What I learnt from the market over the last few years

Although STI has been moving side way for a long time but there are still many stcks that I have analysed had went higher and higher. I didnt take action and buy because I feel STI has no room to go up further and stock has reached all time high.

The few examples are Sheng Siong and SATS. I believe these 2 stocks have good fundamental and business is easy to understand. When I noticed Sheng Siong, it was $0.6 and it was it all time high. I was afraid to enter because its trading volume is not high and its initial plan to enter China stops. But what I am certain about this business is it is unlikely to go belly up. This business is cash rich and has the ability to carry on to expand. At that point, i felt there was limited room to go up, upside more than downside, I held on to my bullet. Looking back, I should start a 20% of my allocated fund in this stock. The remaining 80% shall wait for it to drop lower. As I believe it will not go belly up and give about 5% dividend while waiting, it is not a bad deal. At the point of writing, it is $1.0+. I have no guts to enter as it is too high and together with market volatility, I am not comfortable.

I think the problem with me is I have limited cash and I am afraid to loss my capital.

There is still opportunity in this uncertain time

In the year 2016, I am relative quiet in buying any stocks in Singapore. As I feel there is not much growth and upside not more downside so I have been in the cave. But I see 2 opportunities just slipped away from me. They are Super group and ARA management, they will be privatised. These 2 are in my list of stocks that I will buy in crisis. I like them because the business is easy to understand. They are considered stocks in circle of competence.

I feel I failed in some way. I have read so many books by investing guru but I failed to excute what I learnt. Example Warren Buffett said if price had dropped to its intrinsic value and business still remain the same we should simply add more. The problem with me is that I keep anticipating a crisis is coming so I am not willing to buy now and when it dropped more I have no fund to buy more. What I will miss out is all dividend I could get while waiting.

At the meantime I have to look for some other stocks to replace Super and ARA.

Macro economy in November 2016

S&P had continuous dropped for more than a week, from 2150 to 2085 prior to US election. A day before election it recovered about 80%. Every single negative news that was report on Clinton or Trump had been reflected in the stock market. As there are 2 camps of people supporting Clinton or Trump, any bad news of each one of them are simply bad news to the market. The popularity of Trump had been lower than Clinton most of the time. In the morning of 9 November during the vote counting, stocks in Singapore dropped as Trump was leading. Dow Jones futures was -700 points at one point. At the end of the day when news of Trump as president was announced, it rebound back more than 50% from the lowest point and Dow Jones instead of dropping it went up 200 points.

Although you can say market is unpredictable but from this I learnt something. Many analysts expected the market to drop no matter who is the next president as supporter of either side will reacted to the news. I think the continuous dropped in US market for more than a week prior to election was early anticipation of the result, everyone reacted early. So when news was released it will not drop any further as it had reacted. It dropped to the lowest on 4 Nov and bounded back on 7 Nov before election day. The more it dropped the higher it will bound back, similar to spring, I shall call this spring effect. At this point looking at the chart, I believe market will go up another few more days before any bad news is coming back again.

Learning to take care of yourself

I think you will often hearing me commanding you to do this and that, ask you to bring clothes to laundry, bring plates to the sink and etc.  While growing up you will most probably won't understand why I have been shouting at you and I guess nobody will like that.  The very reason I am doing so because I don't want you to grow up waiting for someone to do everything for you or grow up not being able to take care of yourself.  I am sure you will thank me later in your life.  In doing all these things by yourself you learn independent and take initiative.  

Bear with me for the time being.

Fundamental Analysis - Raffles Medical

Business

Provides healthcare services and hospital services.

34% healthcare, 62% hospital and 4% investment.

Future:

·         Raffles Hospital expanded, floor area doubled.  A one stop hub.

·         Emergency Care Collaboration with MOH

·         Regional representative office in Vietnam and Indonesia.  More to come.

·         More heartland healthcare.

Management

Dr Loo is the co-founder of Raffles Medical.  He is the Chairman.

He holds 51.86% shares of Raffles Medical, so he has control of the management.  We are not sure of his exact salary, just reported as 92% bonus and 8% salary which is over $500k.  In my view, he is flexible and ready to take less when times are bad because 92% from bonus.  As compared to Q & M, Dr Loo is getting a higher salary but Q & M CEO takes 80% salary and the rest bonus and benefit.

Number

EPS going up year after year.  But dip in 2014.
Debt to Asset is only 18%.  Does not have high leverage loan to finance operation.
Definitely considered a growth company, profit leap more than 15% in 5 years.
Retained earnings is increasing yearly, I believe keeping money for expansion and giving out less dividend.
A drop in cash in 2014, due to payment in investment properties or expansion.
Profit margin about 20%.
No long term debt, only short term debt.  Generally downtrend debt.
ROE on the downtrend, getting less efficiency.  Between 12 and 15%.
Dividend payout ratio is < 45%.  Highest 45% and lowest 32%.  I believe money kept for expansion.
Will never be undervalued.
Growth company so cannot expect high dividend yield.

Valuation

Based on 2014, the average PE is 24.  Highest 35 and lowest 14 (that was 2009).

