Sunday, 30 August 2015

A bloodshed August

August turned out to be a month of "turmoil" for my SRS and IPO accounts and the month for paying school fees to Mr. Market. 

Let's start with my SRS account and the transactions. 

Starburst 

I have been wanting to sell Starburst, especially so after its Q2 results were released, where it had another quarter of declining profits.

I left a standing order to sell at 40c or better before I travelled for a weeklong assignment in different time zone. The only thing positive from the trip was that I took the A380 that has the SG50 flag ^_^


Alas, the trade was never done due to low liquidity even though i shifted my sell order down a few times. It kept "meandering" down slowly and closed below 30c. Urrgh...

I took a very painful decision to cut loss on this position and moved on. Sigh. 

There are so many lessons to be learnt from this investment:

• the initial investment thesis was flawed. It wasn't a fundamentally strong stock and it wasn't for recurring passive income either.  The company's founders probably cashed in when its earnings peaked last year - lesson learnt. Need to do more due diligence on management and fundamentals. Stick to companies with proven management that shows increasing profitability. 

• I should have cut loss early when Q1 seriously underperformed. Under normal circumstances, I would have cut loss when a key support gives way. I deviate from my usual discipline and now have to pay a price for it. *Ouch :( - lesson learnt. Be disciplined in risk management. Don't let the losses ballooned beyond control. 

• The liquidity of the stock is pretty bad. This creates a wide bid-ask spread whenever a crisis happens. Probably the small cap nature of the stock doesn't help. - lesson learnt. Stick to bigger cap or stocks with better liquidity. 

Capitamall Trust

The REITs have fallen to a level which I felt attractive and has priced in a rate increase. I shortlisted 4 REITs which are trading either at book or below book value and have a stable yield of more than 5% on last Thursday before market opens. I am happy to hold on those REITs for passive income in any case should prices stabilize. 


All gapped up above my order price on opening and I ended only buying 10,000 shares of Capitmall Trust at 1.905 :(

Let's see if I can find any more interesting stocks to add in September. 
 
UOB 

I also bought 1,000 shares of UOB for wifey's SRS account at 19.27. This is a beta play. I am betting on a short term rebound in STI. 

Thoughts for SRS

The loss on Starburst is a painful one. It is all about the lack of discipline, wrong choice of stock and being complacent and I paid the price

Another thought that went through my mind was whether a pure equity portfolio is a right one. If I allocate a % to bonds, will it meet my objective of creating passive income from my portfolio with less volatility?

Should I change the strategy and style? 

The losses from Sembcorp and Starburst made me rethink my strategy on whether I should be a more active and responsive investor and whether I should allocate part of the portfolio to less volatile instruments like corporate bonds. 

However, unless the bond market develops further, there will be a lack of choices for bonds. 

I have no answers to my own questions above but it is a path that I need to spend more time pondering. 

IPO

I also lost a sum of money on the IPO of CMC Infocomm. I had previously told my broker that I don't like the fundamentals and don't want the placement shares. He assured me that the stock is well received and has the support of shareholders and against my own better judgment, I took the shares. 

Well, the rest is history. The stock tanked against a bearish backdrop and once again, the lack of liquidity resulted in a wide bid ask spread. 

Frankly, I am happy to live and die by the market. If I made a wrong decision, I am fine to "live with the consequences". I am also happy that I didn't let my position affect my IPO ratings. :) 

What i am more "upset" with is the subsequent reluctance to let me cut loss or sell. Although it may have been out of good intentions, they turned out to be disastrous and contributed to the August bloodshed. 

Ok that is all for a Sunday posting. Enough of my ramblings and time to stay focus. 

Good luck to your own pursuit of financial freedom. :)

Saturday, 1 August 2015

Sembcorp - What could I have done better?

I cut loss on my wife's SRS position in Sembcorp on Wednesday when the $3.80 support gave way.

It is always good to do a recap on my investments to see what went right and what went wrong.

Let's do it on the pictorial view. Easier for everyone.


I bought the position in March with a stipulated cut loss around ~$4 thereabouts. The post is here.

A few mistakes made that i can usually avoid for trading but can't seemed to be able to avoid it for a longer term holding position.
  1. Letting a profit of 9% turned into a loss. In trading - i would be moving my stops up pretty closely and it will take me out automatically.
  2. I never cut loss when it broke $4. Again, violating my own stipulated principles ^_^
  3. Finally did it at when $3.80 gives way realizing a loss of around ~15%
Anyway this is my style of investing. I will gladly admit my mistakes and moved on. Let me see how i can further improved on my SRS investments.

The drop in oil continued to have an adverse impact on sentiments and fundamentals on O&G stocks.


Waiting for the crash to come?

Image result for waiting for durians to drop

On a related note - I injected $12,750 into my own SRS account in July. I am done with the SRS contribution for this year.

Many stocks on SGX are on a cheap sale now and on a strong downtrend. The cash of ~$115k will come in useful when the crash comes. 

Happy SRSing
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