In short term trading, the risk is the price fluctuation and the psychological effect of market participant on the prices.
In long term investing, the risk is the company bust and wind up business.
So in long term investing i also believe in diversification. Diversification comes with a cost. If you want to diverse the portfolio yourself, you need big big money, probably 500k for Singapore market. (What you mean by diverse in SG, our economy depend alot on others, so by buying the shares in singapore market alone with 500k is not really diverse. Bcos you are subjected to country risk)
You need to diverse in different region and sector. Woow mean need more than 500k to do so.....yes of course...
The cheaper alternative is investing in unit trust.Is like REIT, a collection of investment. You can tap on different region, sector, market. The fund manager bonus,reputation is peg to the fund price.
Of course there are cost involve. ETF have cost involve, Unit trust have cost involve. There is no free lunch and there is nothing that is free. Unless u can do research on your own on all the stocks that can make your portfolio really diverse and also unless you have that cash to buy all these, there may not be any cost. Most people wont have the expertise, time and resource to do that.Even for trading when you are working, pls really think of the physical constraint before start to trade. Can you check your stock in a meeting? Can you check your stock when on site, in a lab?pls consider it carefully, it can be done but make sure you still do your job properly.
If you cant and you need to rely on some expert to invest for you there is a cost.For any outsourcing, you need a cost. That the fact of life. We are not expert in all things. A doctor cant be an expert in wafer fabrication. A wafer fabrication engineer cant be the best chef. A chef cant be the best waiter.Etc Etc.If you are so conscious of the cost, then you could never be able to reach another height or achieve your goals.
Monday, August 30, 2010
Some things about REIT
What is REIT?? Real Estate Investment Trust is the name.
For most people, investing in real estate, is financially out of reach. But what if you could pool your resources with other small investors and invest in large-scale commercial real estate as a group?
REITs are corporations that own and manage a portfolio of real estate properties and mortgages. It is like Unit Trust or Mutual fund. This allow anyone to buy shares in a publicly traded REIT. With this, they offer the benefits of real estate ownership without the headaches or expense of being a landlord.In other words, it enable you to own real estate as part of your portfolio.
Investing in REITs also provides the important advantages of liquidity and diversity. Unlike actual real estate investing, these shares can be quickly and easily sold. And because you're investing in a portfolio of properties rather than a single building, it is diverse and you face less financial risk.
REIT distribute most of their taxable income to investors, the source of fund they get from is through external capital. REIT just like stock collect fund through IPO. These fund are used to buy, develop and manage real estate. (So is like a unit trust that does IPO) Income is generated through leasing , renting or selling properties. So when a REIT pay out dividend they are equally distributed among shareholder.
REITs can provide both current income and long-term appreciation.
How the REIT management and trustees are compensated will determine the REIT payout to investor. If compensation is based on the value of the REIT's assets, management is usually concentrating on investing in additional properties for capital appreciation. If the basis for determining compensation includes dividends or current earnings, the REIT's management may be motivated to increase dividend yield, possibly at the expense of long-term appreciation.
For REIT investing, it can provide a long term capital appreciation and good dividend payout. So please check on the past record of dividend payout (at least 5 yr ) but note that past performance is not a representative of future performance.Be wary of high yields. If there have been excessive capital gain distributions, this can be a sign that the income is coming from nonrecurring events and will not continue for long. Make sure the REIT is not selling off properties to provide income, because future rental income will be affected.
For most people, investing in real estate, is financially out of reach. But what if you could pool your resources with other small investors and invest in large-scale commercial real estate as a group?
REITs are corporations that own and manage a portfolio of real estate properties and mortgages. It is like Unit Trust or Mutual fund. This allow anyone to buy shares in a publicly traded REIT. With this, they offer the benefits of real estate ownership without the headaches or expense of being a landlord.In other words, it enable you to own real estate as part of your portfolio.
Investing in REITs also provides the important advantages of liquidity and diversity. Unlike actual real estate investing, these shares can be quickly and easily sold. And because you're investing in a portfolio of properties rather than a single building, it is diverse and you face less financial risk.
REIT distribute most of their taxable income to investors, the source of fund they get from is through external capital. REIT just like stock collect fund through IPO. These fund are used to buy, develop and manage real estate. (So is like a unit trust that does IPO) Income is generated through leasing , renting or selling properties. So when a REIT pay out dividend they are equally distributed among shareholder.
REITs can provide both current income and long-term appreciation.
