Sunday 24 April 2016

Possibly The Worst Time to Invest – 2 Years On

About 2 years ago, I blogged about setting up a passive portfolio of 70% stocks and 30% bonds and wondered if it could be the worst time to invest. I updated the status of the portfolio a year later in Possibly The Worst Time to Invest – A Year On. In fact, I believe that nothing should stop us from investing and I initiated a second, more spicy passive portfolio last year. You can read more about it in The Anti-Fragile Portfolios. In the 13 months since the last post, the stock market underwent 2 major turbulences, first in Aug last year and second in Jan this year. It seemed to prove that last year was indeed a bad time to invest. Yet, the 2 passive portfolios, which were designed to rebalance themselves whenever the asset allocation exceeds the target allocation by 8%, soundly slept through both turbulences, blissfully ignorant of the upheavals in the financial markets.

This is not to say the portfolios did not suffer any losses. In Jan this year, when stock markets all over the world fell precipitously, the original passive portfolio suffered a loss of 0.7%. The spicy portfolio, true to its name, lost 7.0%. The stock allocation for the original passive portfolio roughly fell from 71.1% to 67.4%. However, the swing was too small to trigger any rebalancing. Currently, stock markets have recovered and so have both portfolios. The original and spicy portfolios currently return 8.5% and 0.6% respectively over their holding periods. After investing for nearly 2.5 years and 0.5 years respectively, the returns are nothing to shout about. However, considering the financial market upheavals in Jan when there were talks of crises in China, European banks, US credit markets, etc., the portfolios have performed admirably. Even my own actively managed portfolio went into a state of panic, as shown in I Don't Know Where The Market Is Heading, But I Should Know Where I Stand.

Moving forward, I am not particularly confident about the stock market and have been increasing the war chest for my active portfolio. However, I am not pulling any money out of the 2 passive portfolios. Their have in-built defence mechanism which was proven during the market crisis in Jan. While I do not hope to see another market crisis that leads to rebalancing of the portfolios, I am confident that these 2 portfolios will do well in the long-term even if a rebalancing is triggered.

In fact, passive investing in index funds is like buying an air ticket to your financial destination. There is no doubt that there will be mid-air turbulence from time to time. When that happens, do you head straight for the emergency exit and parachute to safety? Although you could save yourself from further turbulence if you do that, you will end up in nowhere and could only watch fellow passengers who sat through the entire flight land safely in their financial destinations. There is no way to avoid mid-air turbulence, but you could choose the type of aircraft you sit in and the pilot who will steer the aircraft. Index funds, which invest in some of the largest companies that make up the stock market indices, are among the most sturdy aircraft available. Passive investing strategies, whether it is Dollar Cost Averaging or portfolio rebalancing, are like flying on auto-pilot, which removes most of the errors associated with human pilots. Combined, passive investing in index funds is like flying on Boeing 777 on auto-pilot. No doubt, there will still be mid-air turbulence, but you can sleep soundly knowing that you are in good hands. You just have to tighten your seat belt and have faith that you have chosen the best aircraft and pilot that will bring you to your financial destination safely.

If you think flying on Boeing 777 on auto-pilot is not safe enough, compare that to the alternative of flying on a 2-seater propeller plane with me as the pilot. You will get a lot of excitement on this flight. For example, in Jan this year, you will hear passenger announcements that we are running out of fuel (i.e. war chest) and need to off-load some cargoes (i.e. sell stocks)! Thus, when you compare the alternatives, flying on Boeing 777 on auto-pilot seems the much better choice. You might ask, if this is the better choice, why do I still choose to fly on my own? I am been participating in the stock market for the past 30 years and will not totally switch to passive investing. It is like a driver who has been driving all his life; he will not easily switch to public transport, even though public transport may be more efficient.

How will the stock market and the 2 passive portfolios perform in the next 12 months? Let us wait and see.

See related blog posts:

Sunday 17 April 2016

Valuable Info That You Can Only Get From AGMs

It is Annual General Meetings (AGMs) galore these 2 weeks. For most of the past 18 years that I have been investing, I have given AGMs a miss. It was only in the last 2 years that I began to attend AGMs, and I find that there are valuable information that you could only get from AGMs.

