Should I do voluntary contributions to my 3 CPF accounts or do voluntary housing refunds to my CPF OA account or purchase Singapore Saving Bonds?

CPF accounts, Singapore Saving bonds or SGS bonds and bank deposits are readily accessible to Singapore citizens and Permanent Residents, and I am sure many are familiar with them.

I guess when it comes to the CPF account, we will face different situations at certain milestones.


It is even more confusing when we are in a rising interest rate environment when yields from Singapore Saving Bonds/SGS Bonds and bank fixed deposits are rising.

In fact, the interest rates of some 1-year bank fixed deposits and Singapore Saving bonds interest rates have breached the key psychological level of 2.5% (eg. CPF Ordinary Account interest rate).

The high bank deposit rates have sparked a lot of interest in recent times. The interest rate on 12-month fixed deposits is currently as high as 2.75%. It was last above that in November 1998 (almost 24 years ago). The rate has been stuck below 1% for most of the past 20 years.

Best Fixed Deposit Rates in Singapore (Sept 2022) — DBS, UOB, OCBC & More (read here)

Singapore’s Highest Deposit Rates in 24 Years Spark Waits (read here)

On the other hand, for now, there is no news that CPF interest rates will be changed.

No change to CPF interest rates: Tan See Leng (read here)

To quote the above article dated 2 Aug 2022:

“There is no change to the interest rates being paid out to Central Provident Fund (CPF) members, given that the current bank interest rates continue to be below the effective CPF floor rates, said Manpower Minister Tan See Leng in Parliament on Tuesday (Aug 2)…

In a follow-up question, Mr Chua asked if CPF would consider granting extra interest and noted that local banks have raised interest rates for their savings accounts, such as for DBS’ Multiplier account.

Dr Tan replied that the banks’ interest rates and their fluctuations are “very short-term volatile instruments”, while the CPF system takes a longer-term horizon to provide security in retirement with risk-free interest rates.

“The rates that are chosen are effective basic rates with no further conditions,” Dr Tan said.”

Poll

I did a small poll on the Seedly Facebook page and also a poll in Investing note.

The question raised in the polls being:

“If you have already achieved Full Retirement Sum (FRS) in your Special Account (SA), hence are unable to convert part of the funds in your Ordinary Account (OA) to SA, or further top up your SA.

Which option would you choose (to safely keep your cash)?
Eg. To do a one-time lump sum contribution/purchase now.”

From the polls, we can see that majority of the voters prefer to purchase Singapore Saving Bonds / SGS Bonds (Yield an average of 2.75% per annum over ten years). The next popular option will be to do a voluntary housing refund to their CPF Ordinary Account (OA).

Seedly Facebook page poll:

There are in total 101 votes here (which is a bigger sample pool as compared to the poll in Investing Note which has 39 votes).

Investing Note poll:

Unable to achieve Full 4% interest using CPF Special Account

In my case, I have already achieved Full Retirement Sum (FRS) in my Special Account (SA), hence I am unable to further top up my SA account or convert part of the funds in my Ordinary Account (OA) to SA.

Hence, despite the rise in interest rates in the SSB or bank fixed deposits, etc, this 4% per annum yield offered by CPF Special Account remains somewhat elusive to me (well, at least not for the full sum contributed if I opt for voluntary contributions to my 3 CPF accounts).

Note: If we have already reached the FRS in our Special Account before the age of 55, we also would not be able to make further top-ups to our Special Account or enjoy the tax benefits of the Retirement Sum Topping-Up Scheme (RSTU) for topping up our own account. We would also not be able to make transfers from our Ordinary Account to our Special Account.


Voluntary Contributions to 3 CPF accounts

Nevertheless, as mentioned earlier, on top of the contributions from my employer, I can still do voluntary contributions to my 3 CPF accounts (unfortunately no tax relief will be given). The percentage contribution will vary depending on age.

When we are younger, our OA receives the bulk of our CPF contributions. About 62% of our CPF contributions go into our OA, 16% to our SA and 22% to our MediSave when we are aged 35 and below. This allocation changes, with more going to our MediSave as we grow older. When we are aged above 70 years old, 84% of our CPF contributions would go to our MediSave.

In my case, I am in my mid-40s. So if I contribute $1,000.00, $513.60, $216.20 and $270.20 will go into my SA, OA and MA accounts respectively.

Voluntary Housing Refund to OA

Alternatively, I can choose to do a voluntary housing refund to my CPF OA account, to take advantage of the 2.5% interest in my OA account.

Options for investments via CPFIS

The next question is the options beyond keeping my funds in my CPF OA or SA accounts, what can I invest in, using those funds.

I can choose to invest via the CPF Investment Schemes (CPFIS).

There is a range of products in which I can invest in (read here). However, individual risky cryptos are not on the list. Still, in my opinion, with the OA there is no shortage of options (can’t say the same for SA).

However, personally I treat the funds in my CPF OA and SA accounts as the fundamental (risk free) layer and is a bit hesitant to invest them.

1 in 2 who uses CPF to invest ends up worse off (read here)

Beyond the type of funds in which I can invest, there are also other conditions, see below. (read here)

Funds untouchable in CPF prior to 55 years old

One key point about setting aside money in our CPF accounts through voluntary contributions is that money cannot be withdrawn before the age of 55 years old. Some may perceive this as a drawback.

Understand withdrawal options from 55 (read here)

Implementation of CPF SA Shielding Hack using FSMOne.com (read here)

If you do wish to withdraw them, make sure you set aside enough funds for your Retirement Account (RA). This is where your SA and OA savings up to the Full Retirement Sum (FRS) will be transferred to the RA to prepare for your monthly CPF LIFE payouts when you turn 65 years old.

Alternative via Singapore Saving Bonds

Given the rising interest rates environment which we are in, the interest rates of recent Singapore Saving Bonds have been looking very attractive.

For instance, for the recent Oct 2022 SSB (SBOCT22 GX22100X), the average return over 10 years is 2.75%. 2.6% (year 1) – 2.99% (year 10).

