2018 Review

Merry Christmas & Happy New Year 2019!

First off, I managed to score quite good results in my SUSS studies, achieving 2 B and 1 A- for my first semester of post graduate studies (my previous semester was foundation bridging modules). I felt proud and victorious for 2 days until I checked with my study group pals & realized they scored even better, (A, A- & B+) and (2 B+ & 1A). My competitive spirit felt disappointed for next few days, even though my study pals revealed a few others whom did not do as well as me (2 C+ & 1 B) etc.

This reminds me of a Chinese quote 人心不足 蛇吞象 which translates to when the heart is not satisfied, a snake try to swallow an elephant. Greed and fear are 2 most cited emotions in financial markets, as I reflect more on trading I feel its important to maintain a happenstance & peaceful mind not matter what situations faced. Easy said than done... But for our mental wellness, its necessary to remind ourselves so.

Reflecting my trading in 2018, I am glad I managed to recover the loss over Midas where my arbitrage went wrong when the counter was suspended, resulting in $9,477 loss. I had another 3 big losses, between January to March 18 when I bought SingTel & had to cut loss suffering -$2,165.58 drawdown, this followed by double whammy when I bought Q&M Dental & YZJ Shipping in May but both failed, falling fast and furious resulting in YZJ loss of $1,955.08 and Q&M Dental -$2,1126.80.

On hindsight, it was an achievement in itself to recover from the above losses and I noticed I tried hard to limit my trade size and risk per trade to under $1K. This caused me to trade lesser than my usual trade size of $30K which seem to be better as I battle less in my mind over hold or cut loss.

Overall I managed to breakeven with a small 0.56% return aka $846.47 trading profit (this excludes the 0.8% interest that I received when my monies are not deployed in my trading account).

Q4	$1,241.38
Q4%	0.83%
Q3	$7,037.41
Q3%	4.69%
Q2	-$9,694.08
Q2%	-6.46%
Q2*	-$217.08	* (exclude Midas write off)
Q2%	-0.14%
Q1	$2,261.76
Q1%	1.51%
YTD	$846.47
	0.56%

I made a total of 61 trades, with my only position in UOB Kay Hian with 20,000shares at $1.18cost.

A = 30%+ of channel			22	37%	43%
B = 20%-30%			4	7%
C = 10%-20%			13	22%
D = 10% or less			5	8%	35%
F = Loss			16	27%
			60

I bought UOB Kay Hian as it hits 10years low, its major low was under 90cents during subprime crisis. Its largest shareholder Wee Ee Chao continues to buy its shares and the top 3 parties together held 71.27%

UOB 38.87% MD Wee Ee Chao 27.97% Deputy MD Tang Wee Loke 4.43% Total owned by related top 3 parties 71.27% Dividend yield is about 4.07% distributed once between April to May, ranging from 3.5c to 4.8c; 2018 4.8c, 2017 3.5c, 2016 4.5c, 2015 5c EPS ranged from low 7.28c in 2016 to high 19.25c in 2010. Trailing 12M Sep 18 10.73c, PE Ratio around 11x and Price/book 0.66x (from SGX Stockfacts).

The current stock market downtrend, catalyst by Fed interest rate rise & Trump's partial government shutdown is likely to fall for a few more weeks. Nonetheless, I see various bullish divergences developing & look forward to trade them. Hopefully I will be wise to hold some of them to maximize their longer term profit, instead of focusing too much on short term channels and miss the longer term uptrend ahead.

God bless you in your investments and trading!
Wish you (& myself too) a wiser & even more profitable year in 2019!

3Q18 Brief Review

A quick brief review of my trading since August's posting, I made several trades and was really close to recover my near $10K loss from Midas. Currently I am 100% in cash, there's been some short term oversold signal from US market which past 2 days had pulled back alittle. I cant really tell if its a uptrend reversal to downtrend or simply a pull back.

Above is a screenshot of my records, you can click to open the full size to view.

YTD I am still down by about $300, am 100% in cash now & monitoring the market for new signal.

