Saturday, 2 February 2019

10 rights, 6 wrongs

Revisiting 6 rights, 2 wrongs a previous post that I have written in 2016, this is an update 2+ years since:


Thursday, 31 January 2019

Revisit: Share price woes of Keppel Corp

An update

Current share price: $6.10

Stellar earnings no longer stellar... but getting "staler"? (consolation, at least 18's results are better than 17.)




One of the big culprits of my 2015 portfolio massacre. I must have been quite stupid to buy it again at $6.82 last year. Now must wait long long for it to slowly recover...


Monday, 28 January 2019

A few good inspirational quotes

Don't succumb to the Monday blues.

  - Andre Gide 
Man cannot discover new oceans unless he has the courage to lose sight of the shore.

- David Mahoney 
Trust your hopes, not your fears.

- George F. Tilton 
Success is never final and failure never fatal. It's courage that counts.


--------------------------------------------------------
To achieve something, we just need three steps:

1) Set your goal
2) Plan your actions
3) Do it



Sometimes along the way when we are tired, think of something that can motivate us and push us along.

When we are afraid, summon our courage but be prepared to face the worse. Else have a contingency plan.

Don't be overly pessimistic but also don't be overly optimistic in life. Balance is the keyword.


Keep trying.
Try and fail, but move on with a lesson.
Try not and we'll never know what would have been the outcome.

***

Sunday, 27 January 2019

Book review: Gone Fishing with Buffett

This book is totally to my style and I finished reading the book in just a few days. Sean did a good job of putting Buffett's (dry) investing principles into layman terms by mean of a story. This makes it easy to read and is pretty entertaining. The story talks about a young man befriending a mysterious old man at a jetty and getting to learn about value investing from this folk (whom you guessed, is the imaginary Mr Buffett). 

If you have the slightest inkling about what is value-investing, this book serves as a refresher of all the concepts or reinforced them for your better memory. There are key notes in a grey section at the back of each chapter, which are the author's notes about each concept.



The book is published in year 2012. With that in mind, we can compare how those businesses that he penned in the book have changed over the years and see if the 'prediction' of their future values still holds true.

The coca cola case study was good to illustrate the point but the values did not seem accurate. When I compared it to real life EPS and current price versus 10 years ago, it showed that coca cola has kind of lost its shine (did not live up to the expectations of projected earning growth). Its liability grew but earnings were not growing.


Let's do a summary on what's covered in the book:

The Rules of Thumb in choosing a business for investment

  • Consistent historical earnings per share
  • Average ROE (=net income/ shareholder's equity) of more than 15%
  • ROA (net income / total asset) of more than 7%
  • Has long-term debt not more than 5 times its net income
  • Interest coverage ratio > 3 (Interest coverage ratio = EBIT/ Interest Expenses
  • Positive earning does not equate to positive cash flow (we have to look at Free Cashflow per share too)
  • Has pricing power


[Calculate CAGR using a finance calculator, value keyed is EPS present and EPS future.]


Avoid IPOs

IPOs are seldom sold at bargain. So be patient and wait for the market to mis-price it against its value before buying the business.


Buy the business that stays competitive due to its business model

"Buy businesses that even a fool can run, because someday one will."

--------------

My take:

Value investing forms the basis of all long term equity investment strategies. 

However, we cannot just buy and forget. Periodic evaluation of the above Rules of Thumb for the businesses we are vested in will prevent us from unwanted surprises like holding shares that are due for perpetual downward price slide.

We would also want to check that the future earnings of the companies we are vested in coincide with or exceed our "prediction". That is also how we decide on whether to continue holding a stock.

Update about a portfolio's face value and bench marking it against Mr Market means nothing in the long run (unless you are a mutual fund manager showing clients your results). Being updated with how the portfolio correlates with the value of its underlying businesses may be much more important.

A related blog post earlier - High value is not the same as low price.



***
Check out my Blog Archives here for previous posts

Friday, 18 January 2019

Revisit: Shopaholic no more

Maybe it is innate that many shopaholics cannot resist anything that looks pretty on the shelves or has a discount tag on it. Besides earning money and making money work hard for us (our income stream), controlling our expenses and saving up are just as important (limit cash outflow).

Here are eight quick tips when you shop and some to help you overcome your buying impulses -

  1. Need vs Want
    Ask yourself if you really need that item before you buy - 3x. Think about what you already owned and if those items are functioning the same as the one you are about to buy or just as good.


  2. Usage
    Can you foresee yourself using this item that you intend to buy frequently? If it is just another collection to your wardrobe of white elephants, then forget it. For items that you are intending to use only once or twice, perhaps borrowing from a friend or neighbour would be a better option and 100% cost-saving.


  3. Maximize credit card rebates / discounts
    Credit cards are hot on promotion these days (signing up rewards) and if you happened to have the right card for a discount on something that you really want, go ahead and swipe the right card!
    Oh no, this is not encouraging you to keep swiping ya.


  4. Wait...
    Signing up for 'membership' has its perks, even if you don't frequent the stores much. Cos retailers would send you SMS / email notifications on their promotions every so often (if you opt for it) that the Great Singapore Sales seems almost obsolete.
    If it's not something desperately and urgently needed, it doesn't hurt to test some patience and see if we can get our trophy at a fraction of the usual price during sale. It is also a kind of delayed gratification technique because that urge to buy would have perhaps gone away or you would have forgotten what you fancy the item for in the first place.


  5. Quality vs Price
    Many times I find myself buying an item just because it looks nice or it's on special offer, but not lasting very long on use.
    Sometimes good brands, high prices do not equate to good quality. (My Casio outlasted my Solvil Titus). However, if a branded good really delivers the quality its price deserves, then part with that extra cash and save yourself the hassle of repair or replacement of another inferior product.
    For skincare products and cosmetics, I would read online reviews and "research" their ingredients first before buying. Some are less than $10 but still rock!


  6. Compare prices
    Chinese has a saying "hua bi san jia" - meaning to compare the goods across three stores. A little more effort can save you substantially and they add up! Especially so for big ticket buys like airfare, hotel stay, furniture and gadgets.
    Trying out certain products at their brick-and-mortar stores then purchasing them online may also save you some money.


  7. Keep records of large purchases
    Or even every single purchase if you are diligent enough. If you have a budget to keep, and you track the actual amount going out of your wallet, your mind will tune towards how you could better manage your expenses.


  8. Make a note
    On things that you think you have wasted money on. Then don't repeat it again. There are always things that we regret buying 3 days later, no?


First published 2010
***
Check out my Blog Archives here for previous posts
Related Posts Plugin for WordPress, Blogger...