Like the CPF, the Singapore Saving  Bonds are fully backed by the Singapore Government. We can always get our investment amount back in full with no capital loss.

The obvious advantage of SSB is the flexibility in redeeming our invested capital (liquidity). We can choose to exit our investment in any given month, with no penalties. There is also no need to decide on a specific investment period at the start.
With the freed-up cash, we can choose to invest in a myriad of investment products (including more risky products). Although I would think twice about being too heavily invested in risky growth stocks or cryptos.

Nevertheless, this freed-up cash would come in handy in times of drastic stock market corrections or crashes. In addition, this freed-up cash would also be useful should we need the cash for some sudden emergencies.

The next question will probably be, why not consider T-bills (or SGS bonds), since they offer better rates. I reckon I used SSB here because in comparison, in terms of liquidity, SSB is better.

Ultimately, we will have the liquidity of SSB on one hand and the effect of compounding in CPF on the other hand.

Comparing lump sum housing refund contribution to CPF OA vs lump sum contribution to 3 CPF accounts vs Singapore Saving Bonds

In gist, given that I have already reached the FRS in my CPF Special Account, I am unable to do voluntary contributions to my SA account or transfer funds from my OA to SA to enjoy the 4% annual interest.

So I am left with the choice of either contributing to all 3 CPF accounts (of which 62% of my contribution will go to OA and 16% to my SA) or doing a lump sum housing refund contribution to my OA (2.5% per annum).

Next, there is a limitation to the investment products I can invest in via CPFIS, and I cannot withdraw my CPF funds until age 55 years old. With SSB there is this flexibility to withdraw and use the freed-up cash to invest in a wider array of financial products.

Perhaps I am splitting hair, but for the interest accumulated over time, I reckon a fair comparison for lump sums would be between a lump sum housing refund contribution to my OA (at 2.5%) vs investing in the SSB (at average return over 10 years of approx. 2.75%). However, I will also be comparing these to the case whereby I do a lump sum voluntary contribution to my 3 CPF accounts.

To refer back to the earlier polls above, the 2 most popular choices to safely keep our funds and do a lump sum contribution/purchase are: (a) To purchase SSB, and (b) Do a lump sum housing refund contribution to the CPF-OA.

I will be using a 10 years horizon for simplicity (although the exact number of years/months may not be that). This timeline is useful for comparison to the SSB. In addition, I would be assuming that there will only be a one-time contribution of $1,000 (now).

Given that I cannot withdraw CPF funds prior to 55 years old, the funds will likely be in my CPF accounts, compounding interests (upon interests). Unless I intend to use my OA and SA for investment needs or have an emergency need for the funds in my MA account.

On the other hand, for the SSB, there will be interest payments every 6 months, and the likelihood of compounding earned interest is comparatively lesser. After all, I am free to use the SSB interest payments for my needs or wants (or invest in other products).

Scenario 1 (Purchase of Singapore Saving Bond, hold for 10 years)

Using the SSB calculator, with $1,000 invested in the Oct 2022 SSB (SBOCT22 GX22100X), and if I hold it till maturity (after 10 years), I will receive a grand total interest of $275.00 (Total amount inclusive of capital is $1,275). See below.

Scenario 2 (One-time voluntary housing refunds to my CPF OA account)

In the case of CPF, if I do a lump sum housing refund contribution of $1,000 to my CPF OA, and let it compound at a rate of 2.5% per year, the total interest I will receive at the end of 10 years will be $280.00 (Total amount inclusive of capital is $1,280). See below.

The difference between the above 2 scenarios is only marginal (for the moment).
In consideration of the flexibility of SSB (convert to cash), the option to contribute a lump sum for the housing refund (in OA) might not be that attractive.

Scenario 3 (One-time voluntary contributions to my 3 CPF accounts)

Another scenario is that I contribute $1,000 to all 3 of my CPF accounts (just to tally up the total interest earned over 10 years compounded). During the 10 years (prior to 55 yrs old), MA cannot be converted to cash or invested. The total interest I will receive at the end of 10 years will be $377.40 (The total amount inclusive of capital is $1,377.40). See below.

Working backwards, the aggregate interests (results of 3 CPF accounts) would be approximately 3.255% interest rate (if the funds are allowed to be in the accounts compounded annually). See below.

It is noted that assuming that when I am 55 years, and if I have met the FRS, I can withdraw any amount above it. (read here)

Note that I am referring to safely keeping cash while earning some interest. I believe this should form a fundamental layer in our investment portfolio. With this fundamental layer (bedrock) intact, I can then choose to invest my excess funds in other more risky products like stocks, REITs, ETF /Index funds or even cryptos, etc… Nevertheless, everyone’s situation is different (dependent on age, income/saving level, needs and wants, risk tolerance, etc). And circumstances might also change. Especially when market crashes occur and opportunities present themselves. Hence, it is important to consider the flexibility and availability of funds to invest during such opportunities.

In gist, it is a choice between the liquidity of SSB (to be withdrawn at any time and the ability to use the half-yearly interest payout), versus the effect of compounding by leaving the funds untouched in the CPF account(s).

Looking at the above, I think it is worth considering the lump sum contribution to the 3 CPF accounts (Scenario 3). However, given the flexibility of SSB (Scenario 1), it is not bad either. No wonder most of the people who participated in the polls opted for SSBs.

Nevertheless, I am sure there will be a group of people, with cash on hand, waiting for interest rates (of SSB or fixed deposits) to rise higher (eg. to be substantially higher than the 2.5% CPF OA interest rates) before making any moves.

Thank you for reading.


StocksCafe

FYI I find StocksCafe useful for the tracking of my own portfolio, and especially like to use it to track my portfolio stock dividend/bond interest payouts (projected and due). You can use my referral code: apenquotes. Just click here. Upon signing up using the referral code, you will get to enjoy being a Trial Global Friend of StocksCafe and test out all features for free for one month!

