Saturday, October 14, 2017

What is my investment plan?

Warning: Incoherent post with main objective of thinking aloud

I think I have a plan until when I asked myself this question, then I realized I have many nagging questions and thoughts, so I thought I pen it down and hope it crystallize my thoughts. You can stop reading now if you are looking forward to a coherent post.

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My plan is simple, has enough cash to buy in bear and enough equity to sell in bull.

The % part is also simple. Assume STI historical peak of near 3800 is a peak where I would want to hold only 20% equity, then if it crash 50%, and STI is at 1900 I should have 80% equity. In between the two, it can be tiered, but  I feel there is no need to allocate a fix % to it.

The nagging question is with STI 3300 and 60% cash with the cash proportion increasing in a few months time, I don't think I am too far off from this rule, but I keep seeing companies that have already fallen close to 50%. such as CDG and SIA engineering (Close to 40%). I also realised I tend to pull the trigger when the fall is more than 30% from its peak. Sometimes too early, M1 and Raffles Medical are 2 examples, although 1 is sitting on loss and another on profits. So how to i reconcile individual companies with the broader market of STI of mainly banks and properties. (>50%).

There is this inherent dissonance within me. I know low tide cause all ships to sink somewhat, although high tide doesn't lift all boats. So should I really just wait for the Durian season to come? All in all, I have already missed 3 companies that turn out to be baggers. Although I have since came up with a rule of trailing gain. However, the wait for "durian" season nagging feeling is becoming a distraction and it seems clear to me I do not have a convincing investment plan. There are also days which I want to sell even more of my counters just to increase cash. This cannot be right.

Maybe the crux of the question should be the proportion of cash to be tiered according to STI or individual companies? Why should my cash be tiered according to STI since it is 50% on banks and properties. There are other sectors. Obviously this incoherence will affect my conviction.

If tired to individual companies, then there is another problem. There are tons of companies, how to allocate "cash level" then? If it is a hybrid of both broader market and individual companies, again it unclear which is which and each get into the other way. Look, if STI is marching upwards at 2700-2800, I seriously don't think I will sell my winning counters. It is precisely that they are 3100-3200 level, that I thought I should start lightening my equity weight and miss a lot of "profits"

Another possible alternative is to continue to with what I am doing and accept that 20-40%profit is acceptable. But hey, that doesn't seem coherent with let winners run, also how many good companies can you find in Singapore.

Maybe I should forget about cash level and buy as and when I see companies with potential growth in the next 1-2 years. But then again, that seems incoherent with risk management..

Thinking back, a rising market lift different boats, in this tide, banks and properties are sexy. But a falling tide (The most recent black monday), I remember seeing almost all companies falling, although banks have it worst. So I do think falling tide is more "evenly distributed" to most companies, and hence the risk management of cash allocation should stay.

Within the cash allocation, It is Ok to conduct guerilla tactics for companies that might have fallen perhaps more than 30% but with potential growth or turnaround stories. How then do I prevent myself from selling too early, if those guerilla hits happen to be correct?

Even if I accept the above preposition, I would have just settled on the buy and sell decision in a rising market. e.g. Buy when I see companies with growth in the near term but has been falling in price. Sell with a trailing stop when it hits above 20% gain.

Another question props into mind. I did saw the growth potential of MIT. (The new leases, etc)I even calculate the entry price of $1.7 would be fair and I even accepted that its OK to buy a few bids higher than that. Also, this is the first time I told myself its ok to buy more at higher price than my initial buying price of $1.48 to accumulate for future growth.

However, that growth in DPU that I calculate would happen also cause the price to keep going up. When it was 1.78, I thought well, it is coming soon. But it just went up, up and away.

Maybe it is ok to let good possible ideas pass if it didn't hit our target price? Ok, I answered this part of the question myself.

So, in a rising market, as long as cash is not stretched, it is OK to buy companies with growth, regardless if the companies has fallen from its peak of more than 30%. It is about growth. Either pure organic growth or turnaround stories with a mix of cyclical plays.

Let me see if I remember my own rules for cyclical plays. It should be alpha company, doing well, and the general market conditions to point at bottom conditions. Whatever I think should be entry price, take another 10% cut.

If I see recovery in earnings in the near term with reasonable valuation in terms of current dividends yield and conservative sustainable longer term yield, I also buy, regardless if the company's price has fallen or risen.

Yes, I should stick with the cash allocation call with the general STI as a risk management tool, since when the tide goes out, almost all boats fall and I am not superb in stock picking.

