Purchase of SGS T-Bills ( TB-080204-0012 )

My twelvth purchase of SGS T-Bills

The bid done for today is for the auction next week :
Issue Code - BQ08105H
Issue Date - 4 Feb 2008
Tenor - 91 days
Maturity Date - 8 May 2008

a 10% downpayment was made ( = $100.00 ) which will be refunded when the transaction is performed next week.

I made a bid of S$1000.00

The yield will be known next week through the auction result.

yield = 1.47%
total paid = $996.29
gain = $3.71

Finance Learning - Show Me The Money Volume I - part 2

11. Correlation is Key To Reducing Risks
Correlations have risen. Correlations higher during crisis.

12. Peter Lynch's Secret : Hard Work, Research
Mr Lynch : 'To make money, you must find something that nobody else knows, or do something that others won't do because they have rigid mindsets.'
Mr Lynch is the legendery Fidelity Magelian Fund manager.

His techniques : Lots of research. Besides his basic talent, Lynch's edge was simply his enormous dedication. He visited 40 to 50 companies a month. During lunch, he was always talking to a company. And he read the numerous reports that landed on his desk every day.

He emphasised the value of personal knowledge, which can be as simple as noticing that a company provides a superior product or service.

Lynch's second advantage was his flexibility. He was not confined to any particular sector, any particular investment style or any particular geographical location. Bought into funeral homes, motels, auto parts suppliers, insurnace companies, airlines.

Asking the competition
One of Lynch's preferred devices is to ask the companies he was interviewing about their rivals. The other steel companies he interviewed prasied Nucor. Lynch looked into it and bought the stock.

Insider buying
Lynch carefully watched when corporate insiders bought their own stocks. An insider, he noted, might sell his company's stocks for many reasons. But they have only one reason to buy : to make money.

Growth
For lynch, growth is a cardinal virtue in a company, and growth stocks are the largest single category in his portfolio.

hitting it big - while the key objective o the investor should be to avoid a major loss, the occassional huge winner will offset a number of small losses.

One of the worst traps is to buy exciting companies that do not have earnings. These are the 'sizzle, not the steak'.

13. The Big Question Behind NTA
When bugying stocks at a discount to NTA, it's important to assess what the firm's NTA consists of, that it's not over-stated, and that there are no contingent claims on the assets.

A company's NTA is its total assets minus intangible assets adn total liabilities. Technically, it's what would be left over for shareholders if the firm were to sell all its tangible assets at the prices recorded in its books and repay all its debts.

see NatSteel example.
see ipco example.

The intangible assets
The worth of a rofitable firm with a strong business model is not just the historical value of its assets.
One has to factor in the value it is able to generate as a going conern. Much of this value comes from intangible assets.

To recap, if you want to buy shares that trade below their NTA, be sure to assess what the NTA consists of and that it is not over-stated. Also, ascertain that there are no conintgent claims on the assets. Usually, counters that trade below their NTA are loss-makers or have unexciting prospects. Buy such stocks only if you think there is a possibility of a restructuring exercise that will realise the true NTA value.


14. Discounts to NTA : Not Quite A Sure-Win
56% of SGX companies are trading below their NTA, But this need not mean you get more value if you buy them.


26. Chartered Rights: The Facts And Myths

27. Some Stock Trading tips, But Only As A Guide
28. Does It Pay To Stick To Analysts' Call
29. How The Game Of Hot Stock Tips Is Played
30. Forget 2002, Live Life A Tad More In 2003

Youtube - Corrupt Banking System

There is a interesting series in www.youtube.com under the title "Corrupt Banking System". It gives a different perspectives of the money system that we have created.

US Presidential Election 2008

I was reading a thread in www.sgfunds.com forum, and someone mentioned about this guy, Ron Paul running for US Presidential Election 2008. I have not heard of him.

But upon visiting www.youtube.com, and searching under his name "Ron Paul", I find his speech amazing. He is very sincere and knowledgable, and speaks from his heart. Very refreshing. Hope he can give the rest of the candidates a fight for their money.