Various bearish divergence signals had went on in S&P500 for some times, some SGX listed stocks also seem to have hit their weekly moving averages which by the way had been down, so its a matter of I am wrong and markets push above their moving averages or more likelihood that they resume their downtrend for a little while before presenting potential buying signals to rise again. One example is OCBC below which I have traded several times since July 18. Fundamentally I thought interest rate rise means better interests income despite various challenges from home mortgages which is slowing and trade war fears. Nonetheless chart wise, the last drop April to June had caused the uptrend to reverse into downtrend, and recent rises had not change the weekly moving averages. The steep MACD-H histograms usually suggest the bear is quite strong and past 3 months is just consolidating, the support line of $10.80-$11 had also been tested several times, with a downside breakdown risk increasing especially with lower highs in early August 18 when it hit $11.80 & the lower high at $11.57 2weeks ago. OCBC is only one of the many counters on SGX, many other counters showed similar patterns. So when unsure, I shall step aside & pray that I am wise to enter at the right time and price for as many of my future trades as possible... Amen...

See you again in 1-2months time.

Portfolio update - July 2018

A short update on July 18's transactions:

I went back to trading (yes, I did it again) but let me explain (my excuses)...

Suntec REIT
On 11/7/18 I sold 17K (following FIFO accounting, or its troublesome to edit on my spreadsheet), basically it fell to a low of $1.80 turning MACD-Histogram red in mid day & I felt it may be turning down (over focus on short-term, daily & missed out the longer term weekly). I also kinda felt that Interest rate rise should probably affect this counter negatively, which turned out true as its DPU dropped slightly though mainly due to more units outstanding.
On 16/7/18, I sold the rest of stakes 20K units as price set to close at $1.81 with MACD-Histogram turned red at close. Well I was wrong, as MACD-Histogram continued to flip between green & red (my broker advised me to use Heikin-Ashi candlesticks but I cant wrap my head around its display on chart, I felt like the actual open & close in normal candlesticks more important).

Looking back, I should have held on even after ex-dividend as Suntec REIT definitely seem to held on to its bullish momentum & rose higher today, perhaps ready to strike new high in coming weeks.

OCBC Bank
I traded in and out of OCBC as I spotted a potential short term rally, my entry was abit early & high as my buddies went in after me at lower price, we held for a while but miss selling at the high. For OCBC, I waited until MACD-Histogram turned red then exit.

All in all, the above trades made me about $3.2K in July 18, which helped to reduce my YTD realised loss to -$4033.10, hope that I can close with a good profit or at least breakeven by end of the year.

Holdings
I am still holding on to NetLink NBN Tr and SingTel.
For NetLink NBN Tr next expected distribution is in November, business wise seem resilient, shall see if the business model is indeed hedged against interest rate rise.

For SingTel, I could have exit to breakeven, but after seeing Suntec REIT's rise, I thought the pattern resemble SingTel & decided to hold beyond ex-dividend rate until possibly next earning release.

Other thoughts - Facebook
Recently there's a tech pull back sparked by Facebook's dramatic fall, a personal idol of mine Adam Khoo shared on his analysis on Facebook both fundamentals and technicals. If you like to know more, do click on the youtube video.

Studies resume in August
My Master Studies at SUSS is officially starting this weekend, I will retreat to a hermit mode & rush with the many writing assignments & exams... Hope to write again in August if not latest in November or December as I reflect for the year if I managed to profit or breakeven & recoup my Midas' loss. Happy National Day to Singaporeans! Peace & Prosperity!!

Converting to a Dividend Portfolio - A smart or denial move?

I started converting bulk of my capital into Dividend yield play as part of honing my horizon for a longer term. Basically I bought 3 counters; SingTel, Suntec REIT & NetLink NBN Trust using 80% of my trade capital.

Switching strategy requires a change in mindset, had I remain in trading mode I would have struggled and bite the pain to exit stop loss for counters for all 3 of them, which may have been a good move as I would then limit my loss to about 2% per counter but that would also hit my maximum stop loss of 6% for the entire portfolio and requires me to stop trading for 1 month to review my strategy.