Now... The buy part in a rising or falling market is coherent

How about the sell part?

In a rising market, maybe slightly straight forward, allow a bigger margin when allocating advance orders either in the head or platforms. What happens if the price goes up together with the broader market? Assume STI march towards 3400 or even 3500. I think I will start to get nervous, if I am holding to 15-30% profits of recent guerrilla tactics of buy, such as silverlake and RMG, do I sell?

I think I am quite clear cut when the fundamental hypothesis of a company do not pend out as i planned, I sell quite ruthlessly. I sold Parkson, reduce Lee metals, Singpost etc when the numbers do not support the hypothesis I have in mind.

But it is not so clear-cut with RMG. I actually intent to average down slowly as I assume short term weakness in their expansion plans, although I seriously think they can manage their expansion costs. But now that the price has risen and the market is going up too, so I take profits so as to hold more cash? If I don't sell, the rule of less equity and more cash in a bull will not hold. Or should I just have a simple profit protected mechanism even if targeted profits is not hit in a rising market?? But if I sell simply because of cash conversation risk management, and the story unfolds according to my hypothesis, then I am also an idiot isn't it?

Selling is the tough part.

You see, when the numbers proved that I am wrong in my hypothesis, I have no problem selling, cut loss or taking profits. But I have been sitting on many unrealized losses during black Monday, although the hypothesis has NOT been proven wrong. I am glad I didn't sold ST engineering, A-Reit etc as the numbers did not show deteriorating numbers.

So i buy when market is falling, and hence the equity increase. But when numbers show, sometimes it is too late.

When the market is going up, you cannot have enough equity although I should have less, when the market is going down, you cannot have enough cash, although you should have less.

But It is damn scary buying in a down market. I know, I bought Sembcorp Industries with an average price of 3.8. You might think what is the big deal? It is... In practice, I told myself I should start accumulate at 2.5, I didn't even buy at 2.4. I dun have my balls. I sold half when it rebounded to $2.75 instead.

Theory works only when you have the guts to make it work. Had I av down at 2.4, I could be laughing now. SO I do think I need a more robust sell plan beside being shown in my face that the numbers are not working. To be fair to myself, the hypothesis of Sembmarine of zero profits is wrong, but when it is proven wrong, the price has plunge so much...

So should I have a circuit breaker? The what is the circuit breaker? 20% cut loss, regardless of numbers? Then I would have sold ST engineering, A-reit, MIT and many more for a song. 20% cut loss also contradict accumulation at bear, when things are supposed to be cheap.

Any company can fall. Just buy ETF? muahahhahahaha

Selling at profits is the easier part.

Selling to cut loss and buy back later? Then when buy back? The magic percentage is arbitrary, isn't it? Or sell on news of disruption? Maybe examples would include disruption of business. In a falling market, which sector is not disrupted?

I think I am getting something.

Sell when the qualitative hypothesis is not working or there are other risk considerations not taken into considerations, regardless of rising or falling market.

Cash ratio is about risk management in generally and thou should not based my buy and sell decisions on overall market conditions as long as the cash reserves is generally aligned to market conditions. With a rising market nearing to the peak, reduce the spread of advance order. With a falling market, buy only when "growth' can be calculated/projected and not simply because can "average down" le.

HAHAHAHA

Buy and sell based on analysis of growth or the lack of. Keep Cash proportion based on the general market, make sure the two ideas don't get mixed up and fudge.

So simple and I keep going round and round. If the market cause the price to plummet but operating numbers is still strong, wait for bigger MOS to average down.

It is clearer for myself now. If you are still reading, Please accept my sincere apologies.  



Friday, October 13, 2017

Random thoughts: Knowledge is hypothesis tested

During my course, I learn about several strategies for pupils to remember vocabulary taught. One that intrigued me is the Frayer model.

In short, it's a model that also highlight examples and non-examples as well as meaning etc for a deeper understanding of a word.

I tried it for both my higher progress and lower progress pupils. I have since discard both.

For the LP, it's straightforward, they can't even understand the meaning, no point going so deep into the concept.

As for the MP, I struggle for a while. The pupils seem bored when I am explaining the model. I think to myself, maybe it's the delivery problem. So I turn it into a game whereby pupils read the table and and take away 1-2 information and get their oppositing team to fill in the right answer. It's a kind of a way of "forced" reading. Reading by itself is quite neutral for "memory", so but playing this game, they did "search reading", then retrieval process and replacing the lost information. This will be followed by a final paper and pen test on the vocab. 

