies
    1. Hi JASS,

      Not sure I replied you.

      But thanks for commenting and reading.

      Hope to hear from you soon.

      Regards,
      TUB

      Delete
  2. Interesting especially the 0.001 price theory. However, I doubt I can convince myself to do it. Haaa...

    ReplyDelete