Author: Theory of Constraints

Global Industry Classification Standard

What I have graphically mapped out below is probably a useful and efficient investment tool, especially for investors who are interested in diversification across industries. Diversification mixes a wide variety of investments within a portfolio. A well-diversified portfolio consists a mix of distinct asset types, investment vehicles and even across industries to limit exposure to any single asset or risk. In 1999, MSCI and S&P Dow Jones Indices developed the Global Industry Classification Standard (GICS) to capture the breadth, depth and evolution of industry sectors. GICS is a four-tiered, hierarchical industry classification system. Companies are classified quantitatively and qualitatively...

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When to BUY or SELL?

Everyone wants to believe that they are better at stock picking than everyone else – this includes expert stock analysts. There are some who are the real deal. For these same people, what you normally see are the results. But what we don’t often see is the underlying efforts in the process of doing so. Are you ‘lost’ so far? Stock picking should be no different from buying a new house or new car. With so many parameters, both obvious and subtle in the stock market, this makes equities investment so much more intellectually stimulating or emotionally overwhelming. We...

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Understand 10 Investment Metrics before you BUY or SELL

I had touched on the basics of reading a Stock Quote, together with its secondary stats making up the stock quote, in helping investors make a better informed investment decision. However, that is just the tip of the iceberg. When it comes to analysing equities and their underlying companies, there are countless of different metrics employed by investors. Frankfurt, Hesse, Germany – January 11, 2018: Figures of businessmen are skeptical looking at stock market charts. The most important consideration for investors is not to face information overload. This means studying your investment strategy well and using only relevant metrics....

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Cognitive biasness cloud your Investment decisions

A normal person makes thousands of ‘rational’ decisions on a daily basis – or so we want to believe in. From what clothes you wear to work to signing a million dollar contract, there are countless cognitive stumbling blocks preventing us from acting in our own best interests. Some are sub-conscious – we don’t realise it till we look back after this article. To bring it back to perspective, many of the biasness illustrated are highly applicable to our investment decisions. There are no bad trades, only bad decisions. There are probably many more biasness, but let us take...

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Creating a Masterlist for Financial Aid

It’s almost the weekend once more, and to most Singaporeans, just another normal week that had passed. But for many of the underprivileged and needy, the mid of the month has come and now they must survive on what they may have till the end of the month. While Singapore’s ‘Third World’ form of poverty has disappeared, many people continue to fall into ‘First World’ type of poverty. Living conditions among the poorest here may not be as dire as the rest of the world, but a good 10-14% of Singaporeans according to economists’ estimates still face severe financial...

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Reading a Stock Quote

A typical Stock quote from Yahoo Finance A stock quote primarily shows the price of a stock on its exchange market and updated real-time (usually) during a trading session. Other secondary stats making up the stock quote help investors make an informed investment decision. I don’t disagree the possibility of information overload when researching stocks. Even I get overwhelmed sometimes on what each detail means in my decision making. Yet, it is essential to know how to read a stock quote. It gives plenty of insight into the underlying company for a better purchase decisions. Company Name, Stock Exchange,...

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Dividend Re-Investment Plan (DRIP) – Take Cash or Shares?

Dividend Re-Investment Plan (DRIP) allows existing shareholders of the stock to choose between cash dividends OR reinvestment into additional shares (“bought” from the company) on the dividend payment date. Most DRIPs allow the option of taking additional shares, usually commission-free and at a significant discount to the current share price. DRIPS of water forming an extensive resource pool For investors, it also means automatic compounding of returns take place over the long term – when dividends are increased, shareholders receive more as the number of shares had increased. For the company, it creates more capital for the company’s deployment....

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52-week High and Low investment strategy

As a pure investor, I am “not bounded” to any of the stock counters that I am vested in nor intending to invest in. I don’t buy stock because I like the brand, the products or services, the industry etc. No sentiments, no brand loyalty, no hard feelings. I invest in them because they were low price or under-valued as opposed to potential future value at that point in time. While there are many variables to consider when making the right trade, one of my favourites is the 52-week High/Low. Simply put, the 52-week High/Low is the highest and...

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How much is your one Bullet?

Anyone who has been in the market for some time would have experienced and incurred some accumulation of market trading fees and commissions. What we realise is that, these can add up to quite a bit after some time, especially if the frequency of trading (buy & sell) is higher or if the value of the contract is lower. What we do want is to optimise our investment dollars and spend as little as possible in fees on each trade carried out. Market Fees Market trading fees Some fees are imposed and is regardless of the value of contract...

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How BIG should your War Chest be?

A common question newer investors wonder as they start to get their hands dirty: How big of a War Chest should I build before I enter the market? The War Chest of a company in the corporate world is no different from the individual investors’. For a company, it could either refer to the cash reserves set aside to take advantage of unexpected opportunity (e.g. acquisitions of other companies or businesses) or crisis (e.g. buffer against adverse events). Be Greedy when everyone else is Fearful and be Fearful when everyone is Greedy For a investor, it largely refers to...

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Update on CPF 101 guide – Investment Scheme

As of today, I have updated the CPF 101 guide to include the INVESTMENT scheme. Hopefully, I have covered all that a regular investor who invest his CPF-OA and CPF-SA needs to know. Last week, I have started putting together a CPF 101 guide, besides the hack guide which I consolidated previously, in an attempt to consolidate all the CPF schemes. Only the RETIREMENT scheme was covered then. The 101 guide still aims to keep it simple and logical, illustrating all the basic principles and concepts. If it aren’t Simple, people aren’t Reading it. It’s NOT complete as it...

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Living on $2 a day food challenge

It was by chance that I stumbled upon this after I embarked on my $2 a day savings challenge. The REAL Two Dollar Challenge is actually a food challenge packaged as a “personal journey that will confront and challenge the person who takes it up with a few of the many constraints faced by those who live on less that $2 a day”. There are three different levels of participation: Beginner, Intermediate, and Advanced. Japanese woman retires at 34 after living on $2 a day for 16 years Who would have forgotten the story of a Japanese woman who...

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Embarking on my $2 a day challenge

From now on, I decided to put away a purple note each day, as soon as I received it. Even though Singapore is heading towards a cash-light society, it is still not uncommon to use cash for day-to-day transactions. For example, we pay for our food and drinks (probably at least 3 times a day) – a high probability at least one transaction will be spent in cash, and one of the following notes being used: Why $2 a day? A question many would pose is, why not $5? $10? Why not a few $2s? $10 a day amounts...

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I want to be an Entrepreneur

By now, it is not too hard to infer that I am a salaried worker or employee of a company. I have had thought about entrepreneurship before, though in a fleeing manner: being your own Boss, working at your own pace and time, greater control over your path in life and greater sense of satisfaction at work. However, when most people think about embarking as an entrepreneurs or leave the company they are currently in to start work outside, what they really mean is to be self-employed or work for themselves. There are differences between the following: Professionals have...

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Why are CPF LIFE monthly payouts for BRS, FRS and ERS not proportional?

A common misconception by many Singaporeans is regarding the Retirement Sum set aside in their Retirement Account (RA) versus what they “should be proportionately getting” in their monthly payouts. There are three levels of Retirement Sum: The Full Retirement Sum (FRS) is two times the Basic Retirement Sum (BRS), and the Enhanced Retirement Sum (ERS) three times the BRS. These are subject to annual revisions to cater for long-term inflation and increase in standard of living. However, why are CPF LIFE monthly payouts for BRS, FRS and ERS not proportional? The first $60,000 of your CPF balances earns higher...

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