Properties and the Population Picture

I've written a couple of times about the potential impact of demographics changes to the property market in future. However, I'm not sure how many people actually noticed and think of it in the current rage over properties. Since words did not effectively convey the message but a picture can say a thousand words, let's try showing pictures instead.Below is a picture taken from the Opening … [Read more...]

Properties and the Population Picture

I've written a couple of times about the potential impact of demographics changes to the property market in future. However, I'm not sure how many people actually noticed and think of it in the current rage over properties. Since words did not effectively convey the message but a picture can say a thousand words, let's try showing pictures instead. Below is a picture taken from the Opening … [Read more...]

Why Warren Buffet’s Rule No. 1 Is Not "Always Make Money"

Everybody knows that Warren Buffet's famous Rule No. 1 is "Never lose money" and Rule No. 2 is "Never forget Rule No. 1". However, why is it that his Rule No. 1 is not "Always make money" but "Never lose money"? By right, if you aim to always make money, won't the outcome be the same as never lose money?Since Warren Buffet is heavily influenced by the teachings of Benjamin Graham, we have to bring … [Read more...]

Why Warren Buffet’s Rule No. 1 Is Not "Always Make Money"

Everybody knows that Warren Buffet's famous Rule No. 1 is "Never lose money" and Rule No. 2 is "Never forget Rule No. 1". However, why is it that his Rule No. 1 is not "Always make money" but "Never lose money"? By right, if you aim to always make money, won't the outcome be the same as never lose money? Since Warren Buffet is heavily influenced by the teachings of Benjamin Graham, we have to … [Read more...]

Cash Over Valuation for REITs

Price-to-Book (P/B) ratio is actually a measure of cash over valuation (COV). Since no buyers like to pay high COV for properties, should REITs be treated the same way? This question has baffled me for some time, and my position has shifted a couple of times. Let us try to tackle this question by understanding why shares can trade above book value and whether the same arguments apply to … [Read more...]

Cash Over Valuation for REITs

Price-to-Book (P/B) ratio is actually a measure of cash over valuation (COV). Since no buyers like to pay high COV for properties, should REITs be treated the same way? This question has baffled me for some time, and my position has shifted a couple of times. Let us try to tackle this question by understanding why shares can trade above book value and whether the same arguments apply to REITs.Why … [Read more...]

REITs Are Not Forever Attractive

REITs have been an attractive asset class since their introduction in Singapore in July 2002. They provide regular distributions with opportunities for capital gains. However, unlike shares, REITs are not exactly forever. The main reason is because the assets that REITs hold are mostly leasehold properties with expiry dates. When the leaseholds expire, they will lose the properties and will no … [Read more...]

REITs Are Not Forever Attractive

REITs have been an attractive asset class since their introduction in Singapore in July 2002. They provide regular distributions with opportunities for capital gains. However, unlike shares, REITs are not exactly forever. The main reason is because the assets that REITs hold are mostly leasehold properties with expiry dates. When the leaseholds expire, they will lose the properties and will no … [Read more...]

The "Prudent Family" Rule in Portfolio Management

In portfolio management, there is a rule known as the "Prudent Man" rule. This rule dictates that an investment professional who is entrusted to invest a trust fund on his clients' behalf has to act as what a prudent man would have done if there were no specific investment instructions. This post is not about the "Prudent Man" rule, but is a light-hearted post introducing a new "Prudent" rule, … [Read more...]

The "Prudent Family" Rule in Portfolio Management

In portfolio management, there is a rule known as the "Prudent Man" rule. This rule dictates that an investment professional who is entrusted to invest a trust fund on his clients' behalf has to act as what a prudent man would have done if there were no specific investment instructions. This post is not about the "Prudent Man" rule, but is a light-hearted post introducing a new "Prudent" rule, … [Read more...]

