4 Reasons Why Spinoffs Outperform the Market Index

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In 1993, Patrick J. Cusatis, James A. Miles and J. Randall Woolridge did a research study on the stock performance of spinoff companies from 1963 to 1988. From the research, they found that spinoffs outperformed the S&P 500 by about 10% per year in the first three years of their independence. The study also found that parent companies of spinoffs also outperformed the index by more than 6% per … [Read more...]

The Allure of Gold – Treachery of the Glitter

Gold is such an alluring product. It somehow carries this magical feeling of value. Perhaps it has to do with the Chinese and Indian cultures of collecting gold products as items of value, passing on from generation to generation. Unfortunately in recent years, gold scams have been repeated, case after case. How does it work? Here's the general idea ... The Scam Company sets up shop in … [Read more...]

2 Portfolios of ETFs – Growth vs Income

I was considering how I might structure a globally diversified portfolio based purely on ETFs available on the SGX (Exchange Traded Funds - Navigating Through the Maze). I came up with the below. Growth Portfolio Broadly, full replication ETFs are preferred over those that are synthetic. 15% US - SPDR S&P500 US$ - XD [Full replication] 15% Europe - DBXT MSEurope US$ - Reinv [Full … [Read more...]

Exchange Traded Funds – Navigating Through the Maze

The number of Exchange Traded Funds (ETF) that have been introduced on the SGX has been growing at an explosive pace. ETFs that are index-tracking are touted as a better alternative to investing via Unit Trust given their lower fees. There is also the belief that being average (i.e. tracking the index) is better than being clever - i.e. beat the index. After all, if half the traders beat the … [Read more...]

Can You Beat Stock-Pickers By Flipping A Coin?

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Imagine a world where nobody knows how to pick stocks. There are no investment books, no brokerages, and no annoying financial gurus trying to sell their stock-picking courses for $2,888. Instead, people “invest” using a very simple method: Flipping a coin. If your coin lands on Heads, you make money. If your coin lands on Tails, you lose money. Every year, you flip your coin and the … [Read more...]

Beating the Market Index Returns With a Simple Method

Investing in market index ETFs provide a generally diversified portfolio with the ability to track overall market returns. What if there is a method to beat the market returns with a simple mechanical and quantitative process? Well, a strategy of simply buying the 10 per cent of the Singapore market with the lowest price-to-book (PTB) ratio, and rolling the money to the next basket of low … [Read more...]

YES! I Also Say So That Investing = Gambling

Today, there is an article in the The Sunday Times that caught my eye. It can be found at the Invest section with the title of "Investing is a bit of a gamble" (by Melissa Tan). I totally agreed with her view that investing is kind of like gambling, but so does most other things in life. As long as we are dealing with anything in the future, we are effectively gambling as tomorrow might never … [Read more...]

Case Study: What Separates The Winners From the Whiners?

One of the coolest things about having a decently-sized email list (we’re almost 2,300-strong now – woot!) is that my Gmail inbox becomes a giant petri dish of different types of readers. I get to hear from people from all walks of life: “regular” executives/entrepreneurs/bloggers/journalists, freeloaders who don’t read my blog and ask me for investment tips, and best of all, weirdos who tell … [Read more...]

How To Invest Using Exchange Traded Funds (ETF) For Portfolio Diversification

When it comes to stock investing, one of the simplest and very effective method is to have a diversified portfolio. A simple way to think of diversification is not to have all your eggs in one basket. For stocks, a basic diversification strategy is to have many different stocks instead of a few. Another is to make sure you don’t have all your stocks in one country, but rather spread out across a … [Read more...]

MAS Should Consider Removing SIP Rules on ETFs

Following the recent article, more Singaporeans turning into investors, there were a record number of new accounts opened in past 12 months. While the number of user have gone up, total stock market turnover for first 6 months actually dropped dramatically by 34% to $136 bil. It seems strange that while there are more investors, total value of trades actually reduced instead of going … [Read more...]

