There is a bubble everywhere the retail investor turn.
1) Stock market bubble. SGX at PE ratio of 24, Singtel at PE ratio of 12, OCBC and UOB bank both trade at 30 percent premium over their Net asset value. I believe that blue chips have 30-50% to fall from this price. For example, OCBC bank recent last trade is at $8.50 with a net asset value of $5.80. when the economy worsened, it may fall 50% to $4.25. At this price, it is a bargain for value investor if the net asset value still remain at $5.80. this is inline with Ben Graham theory to buy stock that is at 70-80% of net asset value. Buyers who bought blue chips for their dividend will be disappointed to find that in bad times blue chips can omit their dividends.
2) Property bubble. For example, Sunglade at serangoon ave 2 was transacted at 1100 PSF and this means that I can sell it for $1Million. However, the risk is a downturn in economy will shed jobs in Singapore. Without a job, foreigners will move back to their home country. This will depress rental yields for property buyers. A loan 80% of $1Million is $800,000. Even with interest rate at 1%, the monthly installment is $3,000 . This monthly installment is high even for a high family income of say $10,000 per month because 30% of their monthly income is sucked away by the housing installment. Besides this, there is also CPF deductions and an interest rate hike risk. If interest rate increases, then the monthly installment may rise to $4,000-$5,000 per month. Couple with a job loss in one party, the loan will turn bad.
3) Commodity bubble. In the internet, buy silver and gold ads appears everywhere. If the economy worsen, the demand for silver may reduce and prices of silver and gold will dive.
4) Bond market bubble. Why is there a bubble in the bond market? The prices of bond in the United States is at all time high. While interest rate is at 30 year all time low. Once interest rate rises, the price of bonds will plummet.
I believe the best bet now is to put my money in fixed deposit. At least, the value will not plunge and I can take advantage of any golden opportunity that comes along every 5 to 10 years.
Wednesday, October 26, 2011
Sunday, August 28, 2011
Insights from Rich Dad’s Retire Young Retire Rich Book
I can identify with Robert tips on how to retire young and rich: in this book page 500, he mentioned that a person must decide to be rich daily and find a loved ones who wants to go on the journey with you. In year 2000, I decided to be rich and that is the reason I went into selling life insurance. If not for that, I doubt I will meet the Citibank banker who advised me to read Peter Lynch’s book. Without reading Peter Lynch book, I doubt I will ever learn about fundamental investing. Without this, I believe I will miss the stock rally in year 2004-07. In year 2001-05, I have life partner and friends who does not want to go on the journey of retiring rich with me. Today, I found my loved one who wanted to be on this journey with me. Without my loved ones, I wondered what and where will I be today. Somehow, friend and loved ones who does not want to be on this journey drifted away one reason or another. Life is uncanny.
Wednesday, August 10, 2011
1995 Desaru investors
I did a search in google using “1995 investors in desaru condo” and the two stark contrast results came out. One was a story on Desaru bright future multi-billion ringgit plans in year 2011. Another was the sad story of Desaru investors who lost money in 1995. The path to financial freedom is littered with poor and rotten investments. If one is not careful, he will likely lose his pants and hopefully not his heart. Please heed the lesson behind these two posts. Anything that is highly touted and well-advertised to the retail investor is unlikely to be a great investment. Look at the investors who paid in full to purchase a condominium that was half completed. They never get their money back. This was sold in Suntec city to the working professionals. I wondered whether the people behind it are being served justice.
Mega multi-billion ringgit development project for Desaru
________________________________________
The 1.7km single-plane cable-styled bridge across Sungai Johor.
JOHOR BARU: The Government’s investment arm, Khazanah Nasional Bhd, will unveil a multi-billion ringgit development plan for Desaru this year.
Sources told StarBiz Prime Minister Datuk Seri Najib Tun Razak is expected to launch the project in Desaru either in the third or fourth quarter.
The project will be undertaken by Khazanah’s wholly-owned subsidiary Desaru Development Corp Sdn Bhd (DDC) which it acquired in 2010, inclusive of the latter’s 1,618ha.
In the pipeline for the development is the building of two international class hotels to be managed by two of the world’s renowned hotel management companies and a world-class golf course.
At the same time, another search result for desaru 1995 came out in a forum:
Just got this from archive news report in 2000, about Impian Desaru now Lotus Desaru. Must be trying for the 200 singaporean investor. Dont know what happen to their investment?