After doing these for 2 chapters and my old way of just "guess the picture" game and bingo game. And looking at the performance of the vocab test, there is no difference. But my older "method" is much faster. 

I am not saying the frayer method is not good. I am saying it has not yet become "knowledge" for me and hence it yet to be useful. It will stay as theory until I can find ways to exact value out of it.

The simple act of connecting a comic to words however work better. I ask my pupils what is the difference between 辩论 and 争辩?silence.

I ask when have we seen the word 辩论?
Silence.

I say Remember pikachu sitting in circle with other Pokémons deciding whether or no to continue battle in comic strip for chapter 15? Oh oh oh that! Debate! A few hands go up the air. 

Maybe we should not scoff at "simple" theory.

I told my boss my project with my department is about giving feedback. I can tell from her face although she didn't say it is why is it worth "Researching and testing". It is such a basic thing.

Well, buy low sell high also basic lei. 

I have seen so many presentations that is centered around how teachers give feedbacks. No one talk about changing the feedbacks according to circumstances and learning progress of pupils. 

We all heard about how to make money by investment legends. But I have not applied through different market conditions. So, perhaps the theory has yet become knowledge. 

However, there is nothing to scoff at. It's just our intelligence level to apply theory. There is nothing wrong with value investing, neither is there anything wrong with trading and stop loss. 

Saturday, October 7, 2017

Spying on the war between CDG and GRAB

I was looking around, wondering what counter measures CDG would do in the war against GRAB.

Seriously, I think CDG is not fighting a war. It is either too confident or too complacent.

I am thinking of the war online. The war on communication and propaganda. I search online Grab recruitment of drivers and CDG's. Here goes:

  

I saw incentives after incentives. Those who are newly signed-up and those who are already with them. This is not easy and I felt the sincerity or (aggressiveness) in getting driver's to cross over and stay. Please note that many promotion on bank deposits are only for new funds and the same with telecom contracts. 

So how is delgro doing ? 

 

Cold. How about the benefits?

 

Lack details. Hardly enticing. 

Next war front. Those of commuters:

This website show promotion from both Grab and Delgro. 

I saw dozens of promotion code, many as high as $10, with tie-up with SIA, UOB card etc.  There are also plenty of reward options with grab points. 

Look at Facebook:
 
 A complaint about wrong calculation of reward points in September was promptly attended to with request for PM and more information. 

Well, CDG also have promotion code with their master pass App. They have $1 $3 offer and the most generous of $15 with DBS pay lah. But...

Let's see:

 
 
 

I look at several newer posts and the issue of drivers unawareness of promotion, as well as the interface problem of master pay is obvious. 

There are also valid feedbacks about link of credit cards promotion etc but with no reply from management except one. You go check out their Facebook ba. 

Next: 攻心 (the war on the heart of driver's)

Grab encourage commuters to show appreciation to drivers and company will give free mooncake to them. Well, not a big deal. But it matters to me. 

There were plenty of "soft" campaigns. Child seat booster for example... 
 

CDG has a lot of news on road closure and a lucky winner of a grand draw. 

COLD....

I am not sure if CDG management just look at hard cold numbers and think that is all to their business. With such glaring difference, I am not surprised with the straits time news that 3000 drivers from CDG had jumped in the month of September.


Conclusion:

Battles might be won with weapons but war lost with words. 

In this case, it is lost in both hardware ($$) and software. 

Grab should be happy burning the 2 billion cash, and seeing the complaceny of CDG. 

骄兵必败

Thursday, October 5, 2017

随心笔:儿童节快乐

我就喜欢看着你们发神经,
到处乱跑,不要太拘束嘛。
很开心,你们走过来和我聊天。
说班上的男生好幼稚,哈哈哈哈!

童年嘛,两样东西别少了。
1)真
2)傻

是的,谁没傻过,
谁没犯过错。
别急着呈现完美,
世界并不完美,
完美是一种包装。

包装很重要!
不过,晚一点再学吧。
包装久了,
自己长什么都不记得了。

儿童节快乐,
和你们在一起,
觉得很温暖,觉得自己年轻。
我教过,没教过的,
喜欢我,讨厌我的学生,
世界很美,因为你们的笑容很灿烂,
笑得真,笑得傻里傻气的。

 

Friday, September 29, 2017

Random thoughts: Improving memory of your kids

Exams is around the corner.