Please follow me at StocksCafe, via my StocksCafe profile page.

Tiger Brokers

For the Singapore market, Tiger Brokers currently waive the minimum fee and only charge a 0.08% trading fee. This drastically reduces your cost as the minimum fee from other brokers (ranging from SGD 8 such as FSMOne and SCB, to SGD 25 for local brokerages) does add up and can eat into your returns.

Tiger Broker Referral Code:: GPE59H

Sign up here.

FSMOne.com

Typically I use FSMOne.com to invest in funds & ETFs (including money market funds).

If you do not have an account, you can sign up here. Please use my FSMOne referral code: P0031127, when you sign up.

Gemini

As stated by MoneySmart on Jan 22, if you’re looking to optimise trading your crypto with relatively low fees, simple-to-grasp expert UI and ease of purchase with Singapore dollars. then the best crypto exchange in Singapore is Gemini,

If you do not have an account, you can sign up here using my referral link. After you have signed up, once you buy or sell US$100 or more (or 100 USD equivalent of your domestic currency) within 30 days of creating your account, your account will be credited US$10 (or 10 USD equivalent of your domestic currency) worth of bitcoin.

Shopee

I have been using Shopee for a while and think you will like it as much as I do.

Get $10.00 off your first purchase using my code DARREB52.
Download Shopee now and enjoy hot deals at the best prices! Click here.

Happy shopping!

Posted in CPF | 2 Comments

Short update on Portfolio

Just some updates on my portfolio.


I have not been very active in investing so far this year. Nevertheless, I have been an avid reader of news, while at the same time doing some minor adjustments to my portfolio.

I guess sometimes, the best thing to do, is to do nothing.

If there are no opportunities to my liking, it is best to just wait it out.

The little Snowball of Dividend income

I find StocksCafe very useful in tracking dividend income, given that I have many counters, which can get too tedious and confusing to track. If you have not signed up for an account, you can use my referral code: apenquotes, to sign up. Just click here. Upon signing up using the referral code, you will get to enjoy being a Trial Global Friend of StocksCafe and test out all features for free for one month

You can also follow me at StocksCafe, via my StocksCafe profile page.

I am anticipating around $3,283 dividend/interest for the month of Sept 2022.

Overall, the projected monthly dividend for the year 2022 would be around $2,500+. It is an improvement of around $500 from last year’s monthly figure.

I guess that is my way of giving myself a ‘raise’ hahaha…It is tough waiting for any chance of pay increment (from active income) these days.

Recently, I purchased the Sept 2022 Singapore Saving bonds, International Housewares Retail Co Ltd (1373.HK), ST Engineering (S63.SI) and Hong Leong Finance (S41.SI).

I have been setting price alerts using StocksCafe, for stocks that I am looking to add more into. (Eg. been setting lower and lower prices).

‘Tools’ I used to track my dividend & bond interest income (read here)

Step by Step guide on how to screen for SG Reits with low debt/equity ratios, high interest coverages, and high dividend yields using StocksCafe (read here)

Income from selling Options

Given the relatively depressed market sentiments and side-way price movements, I have also sold a small number of covered call options recently using my growth stocks holdings, namely Alphabet, Pinduoduo and Tencent. So far results have been alright. However, I would fall short of calling them passive incomes.

Personally, I would consider myself an ad-hoc recreational option seller. I do not regularly sell options, and probably have not set up a routine (or made it into a habit yet)… shall see.

No doubt, given that the majority of options expire worthless (70% to 80%), selling options might appear to be a high probability way of generating some small premiums on the side. However, there is always the possibility of the options being assigned.

The recent sudden upswing in Pinduoduo share prices (eg. approx 20%) in one day, due to their stellar quarterly results is one such example. The stock price almost reached the strike price for my covered call option prior to the expiration date. The worst case is that the option get assigned and I would have to re-purchase my holdings (or sell cash secured puts), hopefully at a lower price. In retrospect, among the growth stocks in my portfolio, only Pinduoduo registered significant gains in Aug 2022.

Lesson learnt: Ensure earning announcement date do not fall within option duration.

Still, these are typically small bets with far-out strike prices, which do not set the adrenaline pumping. Slow way of getting some side cash. No chance of striking big… but I guess that this is the nature of writing covered call (or cash secured put) stock options unless one venture into futures options which I do not intend to. I prefer to keep it slow and simple.

Actually, from a long-term perspective, a falling market is not really a bad thing. I reckon if I do hold companies with strong fundamentals, eventually, stock prices will recover (well at least to their intrinsic values). It might actually be a good opportunity to load up on more shares of my current holdings. Well at least to make them into lots of 100 shares (for my growth stock holdings), so as to facilitate the selling of covered calls. After all, I do have more stocks than I have cash relatively speaking, hence the preference for selling covered calls over cash secured puts.

I reckon with more cash or more stock holdings, I would be able to sell more lots (of options) with more far-out strike prices, hence increasing the premiums while reducing the risks. Essentially using the time (decay) on my side and high probability to my advantage. This would take time… nothing hard and fast. I reckon this would only appeal to certain types of investors.

I don’t typically track the Options which I have sold. As I have mentioned earlier, I do not really perceive them as steady passive incomes, more like bets (playing with odds). For the month of Aug 2022, I reckon I received around SGD 102 of premium (yeah.. small amount).

For selling Options, I use Tiger Brokers. If you intend to sign up for an account, you can use my referral code.

Tiger Broker Referral Code:: GPE59H

Sign up here.

Step by step guide to selling Put Options using Tiger Brokers (Desktop version) (read here)

Singapore Saving Bonds

As mentioned earlier, I kind of lumped the bond interest together with my dividend income.

Nevertheless, I am glad to have some dry powder on the side, which is yielding some interest as well. These can be liquidated into cash for deployment into stocks when opportunities come knocking.

I always felt that the concept of having a substantial warchest in the overall investment strategy is somewhat underrated. I reckon it is because it is often referred to as being held in cash (earning little or no interest). Hence, SSB is a welcome relief.