How the REIT management and trustees are compensated will determine the REIT payout to investor. If compensation is based on the value of the REIT's assets, management is usually concentrating on investing in additional properties for capital appreciation. If the basis for determining compensation includes dividends or current earnings, the REIT's management may be motivated to increase dividend yield, possibly at the expense of long-term appreciation.
For REIT investing, it can provide a long term capital appreciation and good dividend payout. So please check on the past record of dividend payout (at least 5 yr ) but note that past performance is not a representative of future performance.Be wary of high yields. If there have been excessive capital gain distributions, this can be a sign that the income is coming from nonrecurring events and will not continue for long. Make sure the REIT is not selling off properties to provide income, because future rental income will be affected.
Wednesday, August 25, 2010
Some updates
Short on Emini S&P500 on 19 Aug 1074.25...current price 1056
Look at the bond price is going up...so the relationship is again proven.
Mkt weakness may continue for the nxt 2 weeks using the 17 week cycle
Exited straitasia today @2.13 profit from entery price of 2.05
exited yanlord yesterday @ 1.84 profit from entry price of 1.8
cut lost ezion yesterday 0.63 lost from 0.66
cut lost Noble 1.65 19 Aug lost from entry 1.66
Look at the bond price is going up...so the relationship is again proven.
Mkt weakness may continue for the nxt 2 weeks using the 17 week cycle
Exited straitasia today @2.13 profit from entery price of 2.05
exited yanlord yesterday @ 1.84 profit from entry price of 1.8
cut lost ezion yesterday 0.63 lost from 0.66
cut lost Noble 1.65 19 Aug lost from entry 1.66
Sunday, August 22, 2010
Relationship between bond, S&P 500 and US dollar
This is the relationship between US dollar and bond
This is the relationship between S&P500 and bond
This is the relationship between S&P500 and bond
Friday, August 20, 2010
Regarding fundamental analysis
Fundamental analysis is not jus knowing the PE ratio, EPS, ROI etc...This are important but the most important are still the company cashflow, income statment, balance sheet.A examination of 3,5,7,10 years of these data is necessary to make a sound investment decision.
Next understand the business of the company, for example one need to know the nature of the business, how easy is it for new player to enter the business, is the business easy to monopolies, how big is the company in the industry, what is the forecast for this industry??
Frankly i am not a fundamental guy, i am a technical trader.I am train in these aspect of fundamental analysis before but really it is not my cup of tea.Fundamental investing is really about investing the value of the company,investing in the business, something that you really want to own.The world most successful investor Warren Buffet use these approach.
Getting to know the cashflow,income statment, balance sheet is not difficult, understanding the business, the way to do the business is the most difficult thing to achieve. That why Warren Buffet say that diversification is for people who do not know what they are doing.Yes is true. Unless we can be like him whom understand the business, know how the business should be run and able to have coffee with the CEO, we still need to diverse in the long term investment.Put it another way, if we know the things like Warren Buffet then we dont have to diverse, work or worry anymore.\
So for average joe, investing in the long run still need diversification.
Next understand the business of the company, for example one need to know the nature of the business, how easy is it for new player to enter the business, is the business easy to monopolies, how big is the company in the industry, what is the forecast for this industry??
Frankly i am not a fundamental guy, i am a technical trader.I am train in these aspect of fundamental analysis before but really it is not my cup of tea.Fundamental investing is really about investing the value of the company,investing in the business, something that you really want to own.The world most successful investor Warren Buffet use these approach.
Getting to know the cashflow,income statment, balance sheet is not difficult, understanding the business, the way to do the business is the most difficult thing to achieve. That why Warren Buffet say that diversification is for people who do not know what they are doing.Yes is true. Unless we can be like him whom understand the business, know how the business should be run and able to have coffee with the CEO, we still need to diverse in the long term investment.Put it another way, if we know the things like Warren Buffet then we dont have to diverse, work or worry anymore.\
So for average joe, investing in the long run still need diversification.
17 week cycle
I have notice most indices in the world obey a 17 weeks cycle. Which mean every 17th week a low will be found.The market do not 100% obey the cycle(if it is 100% then i would make the last trade in my life) however it give you an indication where it might head next.
Try to identify the cycle yourself, if you have any question can drop me an email.
Right now we are in the 13th week.There is 4 more weeks to complete the cycle.
Try to identify the cycle yourself, if you have any question can drop me an email.
Right now we are in the 13th week.There is 4 more weeks to complete the cycle.
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