Friday, August 27, 2010

REIT - Better than bond and FD for capital protection

After study the rich's portfolio, noticed that they allocate about 20% of their wealth in REIT and 30% in bonds. I would think that it's safe to divest the bond's part into REIT, spread into all types of REITs. The purpose is to further diversify the risk, a particular REIT's actually already diversify into many properties, now we just play safe by investing in all types of REITs, such as retail, residential, healthcare, office, industrial... 

What happen when interest rate increase?
Bond price will go down if interest rate increase. Same will apply for REIT, however, most of the time, rental will increase in every 3 to 4 years. This partially offset the negative impact of interest rate high, though cost of financing will increase. It would be a good opportunity to buy good Reit with best price.  (Actually due to inflation, most of REITs will increase in value every year, hence quite rare can buy REIT at cheap price, if so happen, it's a bonuses)

Why we ignore about bonds and replace with REIT?
The reason is from the history record of US between 1990 to 2010, the average REIT's return is 9.9% vs fix asset income and commodities of 7.5% and 4.5% a year. The stock market have the return of 10.3% return, however, one need to have courage to buy near the bottom and sell at the high. However, it is difficult to buy near low and sell high, further, how can one knows when is low and high? You may miss out one of the opportunity and your return will actually much lower.

Hence, REIT's are the true total return, no matter market up or down. They provide long term dividend and capital appreciation. Any down year is a chance for your to invest more with lower cost and provide better dividend yields. 

Saturday, August 21, 2010

Millionaire's portfolio

According to latest's world wealth report, the rich (with asset more than 1 million) had their average allocation of asset as follow: 

Stock 29%
Bonds 29%
Cash 17%
REIT 20%
Others 5%

The rich seem are not risk taker but rather looking for stable income. What do you think about your investment style today, perhaps we should take a look the millionaire in the mirror.

Tuesday, August 17, 2010

Coconut Water

Coconut Water contains organic compounds possessing healthy growth promoting properties that have been known to help:

  • Keep the body cool and at the proper temperature
  • Orally re-hydrate your body, it is an all natural isotonic beverage
  • Carry nutrients and oxygen to cells
  • Naturally replenish your body's fluids after exercising
  • Raise your metabolism
  • Promote weight loss
  • Boost your immune system
  • Detoxify and fight viruses
  • Cleanse your digestive tract
  • Control diabetes
  •  Low in Carbs  99% Fat Free  Low in sugars
  • Aid your body in fighting viruses that cause the flu, herpes, and AIDS
  • Balance your PH and reduce risk of cancer
  • Treat kidney and urethral stones
  • Boost poor circulation

Monday, August 16, 2010

Trader talk

Since the end of  World Cup, the local market started to go up. Currently, the market is entering the phase of Trading stage, many investors had became traders, a sign where market move to high side.
Trader is someone who try to take advantage of market movement. Trader (he is not an investor), who buy and sell shares using technical strategy, normally buy when a counter start to show bullish sign and ride on the up trend until it started to slow or at early stage of down trend. Everyday, trader will run a program (usually with certain indicator and scan by computer) to find out those counters which can be trade.
Cut loss is one of the most important rule a trader follow. When everyone expect something is supposed to go up but does not, it usually will go down. There's why if your remisier or friends tell you a stock will go up because of so and so (many reasons), but they do not go up, you better run first and normally it will go down. Trader will sell the stock even face with loses when down trend come, you should not be a trader if unable to cut loss at time when suppose to sell.
The right way to eat mangosteen
For those who want to make quick money by using trader strategy, New Economic Model (NEM) and Sarawak stock play could be the possible advantage before announcement of state election. Below are list of counters and reference price as of 13 Aug 2010:
HSL 1.50
CMSB 2.48
UBG 2.26
Encorp 1.06
Weida 0.81
Dayang 2.10
SWKplnt 2.1
Scable 1.05
Penergy 1.43

Tuesday, August 10, 2010

Investing - think like rich

Investing is a process of building wealth. In stock market, many think that investing is try to buy low and sell high. Those try to buy low and sell high, we call them trader (or speculator) but not investor. There's nothing wrong to buy low and sell high (be a trader), as long as you can make money, who cares,  but this is not the right concept for investor.

Investing should be buying an asset or business that can generate stable income. The famous investor, Warren Buffer, became billionaire by investing in good and monopoly company. Let's take a look at local millionaire, do you see Genting or Public Bank's owner sell their business today and buy back tomorrow and sell again next week? No matter how high or low the share price, they are doing nothing with their share holding. As they know their company will keep on growing and business will expand every year, why bother about their share price.

Some of my friends came and ask me to recommend some good stock for investing. Others came and want to learn more about investment. I always tell them to have a clear mind and decide if you want to be a trader or investor. Don't try to use trader's concept and apply as investor. To be a successful investor, you need to think like rich. The rich own good asset and business that will generate passive income even they are not working today. In Stock market one can buy good business any time, however, one question is at what price you willing to pay. Of course, good business may not sell cheap if you buy it now. The beauty of stock market is the price keep on changing, once a while, like supermarket, it will do a promotion, at time many items sell at discount price.

In the past, almost every 2 or 3 years, something would happen and created panic selling, stock market went down by 15 to 20%, or even more depend on the degree of crises. At time, one just need to pick up a good business (of course not any cheap stock), waiting for 20 to 30% return is not a problem. Rich knows when to buy at right price, that's why recently our local tycoon T.Ananda Krishnan decided to privatize two company Measat (RM4.20) and Tanjong PLC (RM21.80) at price which look value to him.
Before you start to invest, have you think like rich today?

Thursday, August 5, 2010

Malaysia REIT report

Our Malaysia REIT portfolio since Jun 2009 have outperformed the long term FD rate in the market. The portfolio start with $100,000, during the year, we have received dividend of $8977, represent about 8% after deducted tax. We were target only to obtain stable income of slightly more than FD, but it came to our surprised, included unrealized profit of $23,000, the return is more than 30%. If we decided to sell all the holding today, we will have the total cash of $132,000.

Two new REIT listed on bursa last month, i.e. CMMT and SunREIT. We use the cash received from dividend to purchase some new shares. Though the expected dividend from these newly listed REITs are not as good as our existing holding (we expect about 7.2% return on dividend for CMMT and SunREIT) but for purpose of diversify and reduce the risk of buying too many unit in one REIT, we purchase some new shares. Since listing, CMMT done at the lowest price of RM0.975 and SunReit lowest at RM0.875. We could not buy at the lowest, but manage to buy some when it start to move up. Compared to today's market price, within 2 weeks, the newly purchase units had gave us 3% of unrealized profit.

Investor who is hunger for yield have lifted the price of REITs, which is something we do not want it to happen, as this may reduce the opportunity for us to invest with cheaper price in near term. Finally, one of my friend recently ask, what will happen if market crash in next few months? My answer to him was, don’t fear when price go down, as it’s time to take advantage of this to lower the investment cost. Isn’t it investor always looking forward to buy good properties at very favorable prices?