For a start, very few CEOs are going to volunteer bad news in their Annual Reports or financial statements. However, some are sanguine enough to give you an honest assessment of the prospects of the business when asked. Secondly, there are experienced shareholders who have done a lot of homework before coming to AGMs. By listening to their queries, you can learn more about the business. Below are some of the information that I garnered from attending last year's AGMs.

How Bad is the Oil & Gas Slump?

MTQ is in the Oil & Gas (O&G) industry. I attended its AGM in Jul last year. At that time, the oil price was around US$50. The Chairman, who had many years of experience in the industry, had this to say about the state of the industry: the current slump was the worst he had ever seen, even worse than in the 1990s, when oil price was trading near US$10. It was just a very simple statement, but it gave everybody present in the AGM a very clear idea of the tremendous challenges facing the O&G industry.

Is Share Consolidation A Good Deal?

Many companies whose share prices are trading below $0.20 are undergoing share consolidation to meet Singapore Exchange's minimum trading price requirement. During Ellipsiz's AGM where this issue was put up for vote, a fellow shareholder mentioned that based on his observations, the share price would actually continue to drop after consolidation. He questioned the need for the consolidation, since companies could choose not to consolidate but move to the SESDAQ board. 

Are Further O&G Write-offs On the Cards?

This question is specific to PEC, which is also in the O&G industry. Shortly after it announced its financial results for the year ended Jun 2015, it announced that one of its clients had gone into receivership and it had to write off receivables of about $19 million. In the footnotes of the company's Annual Report, there were total receivables of $26.1 million which had been past due for more than 60 days. The corresponding figure for the previous financial year was $1.6 million. The CFO assured shareholders that the receivables had since been collected and no further write-offs were expected.

Getting the Most of AGMs

The above information are very valuable information that could not have been obtained elsewhere. I would encourage every investor to attend AGMs to gather such information.

In order to get the most out of AGMs, you need to ask questions. If you do not ask, you would not get the answers to the burning questions that you might have. Secondly, do not get too fixated over the numbers in the financial statements. Some fellow shareholders drill very deeply into the numbers, asking why the profit margins of certain segments have reduced over the past year. I suggest you do not do that. Financial numbers vary from year to year, and are sometimes out of control of the management. As investors, we should be very familiar with this issue, as our returns vary from year to year. What is important is not the numbers, but qualitative issues such as what are the prospects of the business, how well the company is executing its strategy, whether there are any risks, etc. The 3 examples of AGMs that I cited above belong to this category of questions. Do note that not every AGM will yield valuable information, but when you do get one, it will make all your efforts worthwhile. 

I will not be attending the AGMs in the coming 2 weeks, as my project has started to ramp up. Nevertheless, I encourage everyone to attend them as much as possible. There are valuable information that you can only get from AGMs. And if you do have such information, please remember to share with your fellow investors.

See related blog posts:

Sunday 10 April 2016

My Portfolio of Stock Blogs

Besides having a portfolio of stocks, do you also keep a portfolio of stock blogs? I do, and they have made me both a better investor and a better person. Here are some of the stock blogs in my blog list (visible on the desktop version of this blog).


BigFatPurse is one of the few blogs that I always read. I like it because it does not just talk about stocks, but also investor psychology which can shed some light into how investors work and how that translates to actions seen in the stock market. An example of this is their post on Skinner’s Rats and Value Investing – Part 2. I always believe that the stock market is like a "Matrix" and you can defy the laws of the "Matrix" by acting as what you would have in the real world. For example, why is it that people flock to the Great Singapore Sale but run away from the Great SGX Sale when both have mechandise on discount? When the post is not directly about investing, it allows us to see our own actions more clearly and hopefully make better decisions in the stock market. 

Investment Moats

Investment Moats is a blog that most readers are familiar with. I categorise it as a technical blog, because it usually has tables, charts and/or references from some other studies. You can learn a lot from technical blogs. On the other hand, they can also be some of the most dangerous blogs around. Just because a post is long and complete with charts does not make it accurate. I have seen some long posts from some other blogs that are plain inaccurate. 

