Sunday, June 28, 2009

How to avoid Potential Loss?

Dealing with investment, one of the challenge questions always raise by investor, how to avoid potential lost in your investment portfolio? How can anyone predict that Lemon Brother going to collapse in 2006? There are many example people buying a stock that seem with very good performance, but turn bad after 1 or 2 years holding. It’s really hard for one to predict the market, especially on individual stock. However, there are several precautious steps we can take, in order to minimize the potential risk.

There is no free lunch in the world, especially in journey of investment. Some home work need to be done below getting involved to buy a stock. This include go through the last 5 year’s financial reports to ensure the company actually having the stable income and strong balance sheet. The hypothesis question, what will happen if financial turn bad, need to keep in mind of investors. What would be the main income to sustain the company’s operation in the worst case scenarios?

Even we find a good company to invest, do not invest all in one basket. The better solution here is trying to diversify into several different sector, each sector only select the best. Ideally, do not put more than 10% of the overall fund into one sector or stock. At least this will help to mitigate and drive to prevent huge potential lose that will incur should we over confident with our imagination on chasing high investment return.

Related link:

1. Lesson from Warren Buffet
2. The Purpose Of Investment

Thursday, June 25, 2009

Warren Buffer Power Lunch

Want to have a great lunch together with Warren Buffer, now can go to eBay and bid for it, at the time of writting, the bid is worth USD300,500. Great, maybe we can not affort to bid for this one, but we can still learn from him through his past experience.

Warren say he had yet to see the light in the tunnel, many of the stock bought by his company Berkshire Hattaway still remain around or below entry price. Those who follow Buffer's buying pattern, could be still suffer a big lost right now.

The ConocoPhilips bought by Berkshire Hathaway with average price of USD82.55. Now the price around USD41.

For Johnson & Johnson, the average brought price was USD62, now the market price is around USD55.

He also invested Kraft Foods with average price of USD33, now the price is USD25.

Of course, there are many others prefer stocks we may not have the chance to buy, but the above stocks are good enough for a layman to set a good example as investment portfolio should we ask if now is too late for one to buy a stock after the strong rally since Mar 2009. After all, we are trading with Mr Market, since the rally, some of stock may not look cheap anymore, so be carefull with the bid price offer by Mr Market, just ignore him if the price too expensive.

Tuesday, June 16, 2009

S Reit - Worth a look

Below base on closing price on Jun 12, 2009:

Starhill Gbl (P4OU)
DY:10.1%,Closing price:S$0.71,NTA: S$1.43。

CapitaComm 嘉康信托(C61U)
DY:11.1%,PE:3.8,Closing price:S$0.91,NTA: S$2.94。

CapitaMall 嘉茂商产信托(C38U)
DY:10.0%,PE:4.3,Closing price:S$1.43,NTA: S$2.44。

SuntecReit 新达信托(T82U)
DY:12.9%,PE:--,Closing price:S$0.975,NTA: S$2.001。

SaizenREIT 最善房产信托(DZ8U)
DY:40.5%,PE:--,Closeing price:S$0.135,NTA: S$0.85。

Cambridge 剑桥工业信托(J91U)
DY:16.7%,PE:8.6,Closing price:S$0.36,NTA: S$0.73。

CDL HTrust 城市酒店信托(J85)
DY:13.9%,PE:--,Closing price:S$0.765,NTA: S$1.39。

MapletreeLog 丰树物流信托(M44U)
DY:12.3%,PE:7.1,Closing price:S$0.59,NTA: S$0.90。

LippoMapleT 力宝-丰树印尼零售信托(D5IU)
DY:15.8%,PE:--,Closing price:S$0.355,NTA : S$0.727。

MacCooklReit 麦卡特库克工业房地产(BU5U)
DY:25.9%,PE:--,Closing price:S$0.345,NTA : S$1.09。

AscottREIT 雅诗阁公寓信托(A68U)
DY:12.8%,PE:--,Closing price:S$0.69,NTA: S$1.51。

K-REIT K信托亚洲(K71U)
DY:13%,PE:23.8,Closing price:S$1.00,NTA: S$2.22。

First REIT 先锋医疗产业信托(AW9U)
DY:12.2%,PE:7.4,Closing price:S$0.625,NTA: S$0.93。

Currently, most of the Singapore REIT are trading around DY of 11% or more. Some of the counters are traded below 50% of the NTA. This is a good investment opportunity, just consider one can receive 11% dividend with potential capital return in next 5 years.

The reason why REITs trade at the discount of NTA was due to glommy economy especially those properties located in US and Europe. Due to the aggressive buying of new asset in past two years, some company actually borrow too much. Some of companies actually not able to pay the dividend as they need to generate or retain more cash. Couples of companies are considering right issue to pay for the debt or raise the capital to meet the comfortable level.

When more shares issues and circulate in the market, it will further damper the market price. Hence, one need to consider carefully before invest in REITs, not only the return on dividend rate and NTA alone. REITs is different from typical stock, it's depend on the rental to generate the cash flow and income, hence as long as they have the well diversified portfolio, be it in industrial or office building, we should have a very good return of more than 10%. The current under appreciated price provide an opportunities for one to enter this field with low cost.

Related link: Housing Investment

Monday, June 8, 2009

Dow Jones - Rally Sustainable

As caught many investors in suprised, US market continue to break through 200 days moving average. Many traders will start to use this as indicator to enter the market as long term buying sign, at least for the next one week, more technical traders will start to move into market.