Author Archive

Posted on March 7, 2010 - by AK71

First REIT: This one is for keeps

You might have experienced deja vu before. It has happened to me countless times. Psychic? Maybe but sometimes, things just fall into place in the strangest ways.

Today, I received a payment voucher from my broker on income distribution from First REIT. This is not a very glamorous REIT but I count it as one of the strongest in my portfolio. The generous distribution put a smile on my face.

Then, I wondered if I should blog about First REIT, using it as an example of the type of REIT we want to have in our passive income portfolio. I got home, checked my blog and found two comments from anonymous readers, both stating that they do not like REITs. So, that made up my mind for me.

I first bought some units in First REIT in 2007 for an average price of 75c per unit. Through good and bad years, it faithfully distributed income to unitholders every quarter: Read more…

Posted on March 4, 2010 - by AK71

Seven steps to creating passive income from the stock market.

I have made it known to my family and many friends that I aim to create a minimum of $50k in annual passive income from investments in the stock market alone.  Recently, while chatting in the cbox at Bully the Bear, I mentioned this and at least one person was incredulous.  How to achieve this?

Well, to me, it’s quite simple, if I invest $500k in a basket of stocks that yields 10% per annum, I would have that $50k passive income.  Then, I gave it some thought later on and decided that perhaps I should share more in detail how this could be achieved.

Taking a leaf from successful authors using the number “seven”, this is AK71’s “Seven steps to creating passive income from the stock market”:

1.  Get full time employment – Sounds dreadfully straightforward, doesn’t it?  Well, sometimes we need to point out the obvious.  We cannot grow money in pots of soil or fabricate it at home; well, not legally anyway.  Get a well paying job that pays you as much as you are worth (or more than you are worth if you are lucky enough).  Don’t shortchange yourself.
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Posted on March 2, 2010 - by AK71

STI: Marching in place in March?

TA is not about predicting price movements. TA always presents two possible scenarios. To most people, this immediately means it’s as good as not saying anything. Well, if we had a tool that could tell us if a security was definitely moving up or down, …………..; you fill in the blanks.

Then, why do we still have TA? Well, knowing the trends, supports and resistance levels could help us make certain decisions when certain numbers are hit. Is that it? I am probably not doing the subject justice but for my purpose, in a nutshell, yes.

OK, on to what you are waiting for. What do I see in STI’s charts?

On the daily chart, we see that the MFI is clearly downtrending with lower highs and lower lows. The stochastics is turning down from the boundary of the overbought region. These are momentum oscillators and their current patterns indicate weakening buying momentum in the near term. Read more…

Posted on February 24, 2010 - by AK71

Money management: Needs and wants.

I first learned about needs and wants more than twenty years ago in an Economics class when I was a Junior College student. During the class, a female classmate told an irritating guy that he needed medication and asked if he wanted some. That made the distinction between needs and wants very clear to us all and we had a good laugh.

There will always be things out there to buy in the modern world. The question to ask is always whether we need these or we want these. The question seems innocent enough at first glance. However, one person’s needs might be another person’s wants. Do I hear some readers going, “Huh?”

Human beings have various needs for survival. In my mind, at the most basic, we need air, water, food, shelter and clothing. Some might say that the last item is debatable and it might be a want that has become a need due to the evolution of human society which invented the notion of modesty. (more…)

Posted on February 19, 2010 - by AK71

A rebound or something more lasting?

A reader, CT, posed some questions in response to my post yesterday:

“i was wondering why u would reduce ur exposure at this point in Goldenagri and STI. do u think that there will be another correction soon? or are u just afraid of high volatility? could u expand ur thoughts on that? i ask because it seems to me that after this correction, the entire mkt seems poised for a steady uptick.”

Read more…

Posted on February 19, 2010 - by AK71

Fundamental Analysis: Balance Sheet

A company’s balance sheet is a record of its assets and liabilities. Basically, if we look at how much the assets are worth and deduct the total value of the liabilities, we will arrive at the net worth of the company. Net worth or the book value of the company is also known as shareholders’ equity.