However, since I declared I am switching to dividend longer term play, I had to look pass the short term capital loss (unrealized) and focus on the "cashflow" or the dividend that's expected and build up passive income in my new dividend strategy.

Below I am going to delve into what went on in my mind when I purchased the 3 counters.

Suntec REIT's trading notes
Fundamentals as of 25 April 18's report:
DPU 10c or 5.6% at $1.785; distributions quarterly in May, Aug, Nov, Jan.
PE: 21.9x Price/Book: 0.854
DPU: 1Q18 2.433c, 1Q17 2.425c
EPU: 1Q18 1.7c, 1Q17 1.8c
NAV: $2.119
All-in financing cost 2.73%, debt to asset ratio 35.2%


Holding 37K @ avg.cost $1.74, long term DPU play

My initial entry for Suntec REIT on 28 May 2018 at $1.785 was based on a daily bullish divergence which did worked out initially when it moved to $1.82 touching 26day EMA before it resumed its downtrend. I should have exited either 10 or 11 June 18 which would limit loss to $1.74 (low of the days) but I had to ditch my former trading mindset & adjust to a new cashflow dividend focus.

Later, I entered with another 20K purchase on 21 June 18 after indicator MACD-histogram turned green, but the day I entered it fell somemore briefly turned to red then back to green. Honestly with the Fed's rate increase expected for next 2 years, the current distributions may be reduced and current yield of 5.6% or so may be reduced to 3-4% by 2020. But before 2020, there should be various rallies & pullbacks though the current trend is definitely down unless the price on the right edge could push above to $1.81 which may signal the downtrend is over. I may also switched back to trading mode & take profit first, especially if trade war is not resolved & may eventually rolled to a devastating snow ball that reignite a great depression (see Alessio Rastani's "Will A Trade War Kill the Stock Markets?")


SingTel's trading notes
Fundamentals as of 17 May 18's report:
PE@$3.31wEPS24c: 14x   PB 1.83x   norm.PE 10x
EPS FY18 33.35c; FY17 23.91c
4QFY18 4.77c, 4QFY17 5.89c

Dividend $0.175 2x; 26 July 18 ex-date $0.107, Dec $0.068
$0.175 to maintain till FY2020 except unforeseen circumstances, thereafter revert to payout ration 60%-75% underlying net profit, FY18 81% of underlying net profit.
Holding 10K cost $3.31
25/5/18 (Fri): SingTel buy back 440K worth at $3.34

18/5/18 (Fri): SingTel buy back $1mil.worth at $3.42-3.43

My purchase order for Singtel at $3.31 was triggered on 30 May 18, it was the support that have been tested 4th time but it broke at the 4th time. Once again, I struggled whether to cut loss (trading stop loss rule) or hold on; I decided to hold as dividend 10.7cent is due with ex-date on 26 July 2018. Furthermore, SingTel had made forecast to maintain $0.175 dividend for next 2 financial years unless there's unforeseen circumstances. On the right edge, the fall is long and painful and yet to see any consolidation or bottom yet. Based on dividend plan, I intend to average down with my balance 20% capital when there's a potential reversal signal that comes from weekly chart instead of daily as daily's indicators are flipping between green and red (MACD-histogram) thus negating the signal's validity. A potential threat is the flight of monies from emerging markets to US, similar to 1996's Asian Financial Crisis which may affect forex exchange when converted to SGD. Thus far SGD had also fallen but not as much compared to some of the other countries like Indonesia.

NetLink NBN Trust
Fundamentals as of 14 May 18's report:
FY2019 IPO projection est.4.6c, 2xDPU or 6% at $0.75; IPO Jul 17-May 18 3.2c, Nov 18 est.2.1c
Stable slow growing business

8 Jun 18: CEO bought 100K@$0.75, cost $75K
IPO $0.81
Holding 50K cost $0.75

I purchased this as I thought the volume during the pull back is lesser, thus the bullish divergence in force index. Furthermore, buying at the same price $0.75 as CEO should be quite ok as there's someone "with you". There's also various articles that cited the leverage cost of NetLink Trust tied to interest rate thus the distribution should be "safer" than the other REITs or SingTel. On the right edge, force index still somewhat shallower (ie.lower volume traded) than when it broke down from $0.815. If I could somehow exit Suntec REIT at a profit, I may switch to NetLink NBN Trust as its fundamentally safer though distributions are twice a year.

Final thoughts
The trade wars seem like the biggest threat now, all kinds of doomsday thoughts from Great Depression to Global recessions as the world deleveraged etc. On the other hand, World Cup had finally proceeded to quarter finals, so after that more traders will be back in the markets, perhaps that will reignite a new round of momentum, question is will it be more value shopping or panick exit?

I've finally passed my foundation course at SUSS for my Master of Counselling course, the next term's class is starting in August 18. Am expecting alot of assignments, exams, and less time to focus on investing. Not to mention my other personal new year resolutions like getting into work out habit, its been there for 5years but never disciplined enough to become fit :( 

Lets hope I have better results to share in my next update... Good luck! May the trend be with you...

Change of Investing Strategy

As I looked back my trading, they are comprised of primarily the following:

I. Penny stocks speculation
II. Major dividend (5%+) speculation
III. Buyout offer-price spread
IV. Alex Elder’s bullish divergence & impulse system
V. Adam Khoo’s bounce off moving averages
I and II were my initial experimenting which derives mixed results and call for subjective judgement which may be wrong at times, thus I ceased using them several years back.
III was one of my favourite but there isn’t that many buy out offers that presents meaningful spread based on the scenarios thus I also stopped using them.
IV is my most common strategy but with mixed results, honestly, I did not always follow its impulse censorship rules such as buying based on daily signal or wait for weekly impulse to turn blue as I felt price often moved up too fast to have enough risk return ratio based on exponential moving averages. Also using daily MACD-histogram as exit signal which often exited too early or not reliable as MACD-H could fluctuate between red and green.
V was a relatively new strategy that I learned from watching Adam Khoo’s videos. I did a trade and it worked out but felt difficulty to switch my paradigm to that as I was used to MACD & force index; it felt weird just looking at moving averages with stochastics.
I also initially followed his book and used his early fundamentals 9 steps screen but felt too much work and quite impossible to find a great counter with excellent 9 steps scores that meet the technical setup unless a major material development which often throw the entire fundamentals into question and requires quite astute decision and patience for it to work out.

While my greatest returns by % involve some speculation and intra-day penny stocks trades in 2013-2014, but my current work and commitments do not afford me the time to monitor as closely at times.
As for trading, I realised my results are negligible and lacks consistency, winnings often got reduced by big losses, then I struggled to break even.

Thus, moving forward, I decided to spit my war chest $160K into 2 portfolios; $80K of dividend yielding long term holding and $80K for trading at reduced per trade about $20K (instead of current about $30K per trade).
For dividend portfolio, my investing yardsticks would be as follows:
- Established business with consistent earnings of no more than 20% swings from year to year
(cyclical counters like property developers are excluded)
- Established dividend payout track records with foreseeable visibility of maintaining same dividend yield of at least 5%.
- Subject to weekly trading rules such as bearish divergence in weekly indicators / price actions; otherwise counters would be held.
- Possible stop loss of 5% from purchase or 1 ATR down
(to avoid possible fallen angels like Noble and the likes)
Due to the small $80K capital, it would likely be split among 3-4 counters, with an eventual 3 years goal of diversifying into more so that every month or so that could be some payout, and possibly some capital aside for rights issues.