I realise I share so much on investing but never on learning. So here goes. I was told my earlier post on education/ tuition create a storm at investing note. My apologies, I didn't read what is written there, I share what I know, u need not agree with me

The theory:
Memory is about input, working memory, retention and retrieval. To do well, all 4 links need to addressed. Just doing assessment after assessment without input is useless. Also, if u put your clothes is drawer 1, it is most easily retrieve in drawer 1. Our brain is powerful, it can be transferred and hence if you internalized what you learn, it became cloud, and u can retrieve it anywhere. But, the crux of it is, you need to know at which level is your child is, and hit it at the right spot. 

Area of concerns and assumptions:
1) My passion is always with the weakest pupils, so what I am sharing here is for those who fail their writing.

1) Framework. 

You need to know the compo is made up of Intro, body and ending. I understand many (i.e including tuition centers) spent  significant Amount of time is on mermorizing 回忆開頭,天氣開頭,and 人物開頭。But Personally, for me, I believe Intro doesn't yield marks. For my weak pupils I give it a miss. I think ending is more important. There are 2 parts to a ending. 

My last paragraph is call FATS.

Easy to remember. 

F for feeling 
A for analysis 
T for talk 
S for swear

"Bad ending" example.

我感到很慚愧,F
我不应该捉弄小丽,A
如果我没捉弄她,她就不会哭了。A
我难过地说:“对不起,小丽,我错了。我不是故意的,你原谅我好吗?” T

“经一事长一智”,从此,我再也没有重蹈覆辙。S

It seems simple, but trust me. It's not easy, for the weakest pupil to apply FATS

Remembering FATS is easy. The lines and the actual words  are the tough part.

S can be mermorize wholesale. Just understand the exceptions where it cannot be used. (Third person perspective of someone else in the wrong, etc)

Input stage.

1) Chunking and repetition.

After they understand what the sentence means, 

Read aloud in this way,

经一事,经一事长一智,经一事长一智,从此...
1,12,123,1234

If u are helping your son/ daughter. Cover different parts gradually with your hand, and challenge your kid to continue reading until everything is covered.

Cover everything, recall. Note that it is ok to not remember it. Please don't scold the poor kids. Those weaker pupils are miserable enough. Just ask them to skip and recall whatever they know. 

Now, ask them to look at the paragraph and identify the missing parts.

Recall again.

If still can't. Identify what is missing again.

In my experince, no matter how weak the pupils are, as long as they do it seriously, they will remember it by the second round.

Sound too good to be true? Well, we are just at input, we didn't go into rentention and also the writing of the words.

Rentention:

Simple, 2 rules. Humor and frequency.

Doing it everyday for 1-2 min is more effective than squeezing 2 hours before the exam.

Every time the pupils/ son try to recall, play with them.  Mermorize with them. Impress them with your memory power. If u fumbled, laugh with them.

As for difficult words like "覆辙”, break it into smaller words. 

Give a nonsensical story. The more rubbish it is, the better they remember it. Ask what the top look like? Look like 要,tell them girls 女never make mistakes, so you can remove it. But 复 means repeat. Weaker pupils catch no balls, but tell them nontheless. Tell them sun 日 is wearing a cap and a loose skirt. Bad mistake, cap surely get burnt. That's why is a mistake. 

U go get creative and say your nonsensical story. You can even draw the cap and the sarong skirt. 

Those who tried to learn, despite being the weakest lot of the whole level, can remember how to write the 4 words. 

Of course, rule of freq apply too. Everyday must practice writing these words. 

Wow! It's that easy? Hello. There is retrieval 

Retrieval:

A different picture means they forget what to write. So dun give them 1 picture. Give them a dozen pictures and ask them to choose 1 that can apply that particular ending.

The next day, ask them to choose another picture.

Put to them the subtle change of words in the FATs paragraph.

Ladies and gentlemen, this is just the last paragraph. 

I will post about the rest, the main body. What framework and tricks to help them remember.

Conclusion:

"Practice doesn't make perfect; it made permanent" (David Souza)

Dun ask them to write compo after compo without knowing what exactly to write. They hate it and it became a vicious cycle.







Sunday, September 24, 2017

Short update on Yangzijiang

http://splash247.com/worker-dies-crane-collapses-yangzijiang-yard/

YZJ's second worksite accident in 3 months. The key event is operations at Yangzi Yard is suspended. There is no update to SGX though.

