Author: The Bedokian Portfolio

The Straits Times Index

By now a few people had pointed out something about the Straits Times Index (STI), viewed as the representative of the local equities market; there is not enough diversification and it is overweight on certain sectors. Let us take a look, shall we?   Fig. 1 – Weightage of the STI1   The three main sectors of the STI are banks, industrial goods and services, and real estate, which constituted a total of 71.61%, quite a heavy concentration there. Banks, which consisted of the big three (DBS, UOB and OCBC), stood at 41.62% of the index, almost half! Extrapolating this...

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Going Local, Global or Glocal

A number of investors I know of started their investment journey from the local financial markets, like equities and bonds listed in the Singapore Exchange (SGX), Singapore Savings Bonds (SSB) and the local bank fixed deposits. Some had ventured on to overseas markets while others stayed put. Coming from another angle, I know of a handful who began with foreign financial markets, in particular the United States (U.S.) markets. Again, some had “returned” with SSB and a mix of securities from SGX, while others just remained vested overseas. There are many reasons why the above preferences happen. Some say...

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It’s That Time of the Year Again

The first half of 2018 is coming to a close, and it is that time of the year again; yes, Bob will be rebalancing on 29 June 2018, the last trading day before the start of the second half, with an additional injection of $5,000. I had mentioned that Bob may consider investing in some individual company securities, but had yet identified any to invest in, so he will be going along with his original ETF strategy. The $5,000, plus any dividends collected, will be split among the asset classes. So watch out for Bob’s portfolio status here in...

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Light Reads On Understanding Financial Statements

In my ebook The Bedokian Portfolio, I did not cover much on financial statements except for a brief description of the income statement, the balance sheet and the cash flow statement1. Short of reading up accounting and financial textbooks, it is not easy to explain the nooks and crannies of these statements in a simplistic form. Fortunately, I have identified a couple of books that are light for reading (and light for your brain, too) in understanding some of, if not almost, the whole gist of things. Each of these books could be read over a lazy weekend and after...

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Physical Property in The Bedokian Portfolio?

I had mentioned about property briefly in my ebook1, which I stated that it should not be in The Bedokian Portfolio due to its huge capital outlay. One of my acquaintances suggested that I relook into this. Let us look at physical property as an asset class. Real and Physical Asset Unlike equities and bonds, properties are real and physical assets, meaning you can see it and touch it. The main argument for properties over the other financial instruments is that it will never go down to zero value (end-of-lease assumptions aside). Even if a house is demolished, the...

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All About Price: Introduction & Valuation of Value

In our everyday lives, there is one attribute that you will see, hear, use, ponder and gawk about most of the time. Yes, that attribute is price. Whether you are comparing on the same item across different places, different items in the same place, or different items across different places, the notion of price will always be there. Zooming into the financial markets, the price of the financial instruments will be the first thing you will encounter; the bid/ask figures on your trading platform, the ticker tape shown on most business news channels, etc. There is no way you...

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An Intervention and Some Lessons Learnt

While on a weekend getaway a couple of years ago, I received a message from a friend, whom I shall name “H”. H was a relatively new investor and wanted to seek my opinion on a blue chip company whose share price had fell drastically. From H’s entry price, the fall was about 40%, and H was worried about holding it. As I did not bring my laptop or tablet along, I had to use my smartphone (and the hotel’s free Wi-Fi) to do some rudimentary research on this company. After a few rounds of reading from a small...

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Do Not Underestimate The Power of Dividends

One of the underlying principles of The Bedokian Portfolio is in dividends (with bond coupons and bank interests included), which is why the tag line for it is “passive income through dividend and index investing”.  Dividends serve as the compounding effect in the early part of portfolio building, and then later as passive income when one is ready to retire. On a shorter term, dividends can magnify your gains and mitigate your losses. Here’s how. You May Be Earning More Than You Think Take for instance the SPDR STI ETF, one of the ETFs that track the Straits Times Index,...

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Tariffs, Tit-for-Tats and Trade Wars

Recently the financial markets are jittery over trade issues between the two largest economies of the world, China and the United States. With figurative blows at each other, the markets are experiencing a roller coaster ride of sorts. Over the past five days from 2 Apr to 6 Apr, the S&P 500 index swung between 2558 and 2671 points1, while our STI fluctuated between 3339 and 3445 points2. While it is not confirmed whether some or all of these tariffs will come to fruition, such news could bring butterflies to most stomachs. Though some may consider these market swings...

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Bond Coupon Rate and Yields

After starting this blog back in 2016, I realised that I have yet to write a single post on bonds. Let me start the bond ball rolling by explaining bond coupon rate and the two common bond yields used, current yield and yield to maturity. Coupon Rate and Current Yield The coupon rate of a bond is always calculated based on its par value. If a $1,000.00 bond’s annual coupon rate is 5%, the bondholder will get $50.00 per year (5% of $1,000.00 = $50.00). Like any investments, the market value of a bond will fluctuate depending on its...

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Did You Miss The Sale?

Everyone loves a sale. It is during a sale period that you can shop for things at a bargain. There are sale periods in the financial markets as well, but there is a huge difference; Department stores will tell you when the sale starts and how long it will last, but financial markets will never tell you such things. The most recent sale period was during the market downturn in early February. As above, there was no announcement that share prices were going to take a dip, and also in my post here I had stated that we do...

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A Must-Read Investment Book

When it comes to the realm of investment books, there are tons of them. Some are written by famous greats, like Benjamin Graham’s The Intelligent Investor and Peter Lynch’s One Up On Wall Street. There are also books on the different portfolio styles, like The Permanent Portfolio by Craig Rowland and J.M. Lawson, Pioneering Portfolio Management by David E. Swensen, and not forgetting my humble contribution in the form of The Bedokian Portfolio. There is another investment book which I felt is a must-read by both beginners (for learning) and seasoned investors (for re-learning), and it is Essentials of...

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Yield on Cost

We all know that by normal convention, yield is calculated as the annual dividend/coupon/interest amount divided by the current price of the security, which is current yield. However, some investors, instead of using current price, used the entry price as the denominator. This is also known as yield on cost. They would prefer to look at this version of yield as they wanted to know the returns based on their initial investment amount.   For example, a person bought Company A’s shares at $1.00 a few years ago. Fast forward to the present day, the share price had risen...

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Before You Jump In, Some Admin Stuff To Look Into

It felt good being a first time investor; after reading The Bedokian Portfolio or some other investment books or material, you will feel the urge to jump straight into the action. You may quickly want to open up a brokerage and/or regular savings plan account, start to look for securities to invest in, and voila, you have started an investment portfolio. Then as the months or years gone by, suddenly you have discovered something; your Company A and REIT Z shares are straddled between your Central Depository (CDP) and your regular savings plan accounts. Your Corporate Bond Q is...

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