Nikko AM STI ETF V.S. SPDR STI ETF

It's been awhile since I did my last post. Woohoo, exams are finally over. Yay, FREEDOM :) I will be doing a summary on the difference between Nikko AM STI ETF and SPDR STI ETF. Some people are still confused over these two ETF. I hope my post can bring some enlightenment. Basically, these two different ETF are managed by two separate fund companies. The inception dates for SPDR and Nikko AM … [Read more...]

We are not perfect but we can improve our lives.

Hi AK, I am also pessimistic, actually. The thing I realised these couple of months is in life things can be unfair or by a stroke luck fate deals a bad set of cards or bad things happen because of my incompetence. However, whatever situation one is in, the cliche of being optimistic that's sold by people may not be too practical. What's practical I find is to be able to do something even a … [Read more...]

Why Living In The World’s Most Expensive City Can Be An Advantage

A lot of people are complaining about how hard it is to get by in Singapore these days. Maybe it’s because of that EIU report claiming that Singapore is the most expensive city to live in. Maybe it’s the huge surge of unhappiness over the recent transport fare hikes and Whatsapp charges. My Facebook feed is flooded with articles on issues like these, each one filled with dozens of frustrated … [Read more...]

The best investment advice you never get

Barry Ritholtz ripped this whole post just in case it went missing from the original site. I thought it’s a good long read so I shared it here. The best bits for me in the article was the tale of Patrick Geddes, a former CFO of Morningstar, which is a mutual fund research house. One of the company’s founders, Patrick Geddes, aged 48, is a renegade from the top echelons of his field. For … [Read more...]

Gold correction over …

After a major correction, gold has lost it's shine and people have not been talking much about them recently. Most of the people were worried about the tapering, stocks and interest rates, this might be a good opportunity to relook at gold again.In the recent Barron's Roundtable, gold and gold mining stocks were highlighted by few gurus, and in particular George Soros had added gold mining stock … [Read more...]

What’s Good To Invest In “Right Now?”

One of the side effects of being a personal finance blogger is that relatives love asking me for financial advice. This Chinese New Year, about 20 uncles and aunties asked me “so what’s good to invest in right now?” in between mouthfuls of prawn rolls and bak kwa. What’s good to invest in “right now”? I have absolutely no idea. Of course, if you’ve been following cheerfulegg for awhile … [Read more...]

The Myth of the Successful Money Manager

I love to laugh at the fancy ads that fund management companies take out on the MRT. They’ll say things like “Hey, we’re superdamnawesome at knowing our stocks, so don’t worry, let us do the dirty work to invest for you!” But the truth is, “professional” investors like unit trusts (or as Americans call them, “mutual funds”) are terrible at … [Read more...]

The first market plunge test for POSB Invest-Saver investors

Stock market  volatility and market plunges can  be very uncomfortable for first time equity investors. Do remember what you have pre-committed and preserving your brain is more important than your money. It always seem that the banks like to release products at exactly the wrong time. Whether it is guaranteed products at the time when you should be buying stocks or in the current climate … [Read more...]

POSB Invest Saver, Another Regular Investment Plan

The recent launch of OCBC’s Blue Chip Investment Plan (BCIP) has attracted a lot of attention in the market. Financial institutions are more aggressive to accumulate their AUM (asset under management) nowadays as the investment business has suffered since financial crisis. POSB has launched their own POSB Invest Saver Plan, which “Invests in Singapore blue-chip stocks from just S$100 a month – … [Read more...]

The importance of benchmarking your investments against the Effort Free Rate

Imagine a world where there are only two investment opportunities. You are first presented with a risk free investment opportunity; your capital is guaranteed, you have absolute faith in the counter party, and there is zero risk of default. This investment promises returns of n % per annum and you are tempted to invest. The second opportunity is a little more complex and a little more risky and in … [Read more...]