Author: Investment Stab

A random theory of evaluating companies

This is a random thought and theory on how to evaluate and price stocks. It might have majors flaws and I have not done any back testing to certify the credibility and performance. Hence, the title of “random” and I wish to stimulate discussion amongst readers. As I was sitting through a lecture, I suddenly had a thought of valuing companies by taking either their accounting averages in a business cycle or during their normalized performance year. Assuming that the company production capabilities and maintains competitiveness, the company should always “bounce back” to normalized rate of operations once the...

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ETF Strategies

We talked about the benefits of investing in ETFs in the previous article.Link to previous article: Today, this article will be talking about the strategies that can be employed when using ETFs!Personally, I am not a technical investor but a fundamental one.Thus the strategies suggested will not require the use of technical charts etc. For me, there is a passive approach and a slightly more active approach.I think both strategies are suitable for investors who do not wish to take a very active role in their investment portfolio (changing only once every half yearly if required) Strategy 1: Passive...

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ETFs are the New Kings

In recent years, there has been a lot of people saying that ‘Cash is King’.Especially now where most markets have hit new highs and interests are at all time low.However, if you are looking to invest for your retirement or for the long-term, staying invested is key, and there is no better instrument than ETFs! ETFs are Exchanged Traded Funds.They are basically funds that are traded on an exchange.You can buy these ETFs just like buying stocks. Benefits of ETFs:1) Diversification –  1 fund investments in many securities, spreading out the risks associated with individual stocks. Eg; a Financial...

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My Investment Loss from Amazon

As mentioned in my previous post: My 30% gain from Netflix Today’s post will be my result from my Amazon trade. I took a Contract for Difference (CFD) position to short Amazon. This was because it is the most economical way to short Amazon. Outright shorting of Amazon stock does not make me feel comfortable – I rarely short stocks, especially in huge positions. The put options for Amazon...

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How the army has taught me the 2 most important factors of investing

IĀ apologize for the lack of updates these few weeks as the blog authors are currently serving their nation. Being a typical enlistee, time is something that we yearn for more and as we progress, more and more time seem to flow away from our hands. However, not to worry, we are still working on this blog as it is our passion and a pleasure to do so. While army has its disadvantages, it had also taught me some precious lessons which I think most men experienced in their NS lives. One of which is discipline. In my opinion, this...

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Love Low Oil Prices

Oil prices have hit near 5 year low; trading at or more than 50% below their peak several months back. There have been many articles and reports stating that low prices are here to stay, and that a huge rebound is not expected within the next several years. Although the retail figures published yesterday was disappointing, dropping 0.9% in December, it is not the key figure we should be overly concerned with. Instead, more emphasis should be placed on the inflation index coming out today! Markets should be based on fundamentals – the underlying economy. However, since the beginning...

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You need Stocks to Retire

With record low interest rates set to stay and expected to almost never go back to levels during 1970s-1980s, retirees must now start planning to path way for their retirement via stock investing. In Singapore, our government pension system CPF guarantees our retirement fund a minimum interest of 2.5% on ordinary account and 4% on other accounts. However, when compared against history, this is one of the periods where we are actually getting really low returns even though it is above normal savings accounts’ interest. We had had a period of 10 years where interest rates were at 6.5%...

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Why you should not follow the financial news when investing

Are you one of the “investors” whom invest in stocks after reading the hot picks recommended by financial banks or advisers? By faith, you trust them for their superior knowledge and right away, you jump straight into your investment. However, the share price immediately starts to drop and regrets sets in instantly. This might be the typical story that you hear from the streets while chatting with your friends, where the “recommendations” might just differ and changed to “news” or “rumors”. The only reason is because these “news” often lagged behind share price movements. Why is this so? News...

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2015 will be a Great Investment Year

2015 will be a great investment year for everyone – if we buy the right investment. Historically over the last 70 years, the third year of all US presidents have been the most positive year in the US stock market. Photo from Kenneth L. Fisher’s Market Never Forget, Chapter 7 – Poli-Ticking Above is a photo shot I had taken from “Markets Never Forget”, listing the stock market’s (S&P500) historical returns since President John Calvin Coolidge, Jr . Since 1943, the 3rd year of all presidents have ended positive; that’s 71 years worth of historical data and trend. Well,...

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EVERYONE should Invest

Everyone who wishes to retire should invest for their future, irregardless of their jobs and status. Anyone relying on their savings for retirement are bound to experience a short-fall in their future income for 2 reasons: 1) The interest rates you get from your savings will never be able to match inflation rate. 2) If you save 10% of your salary each month for 40 years and aim to retire for 30 years, assuming the interest rate you get matches inflation rate, there is no way mathematically you will be able to draw even 10% of your last pay....

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Ethical reporting has never been more important

While the creation of the Internet has allowed information to flow more efficiently and effectively, it has also resulted in extreme volatility in the markets. An example of such is the oil prices, where its price can fluctuate more than 3% in a week due to a simple announcement of the performance of US economy. This led to the importance of information and especially the “appearance” of it. What do I mean by appearance? People form views or perceptions on every piece of information they gather and how we perceive it is different from one another. Someone’s good news...

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2 Must-Read for all New Investors

Today, I would like to recommend 2 books that I think are by far the best investment books I have read since I started investing. Warren Buffett Stock Portfolio. Warren Buffett and the Art of Stock Arbitrage Both books are by Mary Buffett and David Clark. They are easy to read and easy to understand for a new investor. Warren Buffett Stock Portfolio explains how Warren Buffett identify which companies are great and worth investing in simple layman terms – Earnings Per Share (EPS) and Growth Rates. It comes with plenty of examples as well to aid in the...

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Asset Allocation VS Investment Period

Most investment professionals would emphasize that a good asset allocation is key to great investment returns. Having a portfolio consisting of stocks, bonds, other investment assets and cash is like the safest strategy anyone of any age group can follow. Today, I wish to offer something different. I would like to say that the Time Horizon you have to invest is equally important as to what you invest in. Based on the video below by Fisher Investment, stocks tend to perform better than bonds over a long period – despite the higher volatility (price movements). If you are planning...

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Is Investing Risky?

Ever heard your parents, your grandparents, your friends or relative told you that investing is risky? Watch this short clip and understand why investment is not as risky as they say. Share it to those who tells you that investment is risky and make them all a better investor! #InvestToday...

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High Inflation Coming to US

High inflation rates will be coming to US because of the huge amount of printing by the Fed and a dysfunctioning fiscal policy. It will not be tomorrow, next year, or 5 years, but it will definitely come when the Fed is no longer able to support the economy. PS: This will be a economics lesson, and the market outlook will be at the bottom. Economics The current monetary and fiscal policy in the US (and most other countries) are dysfunctional and highly skewed towards creating inflation. Fed Fed’s duty is to control the money supply and interest rate...

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