200 Singaporeans are among 793 home-buyers who might lose their investments after the Malaysian project's developer wound up
MORE than 200 Singaporeans who bought units in a Desaru condominium, hoping it would be a sound investment, are left in the lurch after its developer wound up last week.
They are among 793 owners who may lose their units if a Malaysian court rules next month that the homes have to be auctioned to pay off the developer's creditors.
Each unit in the condominium, named Desaru Impian Resort and owned by Ghahas (M) Sdn Bhd, cost between RM215,000 ($93,000) and RM615,000 ($267,000).
Besides the Singaporeans, the remaining owners are Malaysians. Ninety per cent of the owners paid up full in cash, said businessman James Chang who represents a group of owners here.
About 160 owners from the two countries have got together to hire a lawyer to retain their units, he said.
The developer is believed to owe at least $20 million to the bank, contractors and buyers, he said.
Touted as the first beach-front condominium built like a theme park in Desaru, the resort-like property's launch here - held at Suntec City in 1995 - attracted many professionals.
It had looked a highly-attractive buy, said Mr Chang. "It was to come with facilities and it was close to Singapore."
But the developer failed to keep his promise. It was supposed to have been completed in 1998, but half of it has not been built.
A computer analyst, who bought a two-bedroom unit for $338,000, said he was promised a guaranteed return of about $34,000 every year for five years if he leased it back to Ghahas to be used as a tourist hotel.
He did that, but until now, he has not been given the key to the unit or the promised cheques. His unit is also not furnished as promised.
The theme park, which was to come with slides, carousels and river rides in front of his block, is nowhere to be seen.
He said: "They are not paying us rent, they have not given us the key, but they are still renting out the units to tourists."
Mr Chang, who bought two units, has pictures of the condominium.
Some units are without air-conditioners. Besides some built-in cabinets, his apartment is also not furnished.
He said while the group is trying to hold on to the units, it also hopes to be compensated for the rent promised by the developer but never paid to the owners.
"But the theme park, I doubt we can get it," he said.
Mega multi-billion ringgit development project for Desaru
________________________________________
The 1.7km single-plane cable-styled bridge across Sungai Johor.
JOHOR BARU: The Government’s investment arm, Khazanah Nasional Bhd, will unveil a multi-billion ringgit development plan for Desaru this year.
Sources told StarBiz Prime Minister Datuk Seri Najib Tun Razak is expected to launch the project in Desaru either in the third or fourth quarter.
The project will be undertaken by Khazanah’s wholly-owned subsidiary Desaru Development Corp Sdn Bhd (DDC) which it acquired in 2010, inclusive of the latter’s 1,618ha.
In the pipeline for the development is the building of two international class hotels to be managed by two of the world’s renowned hotel management companies and a world-class golf course.
At the same time, another search result for desaru 1995 came out in a forum:
Just got this from archive news report in 2000, about Impian Desaru now Lotus Desaru. Must be trying for the 200 singaporean investor. Dont know what happen to their investment?
200 Singaporeans are among 793 home-buyers who might lose their investments after the Malaysian project's developer wound up
MORE than 200 Singaporeans who bought units in a Desaru condominium, hoping it would be a sound investment, are left in the lurch after its developer wound up last week.
They are among 793 owners who may lose their units if a Malaysian court rules next month that the homes have to be auctioned to pay off the developer's creditors.
Each unit in the condominium, named Desaru Impian Resort and owned by Ghahas (M) Sdn Bhd, cost between RM215,000 ($93,000) and RM615,000 ($267,000).
Besides the Singaporeans, the remaining owners are Malaysians. Ninety per cent of the owners paid up full in cash, said businessman James Chang who represents a group of owners here.
About 160 owners from the two countries have got together to hire a lawyer to retain their units, he said.
The developer is believed to owe at least $20 million to the bank, contractors and buyers, he said.
Touted as the first beach-front condominium built like a theme park in Desaru, the resort-like property's launch here - held at Suntec City in 1995 - attracted many professionals.
It had looked a highly-attractive buy, said Mr Chang. "It was to come with facilities and it was close to Singapore."
But the developer failed to keep his promise. It was supposed to have been completed in 1998, but half of it has not been built.
