Sunday, 24 July 2016

The World Has Gone Mad

France is a country seemingly under siege. A man drove a delivery truck through a crowd in Nice, France. A failed military coup in Turkey. Racial tensions came to a boil as the blacks sniped police officers in Dallas. Public Shootings in a German shopping mall. Donald Trump delivered his GOP convention speech like a war-time president, dark and angry. The South China Sea dispute remain contentious, straining ties between ASEAN and China.

Am I concerned about recent geopolitical developments? Sure, I am. But I am not letting these fears stop me from living my life. The world has always been a messy and even violent place (remember WWI & WWII?). I choose to believe in the goodness of humanity! Stay positive and spread the love around.

By the way, I totally enjoyed my recent trip to Washington DC. Bought a Hugo Boss bag! :)

Life is one huge stumble. Just make sure you stumble in the right direction.

Tuesday, 19 July 2016

The Global Economy Is Turning Japanese

The desperate chase for yield is becoming dangerous, driving the valuations of dividend stocks (telcos, utilities & REITs) and bond prices to the sky. The main reason behind this 'new abnormal' is the world (especially developed nations) spiralling into a 'Japan-style' economic malaise. 

-Aging populations result in weak demand
-Weak demand leads to deflation
-Central banks maintain low and even negative rates for longer in order to stimulate growth and battle against powerful deflationary forces. Central banks in Switzerland, Sweden, Denmark, and Japan now all have negative interest rates!

I foresee solid blue-chip yield stocks to be selling at a premium for many years to come as the global population age even further. The thirst for income will only get ever more frantic.

Japan gave us a dress rehearsal of a bleak future

Wednesday, 13 July 2016

First-World Problem - Take SCRIP Or Cash?

Applying for SCRIP has its advantages which benefit investors with certain objectives.

1) SCRIP allows an investor to build up his position in a long-term core counter without having to pay the fees and we all know fees significantly erode our returns over time. In the case of OCBC and Raffles Medical Group, the discounted pricing of their SCRIP make it even more worthwhile. Both companies have solid earnings & dividend growth and management are still pursuing sustainable growth. OCBC just completed a massive acquisition of Barclays' private wealth management business in Singapore and Hong Kong. Raffles Medical Group is building a new wing next to its flagship Raffles Hospital as well as an international hospital in Shanghai. If an investor wants to enjoy the fruits of these expansion plans, he should apply for their SCRIPs. On the other hand, if a struggling company such as Noble offer SCRIP, I would avoid it with ten-foot pole. Anyway, I would not be vested in Noble in the first place.....hahaha!

2) Since an investor apply for the SCRIP year after year over a long period, the compounding effect will multiply several times. For example, you receive 10 shares this year, this particular batch of 10 shares will reap you more shares next year, maybe 11 shares. Then, the 21 shares will reap you even more shares next year and this wealth-generation cycle keeps rolling on.

2) SCRIP is also more suitable for investors with substantial amounts of the counter. For example, if you only own 100 shares of OCBC, just take the dividends in cash. I would suggest applying for SCRIP when you have at least 2000 shares of OCBC as the returns will be more meaningful.

Friday, 8 July 2016

This week's fear-mongering headlines!

1) Italy's banks are burdened with a massive US$400 million worth of bad loans, which is highest in the EU by far. This hinders the banks' ability to provide credit to businesses, which in turn will affect the economy, leading to a vicious cycle. The Italian government could try to do a bailout but they are strapped for cash too. The Italian government debt level is the second highest in the EU after Greece. Furthermore, any attempt to carry out a bailout will likely run foul of certain EU central bank's regulations. Italy seems like the new weak link in the EU, bringing back the Grexit contagion fears. By the way, Greece is barely surviving too.

2) The systemically-critical Deutsche Bank never truly recovered from the 2009 financial crisis. Things are now in 'full-crisis' mode. Worse still, the recent Brexit will hit the bank hard. Deutsche Bank is the largest European bank in London and receives 19% of its revenues from the UK. Now the real question: what happens to Deutsche Bank’s derivative book, which has a notional value of €52 trillion, if the bank becomes insolvent? Financial Armageddon might be near......

3) With the sterling pound under severe pressure due to Brexit, three of the biggest commercial property funds in the UK have stopped redemptions. Investors are running towards the exit in herds. As more investors panic and do the same, the funds will have to sell more properties to meet the redemption demands. Usually the most-saleable and best properties will be sold first. This creates a vicious cycle as investors do not wish to be the ones still remaining in a fund which holds inferior properties in the end. This scenario brought back horrifying memories of how the 2008 GFC started. Dominoes started to fall when panicky investors started redemptions on two hedge funds from Bear Stearns.

This might become a regular thing on my blog seeing that there are always a few fear-mongering headlines from the mass media. Now I understand why people like Marc Faber are often pessimistic about the global economy. It can be rather fun in a morbid way. Ha!  >___<

Many of us are not living our dreams because we are living our fears

Wednesday, 6 July 2016

Dividend Knight Income Portfolio Update (July 2016) - Brexit was good for my portfolio! What!

No. of Shares
30, 000
10, 000
8, 000
2, 031
Frasers Centrepoint Trust
15, 000
Mapletree Logistics Trust
25, 365
Raffles Medical Group
15, 094
2, 520
4, 000
CapitaLand Mall Trust
7, 000
ParkwayLife REIT
5, 000
12, 000
Keppel DC REIT
10, 000
Suntec REIT
6, 000
Ascendas REIT
3, 000
Sheng Siong
7, 000

Dividends received in July 2016: NIL

Total dividends received since Jan 2016: S$6,758.37

Average dividends per month: S$563.20

Average dividends per day: S$18.50

Total portfolio market value: S$348, 210

Unrealised Profits: S$55, 395

It has been a busy couple of weeks for me in the market. The local market actually rallied for a few consecutive days after Brexit. Totally unexpected turn of events! Fortunately, I managed to pick up some FCT, A-REIT and RMG before the prices flew up. As a result, my portfolio paper gains increased to $55k. Looking forward to the quarterly result reports of my vested counters. At the same time, I fully divested Cache Logistics Trust and MCT which boosted my investing 'war chest' to around $30k. I am taking full advantage of this current bullish mood in the market to divest my weakest and non-core holdings.

Time in the market is more rewarding than timing the market