In my view it is unlikely for PE is go to 10.  If crisis is here, it will be realistic to buy when PE is 14 to 20.

In 2014, its EPS is 0.12.  PE 14 - $1.68 and PE 20 - $2.4.  Anything below $2.4 will be good.

In 2014, price $4.2, dividend is 1.3%. Even if price go to $2.4, dividend yield is 2.2%.

CAGR = 10%

PEG = 3.4, no good.  Have to compare with another companies of similar industry to evaluate if it is consider growth.

Using growth rate of 10%, Discounted Cash Flow method, intrinsic value is $1.65 (just for a rough gauge, I will not use it as a price I will enter but just a guide).

Final View

Will not buy this stock now (Mar 2016).  As my view, it does not pay very good dividend to keep me waiting.  So I will only buy if margin of safety is very big, PE to be ≤ 20.  With Holland V expansion in progress, will expect to see revenue to go up in the near future.  Only once that happen, we may see a good stream of dividend.  For the time being, it is a wait for price to come to around $2 before I will make the first purchase.  I will label as growth and turning a mature stock in 5 or 10 years. 

If I find a blue chip with big dividend yield, higher chance to rebound, the amount allocate for Raffles Medical will reduce.

My analysis 8 Apr 16 - STI, OCBC, Feng, S&P

STI, my view: 
* MACD downtrend
* Parabolic SAR above price
* RSI going downtrend to 50 now
* Lower high now
* Volume is also going lower
* Didn't touch MA 200 and U turn downward, if cross MA 50, likely to continue downtrend

OCBC, my view:
* MACD downtrend, although it is still above 0
* Price below MA 20 and MA 200.  MA 20 and 50 no chance to cut MA 200 upward
* K at 20
* RSI at 50
* Parabolic SAR above price
=> Likely to go lower in the short term.

Feng, my view:
* MACD likely to go uptrend
* Price still above MA 50
* Generally downtrend stock
* RSI at 54 still not attractive to buy, wait till 30 and below
=> every time RSI go to 30 and below, there is chance to  get 20% profit if hold till RSI 70

S&P, my view:

* MACD downtrend but above 0

* MA 200 seems like side way

* RSI 59

=> Likely to trend lower in the next few months.

 

My analysis 25 Mar 16 - STI, OCBC

STI
◆ MACD crossing down
◆ RSI from peak and going down, RSI 59 now
◆ Parabolic expected to go below price in next few days
◆ Volume going lower

Will likely to slide back.  Not likely to move to 3000.

OCBC
◆ MACD crossing down
◆ RSI from peak down to 58
◆ Price retreat from MA 200

Will likely to slide back to January range. I will sell all at lost and fight back again.

My analysis 17 Mar 16 - HKL, STI, OCBC

HKL
◆ MACD seems turning down but above 0
◆ MA 20 going to cut MA 50 upwards
◆ Lower low trendline, if break $6.4 then there is chance to go up further
◆ Big volume around $6.8
◆ RSI 66 now

I still have 100 shares bought above $7. If price go above $6.5, I will let go and cut lost.

STI
◆ RSI 69
◆ Uptend after MA 20 cut MA 50 upward
◆ Strong uptrend if price cut MA 200 at 2950
◆ Although it went up lately but slight drop in volume.

Likely to carry on uptrend.

OCBC
◆ Price touches MA 200, once cross that then strong uptrend
◆ RSI 73
◆ K 97
◆ MACD above 0 and uptrend.

Generally think it will go on. I have 500 shares bought at $10.4. At this point I cannot tell if it will go above $10 but I will start selling some at $9.4. More of cut lost and buy back at lower price.

Although all indexes have gone up but I don't feel correct. The latest uptrend is driven by holding back interest rate hike. Fundamentally the economy is still weak, the rally not due to growth but due to news from Federal reserves.  The following are holding back my view that the economy is rosy,
1. Output reduces
2. Property prices downtrend
3. Retrenchment on going, although unemployment rate is low.
4. Forecast of growth rate reduces

Upside vs downside

Buy and hold strategy or buy and sell at  your target price.

I don't think a buy and hold (forever) strategy is a quite relevant in Singapore. Although this method has made Warren Buffett to be the most successful investor but in Singapore context it may be a little difficult. Because I cannot find a company in Singapore is of eqivalent scale or equal growth like Coca Cola, US Post,... Singtel is the biggest company in Singapore based on market capital and has the most influence to STI but in my view I don't think it can be a multi bagger over the course of 20 to 30 years.

I believe a buy low and sell high method will be relevant. The question most will start asking will be "how low is low and how high is high". We will never be able to catch the lowest and sell at highest, just buy reasonably low and sell at reasonably high.

First of all you have to select a stock with good fundamental to start with.  This will be the strategy I will use to evaluate a price I am ready to enter. 