A computer analyst, who bought a two-bedroom unit for $338,000, said he was promised a guaranteed return of about $34,000 every year for five years if he leased it back to Ghahas to be used as a tourist hotel.
He did that, but until now, he has not been given the key to the unit or the promised cheques. His unit is also not furnished as promised.
The theme park, which was to come with slides, carousels and river rides in front of his block, is nowhere to be seen.
He said: "They are not paying us rent, they have not given us the key, but they are still renting out the units to tourists."
Mr Chang, who bought two units, has pictures of the condominium.
Some units are without air-conditioners. Besides some built-in cabinets, his apartment is also not furnished.
He said while the group is trying to hold on to the units, it also hopes to be compensated for the rent promised by the developer but never paid to the owners.
"But the theme park, I doubt we can get it," he said.
How not to catch a falling knife?
I read an interesting post in forum today on how to avoid catching a falling knife. Please allow me to share my experience. In year October 2008, I read Warren Buffet’s advice that it is time to buy stocks because he noted that seasoned investors are afraid that the economy is going to collapse.
Heeding his valuable advice, I immediately researched a stock that I knew is going to do extremely well in year 2009. This stock is Ho Bee. In a quick summary, the important numbers are Net asset value, 80 cents, share price 38 cents, market value about $200 Million, company has a few projects fully sold like The Coast in Sentosa expecting to TOP in year 2009. That is when I got excited because the projects will generate estimated $900 Million in revenue. Based on net profit of 30%, Ho Bee will likely generate a profit of $250 Million for year 2009. The next figure is what keeps me excited. That gives Ho Bee a PE of 1. What can I lose if the PE is 1 and I m buying at 38 cents at 80 cents net asset value? I decided to buy in December.
In addition, I urged my brother and mother to buy Ho Bee as well. But they commented that it is too risky to buy when the economy is collapsing. After I purchased at 38 cents in December 2008, I thought the share price will rebound in January. My god! More bad news followed, and the stock market tanked further. Ho bee was not spared and it fell 30% to 29 cents. That is when I should buy more. I hold on to my stocks and was actually worried that my brother prediction could be right. I also chided myself as I have utilized most of my funds with a couple of thousands left.
In February, I looked at US regional banks in an attempt to emulate Peter Lynch performance in buying Savings and Loans in year 1990. Some of the banks like Fifth third Bank and Huntington Bank have insiders buying at $2 or $3 and the share price fell to $1. I was excited about this banks. What can I lose when I buy at half the price of insiders? Due to lack of funds, I spent two thousands dollars to buy US banks. In March, the economy suddenly rebounded due to the QE measures by the FED. I was vindicated. What a relief. For a moment, I thought, my brother is right in the economy going to fail and all stocks will fall to zero. Thank god, things eventually turned out right. Ho Bee rose from 29 cents to $1.80 in year 2010. The US banks like Fifth Third rose from $1 to $12 in a year or so. Wow!
Peter Lynch is right. He mentioned that it is best to wait 2-3 years (sometimes even longer) and let things fall and then hit the ground and vibrate for a while before picking it up. It is great advice.
Heeding his valuable advice, I immediately researched a stock that I knew is going to do extremely well in year 2009. This stock is Ho Bee. In a quick summary, the important numbers are Net asset value, 80 cents, share price 38 cents, market value about $200 Million, company has a few projects fully sold like The Coast in Sentosa expecting to TOP in year 2009. That is when I got excited because the projects will generate estimated $900 Million in revenue. Based on net profit of 30%, Ho Bee will likely generate a profit of $250 Million for year 2009. The next figure is what keeps me excited. That gives Ho Bee a PE of 1. What can I lose if the PE is 1 and I m buying at 38 cents at 80 cents net asset value? I decided to buy in December.
In addition, I urged my brother and mother to buy Ho Bee as well. But they commented that it is too risky to buy when the economy is collapsing. After I purchased at 38 cents in December 2008, I thought the share price will rebound in January. My god! More bad news followed, and the stock market tanked further. Ho bee was not spared and it fell 30% to 29 cents. That is when I should buy more. I hold on to my stocks and was actually worried that my brother prediction could be right. I also chided myself as I have utilized most of my funds with a couple of thousands left.
