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...]

The Irrelevance of Time Diversification

Time diversification is the holding of an investment over a long period of time and thereby achieving a diversification of annualised return over time. It is often said that time diversification helps to improve your investment returns. At one point in time, I was an ardent fan of time diversification. However, after thinking further about it, I realised that time diversification, while not … [Read more...]

The Irrelevance of Time Diversification

Time diversification is the holding of an investment over a long period of time and thereby achieving a diversification of annualised return over time. It is often said that time diversification helps to improve your investment returns. At one point in time, I was an ardent fan of time diversification. However, after thinking further about it, I realised that time diversification, while not … [Read more...]

Properties, the Population White Paper and the Land Use Plan

In an earlier post on Properties, I mentioned that it was not ideal to hold properties in Singapore in the long run, mainly because of the rapidly ageing population demographics. In that analysis, I had omitted the effects of migration and new housing supply, which could not be forecast with any certainty then. With the release of the Population White Paper and the Land Use Plan, we now have … [Read more...]

Shareholding Disclosure

In stock recommendation reports, the stock analyst has to declare his shareholding in the recommended stocks. When he declares that he holds certain stocks, do you then treat his stock recommendations with some suspicion, wondering whether he is recommending certain stocks so that the rest of the public would buy and lead to a rise in the stocks that he holds? And if 2 stock analysts (Analysts A … [Read more...]

Different Tastes for Different Folks

We sometimes look towards people who are successful in investing and hope to emulate their success. By following their investment strategies, we should be more successful in our own investments, won't it? And by following more such successful investors, we should have a greater chance of success in investing, isn't it? However, even after following their investment strategies, we sometimes wonder … [Read more...]

Know Yourself

In our conversations with people, we sometimes would come across a conversation in which someone said that he should have bought stocks when the market was at a certain (low) level or sold when it was at a certain (high) level? Well, why didn't he do it? It must be because he didn't know what to do when the market was at that level. One of the reasons why I am such a boring investor is because … [Read more...]

Have a Plan

Nobody can predict the movement of the stock market with any certainty. Moreover, emotions often come into play which can significantly affect the rational judgement of investors. When the market is good, most investors are caught up in the euphoria and think that the market will go higher. Their recent past actions to sell turn out to be wrong and the market continues to go higher after they have … [Read more...]

Properties

Properties are the favourite investment class in land-scarce Singapore. Many people have heard and seen for themselves how a flat that cost their parents a few thousand dollars in 1960s could rise to hundreds of thousand dollars currently. The conventional wisdom is that land is scarce in Singapore, therefore, property prices has only one way to go, which is up. I'm not a property investor. … [Read more...]