Stocks and Hamburgers

Friday, 14 November 2014 22:05

Posted by owq market 0 comments

A short quiz: If you plan to eat hamburgers throughout your life and are not a cattle producer, should you wish for higher or lower prices for beef? Likewise, if you are going to buy a car from time to time but are not an auto manufacturer, should you prefer higher or lower car prices?

But now for the final exam: If you expect to be a net saver during the next five years, should you hope for a higher or lower stock market during that period? Many investors get this one wrong. Even though they are going to be net buyers of stocks for many years to come, they are elated when stock prices rise and depressed when they fall. They rejoice because prices have rose for the ‘hamburgers’ they will soon be buying. This reaction makes no sense. Only those who will be sellers of equities in the near future should be happy at seeing stocks rise. Prospective purchasers should much prefer sinking prices.

Excerpt from ValueEdge's Investor's Handbook
http://www.value-edge.com/investors-handbook-beginners-guide-to-value-investing/ 

These words really flicked a switch in my head. They make so much sense. Buy low and sell high!

P.S. Got to know about that handbook from http://www.my15hourworkweek.com/2014/11/14/weekend-reading-for-novice-investors/. So good.

$2 chicken rice vs $4 chicken rice

Sunday, 9 November 2014 16:21

Posted by owq frugal 0 comments

I was quite inspired by this post: The $2 Chicken Rice Story. It talks about how people are a sucker for "cheapo" $2 chicken rice.

You see, we tend to have a psychological bias when it comes to prices. We see them in relative terms. Something expensive in absolute terms seems much cheaper when placed next to something much more expensive.

How is this important when it comes to stocks? The unit price is very important. In other words, the value for money. The business might be very outstanding, but if you have to pay a 10x premium, it may not be so worth it in the end. Everyone has their own way of valuing a stock. And the price you are willing pay depends on the value you give it. Don't overpay for something just because it looks good.

Latest buy: Ascott REIT

Thursday, 6 November 2014 21:53

Posted by owq stocks 0 comments

Bought 1 lot at bid price 1.24. I was too impatient haha. To be honest, I didn't really look through the annual reports.


Pros
Good value for money -- Price/book: ~0.9 (I'll just trust their valuation)
Quite low expense ratio -- 0.5%
Increase in distribution per unit! This was really the reason why I bought at bid price.
I like the good diversification of property in good places.

Cons
Foreign exposure -- (but perhaps mitigated by hedges)
Very focused -- serviced residences (well, most REITs are quite focused anyway -- where is our REIT ETF???!!)

Saving money

21:46

Posted by owq frugal 0 comments

Every dollar saved is worth more in the future (if invested at a decent rate).  Especially so for technology products. I was wondering whether to exchange my Galaxy S3 for a new phone this year, but I decided not to since it fulfills my needs and is fast enough. Technology is likely to improve and I can get a better phone for the same amount of money in the future.

How do I save money for my daily necessities?

Transportation
I cycle to work everyday, rain or shine. Upfront cost: ~$200 (bicycle, rain wear,). Upkeep: <$50/yr
If I took public transport, it would be about $600/yr. Let's not even talk about cars...
I think a reasonable travelling time for cycling to work is about 1h 15mins. That would be about 10km. So probably the only place too far for me would be Jurong or Choa Chu Kang area. Of course, the further the distance the less incentive to cycle because public transport gets cheaper.

Grooming
Cutting my own hair, I save about $10 a month. Cutting a similar hairstyle every month yourself isn't difficult. You can also ask your hairdresser for tips.

Learn to sew. You can save a few of your bags/clothes that way.

Food
I don't really save much on food. Fortunately I work in a heartland area so my meals cost about $3 on average. If I really wanted to save money, I would make my own lunch but it would probably save only a dollar or two? Not worth it in my opinion. A tip though -- never buy beverages. Drink plain water. (I buy packed juices once in a while to satisfy my craving, though)

Entertainment
I don't know why people pay so much for entertainment. Movies, for example. Is sitting there to rot that fun? It's true, the best things are free. And my hobbies don't require much money. 1. I love nature and Singapore is full of parks and reservers, believe it or not. 2. Books. Our libraries are damn good. Seriously.

The money saved isn't that much, but I don't earn much so it's quite significant. I hope to earn more in the future so I can worry less about saving too aggressively.

Hello world

Sunday, 2 November 2014 19:48

Posted by owq 0 comments

I've just started on my investing journey after (finally) graduating and starting my career. Not knowing what to do with my money, I decided to top up my CPF account with about $10k. A year later, I realised that stocks and bonds would be the way to go. I guess topping up the CPF account was a mistake? Since I can only get the money in 30 years time (and not even all of it). At least there is tax relief and a "risk-free" interest rate of 5% (I moved all the $$$ to the special account). Well, a small mistake considering I'm still young.

Currently, I have an trading account with SCB. It was the easiest to open, and probably the cheapest for small-time investors like me. No CDP account required (but there's risk in the external custodian) and no minimum fees.

So far I've bought the STI ETF and some REITs. Will talk more about my portfolio another time.

The only man who never makes a mistake is the man who never does anything. -Theodore Roosevelt