NCC - service for the month Feb

03/02 - Cam 2, 3rd session

Purchase of SGS T-Bills ( TB-080131-0011 )

My eleventh purchase of SGS T-Bills

The bid done for today is for the auction next week :
Issue Code - BQ08104S
Issue Date - 31 Jan 2008
Tenor - 91 days
Maturity Date - 31 April 2008

a 10% downpayment was made ( = $100.00 ) which will be refunded when the transaction is performed next week.

I made a bid of S$1000.00

The yield will be known next week through the auction result.
yield = 1.43%
total paid = $996.40
gain = $3.60

Maybank Saving Rates

From PanzerGrenadier's Fixed Deposit blog -
Maybank: One of the best Savings Accounts rates in Singapore!

Maybank rates

5 cents,10 cents - new fixed deposit blog

PanzerGrenadier new blog -
Fixed Deposits

Live Feed of revamped STI

Revamped STI can be obtained from the following sources :

- http://www.investasiaonline.com/
- http://www.sgx.com/
- http://www.shareinvestor.com/
- http://www.listedcompany.com/
- Btstocks.asiaone.com

Purchase of SGS T-Bills ( TB-080124-0010 )

My tenth purchase of SGS T-Bills

The bid done for today is for the auction next week :

Issue Code - BQ08103Z
Issue Date - 24 Jan 2008
Tenor - 91 days
Maturity Date - 24 April 2008

a 10% downpayment was made ( = $100.00 ) which will be refunded when the transaction is performed next week.

I made a bid of S$1000.00

The yield will be known next week through the auction result.
yield = 1.59%
total paid = $996.04
gain = $3.96

Home - Bills for Jan 08

Bills for the month of Jan 08

1. Singtel residential phone fixed line - $25.00
2. SP Services - $24.47
3. S&CC - $37.50
4. SCV - no subscription yet.
5. Broadband - $70.55
6. Property Tax - no need due to rebates.
7. TV licence - $110 per year ( paid for 2008 )

black - not paid,
blue - paid

updated on 17 jan 08
updated on 9 Feb 08 ( SP services )

Home - AXS for SnCC

Today I paid for my SnCC at an AXS station.
First,
1. choose Bills,
2. click on the tab for Town Council,
3. choose the relevant town council...
and just follow on screen to pay the stated amount...

Finance Learning - Show Me The Money Volume I - part 1

From Show Me the Money I by Teh Hooi Ling

1. How to Exit The Rat Race Early
invest... invest...and let your hard-earned money grow...

2. Before You Invest Your Money

3. Time To Pile Into Stocks Now?
4. Time To Overcome Your Greed and Fear
5. It's All About Timing, Believe It OR Not
Equity risk premium - the compensation investors require for holding stocks.

using historical data, the equity risk premium by taking inverse of market price earnings ratio - or earnings yield - minus the risk-free rate.

Market PE ratios were obtaned from Thomson Financial Datastream and one-year deposit rates were taken as risk-free rates.

Every time the risk premium measured in basis points - hit 350, it was an indication of under-valuation of equities. On the other hand, a drop to about 60 points suggested that the market was over-valued.

without data from thomson financial datastream,
All one has to do is tally up the most recent year earnings of the 45 companies which made up the Straits Times Index(STI). Also add up their market capitalisation. Dividing the combined market cap of STI index stocks with the combined earnings will give you the average PER for STI.
Taking the inverse of the PER and deducting the one-year fixed deposit rate will give you the estimate of equity risk premium.
The combined net profits figure would stay pretty constant for much of the year. The one-year fixed deposit rates, too, move infrequently. Market cap, however, will fluctuate every day as the stock prices of the index stocks move up and down.

6. How to Detect Lower Earnings Quality
The acconting discretion granted to managers is potentially valuable, because it allows them to reflect inside information in reported financial statements. However, since investors view profits as a measure of managers' performance, managers have an incentive to use their accounting discretin to distort reported profits by making biased assumptions.
In other words, mangers can use accounting flexibility to either communicate their firm's economic situation or hide its true performance.