In February, I looked at US regional banks in an attempt to emulate Peter Lynch performance in buying Savings and Loans in year 1990. Some of the banks like Fifth third Bank and Huntington Bank have insiders buying at $2 or $3 and the share price fell to $1. I was excited about this banks. What can I lose when I buy at half the price of insiders? Due to lack of funds, I spent two thousands dollars to buy US banks. In March, the economy suddenly rebounded due to the QE measures by the FED. I was vindicated. What a relief. For a moment, I thought, my brother is right in the economy going to fail and all stocks will fall to zero. Thank god, things eventually turned out right. Ho Bee rose from 29 cents to $1.80 in year 2010. The US banks like Fifth Third rose from $1 to $12 in a year or so. Wow!
Peter Lynch is right. He mentioned that it is best to wait 2-3 years (sometimes even longer) and let things fall and then hit the ground and vibrate for a while before picking it up. It is great advice.
Monday, July 25, 2011
What a show!
I read the news that the US senators and government officials fight over the plan to raise the debt ceiling with amusement. To me this is acting at the highest level. They probably deserved the “best actor award”. It reminded me of a show I watched in China. My China cousin who wanted to setup a retail shop, had a meeting with a landlord. In this meeting, which I witnessed, the landlord’s sons and relatives were urging the decision maker that “someone had a better price”, etc…it was like they do not want to rent it out to my cousin. I find it strange because the shop was sitting there empty collecting dust. Why would they not rent it out? Eventually after some serious quarrels or acting, they decided to rent it out to my cousin. It was almost as if the landlord were doing us a favour by renting the shop to us. And my cousins are the so called buyers. What a show!
The US officials bickering with the debt ceiling plan is also a show. It was scripted and directed by someone. In this play, they have already decided to increase the debt ceiling. It is just that they wanted to show the world, how serious they wanted to reduce the deficit so they debt holders will continue to buy their debt. What a show to sell! Anyway, it was a good show for the US debt holders like Japan and China.
The US officials bickering with the debt ceiling plan is also a show. It was scripted and directed by someone. In this play, they have already decided to increase the debt ceiling. It is just that they wanted to show the world, how serious they wanted to reduce the deficit so they debt holders will continue to buy their debt. What a show to sell! Anyway, it was a good show for the US debt holders like Japan and China.
A simple world
Assume in this world there are only two persons. Mr rich and Mr Poor live happily in this world. One day Mr Poor needs money badly and borrow $1 from Mr Rich. The asset of loan $1 is with Mr Rich. Mr Poor is in debt of $1. The only way Mr poor can pay off the debt is when he works for Mr Rich and Get paid $1. Then they are equal in economic standing. Only when Mr Rich buy something from Mr Poor, does Mr Poor has a chance to be richer than Mr Rich. The USA reminded me of Mr poor and Mr rich is China. The existing economic standing of both man will change when Mr poor decide not to honour the debt or change the medium of transaction i.e. money. The game changes when the above happens. It is interesting because this is what may happen in the next 1-2 years. Mr rich also remind me of government and Mr poor is the average guy.
Assume in this world there are ten persons. 5 of them are saver and 5 of them are spenders. They each have $1 at first. Then the spenders spend their $1 and they are left with nothing. The savers got their money and they got $10. One of the good spender decide to borrow $1 to pay for wife medical bill. He promised to pay it back with his job income. True enough, after some time, he paid back the $1 to the spender. Another bad spender borrow $1 but did not pay back the $1 to the saver. He claimed he lost his job and has no money. This only impact the particular saver. But if the US is to claim he has no money to pay back the loan, then the creditworthiness of the nation will be in doubt and the value of the dollar will plummet. The whole world will be impacted because this bad spender has borrowed from too many people.
Assume in this world there are ten persons. 5 of them are saver and 5 of them are spenders. They each have $1 at first. Then the spenders spend their $1 and they are left with nothing. The savers got their money and they got $10. One of the good spender decide to borrow $1 to pay for wife medical bill. He promised to pay it back with his job income. True enough, after some time, he paid back the $1 to the spender. Another bad spender borrow $1 but did not pay back the $1 to the saver. He claimed he lost his job and has no money. This only impact the particular saver. But if the US is to claim he has no money to pay back the loan, then the creditworthiness of the nation will be in doubt and the value of the dollar will plummet. The whole world will be impacted because this bad spender has borrowed from too many people.
