What's next?

I've been having a lot of thoughts lately when I was in Thailand.

Looking at the development in Thailand and how the economy works, it makes me think a lot about my own country, Singapore.

I'll try to pen my thoughts about the development of my country, although its not as fresh as what it was in my head then.

Singapore's economic success is due to its ability to take case studies of other developed countries, list out the direction taken, problems faced, solution taken and the outcome of the solutions.

By identifying the direction to take, the leaders see whether this strategy is suitable for Singapore. Surely, no one will push for Singapore to move into agriculture, unless it is high-tech. Even so, no one will make it the general direction of Singapore.

Having said that Singapore's success is largely due to evaluating case studies, nothing will be possible without the power to implement it. The government in Singapore has been in power since the start of Singapore's independence. This political stability is assuring to investors to know that the strength of the current government is strong. This assurance should not be underestimated as the current government is pro-economic growth, which is vital towards businesses. Yet, it should not be over-estimated and bragged about, because many other countries such as Hong Kong also provide every good business environment.

Singapore's economic direction, in my opinion, seems to follow a 10 year life-span. Since independence, the pattern seem a little like this, I know it seems like secondary 4 social studies.

1965 - 1975 : labour intensive industries
1975 - 1985 : blend of labour and capital intensive industries
1985 -1995 : capital intensive industries
1995 - 2005 : knowledge intensive industries
2005 - ???? : knowledge intensive and service industries

Having seeing this timeline, its also important to note that just because one type of industries exist in one time does not mean that it does not exist in another. We still see cobblers and tailor shops these days, but their numbers are dwindling. This time line just represents the focus placed by the government on certain industries. Some industries just fade away like the sunset.

The movement towards service oriented industries is most evidently seen in the decision to have 2 Intergrated Resorts(IR) in Singapore. These 2 integrated resorts are expect to be completed by the 2nd quarter of 2010. This also implies 2010 will be an exciting year for the Singapore economy, especially the property sector. Much speculation has been place on companies such as Genting, which is reponsible for one of the IRs in Singapore.

But the question which bugs me most is "what's next?". We have been learning and doing case studies of other countries, and how great nations come to be and problems faced. Issues such as declining population and immigration has been based on research and academic studies. Even fears of gambling addictions due to the coming IRs has lead to groups to research and curb gambling in Singapore when the IRs are complete.

Singapore may not be in the fore front of engineering development such like Japan and Germany, but she has grown into a developed nation. As we look ahead into the future, a very interesting question is, "what's next?".
Are there still any case studies for us to learn from? Or are we going to be our own case study?

I'm back ! With the Funk

Thailand is so fun!!!

Just an advice, for those going there, change your money in Thailand.
The exchange rates the money changer is offering is better than Singapore.

Erm, for those interested in investing, my friend Joe has just posted a comment on things analyst note of when evaluating a company's strategy. I'll summarise in point form below.

• value the firm's strategies by understanding what our firm's strategy is relative to its competitors (key success factors)
• compare ratios and the such to determine whether they have successfully achieved its desired strategy.
• You have to know what differentiates your firm from the other competitors and identify possible events that would cause this competitve edge to diminish.
• Finally, other factors related to its strategy such as management effectiveness, creditor policies (is their credit terms good? Reputation plays a major role in credit policy), pay structure (are they being paid too much, to not care about shareholder value?).
• Government created monopoly may sometimes not be as effective as those created by talented entrepreneurs, therefore you should be aware that changes in regulations may cause those with weak management to lose its "shine", and paying a high price for a monopoly like that will cause large dissapointments when regulations do change.

Just some things for you guys to note. I know its completely copy and paste. Haha.

I'm in Thailand and its awesome

BOO YAH!!!

Day 3 in Thailand, It just gets better and better.

Erm...what did I do today...
In the morning, we left immediately after breakfast. We met our tour guide, Anna. She was friendly, like any other Thai person. Thai people are exceptionally friendly, they make you feel really at home in their country...AWESOME!!! Looks like they got the funk!
WELCOME TO FUNKLAND!!!!



First we went to the floating market. It was a market which was on those wooden houses which were by the river.
We went to the Royal woodwork center. Got a good look at some very fine and intrinsic woodwork. Then we left bangkok, and headed for our next destination.

We stop by a restaurant there was on a platform and had awesome food. From here we took a boat, and visited some World War 2 memorial sites. I'm not too crazy about it though. Then we went to a elephant farm(not that they grow elephants to eat), its kind of like a nature park to protect and take care of these elephants. I got a chance to ride an elephant. Maybe I'll post it up in a few days time.

