July Portfolio Update

July was rather bullish. Sometimes, I wish it wasn't so bullish so that I can buy stocks that give good dividends on the cheap.

As mentioned in the earlier STI technical update, I expect a 5th wave to be occurring. That means it is still bullish, but a terminal end could be near (not yet). I would have to be more cautious if I want to buy any equity.

July saw me doing 2 things, of which (2) I'm not sure if I have made the right decision.

1) I bought 5 lots of Keppel Green Trust at $1.14. I remember staring at it at $1.02, and hesitated for a while. Subsequently, it climbed back fast to $1.06 and then $1.13 since. From here, and also from staring at SP Ausnet at 92c, I told myself that next time, if I think I like the price, the dividends and what the stock is doing, I should just buy it. There's no point waiting. Instead, divide the accumulation into batches, and enter slowly.

I'm writing a book

Yes, you heard right. I'm currently attempting to write a book on A Level Physics. It's a lot of hard work, and that explains my infrequent updates on this blog. Definitely not easy. I sleep <5 hrs a day to try to write, and think of ways to improve it, to make concepts clearer to the students.

What am I writing
I'm writing on an A level physics study guide. I chose to start on physics because physics is my forte.
After all, I'm among the top 10 scorers for 2001 A level Physics in Singapore, and among the top 39 in Asia for the 2nd Asian Physics Olympiad.

STI Technical Analysis 23rd Jul 2010

This is an update to the wave count done on 6th Jul 2010
http://wealthbuch.blogspot.com/2010/07/sti-technical-analysis-6th-jul-2010.html

Apparently, I made the mistake of adapting the count to my expectations when I should have followed my timelines.

It appears that STI has completed it's intermediate 4th wave at 2648 on the 25th May 2010.
It remains if STI can break the previous high of 3037 for this high to confirm.

Oceanus -- Overhyped counter?

Recently, Oceanus came under my radar. I was always fascinated by their business of rearing abalones, a Chinese delicacy, in their farms. It had went from a share price of <20c to near 60c, before coming down again to 31.5c recently. It is interesting in its strategy to acquire farms and lands from the centre of the coast, such that it can grow both left and right sides, while its competitors would find it harder to expand because they would have farms separated by Oceanus.

Before I do any impulsive buying (like before), I made it a point to look through some secondary sources (especially the more critical ones instead of the more bullish ones). I digged out the following nuggets of information from value investing forum Afralug Forums (formerly WallStraits forum), which are rather insightful.

The most interesting paragraph is the following:
"The financial statements use fair value accounting which books estimated changes in market value as revenue. While this may comply with accounting rules, it is total nonsense from a cash flow perspective because none of the so-called fair value profits can actually be converted into cash. Only when the actual goods are sold and cash received will the company know what their real profits are."

What fresh grads should or should not do?

I read with interest the following from the CPF IMSAVVY blog on what Fresh Grads and Young People should and should not do:


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In view of the above, the following is what the young person should do:

1. Save up a war chest of at least 6 months to two years (depending on the stability of the job) of cash.

2. Get the basic insurance because you don’t have money to pay your medical bills for yourself if you are sick.

The following are things that a young people should NOT do (which unfortunately almost all my clients did it all):

Greed Kills -- News Report

Teacher in $130,000 debt over World Cup bets

By MAUREEN KOH

HE was thrilled when Germany beat Australia 4-0 in the Group Stage match at the World Cup last month.

In just under two hours, the first-time bettor made $6,000 - the equivalent of two months' salary for the secondary school teacher.

But by the time Brazil suffered a quarter-final defeat by Holland, John's thrill had turned into shock and fear.

He had chalked up nearly $130,000 losses in bets with three different illegal bookmakers.

The only way for him to pay off his debts was to sell his car.

He started with "small bets between $2,000 and $4,000" for the first two matches, but upped the stakes to as high as $10,000 for each bet.

At his request, we are not using his real name as he risks losing his job.

In the hour-long interview with The New Paper on Sunday earlier this week, John, 28, who has been teaching for two years, pleaded repeatedly: "Please, please don't name the school too.

"I can't afford to lose my job now - my future will be gone."

Gearing of REITs

I have had some questions on what is meant by gearing of REITs and how it could affect a REIT.

What is gearing?
In the most simple terms, gearing is calculated by the amount of liabilities dividends by the total assets valuation.

Let's say for REIT X, the valuation of all its buildings and assets comes out to $1 billion. The total liabilities is $300 million. This will work out to a gearing of 30%. [I stand to be corrected in my concepts. Feel free to comment if my understanding is wrong.]

Different countries would have different policies for the maximum gearing for a REIT. In Singapore, there's a cap of 35% gearing.

STI Technical Analysis 8th Jul 2010

Although STI rallied nicely, I don't have a good feeling about this rally.

Reasons:
1) volume is low. The volume over the past few days rally is below the volume 50 day MA. I will only consider it good volume if it is higher than the 50 day MA (i.e. NOL).

2) STI closed with a hanging man candlestick pattern right at the resistance line and the upper bollinger band. Of course, it would be good to see a confirmation candle tomorrow.

Chart:

STI Technical Analysis 6th Jul 2010

It has been a long time since I looked at the STI chart. Had been really busy.

I took another look at STI, and found a more bullish Elloitt wave count. We could be in a minor wave 4 of Pri 1 instead of having begun on Pri 2.