Thursday, May 5, 2011
My thoughts on the election
I was neutral to all parties before the election. Personally, I was worried too many cooks spoilt the kitchen. After hearing both sides verbal attacks, doubts began to form on the ruling party ability to lead. One of the famous phrase used was “ Despite knowing the perils in walking to a tiger filled mountain, I purposely walked forward”. When someone in an ordinary situation used this phrase, it meant that he or she is moving forward despite the danger ahead. This phrase represents courage. When the ruling elite heard this phrase, they assumed that it meant they were a tiger. Anger was written over their face and it seemed that they were highly irritated over a neutral remark. The wife of the ruling elite added that whoever kill my tiger will be deal with. Aren’t they over reacting on a neutral remark? Then there was the hype over co-driver or pilot. The underdog suggested that if the driver is sleeping on the wheel, the co-driver has to slap the driver awake. I do this all the time to my brother if he drives recklessly. The ruling elite assumed again that the co-driver wanted to tussle with the wheel with the driver. Again, the underdog(or I) never said they wanted to tussle with the wheel. They merely wanted the driver to wake up if they were on the wrong track.
If the analogy was wrong, then as a champion for thirty years, let it go. Why keep harping on such a little comment. It seemed that the ruling elite is unduly concerned with minor issues that the opposition made and claimed that it was a personal attack on their integrity, etc…… well in my humble opinion a true champion would have said “No comments” or ignore those minor comments completely. By responding excessively to such minor comments, it is clear to me that the ruling party is inconfident, unsure and perhaps shaking in fear that their empire is unravelling. Michael Phelps (8 gold medals Olympic winner) did not say the competitors have deeper ambition, lack a plan, do not have any substance or is a celebrity. Luckily he did not say if you support the competitor, you will have to repent. Before his competition, he mind his own business ( listen to his favourite song to perk him up) and relax his muscle. Before his swim, he chat or shake hand with competitors. This is a true champion behavior. Well this is truly a national disgrace to see this level of pettiness in a top management team. They are behaving like kids fighting over a “class chairman” award. HAHA. Amazing.
The ruling elite also accused the underdog that their accounts is messy. If the underdog had thrown similar accusations, they would have lost their pants (bankrupt). HAHA. What an unfair world!
The best part is this. There is a boy who wanted very much to be re-elected as a chairman again. In his term, he was supposed to guard a mad dog who will bite anyone. Due to some strange reasons, he let the dog escaped. Luckily the dog did not bite anyone. But the worst part is, he did not apologise and repent, instead he said “let us move on”. Amazingly, he was not sacked by the teacher. Now when his term expire and he wanted to be re-elected, he apologise to the whole class.
I guess we know who to vote now. Do u?
If the analogy was wrong, then as a champion for thirty years, let it go. Why keep harping on such a little comment. It seemed that the ruling elite is unduly concerned with minor issues that the opposition made and claimed that it was a personal attack on their integrity, etc…… well in my humble opinion a true champion would have said “No comments” or ignore those minor comments completely. By responding excessively to such minor comments, it is clear to me that the ruling party is inconfident, unsure and perhaps shaking in fear that their empire is unravelling. Michael Phelps (8 gold medals Olympic winner) did not say the competitors have deeper ambition, lack a plan, do not have any substance or is a celebrity. Luckily he did not say if you support the competitor, you will have to repent. Before his competition, he mind his own business ( listen to his favourite song to perk him up) and relax his muscle. Before his swim, he chat or shake hand with competitors. This is a true champion behavior. Well this is truly a national disgrace to see this level of pettiness in a top management team. They are behaving like kids fighting over a “class chairman” award. HAHA. Amazing.
The ruling elite also accused the underdog that their accounts is messy. If the underdog had thrown similar accusations, they would have lost their pants (bankrupt). HAHA. What an unfair world!
The best part is this. There is a boy who wanted very much to be re-elected as a chairman again. In his term, he was supposed to guard a mad dog who will bite anyone. Due to some strange reasons, he let the dog escaped. Luckily the dog did not bite anyone. But the worst part is, he did not apologise and repent, instead he said “let us move on”. Amazingly, he was not sacked by the teacher. Now when his term expire and he wanted to be re-elected, he apologise to the whole class.
I guess we know who to vote now. Do u?
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