Investment Moats does not have such issues, as it always gather facts to support its posts. In fact, it is the only technical blog in my portfolio. I especially like his series of posts on returns from insurance policies, such as Does your Insurance Saving Plans (Endowment) give you 3 to 5% returns? It gives us some ideas on the type of returns on insurance policies that we do not normally hear about. Finally, this is one post that I wrote after first learning about it from Investment Moats: You Don't Need To Be Good In Investing To Be Rich.

Rolf Suey

Rolf Suey is another blog that most readers are familiar with. I first got to know Rolf Suey for his insider views of the Oil & Gas industry. It is rare for an industry insider to be a investment blogger. I believe many people, including myself, have benefitted immensely from his views, which have proven accurate many times.

However, I did not immediately add his blog to my portfolio, primarily because in the second half of 2015, our market actions differed. As he was selling, I was buying. Eventually, I came to realise that the actions did not matter, because our circumstances were different. What is important is the thinking behind those actions. They are very sound and prudent rationale that I can benefit from.

Money Honey

If you run through the list of blogs on my blog list, you will see one that is different from the rest -- Money Honey. He regularly posts about charities that he supports and donates generously to them. In fact, he actually sets aside a separate "Not-For-Profit" portfolio to fund donations to charities. You can refer to the amount he has donated here. I am humbled by his deeds and his blog posts serve as a constant reminder to me to help others in need.


The above are some of the blogs in my portfolio. For a complete list of my blog list, please switch to the desktop version of my blog. As shown above, they have helped me become a better investor and person. Do you also keep a portfolio of stock blogs?

Sunday 3 April 2016

The Value of (The) Boring Investor Blog

Today's post is No. 156, which makes it the 3rd birthday for this weekly blog. Usually, the post at this time of the year is on reflection and also some shameless self-promotion. Regular readers can skip this post without missing much. The topic for this year's post is the value of (The) Boring Investor blog.

The most direct measure of the value of this blog is the amount of advertising revenue received. For 3 years of efforts, the grand total of advertising revenue is... $78.20! This works out to be $26 per year or $0.50 per post! Applying a Price/ Earnings multiple of 12 times, the value of this blog works out to be $312!

There is another way to measure the value of this blog, which is the value that it brings to readers. Besides writing it, I also refer to my own blog from time to time, to remind myself of the actions that I have to take or the rationale for taking certain actions. Generally, the driving force behind this blog is about applicability. It attempts to answer, for example, whether a particular investment is a good one for investors. To this end, this blog has several themes running through it.


To determine whether an investment or a strategy is a good one, sometimes you need a lot of data and research to back it up. For example, do you wonder how the Dogs of Dow strategy would perform in Singapore's context? The answers to this and some other questions are addressed in posts such as the following:


There are a lot of finance books that talk about how to pick and trade stocks. However, they do not discuss what investment strategy should you choose, or what do you do when the stock market goes into a bear market, etc. This is another area where this blog attempts to fill some of the gaps with posts such as:

Personalised Calculator

Blogs are always static information. Thus, we can only talk about things that apply in general which may not be applicable to every reader. For example, is the UOB One account or the OCBC360 account better? The answer depends on the individual readers' circumstances. One of the things that I found out through experimenting is that it is possible to incorporate Javascript in blogs! With this feature, it is possible to take in individual input and produce output that are personalised to individual readers' circumstances. So far, there are only 2 web calculators on this blog:

If you know of any ideas that can be solved using similar features, please feel free to leave a comment below.

Navigating Unchartered Territories

The world and our own circumstances are constantly evolving and we sometimes enter into uncharted territories. There are no experience to call upon to navigate these unchartered terrorities. For example, we now have negative interest rates that we thought were impossible only a few years ago. In such cases, we can only rely on understanding the facts, analying the second- and third-order implications and come up with an appropriate answer or solution. Some of the posts that address these issues include:


That's all for my once-a-year rumblings. I hope this blog has brought value to all readers. To those who read through this post even though you know that there is no new information, I thank you for being willing to read whatever I write. Thank you. 

See related blog posts: