Monday, 23 May 2016

How to stay the course on your investing journey? Be less human......

Over the long run, patience is a virtue when it comes to investing. That's why financial advisors always advocate the benefits of starting young in one's investing journey. This will allow wealth to be accumulated and compounded over decades.


Unfortunately, humans are emotional beings and we tend to interact with one another more than ever before, thank to the widespread use of social media these days. As a result of high frequency trading, algorithm bots and easy access to international market news flow, fear and euphoria can perpetuate at an alarming speed around the world. Hasty decisions made in heat of the moment are rarely right.

Volatility is a fact of life. Investors tend to over-react in either direction. Therefore, we must perform thorough due diligence on our targeted companies and tune out the 'noises'. This will help us avoid making emotionally-driven decisions. With absolute clarity on our investment objectives, we reduce our chances of getting caught on the wrong side of an irreversible shift.

Warren Buffett and his trusted partner Charlie Munger do not panic despite the turbulent markets over numerous crisis because they know exactly what characteristics they want in a company before they decide to fire their 'elephant gun' and they stick to their investment principles come rain or shine. They do not take frequent pot shots indiscriminately with a gambler's mentality. Bershire Hathaway always go for big brands which enjoy a strong moat and protected by sustainable competitive advantage, stable cashflow and run by a competent management. Naturally, when these breed of companies become undervalued due to irrational short-term market forces, Warren Buffett will have the conviction to buy more instead of panic selling as he already understood them inside out. He know their fundamentals will remain robust. On the other hand, if you know the company so well, you will also divest with conviction once you see the fundamentals facing a terminal decline. Either way, there is no panic and fear involved. Just effective decision making.


Be a robot when making investment decisions
DK

Monday, 16 May 2016

Dividend Knight Portfolio Update - Sell in May and Go Away? Not me!


No.
Company
No. of Shares
1.
AIMS AMP Capital REIT
30, 000
2.
Starhub
10, 000
3.
Singtel
8, 000
4.
DBS
2, 000
5.
Mapletree Logistics Trust
25, 365
6.
CACHE Logistics Trust
29, 000
7.
Frasers Centrepoint Trust
12, 000
8.
OCBC
2, 500
9.
SATS
4, 000
10.
CapitaLand Mall Trust
7, 000
11.
Raffles Medical Group
9, 000
12.
MGCCT
12, 000
13.
ParkwayLife REIT
5, 000
14.
Keppel DC REIT
10, 000
15.
Suntec REIT
6, 000
16.
UOB
400
17.
Sheng Siong
7, 000
18.
Mapletree Commercial Trust
2, 032


Dividends received in May 2016: S$3,153.87

Total dividends received since Jan 2016: S$5,873.37

Average dividends per month: S$489.45

Average dividends per day: S$16.09

Total portfolio market value: S$339, 000

Unrealised Profits: S$37, 280


For the month of May, I will be receiving a total of S$3,153.87 in dividends and distributions.
  • Starhub: $1000
  • UOB: $140
  • Sheng Siong: $122.50
  • CapitaLand Mall Trust (CMT): $191.10
  • Frasers Centrepoint Trust (FCT): $364.68
  • Suntec REIT: $142.26
  • CACHE Logistics Trust: $591.31
  • ParkwayLife REIT: $149.50
  • MGCCT: $452.52
I accumulated more OCBC and DBS with the intention of subscribing to their SCRIP dividends. OCBC's recent acquisition of Barclays' private wealth management business in Hong Kong and Singapore is expected to be immediately accretive to their bottom line. DBS is the only major bank in the world which still achieved revenue and earnings growth in a challenging environment. However, the banks need to meet stringent capital requirements (Basel III Tier 1) by 2019. Therefore, I expect OCBC and DBS to maintain their Scrip dividend programme until 2018. Well, I guess there will be more opportunities to get their shares at a discount! The three local banks will be here to stay and prosper for a long long time, probably long after all of us are gone. There is a saying..... 'If you have a gun, you can rob a bank. But if you have a bank, you can rob everyone!' :P

Next, I divested VICOM as its fundamentals is showing early signs of weakening. Revenue from vehicle-related inspection services has dropped, thus affecting earnings significantly.  An impending tsunami of car de-registrations will probably hit VICOM hard over the next few years.