Earlier, there is news that YZJ has retrench 2000 workers. However, it's yard are busy with orders stretching to 2019. Is there over-work.? It is it just a freck accident

This might be the first test for Ren's son as CEO. 

Not vested. 

I dun want to sound like sour grape. Because I sold earlier at a song. But personally, the risk reward profile at current levels is rather unattractive.


Thursday, September 21, 2017

Discussion on comfort delgro

This post is kind of triggered by B's blog post. There is an robust discussion over there. Some of the ideas throw out also appear in valuebuddies. 

I would just like to share my view on some of the thoughts and comments. I am only interested in the forward looking comments, that's where the fun comes in; as for past numbers, there can be little arguments.

Here goes: (B, no disrespect, come join and poke me too)

1) Grab business model is unsustainable. 

MHO:Yes, it is burning cash. But it can burn cash long enough to create a lot of pain to Comfort-Delgro.

Alibaba, burn cash for a long period of time. But Japan SoftBank dump billions and billions. Amazon laughed at it, since they don't collect fees for its platform and hence its "burning cash". We all know how the battle at China goes. 

Alibaba's Gem is alipay. Although it has now reach such scale that the platform by itself is profitable. When I read Amazon Annual reports, its profits is volatile. I can't the name of mother company of Lazanda (use to), food panda, Zalora. Those platforms are hardly profitable, their business plan is to gain scale to list as a IPO or sell the company (like lazada to Alibaba) it has a venture capitalist business model.

I know u will think that these e-commerce platforms are not actual comparables. I agree. My point is: we might be sure what game plan Uber,Grab has.

2) Comfort delgro business will survive.

IMO: I have no doubts about it. In fact, I think it might not even incur a loss. But I am not sure everyone investment in Confort Delgro will "survive" 

3) Comfort delgro alliance with Uber is a potential catalyst.

IMO: I agree too. However, my thoughts is this. It is just a case of lesser evil. There are several ways the alliance can work. The most logical partnership is uber tap on hardware and comfort tab on software.

Comfort delgro will win, because the idle fleet will reduce. Uber will gain, it will not need a big capital to buy vechicles. But will Confort delgro be able to rent out at attractive rates to Uber? I do think Comfort delgro is in a position of weakness. Remember, Confort used to charge cabbies $140 for newer vehicles. That is 10 years ago when I don't drive and I like to chat with cabbies. The norm is $130 and the better ones up to $140. Now, no one talks about $120 rental. 

Can Comfort bulk rent to Uber at good rates? Hardly. But it is defintely better have them idling, since vehicles  are depreciating assets of 7-8 years. 

And I  have not go into the handicap of comfort. I felt they are really shortchanged in this competition. They are like going into the boxing ring with both legs and hands chained. If I drive Uber, I can renew a 10 years old car for 10 years coe. If cabbies' info to me is accurate, taxis are up for scrap in 7 years. Max renewability is 9 years.

If I already have a car, I dun even have to rent and I can drive for Uber. Also, as mention in previous post, taxi is a full time job. Once u hire the car, u need to pay everyday. Drivers might not like this kind of rigid arrangement. I know a few friends who toogle between Grab and Uber to earn extra bucks depending on which have better incentive, during a particular period. 

If they are busy, or have a sub-contractor job or free-lance work, they just need to do nothing. Don't rent the car and no rent is required. So the competition is not on rates alone, if u know, u can say "quality of worklife"

4)  Regulation tightening is another catalyst 

Not a lot of people talk about this. As I have said, the competition is really unfair. Now all drivers need vocational liscenses. I believe Comfort Delgro will try its best to evolve its business plan as its tried to arm twist the regulators. 

For one, I believe Delgro is already making more fleasible rental arrangement. As for rates, it will also move towards more equilibrium, I will not bet it will happen anytime soon due to point no.1 

For various safety reasons, the cost of private hire could increase if the regulators start to set the conditions where cars can be used to private hire. The supply of drivers has actually increased tremendously (as a forummer in valuebuddies mention) because it has made freelance taxi-Ing sexy. Confort might be able to capture this "enlarged pie" when equilibrium happen, especially if they can come up with really flexible plans, and regulation start to clamp down on the "anyone also goes" 

5) Uber and Grab show their trump card earlier

IMO: Grab/ Uber is not a taxi company and neither is it interested in becoming one. I am not sure what it's game plan? IPO? Venture capitalist? Logistics ? 

When their trump card is out in the open. Delgro will fight a easier war

Conclusion:

Am I vested: No

Am I tempted: Yes