The Hidden Risks of Buy-and-Leasebacks for Industrial REITs

Buy-and-leaseback arrangements are quite common among some of the industrial REITs. They buy a property and lease it back to the original seller for a no. of years. The advantages of this practice are it increases the distribution to shareholders, diversifies the sources of rental income and has the potential for capital gains when the property is eventually sold. However, there are risks involved … [Read more...]

The Hidden Risks of Buy-and-Leasebacks for Industrial REITs

Buy-and-leaseback arrangements are quite common among some of the industrial REITs. They buy a property and lease it back to the original seller for a no. of years. The advantages of this practice are it increases the distribution to shareholders, diversifies the sources of rental income and has the potential for capital gains when the property is eventually sold. However, there are risks involved … [Read more...]

A Comparison of Risk Management Tools & Strategies

In my last 2 posts on Stress Testing Your Portfolio and Behind Every Successful Bear Market Recovery is A Cash-Like Instrument, I have discussed some of the risk management tools and strategies that can be used to manage investment risks. This post puts together all the risk management tools and strategies and discusses their pros and cons.Tool #1: Value-at-Risk AnalysisValue-at-Risk (VaR) … [Read more...]

A Comparison of Risk Management Tools & Strategies

In my last 2 posts on Stress Testing Your Portfolio and Behind Every Successful Bear Market Recovery is A Cash-Like Instrument, I have discussed some of the risk management tools and strategies that can be used to manage investment risks. This post puts together all the risk management tools and strategies and discusses their pros and cons. Tool #1: Value-at-Risk Analysis Value-at-Risk (VaR) … [Read more...]

Behind Every Successful Bear Market Recovery is A Cash-Like Instrument

29 July 2013 marks the end of the OCBC 5.1% Non-Cumulative Preference Share (NCPS). I had held this stock steadfastly since its inception 5 years ago, only liquidating it partially to raise cash for the equities and REITs during the Global Financial Crisis (GFC) in Oct 08. I seldom think about this stock, but now that it is gone, I'm beginning to remember its importance to my portfolio and … [Read more...]

Behind Every Successful Bear Market Recovery is A Cash-Like Instrument

29 July 2013 marks the end of the OCBC 5.1% Non-Cumulative Preference Share (NCPS). I had held this stock steadfastly since its inception 5 years ago, only liquidating it partially to raise cash for the equities and REITs during the Global Financial Crisis (GFC) in Oct 08. I seldom think about this stock, but now that it is gone, I'm beginning to remember its importance to my portfolio and … [Read more...]

Stress Testing Your Portfolio

Whenever I feel that the stock market is about to go into a bear market, I would run a stress test on my portfolio. The method I use is Value-at-Risk (VaR), which measures the amount of loss at a certain confidence level or probability of occurrence. For example, a VaR at 99% confidence level (which is equivalent to 1% probability of occurrence) of $1,000 would mean that the loss would not exceed … [Read more...]

Stress Testing Your Portfolio

Whenever I feel that the stock market is about to go into a bear market, I would run a stress test on my portfolio. The method I use is Value-at-Risk (VaR), which measures the amount of loss at a certain confidence level or probability of occurrence. For example, a VaR at 99% confidence level (which is equivalent to 1% probability of occurrence) of $1,000 would mean that the loss would not exceed … [Read more...]

The Great SGX Sale on REITs

As usual, whenever there is a Great Singapore Sales, everybody rushes into it. But when SGX holds a sales, everybody runs away from it. The latest SGX sales is on REITs/ Business Trusts (BTs), which have fallen by about 14% from end Apr 13 till end Jun 13 on average. The decline on some individual REITs/ BTs is even more, with Suntec falling by nearly 20%. The trigger for this decline is an … [Read more...]

The Great SGX Sale on REITs

As usual, whenever there is a Great Singapore Sales, everybody rushes into it. But when SGX holds a sales, everybody runs away from it. The latest SGX sales is on REITs/ Business Trusts (BTs), which have fallen by about 14% from end Apr 13 till end Jun 13 on average. The decline on some individual REITs/ BTs is even more, with Suntec falling by nearly 20%. The trigger for this decline is an … [Read more...]