It is good that I can also track their interest payout (actual and projected) in StocksCafe.

Alternatively, I can head to MAS website for Singapore Saving Bonds to track my holdings. The rising interest rates make these bonds more attractive, although the yield for the Oct bonds seems somewhat disappointing compared to the previous month’s (Sept) offering. (Eg. (Average return over 10 years of 2.75% vs 2.80%)

Others: I have basically converted my small holdings in crypto (DAI) to cash.

With the coming September school holiday around the corner, I will be taking a couple of days’ leave to spend time with my family.

For the past couple of weeks, my wife and daughter have been sick. Hope they will be well enough for a short visit to an urban farm in Singapore next week.

Thank you for reading.


StocksCafe

FYI I find StocksCafe useful for the tracking of my own portfolio, and especially like to use it to track my portfolio stock dividend/bond interest payouts (projected and due). You can use my referral code: apenquotes. Just click here. Upon signing up using the referral code, you will get to enjoy being a Trial Global Friend of StocksCafe and test out all features for free for one month!

Please follow me at StocksCafe, via my StocksCafe profile page.

Tiger Brokers

For the Singapore market, Tiger Brokers currently waive the minimum fee and only charge a 0.08% trading fee. This drastically reduces your cost as the minimum fee from other brokers (ranging from SGD 8 such as FSMOne and SCB, to SGD 25 for local brokerages) does add up and can eat into your returns.

Tiger Broker Referral Code:: GPE59H

Sign up here.

FSMOne.com

Typically I use FSMOne.com to invest in funds & ETFs (including money market funds).

If you do not have an account, you can sign up here. Please use my FSMOne referral code: P0031127, when you sign up.

Gemini

As stated by MoneySmart on Jan 22, if you’re looking to optimise trading your crypto with relatively low fees, simple-to-grasp expert UI and ease of purchase with Singapore dollars. then the best crypto exchange in Singapore is Gemini,

If you do not have an account, you can sign up here using my referral link. After you have signed up, once you buy or sell US$100 or more (or 100 USD equivalent of your domestic currency) within 30 days of creating your account, your account will be credited US$10 (or 10 USD equivalent of your domestic currency) worth of bitcoin.

Shopee

I have been using Shopee for a while and think you will like it as much as I do.

Get $10.00 off your first purchase using my code DARREB52.
Download Shopee now and enjoy hot deals at the best prices! Click here.

Happy shopping!

Posted in Dividend & Yield, Options, Portfolio | 2 Comments

Stories from Blogophere & Videosphere: Losses from Crypto & Stocks and Lessons learnt

2021 was a good year for stocks and crypto. So far, 2022 is not so good (for lack of a better word). With the high inflationary and rising interest rate environment, geopolitical tensions, there seems to be a never-ending stream of bad news.

On the web, articles and videos about losses have been sporadically popping up. These are often meant as a means for self-reflection on lessons learned and the way forward.

How To Deal With Your Losses

Ultimately, no one wants to suffer a loss of any kind, we invest so as to profit. However, the best course of action is often to cut your losses and move on to the next trade. Turn it into a learning experience that can help you going forward:

1) Analyze your choices. Review the decisions you made with new eyes after some time has passed. What would you have done differently in hindsight, and why? Would you have lost less or perhaps nothing at all if you had acted differently? Answering those questions may help you avoid making the same mistake twice.

2) Recoup what you lost. Tighten your financial belt for a while if you must. You might be able to recoup it with a little discipline if the loss is small enough. Regain that money and try again, keeping in mind the things you learned for the next time the market gets shaky.

3) Don’t let losses define you. Keep the loss in context and don’t take it personally. Remind yourself that a lot of other people out there took a hit just like you did—perhaps even more of a hit than you did. The loss doesn’t define you, but it can make you a better investor if you handle it correctly.

Losses are never easy.

Do you remember that scene when Joker burns a huge pile of cash?

It (our losses) is something that many of us will probably find extremely difficult to forget.

$$$ KPO and CZM $$$: We lost >2 million SGD in the Collapse of Terra LUNA & Good Bye (read here)

To quote:

“At its peak (Portfolio – March 2022), we had a crypto portfolio worth 2.4m SGD with 597k SGD debt from Anchor Borrow and ~100k SGD worth of NFTs. Not forgetting, I had a crypto business with 2 other friends that was built on Terra and we had a bunch of aUST and 5 digits LUNA before the depeg happened. All that is left now is around 28k SGD. A loss of >2 million SGD.”

It is hard reading about their losses. However, there are key lessons learned and self-reflection points highlighted in the post.

Some investors still believe in cryptocurrencies, undeterred from investing even after crash (read here)

$300K lost in crypto staking (read here)

A reader of AK’s blog commented that he has lost $300k in cryptocurrencies.

To quote:

“He shared that he lost big time on Luna and even on his Bitcoin and Ethereum which he staked for much higher returns than the interest income he could get from our local banks.

Apparently, some of the crypto lending platforms where he staked his coins became insolvent recently.”

Seasoned investor AK highlighted a few key points that for any investor, before investing his money for income, it is important to make sure that it is a bona fide income-generating asset. And this is especially true if it promises what seems like an incredibly high return.

Invest For Yourself: Mid Year Review (2) – Reducing Exposure to China / Hong Kong Stocks (read here)

To quote:

“I used to aim for 50% US and 50% China / Hong Kong for my overseas equities exposure.

However, since the beginning of this year, I have started to pare down my Hong Kong stocks as I lost my confidence in the Hong Kong and China economies….

My loss in Hong Kong shares is almost 30%.

Any upward movement will just give me a reason to cash out.

I don’t know where the optimal % holding of Hong Kong equities is now. For a start, I would like to keep it to about 10% of my equity holding and a 25 / 75 ratio split for my Hong Kong and US stocks.

So, if I maintain my current holding of overseas equities, I would be buying more US stocks.”