I notice quite a few japanese restaurants in Bangkok, but I've yet to try them. The food is so cheap and so good!!! Sugoi!!!

OKOK, need to rush my mother hurrying me...argh!!!

I'm flying on a jet plane

I'll be going to Thailand today.
I'll only be back next week.
So don't feel bored, okay?

Line of the day(23/12/2009)

Before I announce the line of the day, I'll tell you a real life story.
Basically, its something that happen just now which I thought was quite funny.

So I was in cafe in the Queenstown library. I was having a drink and reading my book.
Beside me was a mother and her daughter. The daughter was about 3-4 years old.
The daughter ordered a plate of onion rings and was eating on her own.
As the sky grew dark, it suddenly seemed as if it was going to rain. So the mother looked at her daughter and said "hurry up and finish the food in case it rains".
Hearing her mother's words, the little kid started gorging down the plate of onion rings. Note that its a plate of hot onion rings.

Then a man seeing this walked over and told her that for little children to each big pieces at one go is bad for their digestion. He advised her to cut it into smaller pieces for the little kid. The woman took a glace at him, then she ignored him.
Then the little girl looked at her mother and ask, "mummy, what did the man say?"

The mother replied, " The man is crazy, something wrong in his head. This kind of people got problem."

When I heard that I almost broke out into laughter.

Okay, the line of the day is about pride and being stubborn.

" Stubborn and ardent clinging to one's opinion is the best proof of one's stupidity."
Michel de Montaigne

SMRT

This post is kind of like a follow up on the post called monopoly. I've been mentioning about monopoly, the least I could do is to give an evalutation on SMRT.

Before I get to my evalutation, a little thing to add. People who get monoploy companies tend to not really care about their monopoly status, they tend to do so because they are lured in by their defensive status and their reputation for good dividends. You can say its a blessing in disguise.

Moving on to my evaluation

My evaluation of SMRT is based on the 2009 annual report and the stock price as of 18/12/2009.

A little introduction to SMRT's business. SMRT is the company responsible for singapore's train system, which we call mass rapid transit. While many people like to talk about how they are crammed into trains, let me assure you that is not really the case and these are just whiney overly pampered people who don't like others getting into their comfort zone (Okay, I should stop ranting). Besides doing train services, SMRT deals with LRTS, buses, taxis, rental of commercial space, advertising and enginerring. Evidently SMRT deals with a large portion of singapore's transport network.

Lets evaluate the history of SMRT for the last five years.

Revenue ($mil)
2005 2006 2007 2008 2009
673.5 711.7 743.1 802.1 879.0

Do I need to say anything more? Revenue is rising consistently for 5 years. I guess we can conclude the company is growing.

EPS(cents)
2005 2006 2007 2008 2009
8.4 6.9 9.0 9.9 10.7

Well, there was an adnormality in 2006, well, I'm too tried to find out why, so why don't you and comment below...thats your homework...hehe...other than that EPS has always been rising. Investing isn't hard science so don't stick stubbornly to methods. This is considered fine to me.

It is interesting to note that inventories increase by 1 million from 30,917,000 to 31,872,000. Well, I think its fair to attribute that to the economic crisis. Yeah, blame everything on the crisis.
Rather interesting to note that receivables dropped from 71,548,000 to 60,717,000. Since business is less, does it mean lesser money to collect? but revenue increased. Maybe they were growing during this crisis explaining the rising inventory and revenue and better able to collect payments explaining the falling receivables.

Profitability
Profitability ratios should be used to as a comparison better companies within the same industry or the industry as a benchmark.
The profit margin of this business is 18.5% and return on asset and return on equity is 10.8% and 22.4%. Comparing it to SBS's profit margin of 6.45%, well i guess its a fair statement to say that SMRT provides a significantly better profit margin. The return on asset's of SBS is 9.1%. making SMRT seem like the better deal in comparison.

Liquidity
I found that SMRT's current ratio is 0.9424. Current ratio compares the company current assets against it's current liabilities. It is interesting to note that SMRT's current assets is more than its current liabilities. What are the implications?

Debt
Debt ratio : 0.518
Debt to equity ratio : 1.075
Erm...low debt? seems so...

PE and PB
If you are a value investor you're likely to flip when seeing this.
PE: 17.6
PB: 3.97

STI's PE is about there, so their isn't too much of an issue. The PB though, scream shingZZzzzZZz, but its a monopoly so its kind of expected.

Future
Many people are looking forward to the completion of SMRT's next big project. **drum roll**
Yes, ladies and gentlemen. The Circle Line.

My opinion.
Well, note that the price doesn't fluctuate much and the company consistently pay dividends and the value is rising.