As for my trading portfolio, I would likely keep the per trade amount smaller, praying for wisdom from God that I would judge the setup correctly and avoid disasters and also sticking to trading rules.
Trading strategies that may be deployed:
- Alex Elder’s MACD-H 4 seasons, bullish divergences
- Adam Khoo’s bounce trade and possibly others
- Scenarios based such as buyout-price spread arbitrage and others
To end, I hope to be posting monthly update as journaling would help me to reflect and hopefully avoid or realise earlier if I am fooling myself with certain trades.
Moving forward, I aim to do a monthly portfolio update.
May the trend be with us…

Next blog likely end Jun 18, I will be sharing my first 2 purchases for my dividend portfolio, I bought both towards end May 2018.

Triple Blows

Triple Blows

Its 5 months into 2018, I suffered triple major blows to my returns this year which made it seem like a year of loss or at best breakeven.

First blow, arbitrage venture in Midas Holdings Limited that went horribly wrong; it was an experiment to buy Midas in SGX (bought $0.169 in Jan 18) and sell in HKSE (then trading at around SG$0.60), however the transfer of shares takes 2months and suddenly on 8 Feb 2018 it was suspended and the rest is history. Apparently, PRC companies simply have a trait of forging their accounts, their bank balances and pledging shares for loans without declaring and finally emptied the company’s coffers and bankrupt it.

The result of this experiment was a loss of $9477. This is the biggest loss in several years since my naïve days of holding (also another PRC company) Beauty China of $10K worth to zero after it was delisted.

Second blow, was my recent trade on YZJ Shipbuilding SGD that horribly dropped 3% from $1.08 to $0.98 on Friday, 25 May 2018. I entered based on trading and exited at stop loss $0.99 which resulted in a near $2K loss. It was later realised that HSBC Global Research the previous day on 24 May 2018 downgrading to reduce with a target price of $0.87, in absence of other news, this could potentially be the cause of the fall.

Third blow, was my purchase of Q&M Dental for trading between Friday, 25 May 2018 and Monday, 28 May 2018. It hit my stop loss alert but due to illiquid volume I failed to take action immediately as I was also busy with my work. At the end of Monday, it dropped 6.8% from $0.59 to $0.55, my cost was about $0.585 as I bought since Friday, 25 May 18 for trading. In the end, I sold off at $0.545 during the opening, hopefully to close this painful chapter behind and never have it again.

Because of the 3 major blows, my returns fell to -

Q2	-$9,623.51
Q2%	-6.42%
Q2*	-$146.51	* (exclude Midas write off)
Q2%	-0.10%
Q1	$2,261.76
Q1%	1.51%
Till Date	-$7,361.75
	-4.91%

Next blog I am considering a change in my investment strategy and possibly list the new strategy’s concept framework.

World Cup effect on Stock Markets

As World Cup 2018 at Russia is starting soon on 14 June 2018 with first match between Russia and Saudi Arabia, its timely to share on this World Cup effect on stock markets.

Apparently, with records going back from 1994, World Cup have been consistently correlated to -0.3% to -25.5% to equity market in second quarter of the World Cup year.

Credits to DBS Bank analyst who compiled this table for World Cup's impact on Straits Time Index level.

The effect was attributed to rotation of funds from equity markets to sports markets (more like gambling casino) where people would withdraw funds from stock markets and speculate on World Cup matches. 

There's even professional arbitragers that try to take bets and arbitrage on the different rates offered by various bookies / betting houses, thus locking in to the spread regardless of what the results went. 

Eg. Bookie A takes bet of $1000 from various parties whom bet on Match 1, home team to win, the bet is accepted at a rate of 2.1x payout, ie if home team win bookie A is to pay $2100 to the parties. One way to arbitrage on betting markets, is for bookie A to unload the bet of $1000 to other bookies / gambling house that later increase the rates to say 2.3x as most have fluctuating rates depending on the bets they receive to spread out their risks.

However, for bookie A, once he secured the higher rate of 2.3x, he is effectively risk free and sure win especially if this is repeated often enough with larger / wider bets received. If home team win, he is locked into 2.3x and would earn 0.2x spread of $200 after paying out $2100 back to the parties.

If away team win, then he has no loss to pay since he already offload the risk & monies to other gambling houses. The only risk is counter party risk where say if home team win, the other gambling houses ran away and failed to pay.