As China continues with its zero Covid policy which inevitably affects its economic recovery, China and Hong Kong stocks continue to face headwinds and volatility. This is in addition to the geopolitical tensions between the US and China. Like many investors, the prolonged downtrend is sapping the patience of most investors.

Many (China and Hong Kong stock) investors are now at a cross road.
Having said that, recently there is news that regulators were progressing in talks to avoid the delisting of US-listed Chinese companies in the US. Will this be the start of a turnaround, finally?

An unexpected deal may save $1.3 trillion of U.S.-listed Chinese stocks from a mass Wall Street delisting (read here)

Chinese Stocks May Extend Gains on Talks to Avoid Delistings (read here)

Singaporean Lady Road to FI: 6 figure paper loss (read here)

To quote:

“At times like this, grit and having a job is important. Now I’m in a frozen state, unsure what to DCA in. FIRE of any sort definitely has been impacted.”

Singaporean Talks Money: Q2 Portfolio Review | Step back from my goals (read here)

To quote:

“Painful to even talk about this because my crypto value fell more than 50%…

So technically I lost much more than 4000 USD especially since LUNA was almost $100 in the beginning of Q1 of 2022. BTC and ETH have also seen significant falls since Q1. CRO, SOL and Chainlink which I have small positions of have also fell drastically. I sold and clean up my crypto portfolio even though things are down down down, I just wanted to clean it up and also focus on stacking BTC and ETH. So boring DCA action resume for both BTC and ETH. Ending Q2 at about $18,000. A very huge drastic drop compared to Q1…

I think overall, the portfolio has taken a hit from stocks to crypto and even my stablecoin position ahem UST…..I thought entering 2022, I might be able to hit $100,000 by the end of the year but boy oh boy, my portfolio got hammered instead.”

In her post, she mentioned that she has learned a lot from the first half of 2022. For one taking profit is good and allows her to at least secure some profits. Otherwise, she would have to be ready to ride the volatility and see the unrealised profits decrease. She believes in holding quality index funds for the long term but it is nice if she had sold around the top in 2021, but of course, this is all in hindsight.

Azrael’s Financial Cents: Updates for my Portfolio for May 2022 (read here)

To quote:

“I recently got burned pretty badly from the UST/Luna event on May. I thought I would write to share my thoughts. 

Back then, when I was looking at UST and researching about it, I promptly forgot that I had a rule that I avoided algo stablecoins as most of them fail and sticking only to fiat backed stablecoins. So I stupidly swapped stablecoins of my smaller account to UST. And less than a week after that, UST unpegged and chaos ensured….

My portfolio YTD is now -71.6%, with the long term XIRR at 0%. It is pretty humbling to see a mistake like that wipe out years of performance.”

I am an avid reader of Azrael’s blog posts, and it is painful to read about his losses. Nevertheless, he has learned from this experience and is rebuilding cash while waiting for opportunities.

STACKED: “I Lost RM 1 Million Investing in KL Real Estate”: 5 key lessons from a Singapore Investor of 36 years (read here)

Cheryl shared the experience of a real estate investor who has at one point, lost more than a million Malaysian Ringgit (SGD 312k) in KL properties alone.

Lessons learnt ranged from, one should not chase after the highest yield while neglecting short-term gains, not having a sound financing strategy, not having enough buffer cash and lack of proper budgeting, not being able to see the bigger picture (by building wealth slowly), to not building rapport with other investors, contractors and agents.

40 year-old lost $618,848 Options Trading in 2022 – Here’s what this Singaporean learned (read here)

Financial Horse shared the experience of an investor who lost $618,848 via options trading in 2022.

To quote:

“Over the past 6 – 12 months, he has been buying long dated FAANG call options. Unfortunately, the crash in the NASDAQ has not been kind to him. As we speak, of his original $1,000,000 portfolio, only about $394,000 remain.”

In retrospect, the investor mentioned that if he could turn back time, he would have taken the huge profits that he made in 2021 and re-invest into stocks and hold them for the long run. And then he would sell covered call options against the stocks that he owns, and generate more side-line income every month.

I recall back to the comment by AK in the post as mentioned earlier, bloggers (and Youtubers) are regular folks just like you and me. We should not read blogs (and watch videos) thinking that they are always right.
I do find the Youtube Channel videos by Chicken Genius Singapore (Ken Teng) entertaining, However, there are many points that I personally find dubious. No doubt he has made huge profits in the growth stocks run-up during the pandemic. However, investing (or trading) is highly personal, and what suits him might not be suitable for you and me. Personally, I follow what I find most comfortable for me and what can allow me to sleep soundly at night.


The Daily Ketchup Podcast: How To Cope With Losing Your Life Savings | TDK Podcast #96

Good video on the Terra Luna crash.

What kinds of investment mistakes have people made and what we can learn from the crash.


Honey Money SG: My Urgent Warning in this Market Crash

Like many Chris is also quite badly hit by the market correction. In the video, he shares the actions that should be taken if one is facing a market downturn.

What I Lost – And Learnt – In The Terra Luna Crypto Crash

Think the title is self-explanatory (on roughly the amount lost).

The cryptocurrency Luna was valued at an all-time high of US$119 in April 2022, before crashing to below US$1 in May.

Lai Yuen, 25, a fresh graduate who was co-president of the NUS Fintech Society and a crypto investor, saw his portfolio lose a six-figure value – approximately the cost of a sedan car in Singapore.

Thank you for reading.

Other posts you may like:

The Great Resignation Wave: 2 Singapore Financial Bloggers who just recently left their jobs and here’s a look at their net worth and passive income (read here)

Singapore Investor Bloggers with min. 1 SGD Million (read here)

The Five Titans of InvestingNote (read here)

Top 5 Performing Shared Portfolios in StocksCafe (read here)


StocksCafe

FYI I find StocksCafe useful for the tracking of my own portfolio, and especially like to use it to track my portfolio stock dividend/bond interest payouts (projected and due). You can use my referral code: apenquotes. Just click here. Upon signing up using the referral code, you will get to enjoy being a Trial Global Friend of StocksCafe and test out all features for free for one month!