Retail & Industrial sectors struggling
Almost all the industrial and retail REITs are facing increasing headwinds according to their latest quarterly results. Many malls in town are struggling to retain or attract tenants. The situation risks spiralling into a vicious cycle. When shoppers see lots of empty boarded-up units, they tend not to explore the mall further. A decrease in human traffic will then lead to worse sales for the remaining stores which are still operating.

An empty unit at The Mandarin Gallery
The silver lining is that sub-urban malls which mainly caters to the daily needs of masses are still resilient despite the challenges posed by e-commerce, high operational costs and manpower crunch. It is 'business as usual' for Causeway Point & NorthPoint, the twin crown jewels in FCT's portfolio.

I am cautiously optimistic that the major AEI at NorthPoint will reap long-term sustainable benefits from 2018 onwards. Phase 1 of the AEI has already begun and Phase 2 will be completed in September 2017, thus integrating the mall seamlessly with the new NorthPoint City and Yishun bus interchange. Just keeping my fingers crossed that the sponsor (FCL) will not inject Australian assets into FCT in a haphazard manner which harm the benefits of minority unit-holders.


Money can't buy happiness, but neither can poverty
DK

Thursday, 12 May 2016

My first cheque from Nuffnang! Time for Starbucks!

I received my first cheque from Nuffnang a few days ago. Yippee! Time to spend it on my weekly Starbucks indulgence..... >___<


Set meal from Starbucks. Cappuccino with buttermilk chicken & egg croissant. 

I know what you all are thinking. OMG! What happened to the frugal-minded DK? What have you done with him!?!?!? LOL.....Life is short, fragile and unpredictable as sadly shown by our finance minister collapsing in the middle of a meeting due to stroke. Sometimes, it is alright to slow down and smell the roses. Live a little. Pamper yourself. Spend more time with your loved ones and cherish those moments.



Get well soon, Mr Heng
DK

Tuesday, 10 May 2016

Want to take advantage of global aging? Focus on the rich elderly.....the baby-boomers

Humanity is aging. Fast. Over the next decade, the world is going to be hit by a tsunami of retiring baby-boomers. After that, another huge wave from Generation X is going to retire. This secular demographic trend cannot be stopped. There is no breaking point. There is no reversion to mean. There is simply no going back to a world of high birth rates anymore.

This group of future retirees has greater spending power than their predecessors. In my opinion, old people can be categorised into 2 groups - the recently-retired healthy elderly who are still active with more spare funds for lifestyle consumption and the extreme elderly (those in their 80s/90s) who spend most of their funds on healthcare or nursing services.

Higher demand for stable dividend-paying bluechips and bonds
Can you imagine a 70 year-old retiree sitting at the desk, his eyes glued to the computer screens as he stares at charts through his blurry eyes? I can't. And even if he happens to be an extremely healthy individual, does he want to spend his golden years and remaining time on Earth doing risky trades everyday? I doubt so. What he probably desire is a stable flow of passive income to fund a comfortable lifestyle and maintain a respectable quality of life. He no longer has the same voracious appetite and high tolerance for market risks and volatility. Most of his funds should be in income-producing assets like bonds, fixed deposits and dividend-paying bluechips. Right now, the younger generation of investors like us can take advantage of this future investment trend by getting into these dividend-paying bluechips early. Do not wait until you are in your 70s or 80s before making the switch.

A report posted on April 20 on the Singapore Exchange's My Gateway portal reveals that the STI offers the highest dividend yield in a study of 10 major stock indices across Asia. The 30-stock index yields 4.1% in dividends versus an average of 2.8% for the region. Hong Kong's Hang Seng Index is a close second with a dividend yield of 4%. Hong Kong is another rapidly aging country. 

Higher demand for air travel
Going on long overseas leisure trips seem to be a rising trend with the retirees in recent years. They are even posting pictures and videos on social media platforms. Who says grandparents cannot be cool? They love travelling with their spouses, family members or friends. Compared to their predecessors, baby-boomers prefer to pursue experiences rather than material possessions in retirement. This will potentially create traffic growth for aviation hubs like Changi Airport, thus generating more revenue for companies like SATS and SIA.

Higher demand for aged care services
Lastly, we move on to those extreme elderly who will increase the demand for nursing homes, clinics and hospitals. The rich baby-boomers can afford the premium prices at the private healthcare establishments such as Mount Elizabeth, Gleneagles and Raffles Hospital. As a result, companies like IHH, PLife REIT and Raffles Medical Group stand to benefit from an increasing demand for aged care services.


How will SG100 look like? Full of old people.....