Under assets, first, we see Current Assets. Current Assets are cash and other assets which can be converted into cash within a very short time. Usually, they are listed in the balance sheet in order of liquidity with cash being the first item as it is the most liquid. Secondly, we have Non-current Assets. These are assets which cannot be converted into cash within a very short time.

One thing that value investors look out for is how much cash and cash equivalents a company has. Having a lot of cash is usually a sign of strength. The company will have the ability to seize business opportunities and will be able to go over rough patches in the business cycle relatively intact.
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Posted on February 15, 2010 - by AK71

Fundamental Analysis: The Income Statement

Every trading day would see me looking at charts in the evening and looking out for pertinent news which might have an impact on my investments. On weekends, I would sometimes blog about my personal experience and some ideas which I might have about investments. The Chinese New Year long weekend is giving all of us a much needed break from trading. Take some time to smell the flowers, so to speak.

I have decided that I will blog about different aspects of FA and this will probably spread over a few posts to make it more manageable. My formal education in Economics and Business Administration, specifically, Financial Management help to inform my FA. Of course, these are textbook material and I try to keep myself up to date by reading weekly periodicals such as Newsweek and The EDGE. (more…)

Posted on February 10, 2010 - by AK71

A capital question: how much to have or how much to use?

I remember reading a book titled “The Swiss Family Robinson” in my school going days. It was one of many classics such as “Black Beauty” and “Call of the Wild”. It is very strange but most people who are younger than me by just, say, 6 or 7 years have never read these books before. Classics, they are. Anyway, I digress.

The book in question is about how a family got shipwrecked on an island and had to to use whatever was available there to build a life for themselves and over time, they did quite well. Very resourceful family. The father would praise his children if they came up with a good idea by saying: “That’s a capital idea!”. I have yet to come across anyone in real life who would use the word “capital” in the same way. It might be a very English or a very archaic usage since the book was written in the 19th century. Now, that brings me to the topic of this post: capital. Specifically, capital for investing in the stock market.
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Posted on February 3, 2010 - by AK71

Excuse me, are you an investor?

We have heard many times the advice that we should diversify our investments to minimise risk. For those of us who have read books about Warren Buffet, we would also remember something along the line that diversification is for the “know nothing” investor and for the “know something” investor Warren Buffet, when he identifies something good, he goes in big! He doesn’t diversify, he concentrates! Of course, this is probably viable for us if we were in the same league as Warren Buffet and, of course, if we were in the same league as him, I wouldn’t be blogging here and you won’t be reading my blog. Maybe, there should be at least two more categories of investors: the “know a bit more” investors and the “know a bit more than a bit” investors.

I started out as a “know nothing” investor in my university days and would buy anything analysts recommended. Chasing after the flavor of the month was a regular exercise. I would be very happy if I made money and would be very sad if I lost. I had no technique to speak of and did not employ FA or TA. I did diversify since I must have had more than twenty different stocks in my portfolio at any one time. Did that help to reduce risk? I think not.
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Posted on February 2, 2010 - by AK71

Portfolio strategy

Done my weekly reading of The EDGE. Goola Warden, Darryl Guppy and Michael Kahn are people whose articles I enjoy reading. I have also learned a lot about TA from their writings. In this issue of The EDGE, all of them have gone decidedly bearish about the prospects of global stock markets. My own reading of the STI shows that the uptrend is still intact but the index is in a rather dicey situation should it not confirm the reversal signal seen in the last session. With the US market closing in the red in the last session, the STI has to look to the SSE and HSI for leadership and we might agree that it is not all that promising.

So, what are we to do? I have taken much of my profit off the table three weeks ago. I have been averaging back into the market as prices came down to supports. Looking ahead, I plan to continue accumulating high yielding counters at attractive valuations. This remains the core of my investment strategy as my long term aim is to acquire a reliable passive income stream from high yields. Read more…