Please follow me at StocksCafe, via my StocksCafe profile page.

Tiger Brokers

For the Singapore market, Tiger Brokers currently waive the minimum fee and only charge a 0.08% trading fee. This drastically reduces your cost as the minimum fee from other brokers (ranging from SGD 8 such as FSMOne and SCB, to SGD 25 for local brokerages) does add up and can eat into your returns.

Tiger Broker Referral Code:: GPE59H

Sign up here.

FSMOne.com

Typically I use FSMOne.com to invest in funds & ETFs (including money market funds).

If you do not have an account, you can sign up here. Please use my FSMOne referral code: P0031127, when you sign up.

Gemini

As stated by MoneySmart on Jan 22, if you’re looking to optimise trading your crypto with relatively low fees, simple-to-grasp expert UI and ease of purchase with Singapore dollars. then the best crypto exchange in Singapore is Gemini,

If you do not have an account, you can sign up here using my referral link. After you have signed up, once you buy or sell US$100 or more (or 100 USD equivalent of your domestic currency) within 30 days of creating your account, your account will be credited US$10 (or 10 USD equivalent of your domestic currency) worth of bitcoin.

Shopee

I have been using Shopee for a while and think you will like it as much as I do.

Get $10.00 off your first purchase using my code DARREB52.
Download Shopee now and enjoy hot deals at the best prices! Click here.

Happy shopping!

Posted in Personal Finance | Leave a comment

The Great Resignation Wave: 2 Singapore Financial Bloggers who just recently left their jobs and here’s a look at their net worth and passive income

The Great Resignation Wave

In the working world, trends such as work-from-home (WFH) and The Great Resignation have become the focal point for discussion (and disagreement) for many companies and their workers.

In Singapore, one recent headline that caught employers’ attention was “The Great Resignation Wave”. This trend is not unique to Singapore. US had already reported peak resignations starting from April 2021 to September 2021, resulting in a record 10.9 million job openings at the end of the period.

A possible cause for the high number of resignations in SIngapore could be fuelled by pent-up frustrations over the 2 years long COVID-19 situation. Employees felt unmotivated and were kept under prolonged anxiety.

On the other hand, employers had to struggle with managing cost and profit, while trying to keep jobs intact.

There is no lack of articles on the “R” word:

1 in 5 Singaporeans quitting job expects 6-year retirement delay: Prudential survey (read here)

Commentary: Why many workers are deciding to step off the corporate grind in 2022 (read here)

More than just the paycheck: Many S’poreans are quitting in 2022, what would change their minds? (read here)

Close to half of office workers surveyed in Singapore consider quitting their jobs in the next 6 months (read here)

It’s the Great Resignation: Before you quit your job, here’s what you need to know, according to experts (read here)

The Great Resignation: Has the global trend reached Singapore? (read here)

Over half of S’pore workers would consider quitting if made to return to workplace full-time (read here)

2022 will see a “Great Resignation”: What are S’pore firms doing to retain their employees? (read here)

The Great Resignation: How the global phenomenon is hitting Singapore’s SMEs hard (read here)

Great Resignation: Why Is Everyone Quitting? (read here)

The Great Resignation is coming for Singapore’s C-Suite (read here)

Would The Great Resignation Become The Great Retrenchment? (read here)

Singapore Financial Bloggers who just resigned, and here’s a look at their net worth and passive income.

Well, we can go into the details on why so many in Singapore are considering quitting their jobs, but this post is not about that.

I am sure, there are many things to consider when one is contemplating resigning. Among them, the key consideration, no doubt is one’s own financial situation. Unless one has no financial worries (eg. rich parents willing to support the lifestyle).

Here is a sneak peek into the net worth and passive incomes of these financial bloggers who recently left their job. I reckon they probably have the financial resources to stay ‘retired’, or at least explore what they really want to do.

They are very transparent in sharing this information.

Trust that they have made all the right financial moves before quitting. Well, if you are going to quit, you might as well have the ‘F*** You Money’ ready, right?

6 Money Moves To Financially Prepare for Quitting Your Job (read here).

Fuck You Money: Why You Need It And Where To Get It (2022) (read here).

To quote the article above: “F*** you money” is the amount of financial resources required for the average person to say “F*** you” to their employer but still be able to meet their financial commitments over the long term.”

Blogger from singvestor.com

I quit my job – monthly update July 2022 (read here)

Technically, he is not quitting for good.

In July he left his job, after 14 years with the same company to do something new and risky

His posting to Europe has come to an end and he has decided to join a startup company in Europe. He stated that he will earn less than 20% of his Singaporean salary each month and instead will get equity in the firm. High risk – high reward.

To quote him in his 29 Jan 2022 post:

“By the end of 2021 I finally reached a major milestone: lean financial independence.

What is lean financial independence?

Lean Financial independence is often defined around having USD 600,000 invested, which would allow for a passive income of USD 2,000 each month when withdrawing 4% of the portfolio each year. USD 2,000 a month is not much, but definitely survivable in many nice places in Europe, including the cheaper parts of Southern Spain etc.

Having some basic income secured for life feels very good and calming.”

Portfolio size:

In July his portfolio increased from SGD 820,557 to SGD 830,173.

His hypothetical income (on 8 July 2022, read here) at 4% WR was SGD 2,735.

Blogger from HAPPY REIT INVESTOR

So who is this blogger? Well, you can read his self introduction here.

He is 40 years old this year and is a Singaporean. He recently decided to have a career break (as of July 2022) to spend more time with his kids (2 of them, below 5 years old) and also to be a better husband, a better son and to refocus his life/career.  His family has always been very financially frugal and thus the decision can be made to go from a dual income family to a single income family. This is with the blessing from his wife. In fact, she was the one who decided for him that he should quit.