If you are young and want to make money from the stock market via capital gains, stay away from this stock. From the recovery from March 9, 2009 to now, we see the rise of less than 50%. Its rather stable with little fluctuations. Then again hindsight is 20-20. Yet interesting to note that with a profit margin of 18.4% this implies a certain degree of growth element in it.

If you are middle aged and above, you are likely in need of protecting your capital and get some dividends to spend. This might be a good choice for you. But further consideration and research is needed before entering your trade.

Eventually it depends on your strategy and the role you want SMRT to play in your portfolio.

Line of the day(21/12/2009)

Finally Fairy Tail is out this week, they didn't come out last week!!! I was so lost for a week!!!

Wendy is so cute!!! Erza is so hot!!! Wendy's story is so touching!!!

Line of the day
"With meetings and partings occurring in succession, it is by using the bonds you have as a stepping stone that you can reach a new start, a new tomorrow..."

Monopolies

Anyone who played a game of Monopoly will realise that the eventual goal is to establish as many monopolies of districts which share the same colour. After doing so, they can move on and build their houses and hotels, then charge a daylight robbery rate for stepping on it. By charging high rates, they are able to drive the competition bankrupt and become the last man standing.

In reality, thats also how monopolies work. Being the only(or for some industries, largest) producer, they are able to capitalise on the large market share and manipulate the market. It is also interesting to note that because of their monopoly status, they are able to charge a higher prices compared to if they were not monopolies.

Purchasing a monopoly is always a safe bet. Since the monopoly is the only producer, there is little worry that the company would be knocked out by the competition. For this reason, it is interesting to note that the stock price of monopolies are often over-valued, by the standards of valuation ratios.

When it comes to investing, I am often very concern about valuation ratios. This is because I find the idea very intuitive. PE and PB are my favourite ratios. In particular, I like using Price to Book ratio(PB) because it indicates how much of a discount is the company selling at. I find it rather intuitive because if I want to buy a company, I wouldn't want to pay too much for it since I know most likely no one would do so as well, which makes me a sucker.

However, using PB is extremely ineffective when the discussion of a monopoly is concerned. This is not some thing surprising if you think about it. Think about it, monopolies are stable businesses, especially in a highly globalised country like Singapore. Competition does not just come from within, it also comes from abroad. A monopoly would protect the company from competition.

Below is a list of monopolies and their PBs

Singpost

PB: 6.93

SMRT

PB: 3.97

SPH

PB: 2.62

Singtel

PB: 2.42

Some figure are from October. Somehow SGX is down.

This lead to 2 reasons why monopolies in Singapore are overvalued by the standards of valuation ratios. The first reason is as described above, investors want to own monopolies so as to leverage on its stability. This gives the investor the opportunity to adopt a passive attitude towards the stock and focus his attention elsewhere. The second reason is the government. In order to protect the interest of the state or the ruling party, it is in the government's interest to own a large portion of the company so as to ensure no external party can buy over the company to distrupt national interest. This is seen in companies such as SPH and Singtel, which the government own a substantial portion of.

So when evalutating monopolies, my suggestion is to...

• Monitor the history of the company. It is important that there is steady growth in EPS, sales and cashflow. It is also important to note that there is no overstocking of inventories and no problems in collection of payment(account receivables). This is should usually be no problem as monopolies tend to be able to grow fine, especially with the absence of competition.
• Evaluate the profit margin to ensure that the business and the industry is a profitable one. Its not good if the monopoly is not profitable because the pay out will usually not be good.
• We need to note how much debt the company is borrowing. Debt ratios are crucial because it is never wise to borrow too much.

This list is not exhausive, there are many other things to look at and evaluate. I'm kind of tired so I ended at the third point. Other indicators can be found on the web or investment books.

It is interesting to note that some of these monopolies share some common characteristics.

• Defensive counters

Their stock prices do not fluctuate alot, making them very good defensive counters. This is for people who are interested in capital preservation.

• Good dividends

SPH and Singpost are known to be stocks which give decent dividends. This is especially seen in SPH which has a tack record of giving 7% dividends annually, making it the highest % of dividend payout in the STI index.

• The company business goes beyond the industry which it is a monopoly

SPH and SMRT have some dealings in the property industry. SPH owns Paragon, an upmarket shopping mall. Singpost beside doing mail, also deal with payment to government organisations such as CPF and they collect a small fee for it.

Line of the day(19/12/2009)

"The markets can remain irrational longer than you can remain solvent”

John Maynard Keynes

I'll be posting more stuff, but I need to go for dinner now.