While asset allocation will determine a large part of the variability of a portfolio's returns, stock selection can and do enhance the portfolio's performance. And there is no short cut to that extra returns. Understanding a company's industry characteristics, its own competitivie strategy to ascertain its key success factors and risks is a major part. To gain that understanding, you have to gather information from various sources, chief among them the company's annucal reports.

some common red flags are:
- unexplained changes in accounting, especially when performance is poor.
- a disproportionate increase in accounts receivables in relation to sales increase.
- a growing gap between a company's reported earnings and its cash flow from operating activities.
- unusual increases in inventories vis-a-vis sales increases.
- unexpected large asset write-offs.
- large fourth-quarter adjustments.

Other helpful hints to detecting earnings quality declines are:
- inclusion of profits from past periods in the current period, such as a reversal of a reserve.
- under-provision of future expenses associated with current sales, such as bad debts, warranty obligations, etc;
- increasing reliance of earnings sources not central to the company's principal business activity and strategy.

market generally value growth stocks at a higher multiple to earnings.


7. Looking For Red Flags In Accounts
One of the most common red flags investors should look for is a growing gap between a company's reported earnings and its cash flow from operating activities.

Cash flow from operations, or CFO, is the actual cash generated by the business that will be used to pay interest on bank loans, or repay principal and to finace new investment. It excludes depreciation charges of assets - an accounting number. That's why it is usually higher than the net earnings figures.
Obviously, you want cash flow to be higher than net earnings, as it is a measure of a company's ability to self-finance. There usually is a steady relationship between the two if the company's accounting policies remain the same.
A growing gap may suggest aggressive recognition of revenuse which has not materialised into cash for the company.
Another red flag that analysts look out for is a disproportionate increase in accounts receivables in relation to sales increase. This may suggest that the company is relaxing its credit policies or stuffing iits distribution channels to recordd revenues in the current period.
If credit policies are relaxed unduly, the firm may face receivable write-offs going forward as a result of customer defaults.
Another tell-tale sign of unsustainability of earnings growth is when net earnings is expanding at a much faster rate than sales.
see charts.

8.How To Read The signals That Companies Give Out
Meanwhile, new plants must be built to make the new product, so capital must be raised. The company can borrow the money or it can sell new shares to raise the funds.
If it issues more new shares, then the claim of existing shareholders(including the management) on the future earnings of the company will be diluted. In other words, future explosive earnings from the new product will have to be shared with the new shareholders.
And with more shares in the market, the company's stock price will not appreciate as much as it would have if the management had not issued any new shares when the share price was much lower.

if company has good prospects, it will not issue more new shares, as the earnings of the company will be diluted. Therefore, one would expect a firm with very favourable prospects to try to avoid selling stock but to raise any requied new capital by other means including debt. With debts, the company needs only to meet the fixed obligation of interest payments. Any excess returns from the investments will accrue entirely to the shareholders.

A firm with unfavourable prospects would want to sell stock, which would mean bringing in new investors to cushion existing investors against future adverse developments.


So, in short, the announcement of a stock offering is generally taken as a signal that the company's prospects as seen by its management are not bright. Consequently, when a company announces a new stock offering, more often than not, the price of its stock will decline.

Investors here generally prefer debt-free companies. But as can be seen above, the announcement of a debt issue can signal better things to come.

Furthermore, debt is a cheaper form of capital than equity. This stems from the fact that interest expense on debt is tax-deductible.

debt provides a leverage effect that can significantly boost a company's earnings in good times. ( affects EPS )
debt can be a double-edged sword with the leverage effect going the other way. ( see e.g. in book, page 35 )

9. Lessons in Buffet's Focus Investing
Academics define risk as price volatility, and to counter that risk, they recommend holding a diversified portfolio.

But to Mr Buffet, risk is the intrinsic value risk of a business, not the price behaviour of its stock. And intrinsic value risk, he says, coms from misjudgement of a company's prospects.

You should have the courage and conviction to put at least 10 per cent of your net worth into each investment you make, he says.