HOW MUCH DO YOU NEED IN ORDER TO “RETIRE” IN SINGAPORE (read here)

EXPENSES FOR JULY 2022 (read here)

He handed in his resignation letter in April 2022 and he left the corporate world (off-shore O&G construction sector) around early July 2022. With a monthly passive income of around SGD $5000, and a target expenditure of $3000 to $3500.

Total net worth as of 15 July 2022 (read here), see below.

The financial products percentage is approx. 64.07% of his total net worth, which will be around SGD $1,289,539.11.

To quote (read here): “I will be taking a career break (or a career suicide as some may say) so that I can be in Singapore all the time. My work requires me to travel very often, unfortunately, due to family reasons, I can’t do that anymore. For now, I will spend more time with kids and also take the time out to recalibrate and refocus my life and career. On the bright side, I realised if I can cap my monthly spending to around 4000 per month and barring any black swan event, I can technically “retire”.”

Notable mentions:

Blogger (Kevin) from the blog Turtle Invest.

To quote Kevin: “To many of these travellers with whom I’ve had fleeting interactions with, I’m eternally thankful to them for giving me the impetus to try and live my life with no regrets – just like how many of them are actively doing the best they can, with what they have got, regardless of how old they might be.”

It Wasn’t Supposed To Be Like This (I Quit My Job And Worked Part-time At A Hostel) (read here)

Blogger from the blog Singaporean talks money.

She left her job sometime in Aug 2021.

I Quit my Job! | The Great Resignation (read here)

Resigning from your job – Should you quit when you can’t take it? Or stay on for the pay? (read here)

My mum resigned from her job, whats gonna happen next? (read here)

She is currently employed.

To quote her in her 25 June 2022 post: “Anyhow, I will just be working from home and making sure that I test negative before going out and feeling better is my priority. It really is becoming endemic but a lot of extra expenses, medicines for the symptoms like fever, sore throat, cough and even having to buy the ART kits for routine testing. All these does add up but ultimately, this has made me realised that HEALTH IS WEALTH!”

Blogger from the blog Simple Budget, Simple Life.

He tendered in June 2021.

I’ve resigned (read here)

He is currently employed. To quote from this post dated 5 July 2022:

“It’s all over the news that layoffs are happening, even in Singapore. While my company has yet to be affected, I can’t help but be worried. 

I’d be hitting my one year mark in the company soon. It seems like I will never be happy working anywhere. Firstly, we are forced to return to office – as a social hermit, I dread this. Secondly, I feel that my work is getting monotonous and I’m not learning much. While I can pass time, the issue is I’m shortchanging myself in career growth. I’m not looking for upward movement or climb the career ladder, but I want to be skilled enough to move laterally. It is sad that I’m only in my early 30s and feel uncompetitive in todays’ market; I am already starting to feel that I could be expensive to hire and getting too old for some companies.”

To quote (as per his 5 July 2022 post):

“It’s mid 2022. I set a goal last year to hit $850k net worth end of this year. This will  be the first time I fail to hit my goal. I don’t even think I can hit $700k end this year. As of end Jun, I am at ~$650k net worth. Worse than my Dec 2021 net worth of $690k. Can only pray for miracles to hit my $850k net worth.”

Dave and Kate from the blog Minimalist in the City.

The couple, together with their four-year-old daughter Ally and baby boy Ashton, they are a family of 4 currently staying in the sunny island of Singapore. 

In 2022,  Dave was made redundant – due to challenges in the business, partially due to Covid-19. 

Subsequently, they executed their mid-career switch in a staggered manner, so that they will not lose all their income at the same time. Dave made the first move transiting to become a self-employed financial coach, striving to help sandwich-class families who might be facing the same financial dilemma as them, as well as to educate them about financial literacy. At the same time, it also allowed him more time to continue blogging.

Kate also then successfully did a career pivot about half a year later, into an area that she is passionate in and a role that would generate considerable social impact.

Minimalist in the City – How we executed our “Great Resignation” (read here)

Seedly Community member, Sera

Technically not a blogger. Seedly Community member, Sera left her first full-time job during COVID-19 (2021) without having another job lined up for her.

Here’s Why I Resigned During COVID-19 Without Securing a new job (read here)

Faith, a junior doctor who loves travelling, writing, art and all things film-related, from the blog Chasing Faith and Love.

Since 2016, she has written extensively about her life as a medical student & doctor.

Her choice to resign (in 2022) was influenced by her desire to seek out new opportunities, as well as multiple systemic issues.

To quote her: “If anything, I hope my story serves as a cautionary tale to aspiring medical students, or those rushing to choose their life paths at the tender age of 19. Take your time to explore other career/life paths, take a gap year to try new things/broaden your horizons (and work a part-time job to keep yourself afloat), do an undergraduate degree; once you understand yourself better, then take a confident step towards med school.

The Great Resignation (Part 1): the journey of a burnt-out doctor + why you shouldn’t rush into Med School at 19 (read here)

Couple (Chia Kim Hui and Adrian Chew)

Chia Kim Hui, 35, and Adrian Chew, 34 who left their corporate jobs to become full-time globetrotters, kicked off their journey last November 2021 in Germany and hope to remain overseas for “as long as possible”.

After Saving Money For 6 Years, This Couple Quit Their Jobs To Travel The World (read here)

Jean Voronkova a Youtuber

Technically not a blogger. Nice video.

3 important realizations about money finally helped me to quit my $120,000 Big Law job. (Watch here)

How I retired at 38 to live in Bali – 5 Money Concepts that helped me get there faster (Watch here)

Blogger from Early Retirement SG

Technically, he left his job prior to the pandemic. Nevertheless, I thought this post is great as it is a personal reflection of the time he was ‘retired’ for 2 years and why he returned to work.

After he left his job, he was without a job for 2 years. Subsequently, he went back to his previous job. During these 2 years, he really understood what it meant to be “retired”. 

To quote: “So back to work it was. I went back to work with a new direction. I always saved a lot but never knew what I was saving for. This time, I had a goal. I wanted to save enough to generate a passive income to sustain my retired life. I’ll probably do some simple work after I retire in future. Just to pass the day away faster and get some light income. The psychology of having a small income gives a sense of security rather than the necessity of the income. It will probably help me sleep better at night. I’m now on a good pace to my final goal.”