That's for today, I may be writing more blogs moving forward as I am pondering a change in my investing strategy and as I reflect on 3 major blows that hit my returns this year. More in my next week's blog, see you!

2017 & 5 Years Review

An entire year gone by since I last posted, here are my 2017 & past 5 years results.

Year	Absolute Gains / (losses)	% Return	Styles
2013	$   3,595.89	8.4%	Penny, intra-day, dividends play
2014	$   4,182.00	5.9%	Insiders following, intra-day, technical analysis, candlesticks
2015	$(2,785.44)	-2.8%	Value Catch (more like Value Traps)
2016	$   4,244.83	3.2%	Unwinding previous holdings, divergences, dividends play
2017	$   2,111.68	1.6%	Divergences, caught falling knives

Honestly, I am not a great trader, looking back I struggled with same mistakes as I did in 2015, 2016 & continued to today. At times, it were ok to hold on beyond cut losses, with some bounced back, other times when it don't, it became too painful to hold.

As such, I decided to top up $7,000 from my year end bonus to my CPF SA account to lower my taxable income as well. This was my first time doing so, as it is a leap of faith to lock up the monies in CPF SA and ultimately to believe in the government in maintaining prudence and prosperity of the island country Singapore until my retirement 29 years later (I am age 33 this year), presuming retirement age was still 62 then.

I also transferred my CPF OA monies to SA account and managed to hit the minimum sum of $168K in SA in Jan 18. This showed that if one is to spend prudently and worked 10 years with an below average to medium income (I started with salary $1.7K in 2008 and only earned about $4K, both gross figures), its possible to reach the minimum sum.

The big caveat is to avoid buying big expense items like house and car and delayed gratification for 10years if possible. Many peers held alternative beliefs that travel twice a year to exotic countries and luxury eating each weekends are deserved relaxations, well each to their own. As long as one spend within its means and not use debts to purchase doodads or liabilities, thats fine.

I guess my circumstances is getting common, as a bachelor single, I do go out occasionally and nearby countries for travel, hiking but I dont crave for car since the COE is so high. 

Also, I stayed with my aged parent, being the only single in my family; naturally the filial piety burden falls on me, though without having to rent or pay mortgage, it allows me to save & direct this monies to trading. 

As I plan my personal work plan in 2018, I do foresee more time to be involved in my Master studies starting in 2018 to end 2020. I also had to divert more of my disposable income now to engage a maid to care for my aged parent, I have to say currency difference is really a big advantage for affluent countries to utilize precious human resources that would otherwise been too costly to hire. Still the costs of wage & daily expenses had reduced my disposable income, I had to make my money works harder by honing my trading skills better. Each time I went on a series of wins, I became overconfident, and when loss hits, I tend to hold it for too long and stun like vegetable, unable to act.

Q4	$601.58
Q4%	0.45%
Q3	$3,769.99
Q3%	2.84%
Q2	$328.92
Q2%	0.25%
Q1	-$1,828.81
Q1%	-1.38%

My returns by quarter was actually quite good except each huge loss often took me several good wins to cover.

A = 30%+ of channel			14	40%	49%
B = 20%-30%			3	9%
C = 10%-20%			8	23%
D = 10% or less			2	6%	29%
F = Loss			8	23%
			35

In fact, out of my 35 trades for the year, majority were wins that grabbed more than 20% of the channel (based on ATR+2 daily band), but the trouble is some channel lacks volatility and not enough to profit or even breakeven.

Worse still, that 8 loss trades hit me hard, with 6 trades above $1K loss and 2 trades almost $1K loss.

Had I not make those 8 losing trades, I would be $8K richer; well common fantasy in trading (similar to gambling, had I know the toto numbers... )

To end with a resolution for 2018, I hope I can be wiser in my trades and hold those uptrends longer; to move from trading divergence swings to ride on uptrends and grab 30%+ of weekly channel for longer term trades.

Happy, Healthy and Wealth 2018!