In other words, by pruposely focusing on just a few select companies, you are better able to study them closely and understand their intrinsic value. And the more knowledge you have about a company, the less risk your are likely to be taking.

Such focus investing can, no doubt, only be employed by those who have absolute conviction of their analysis - and the fortitude to hold steady during any short-term market gyrations.
"Diversification serves as protection against ignorance'. It's a good strategy for a know-nothing investor, but the price is an average return.

4 primary factors to ascertain the probability of achieving a return on one's investment
1. The certainty with which the long-term economic characteristics of a business can be evaluated.
- is the business simple and understandable;
- does it have a consistent operating history;
- does it have a favourable long-term prospects.
2. The certainty with which fmanagement can be evaluated, in terms of its ability to realise the full potential of its business and wisely employ the cash flows
- is management rational?
- is it candid with shareholders?
- does it resist the institutional imperative?
3.The certainty with which management can be counted on to channel the rewards from the business to the shareholders rather than to itself
- focus on return on equity, not earnings per share;
- look for companies with high profit margins;
- for every dollar retained, make sure a company has created at least one dollar market value.

In terms of valuation, investors should do some homework to arrive at the value of the business and ask if the business can be pruchased at a significant discount to its value.

Followers of Mr Buffet must be willing to make big bets when they encounter a strong opportunity or a high probability event. And they must be patient. Mr Buffet thinks that risk is inextricably linked to an investor's time horizon. One mustn't panic over price changes. The volatility of one's portfolio is a necessary by-product of focus investing. To be a Buffett follower, you have to steel yourself against bumps and not act rashly in response to the vagaries of the market. Mr Buffet views price weakness as an opportunity to buy more of a godd company.

10. Crucial To Hold A diversified Portfolio.
Two types of risks. One is the non-systematic risk, or risk which is unique to each individual company. The second riks is systematic risk. The market only rewards systematic risk. Non-systematic or unique risks are not rewarded because they can be diversified away.

Diversification - in the same fashion that insurnace companies diversify risks by writing a large number of policies, investors can diversify risks by holding a large number of securities.

stocks with low correlation to STI are Want Want, Delgro, hong Kong Land, SembCorp Marine, Dairy Farm and Keppel Corp.

Financial Terms - Fiscal Policy

What does it means...
Government spending policies that influence macroeconomic conditions. These policies affect tax rates, interest rates and government spending, in an effort to control the economy.

What investopedia says...

Since the 1980s, most western countries have held a "tight" policy, limiting public expenditure.

Details here.

What is Fiscal Policy?
Trying to predict Interest Rates.

Home - Sound Theatre System

Today, I bought a sound system for my TV. Actually it is a karaoke system. The brand is Electro Voice. Its website is here. It is a US brand. It is trying to penetrate into the Asia market. Its USA homepage is here. This system is also known as the Lotus package.

I bought it from Audio House @ Clarke Quay.

Specifications for Lotus Package.
- ES225A Amplifier
- 150W x 2 @ 8 ohms
- 250W x 2 @ 4 ohms
- KL-803 speakers
- 8 inch speaker

Purchase of SGS T-Bills ( TB-080117-0009 )

My ninth purchase of SGS T-Bills

The bid done for today is for the auction next week :
Issue Code - BQ08102F
Issue Date - 17 Jan 2008
Tenor - 91 days
Maturity Date - 17 April 2008

a 10% downpayment was made ( = $100.00 ) which will be refunded when the transaction is performed next week.

I made a bid of S$1000.00

The yield will be known next week through the auction result.
yield = 1.55%
total paid = $996.14
gain = $3.86

Financial Terms - Reverse TakeOver

What does it means...
A type of merger used by private companies to become publicly traded without resorting to an initial public offering. Initially, the private company buys enough shares to control a publicly traded company. At this point, the private company's shareholder uses their shares in the private company to exchange for shares in the public company. At this point, the private company has effectively become a publicly traded one.

A reverse takeover can also refer to situation where a smaller company acquires a larger company.

