Author: 8% Value Investhink

Are we at the bottom yet?

By: Jay The short answer is no, but… 1. In terms of magnitude, yes it’s pretty scaring, some markets are close to 70% from the previous peak, China is down 50%, India is down 40%. But the US, where everything started, is down only 28%, and Footsie down 27%. Developed Asia-wise, STI is also quite resilient, down about 36%. Hang Seng down 46%, Japan down 37%. So magnitude wise, maybe 60%-70% done. There may be another 10-15% downside, and things should pacify. Timeline-wise, things started to unfold only last June or so. We hit 1 year anniversary not too...

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Penny stocks – continued

By: Jay So, 600+ stocks out of the 700+ listed counters on SGX are penny stocks (trading less than $1). What are the implications? What are some takeaways one can develop? For me, the few takeaways are as follows: 1. The market is cheap. The stock market can tell you the prices of stocks, but not their true values. When these kind of statistics get on the newspaper, you can tell, yeah things are quite bad, there may be some real bargain going on. But somehow, it feels like it is not the bottom yet. It has to be...

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Hopes and Dreams

By: Jay Flipping through the newspaper everyday, I see so many dreams asking us to fork out top dollars to make them come true. Proprietary trading systems to help you trade and earn big money, ways to become millionaires, weight loss to a perfect figure, teaching methods to make your kid a genius, and many more others. Most of the time, they don’t work, bcos if they did, they won’t need these advertisements, people will just flock to their shops by the truckloads. But the sad truth is, people still pay top dollars to go through these useless programs...

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The Singapore Property Market: Personal Take II

By: Jay This is a continuation of the last post. Ok, so the bulls will say expats can pay. Now I do not know what is the average expat pay, but let’s just assume the average expat gets the same salary of the top 10% of our population ie $12k per mth. If you are an expat earning $12k per mth, will you fork out 33% of your salary for rent? For me, if I were an expat, I know I am not going to be in Singapore forever, I would rather stay somewhere cheap, save the extra $1-2k...

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The Singapore Property Market: Personal Take I

By: Jay In this post, I am going to give my two cents on the Singapore property market. As with people giving their two cents, usually it is worth about one cent, esp when people try to give their two cents in some arena where another 10,000 people already gave their answers to 6 million dollar questions. So always do your own analysis and learn to be an independent thinker. I think that should be everybody’s goal and that means also you shouldn’t be reading the rest of this post. Hehe. But read lah, just for entertainment lor. So...

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Mind Share

By: Jay This concept should be familiar to followers of the guru and value investing as well. Essentially, we should invest in companies that have a market share of our minds. The bigger the better. Well, basically, we are talking about branding, but Mind Share sounds so cool right! So let’s just use this term indiscriminately in this post. For the uninitiated, let’s try to define what’s Mind Share. In today’s world, most of us suffer from information overload, everywhere we go, we get bombarded by sexy ads, bright slogans, spam emails, fancy taglines, funny ringtones etc. We used...

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Choosing Numbers, Beauty Contests and Stock Markets

By: Jay I once attended a class where the professor asked us to play a game. It was a pretty simple game on the surface. Everyone was asked to choose a number from 1 to 100. The person who chose a number that is closest to 2/3 of the average number that everybody chose will win the game. Now how should one choose such that it would maximize one’s chances of winning? Well, first you must determine what is the average of everyone’s number choices. There were about 100 students in the class, so assuming everyone randomly chooses a...

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Don’t get caught in a bubble – Part 3

By: Jay The 3rd bubble that we will talk about would be Singapore’s own property bubble in 1996-1997. This is the most interesting example bcos it is the only 1 in my 3 examples whereby prices have surpassed the previous peak. However that doesn’t mean that investors who invested at the peak did ok. In fact most people will still be under water. But at least, they have much better chance to recover their capital even though their compounded return will still be quite miserable. The Singapore property bubble actually started in 93-94 when Asia experienced tremendous boom. In...

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Don’t get caught in a bubble – Part 2

By: Jay The 2nd bubble that we will talk about is the one that is most familiar to many of us. This bubble goes by many names, the dot com bubble, tech bubble, IT bubble etc but I shall call it the TMT bubble (as some in the financial industry calls it). TMT stands for Tech, Media and Telco (I think), and it is named as such bcos these are the sectors that rallied the most during those days in 1999 and 2000. The index representative of this bubble is, of course, the NASDAQ, where most of the tech...

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Don’t get caught in a bubble – Part 1

By: Jay Investing in stocks or real estate or any other asset class is a good thing most of the time. Over time, most “well-known” investable asset classes give a good real rate of return (ie a return that can beat inflation lah). Ok the other caveat here is “well-known” asset classes, ie dont go and invest in wine or art, jewellery etc, chances are you are likely not to see your money again. Just some ballpark no.s to play with, historically these asset classes have been able to generate these returns (nominal not real and they also include...

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DCA: When the market down, BUY MORE!

By: Jay Value investors rejoice when the markets go into correction mode. Bcos that means they can pick up good businesses at bargain prices. Logically and intuitively, this makes perfect sense, but somehow our ape-evolved brains are not wired to think that way. When the markets have rallied for some time and it goes down, we panic. When they subsequently rebound, we curse and swear that why didn’t we buy more during the correction. And when the markets go into correction mode for 3 years, we get totally not interested in the markets. Many don’t ever return to invest,...

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More on inflation

By: Jay In the last post, we talked about how inflation will hurt us badly. Today we shall discuss some countermeasures. So inflation is a major issue if you think hard about it. All your savings goes down the drain and you are back to square one. You think you save S$1mn for your retirement and that should be enough. But hey 30 yrs from now, S$1mn cannot even buy HDB, Bcos the value of S$1mn in 2038 is worth only S$300,000 in 2008 and basically you might even have lost money even though you saved like mad for...

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The return of inflation

By: Jay Most of us never really lived through periods of high inflation, thanks to very effective central banks throughout the 80s until today. But with recent rise in commodity prices translating to higher food prices, higher raw material prices, higher property prices, higher taxi fare, higher this, that and everything else, inflation may be coming back to haunt us. And believe me it’s gonna be scary. It is generally accepted that mild inflation is actually good for the economy bcos it helps increase wages, improve productivity, encourage employment and keeps the economy churning along and all is well....

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Defensive stocks

By: Jay In different markets, different sexy terms come into play. I guess the latest infatuation on Wall Street in recent months has been “defensive stocks”. Defensive stocks usually refer to stocks that will see stable profits even during times of trouble, ie like the past few months lah. These would be stocks in industry sectors like: consumer staples ie your food, beverage, razor blades etc. The thinking is that people need to eat, drink and shave no matter what right? Stock market down means everybody goes without food? Unlikely, so these are defensive stocks. The other sectors are...

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Hurray! Buffett is World Richest!

By: Jay This is a time for the world’s value investors to rejoice. Our hero, Warren Buffett has become the world’s richest man, overtaking Bill Gates, Founder of Unpopular Vista and Insecure Windows and Carlos Slim, Monopoly Tyrant oops Tycoon of Mexico. Of course, Lady Luck has got a lot to do with this, here are a few facts to support the thesis: 1) Microsoft has eaten full full and got nothing better to do, so decided to launch a bid for Yahoo! which aggrevated a lot of investors bcos it’s quite a stupid move given that Yahoo! is...

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