• After selecting a stock with good fundamental, a very general method is "upside must be 2 times more than the downside". 
• Determine current, lowest and highest price in the last 5 to 10 years. 
• Example OCBC, the lowest was around $4 in 2009 and around $11 in 2015. Current price in March 2016 is $8.8. 
• Downside is $8.8-$4 =$4.8
• Upside is $11-$8.8=$2.2
• From this case the upside is not more than downside. So wait.
• It will be attractive when price drops to $6, where upside is $5 and downside is $2. So upside is 2.5x the downside.  
• If you are looking at long term investment then the lowest and highest price should be 5 to 10 years where it is usually a duration of a bull and bear. But if you are looking mid term, the lowest and highest should be taken during the last 1 to 2 years. If no upside, then pass. There is always opportunity else where.

This method of "upside must be 2 times more than the downside" applies to buying property or even in life.  For every decision you make, the benefit must be always 2 times the risk involved.  This will put you in a better position as the chance to fail is minimized.  Even if you fail, your lost is at minimal. For example OCBC, there is always a possibility that OCBC may drop to $2. 

What I am going to do this coming "winter"

At this point (6 Jun 16), S&P at 2099, close to historical high of 2134. In the coming months,  there is a slight it will continue to rise and challenge 2134.

What I am going to do, buy SPXU and SLV.
15 shares - $28
20 shares - $27
30 shares - $26
40 shares - $25 may add more if it really reaches this price

Buy between US$5000 to 10000 and let run run during crisis.

As for silver, I am still monitoring and looking at a right price to enter.

The rest of the stocks, I will try to clear off in coming months as I dont see a tremendous growth in near future and wait. But at the moment aside from weak export all over the world, I dont see any serious issue to trigger the meltdown.

My analysis 4 Mar 16 - OCBC, STI

STI have been going up and for consecutive 5 trading days. Let's look at STI and OCBC TA and see we are now,

OCBC
◆ MA 200 is at $9.1 and current price $8.8.
◆ high volume ard $8.9 to $9. Likely break $9, and those stuck at $9 will sell. Seems like the high volume range is distribution.
◆ MACD above 0, uptrend still intact.
◆ RSI 73
◆ K is > 90
◆ MA 20 likely to cross MA 50 upward

STI
◆ MA 200 is 3000 and currently at 2825
◆ high volume at 2900.
◆ RSI 69
◆ MACD above 0, uptrend still intact
◆ K is 96
◆ MA 20 likely to cross MA 50 upward
◆ broke lower low trend line.

My view:
STI and blue chips are likely to continue to go up. Resistant at 2900, very high chance it will cross 2900 points.

I have sold 100 shares OCBC at $8.5 bought at $8.72 although sold at lost but I dont think this rebound can continue very long. I want to accumulate cash now. 

Will only buy STI ETF if break new low.  If price for OCBC break $9.4, I will sell all OCBC at $500 lost as I believe it is possible to buy back at $4 in future. Although for long term investment we shouldnt care about price fluctuation, but right now I believe we are at the verge of crisis (I am not an god, I dont know when a crisis is coming).  As many people would always say "cash is king".

My analysis 2 Mar 16 - OCBC

My analysis for OCBC,
◆ breakout of trendline
◆ MACD cross above 0, still uptrend
◆ Price clear MA 20 and MA 50
◆ RSI 63
◆ Para still below price

My action: intend to sell when RSI > 65 or MACD cross downward.

Life lesson

"Life is not fair, get used to it."
By Bill Gates

"If you born poor, its not your mistake, but if you die poor, its your mistake."
By Bill Gates

The few quotes which I fully agree.

In life nobody has to give you a reason why it is unfair. Instead of complaining unfairness, we have to be positive.

It is your fault if you don't work hard. You are the only person to blame.

Our view and judgement are important

Lately there have been too many negative news of the economy. Too many experts gave their views about the condition of the market.  In my views we can listen to what they said but it is very important we have to have our own views and judgement after hearing it. Don't accept completely whatever they have said but instead analyse the reason of their views and we make our own judgement.

Example this Swiss billionaire said "Massive banking crisis brewing in Singapore".  I am not sure how bad is the situation but I will just monitor the situation. At the end of the day, if he is wrong, there is no way we can question his judgememt.  So I will keep this article here and look back again many years later and see the judgement of these billionaire or experts. 

Just a few weeks back, Japan together with some European countries introduce negative interest rate. It means we have to pay bank to keep the money in the bank. After reading further, I realised this is another way to spur the people to spend more money. This will directly improve the economy. With all the money printing and slashing of oil price have not helped to stabilise the situation, in my view it is hard for this measure can help to improve current situation.

My analysis 22 Feb 2016 - OCBC

Look at just the TA for OCBC, it has similar trend to STI, forming lower low.

● RSI 55
● MACD has not cross downward
● Price just cross MA 20

My view: price may just cross MA 50 then U turn. I have 100 shares at $8.72. I will sell at a lost when RSI > 60 and MACD cross down. Then buy back when it hit lower low trend line and at the same time STI still above 2500 points.

My analysis

I want to keep track of my own TA analysis and see how is my analysis. First start with STI.

17 Feb 16 - STI ETF
* based on trendline it will hit between $2.7 and $2.8 before it comes down. Forming lower lower.
* MACD just cross upward so short term it will go up.
* price just cross MA 20 so look for it to cross MA 50 next.