What investopedia says...
With this type of merger, the private company does not need to pay the expensive fees associated with arranging an initial public offering. The problem, however, is the company does not acquired any additional funds through the merger and it must have enough funds to complete the transaction on its own.

Details here.

The Whacky World of M&As.
The Basics of M&As.
Why do companies merge with or acquire other companies?

IPO - OCK

Applied for IPO :
IPO price : $0.20
Shares applied : 3,000
Total cost : $600

Updated on "15 feb 08" -
Cost Returned : $400
Shares Allocated : 1000
Cost : $200

Oilpods Investment

I received my 5th monthly income from my ownership of the Brookshire Salt Dome project= $108.75

Brookshire Salt Dome project monthly income breakdown
Sept 07 = $114.49
Oct 07 = $110.89
Nov 07 = $108.84
Dec 07 = $108.38
Jan 08 = $108.75

Total Sum to date = $551.35

Total Holding Yield = 551.35/ 15,210 = 3.62%

FCFD - NZ

Today I deposit into a foreign currency fixed deposit. Details as follows :

Currency : New Zealand Dollar
Value Date : 9 Jan 2008
Tenure : 12 months
Amount : NZ$ 5,000
Conversion rate : 1.116
Amount : S$ 5,580
Interest : NZ$372.10

Due Date : 9 Jan 2009

Financial Terms - Goodwill

What does it means...
An account that can be found in the assets portion of a company's balance sheet. Goodwill can often arise when one company is purchased by another company. In an acquisition, the amount paid for the company over book value usually accounts for the target firm's intangible assets.

What investopedia says...
Goodwill is seen as an intangible asset on the balance sheet because it is not a physical asset such as buildings and equipment. Goodwill typically reflects the value of intangible assets such as a strong brand name, good customer relations, good employee relations and any patents or proprietary technology.

Details here.

goodwill = intangible assets
Can you count on goodwill?
New Accounting Rules Could Roil The Markets

wikipedia goodwill definition here.
The acquiring company must recognize goodwill as an asset on its financial statements and present it as a separate line item on the balance sheet, according to the current purchase accounting method.

Instead of deducting the value of goodwill annually over a period of maximal 40 years, companies are now required to value fair value of the reporting units, using present value of future cash flow, and compare it to their carrying value (booked value of assets plus goodwill minus liabilities.) If the fair value is less than carrying value (impaired), the goodwill value needs to be reduced so the fair value is equal to carrying value. The impairment loss is reported as a separate line item on the income statement, and new adjusted value of goodwill is reported in the balance sheet.

carrying value = what is recorded
fair value = market value

If a company management team is constantly writing down goodwill, it is giving off a telltale signal that management has made poor decisions. Investors may want to rethink the investment.

It is worth the effort to examine goodwill. The account is located on the balance sheet, but more often than not it is lumped together with other assets and disclosed in the footnotes at the end of the financial statements. Once identified, it should be handled with care, and the sources of its value scrutinized.

FAS 142 eliminates amortization and institutes an annual impairment test.

Purchase of SGS T-Bills ( TB-080110-0008 )

My eighth purchase of SGS T-Bills

The bid done for today is for the auction next week :
Issue Code - BQ08101E
Issue Date - 10 Jan 2008
Tenor - 91 days
Maturity Date - 10 April 2008

a 10% downpayment was made ( = $100.00 ) which will be refunded when the transaction is performed next week.

I made a bid of S$1000.00

The yield will be known next week through the auction result.
yield = 1.80%
total paid = $995.51
gain = $4.49

Home - GIRO 4 SCC

Today, I submitted the GIRO applicaton for my SCC . The application will take about 2 months. I will only stop paying through cash or AXS station when I received confirmation.

09 Jan 2008, I received a letter from Town Council about receiving my GIRO application.

Home - Light Bulbs

I bought another set of 3 daylight light bulbs. Brand is OSRAM, 60W mini-twister. Each costing around $5.50. I put the 3 bulbs in the living room middle celing light. That will give me another set of 3 of daylight bulbs of 40W each from philips as spare.