Visit to the hospital

My grandmother fell down at home two days ago. She broke her leg and was bedridden in the hospital, so I went over to visit her. She was sent to SGH. It was quite boring though, she was barely awake due to her medicine and she was terribly exhausted so all I did was watch her sleep.

I kind of realise something. Being hospitalised is extremely boring, patients either spend their time sleeping or they stare blankly into space. Boredom was not the only problem, the beds were uncomfortable and some of the nurses were rather unfriendly(or at least unemphathetic).

I know this sounds xenophobic, but I kind of felt that the foreign nurses are rather nasty. Granted they are able to speak english(which most singaporeans are able to), their customer service standards are rather low. Its surprising that we still import them on the shiploads. Nah, its just a random thought due to certain events which occurred during the visit.

Line of the day(17/12/2009)

Ok, Bleach 387 is out!!!
Line of the Day is from Captain Komamura.

"I decided I would be your true friend. I would accept your sorrow and I would share my joy.
If you strayed, I would reprimand you. If you made mistakes, I would forgive you.
And when you found yourself in trouble, I would be there for you.
So that you, who had learned to hate the world, would come to love it once more."

It's rather sad with all the commotion about Tousen's holofication that he so easily got stab on the skull by Hisagi. Think about it, he was completely unharmed by Komamura's Bankai and he got killed by a shikai?

Its probably not over, but its not coming out next week since its a double issue this week. Anyway, I'm going Thailand so it wouldn't bother me.

Investment checklist

I just came back from an Invest Club internal training session. Overall the session was pretty good. I've been trying to structure my methods for evaluting stocks. This session was good in a sense that now I have structured approach to evaluating companies. I'll try to create an excel sheet and probably upload it or something like that. Meanwhile, I'll have to create the excel sheet and check up how to up load excel files.
Luckily, I read up a little on trading before hand, otherwise, I'd think I'll have problems understanding some of the terms used in technical anaylsis.

Sasuke Vs Danzo in Colour!!!

To all those Naruto fans out there, Naruto 476 is out.
Sasuke Vs Danzo, not much fighting though. It's pretty much Sasuke being emo and then he ask Danzo a question. Danzo charges to Sasuke, only to be caught by Sasuke's Susanoo. Sasuke demands an answer to his question and he has a FLASHBACK!!! What the hell?!?!?! A flashback? At a critical moment, no way, beat the crap out of him!!!
If that was not bad enough, they change the scene to Naruto. No one cares about Naruto at this point! Is Naruto fighting? NO!!! Big fat NO in caps!!! Then they give Naruto a flashback and he hyperventilates!!! Naruto. The guy who has the nine tails sealed in him, the guy who has mastered sage mode and the guy who defeated pein, hyperventilates over think about Sasuke, come on!!! Okay, I'm overdoing it...At least Naruto is better than Sakura.
Then they go back to Sasuke again, and they go on to a conversation and Sasuke finally kills Danzo, or he thinks so, Danzo is behind him!!!ARGH so exciting, right? sorry the manga stops here and since its a double episode, you've got to wait 2 weeks.
Okay okay, too much complaining here, at least this episode is better than the one where Sakura confesses to Naruto. Wasted episode.

Yeah, One piece is out and is so awesome!!! So catch it on Onemanga.com.

My cabal character

I've been playing cabal for a while, my character is evel 114 now, training is kind of tormenting so I've been going slow. They story plot in the game kind of ends at level 100, after that, you just need to repeatedly do dungeon raids and nation quest. So unless you are really interested in that, this game is only fun till level 100.

I piece of advice for noobs, do every quest. Its a good way to level up. The experience and gold rewards are ridiculously high. You can just level by doing quest, screw sense grinding, it so darn boring.

just a few pics.

I was in Bloody Ice the other day , when I saw this pet, its not mine though. I think it belongs to the girl on the right. OMG its so grumpy. I mean I'd feel sad just looking at it. I bet the owner msut feel be in a depression. Look how she ignore the pet and how pissed the pet looks with the grumpy face and folding its arms. You thought a panda costume makes everything cute. Now you know it doesn't. Pandas are cute if you are hello panda(its not a spin-off from hello kitty, its a chocolate biscuit, and its awesome) or if you are Peter the Panda(I've attached a video below, enjoy).

Nice armour eh, I thought it looked so darn cool, it looked as if it was made out of motorcycle parts. The silver and metallic blue compliments the design. Then I realised it was a nation armour, then it stuck me its probably made out of motorcycle parts in a factory somewhere in a developing nation and its MASS PRODUCED. No way man, how can awesome armour be mass produced, it only diminishes the value. It should be made like a Ferrari, or like the choppers on American choppers which are rare and custom made.

