bull? bear? mini bull? mini bear? bear in bull skin? bull in bear skin?

Sti raises by 93 pts today, various market also raises a lot these few days. Many seems to forgotten the instability in US and Europe.

Let's poll.Which is your choice?

1. Last stretch of bull?
2. Mini bull like mini mooncake?
3. Bear in Bull skin?
4. The last 500 pts drop for almost one weeks is bull in bear skin? Bull all the way till last high of 3800?

STI for today:

 STI for past 5 years

 

Kungfu and/or? inner strength

This post is specially dedicated to BB AK in Cbox. As many already known, his blogs are famous and he has many readers who ask him finance related questions. To many of us readers, we admired his kungfu. However, not many of us have his inner strength. 

In stock market, different traders and investors have different kungfu. It may be easy to know and learn other people kungfu but applying it is not that easy.

As a summary, BB AK’s kung fu is:

• Buy more when price hit new low at resistance and with positive divergence.
• Don’t sell when the prices form new lows, instead reduce exposure on rebounds.

However, normal people like me cannot keep buying more when price hit new low. We don’t have enough inner strength. If we did that, the % of that stock out of our entire portfolio will be too high such that it causes us sleepless night. Subsequently, many of us will just panic sell when the price keeps hitting lower low, while BB AK keeps buying from us HAPPILY. (Quoting from beary, "AK will win money no matter what.") When rebound really come, we will all regret on hindsight.

Therefore, this boils back to the very fundamental issue of mind and money – the need to train your mind to sit tight when price high and not to panic sell when price goes lower.

Personally, a very good way not to panic sell in bear is to manage your money allocation well. For example, if you have 100k, you put 5k into each stock. This stock only takes up 5% of your portfolio. In addition, due to your prior experiences with losses (see http://opposethetrend.blogspot.com/2011/05/sharing-on-how-to-be-emotionless.html) and the fact that you know how long you can replenish that money from your working income, you will not easily panic sell and can sleep well in night. If you are comfortable with 10% per stock, you can add 5k later to average in. (not average down.). Do not keep averaging down if you do not have enough inner strength. You will 走火如魔，死无全尸。

In short, plan your money allocation well first as this will indirectly train your mind to follow the most simple rule - buy low sell high. 

Remember, you can only be invincible if you have great kungfu with good inner strength and mind.

FA - ARA

Based on latest FY2011 1H report

• AUM grows to 18.8B (current) from 9.4B (2007) (it might not be easy to double again.)

 Based on 2007 to 2010,

• HK 超人 as backup. around 13% from ARA's website.
• Good ROE, ROA. consistent earnings due to its interesting business model
• Little or no debt
• Consistent +ve FCF
• Current dividend around 3.6%
• Valuation - fair. PE around 15.4, enterprise value/EBITA around 12.8 for FY2010. Given the potential bear market, could wait longer for cheaper valuation around $1 to enter. $1 gives PE around 10.9 and enterprise value/EBITA around 8.9. Of course, ideal will be PE <10.

(Disclaimer: This is not buy call, just my personal opinion.)

Gearing Ratios

I did some research and realised that the generic term "gearing" that people use have different meanings.

For Reits: Gearing = Total Debt/Total Asset.
Using LMIR as example for FY2010, gearing = 125000 / 1212508 = 10.3% (ST debt of LMIR = 0)
(this is what you see in the presentation in LMIR.)
(For reits, this is usually the gearing which they talk about)

However, some people also use gearing as Total debt/Total Equity where Total debt = LT debt + ST debt
Using LMIR as example for FY2010, gearing = 125000 / 901909 = 13.7%

For Net gearing, which is more comprehensive in my opinion as it account the cash portion.
Net gearing = Net debt / Total equity where Net debt = LT debt + ST debt - cash & cash equivalents. This ratio include the liquid portion of the company, cash & cash equivalents.
Using LMIR as example for FY2010, net gearing = (125000 + 0 -109979) / 901909 =1.67%

Of course, there is also the famous debt to equity ratio. Debt to equity = LT debt/equity.

In summary, there are many gearing ratios available. Different gearing ratios should be use for different purposes. Always think of purpose first before using.

Next time, when other people talk about gearing, please remember to ask them which gearing they are talking about. 

TA - Healthway

Healthway daily show potential MCAD divergence but weekly chart does not demonstrate that.

Its Q2 is not good and its not very bad either, but at least its cashflow from ops become positive.  

I pray hard and hope that the daily divergence can get stronger and override the tide so that I can do some cut loss selling. Hope the testing of resistance at 20MA is successful.

100% cash no more!

Yesterday I sold cache to reach 100%. However due to my itchy hand, I went to buy kingsmen today.

No more 100% :(

My current plan is:

If rally for no reason, try to sell to rebalance my portfolio
If fall further, I slowly buy using joint account.

I hope I can stay discipline when the times come. It is really hard to stay clear minded and discipline.

Joint account portfolio - 100%cash

Sold cache today to recycle capital for other future purchases.

Now I am just waiting for opportunity to come.

8 Aug 2011

See the similarity?

I think I should stop being greedy for little gain. Should sell slowly into rebound.

Its time to restart and be patient and wait.

Interesting photo!

Long time no see these, must take a photo and put in my blog as loving memory :)

Portfolio Performance

Since yesterday night, I been trying to redo my excel file to calculate XIRR. Thanks to guidance from Cory, LP and CW in cbox I managed to complete the XIRR for both my accounts with the start date of 13th May 2011.  (I do not have detailed data before this.)

 It can be easily seen that the XIRR values vary a lot with or without considering investible cash as part of the equation.

Basically there are two schools of thoughts

1. Equity 
2. Equity + investible cash

For method 1, we should only consider pure equity return to measure the performance and cash should not be included as cash is subjective.

For method 2, we should only consider investible cash as part of the equation as one constantly input funds from one earned income into investible fund. This measure if one has effectively made full use of the investible cash available.

Personally I think both methods are good, it all depends on the objective of the measurement.

If one wants to measure how well the performance of its equity is as benchmark against something, such as STI index, method 1 is good.

If one wants to measure how well one has effectively use the investible cash for investing, method 2 is good.

Of course, besides the 2 method above, the most simple method of absolute and % growth of the entire portfolio should also form part of the equation too. My definition of entire portfolio = all cash + all investments,  exclude CPF and the flat which you currently live in.