This is one awesome dress and I'm not meaning my awesome osmium martial suit. I realised I've got a darn large number of upgrade core(high) so I started spamming it all on my armours. Every piece of armour is at least a +4. Yeah, but its a nice the lady got there, I wonder what effects its got.

Line of the day(15/12/2009)

I found this comment on some youtube video and I think its awesome.

"Nerds want to have sex, a geek is a singular focus, anti-social asexual."

Nice definition, I didn't know there was a difference. I'm a nerd!!!

Investment talk at SGX

I attended an investment talk at SGX today, it was more of a career talk than an investment talk. I should have read the program before registering. It was an insightful talk though. The speakers were employees in OCBC bank holding various positions. There was an investment analyst, dealer and a banker. They introduce their job scope and their experiences in the fiancial sector.

Whenever it comes to investment talks, I am always interested to listen to the market outlook as well as the stock recommendation. Anyway, the last part of the talk is about the market outlook. The speaker's name did sound familiar. I think I heard her interview over Bloomberg before. I think Bloomberg is awesome, most news you need to know about the market is there.

Some of my opinions in investing.
Looking back at my trades, I've been lucky in some instances.
For example, Keppel land. I took the risk buying it at the bottom and it brought be proud returns, exercised my rights, giving me one more lot(not that I own alot). The price soared over the next 9 months(that why I think investing is like watching a baby grow) and I'm currently seating on a 200% paper gain(its not a profit until its sold). I know its not alot to some traders who make large percentages of money over a short period of a few days or weeks. In fact, I could have sold it 1 month - 3 month later and get a profit of 60-150%.
But I guess I was emotional, Keppel land has a special place in my heart as my first stock. Beyond that, I feel that its price can still rise somemore and even if it doesn't I can still take dividends. Currently at its price of $3.3, its still far from its high at $8.30. I know I probably cannot climb any higher since they recently issued dividends which means that the stock value is diluted. But if we look at the PE and PB ratios, the price is still reasonable.
XOMG!!!! How can I emo over a stock?!?!?!? Its not like its my girlfriend or something, this is going to drive my FAN GIRLS cRaZy!!!

But I learnt that its not those shares that you do well in that you learn alot from. Rather, it those shares that you lose money that you learn something from. Okay, This part sounds awfully depressing, its not like I lost any money, its just that the stocks that I buy tend to drop the next day after I buy it(damn). My portfolio is currently making me 88% returns.(I'm not trying to brag, I just don't want people to try to console me).

My opinion is that under this current market condition, as long as you bought blue chips, mid-cap or large cap, when the index breaks a certain resistance level, the price of the blue chips will rise. However, the tricky issue is when the market is consolidating. The price of the stock can go either way, it can both rise and fall dramatically during this period, depending on factors from the market or that sector.

I know to value investors short run is not an issue. In fact, all value investors ignore short run fluctuations and focus on the long run. With fundamental analysis, we are able to evaluate and determine if a company is undervalued or not. From there we expect the market to be mean reverting in the long run, meaning that the market will tend towards the mean as time tends to infinity. This is how we look at the market from a macro perspective. However, from means that the market will change from undervalue to fair valued to overvalued in the short-run. Fundamental analysis does tell you where the mean or in this case the fair value is, but it fails to tell us how long will it take for the market to reach this long run.

Well, no one can predict when and how the market will move. The market is governed by multiple factors, such as economic factors and market sentiment. My experience is that no matter how good the fundamentals are, if you enter when when there is excessive negative sentiment, you are bound to face certain losses in the short-run. If you enter when the momentum suddenly lose steam, price is bound to drop. Of course, in the long-run it doesn't matter, but in the long-run we are all dead.
I find it very depressing when I buy a stock and the next day it drops dramatically. Hence, I propose a solution, which is to identify a company using fundamental analysis, but I'll use technical analysis to determine the entrance and exit points for the stock.

I haven't exactly bought any stocks using this method, I'm trying it out with some conpanies I have in mind. There are a variety of technical analysis tool and indicators, but I find the MACD and RSI rather suitable to my strategy. There are probably experts out there using this method already, probably I come across anything teaching this strategy, but I'll try to fine tune it myself.

Line of the day(14/12/2009)

You can't spell "school" without spelling "cool".

First!!!

Hi, my name is Aaron. I'm a student currently studying in the National University of Singapore, in short NUofS. I'm currently having my holiday break now. Life's kind of boring so I decided to have a blog. It's my first blog, so I'll try to make it interesting and post frequently, hope you guys will like it and visit it more often.

Yeah, I know the title is bound to remind you of those annoying people who do those "first" post on forums. Yeah I decided to annoy you guys abit. I know you'll come back for more.