Leaving without a job (read here)


StocksCafe

FYI I find StocksCafe useful for the tracking of my own portfolio, and especially like to use it to track my portfolio stock dividend/bond interest payouts (projected and due). You can use my referral code: apenquotes. Just click here. Upon signing up using the referral code, you will get to enjoy being a Trial Global Friend of StocksCafe and test out all features for free for one month!

Please follow me at StocksCafe, via my StocksCafe profile page.

Tiger Brokers

For the Singapore market, Tiger Brokers currently waive the minimum fee and only charge a 0.08% trading fee. This drastically reduces your cost as the minimum fee from other brokers (ranging from SGD 8 such as FSMOne and SCB, to SGD 25 for local brokerages) does add up and can eat into your returns.

Tiger Broker Referral Code:: GPE59H

Sign up here.

FSMOne.com

Typically I use FSMOne.com to invest in funds & ETFs (including money market funds).

If you do not have an account, you can sign up here. Please use my FSMOne referral code: P0031127, when you sign up.

Gemini

As stated by MoneySmart on Jan 22, if you’re looking to optimise trading your crypto with relatively low fees, simple-to-grasp expert UI and ease of purchase with Singapore dollars. then the best crypto exchange in Singapore is Gemini,

If you do not have an account, you can sign up here using my referral link. After you have signed up, once you buy or sell US$100 or more (or 100 USD equivalent of your domestic currency) within 30 days of creating your account, your account will be credited US$10 (or 10 USD equivalent of your domestic currency) worth of bitcoin.

Shopee

I have been using Shopee for a while and think you will like it as much as I do.

Get $10.00 off your first purchase using my code DARREB52.
Download Shopee now and enjoy hot deals at the best prices! Click here.

Happy shopping!

Posted in Personal Finance | 5 Comments

Step by Step guide on how to screen for SG Reits with low debt/equity ratios, high interest coverages, and high dividend yields using StocksCafe

I like trying out stock screeners. Occasionally, I would be surprised by what I might find.

StocksCafe has this feature on its site, and I find it highly useful for screening dividend stocks and in particular SG Reits.

In this post, I will run through on how to screen for Reits with low debt/equity ratios, high interest coverage ratios, and high dividend yields. Please note the order.

My priority is to find look for Reits with low debt loads first, as I am sure with the rising interest rates environment that we are in now, it is perhaps prudent to do that first. After all, a high dividend yield would probably be not sustainable over time if the Reit management has to subsequently allocate a higher percentage of the income to pay for the rising interest payment to its debt.

Login to StocksCafe.

Go to Screener under Tools.

Click on “+Add More Conditions” below.


Then click on “Show Advanced Condition Types”.

Go to Type 5, and choose “Latest SGX REIT Counters”.

Click on Mandatory, click on “Stock in Subset”, then click on “Add Subset”.

There are a few of Reits lists here which you can choose from, but I find this list created by Christopher Ng to be quite recent. There are in total 45 counters within, and we can find the recently IPOed Reits like Digital Core Reit and Daiwa House Logistics Trust within the list.

Low debt/equity ratios

What Is the Debt-to-Equity (D/E) Ratio? (read here)

Name your new screener (in my case I named it SG Reits), and save the new screener.

Click on “+Add More Conditions”. Then click on “Show Advanced Condition Types”.
Under Type 1, choose “Debt/Equity”, tick mandatory. Let’s choose a low baseline number like 0. Click on “Add condition”. And run it.

You might need to refresh your screen. When it is processed, you can click on “Results”.

We want the top 20 Reits with the lowest Debt/Equity ratios. Click on the top of the Debt/Equity column, which will list the Reits with the lowest Debt/Equity ratios from top to bottom.

At no. 20, we have Mapletree Log Tr at 55.30% Debt/Equity.

Go to saved screener, click on your saved screener.

Edit the Debt/Equity Ratio. Ensure the value is set to <= 55.31, click on “Mandatory” and “Update Condition”.


Click “Run”. Then click “Results”. We now have the top 20 SG Reits with the lowest Debt/Equity ratios.

High interest coverage ratio

Interest Coverage Ratio (read here)

Interest coverage ratio is a metric used to determine whether a company can meet its financial obligations.  Generally, the interest coverage ratio is calculated using a company’s earnings before interest and taxes (EBIT) divided by its annual interest expense.

Generally, a higher interest coverage ratio is better than a lower one. A higher ratio represents a stronger ability to meet a company’s interest expenses out of its operating earnings. Too low of an interest coverage ratio can signify that a company may be in peril if its earnings or economic conditions worsen.

Now back to StocksCafe.

Go to saved screener, click on your saved screener again.

Click on “+Add More Conditions”. Then click on “Show Advanced Condition Types”.

Hodlnaut

Hodlnaut is a crypto-borrowing and lending platform that helps investors improve the return on their assets.

Under Type 1, choose “Interest coverage”, and tick mandatory.

If you do not have an account, you can sign up here using my referral link. After you have signed up, you will receive a US$20 sign-up bonus after making a deposit equivalent of US$1,000 in a single transaction on any supported assets within 1 week. Bonus payouts are paid in the same asset deposited. You may make a test deposit of any amount. The deposit equivalent of US$1,000 or more must be completed within one week of the first test deposit.

Let’s choose a low baseline number like 0.

Click on “Add condition”. And run it.

When it is processed, you can click on “Results”.

Note: As highlighted earlier, the higher the interest coverage the better. So among these 20 counters, we list the counters with the highest interest coverage from top to bottom.

At no. 15, we have AIMS APAC Reit with interest coverage of 6.479.

Go to saved screener, click on your saved screener.

Edit the Interest Coverage ratio. Ensure the value is set to >= 6.4, click on “Mandatory” and “Update Condition”. And run it.

When it is processed, you can click on “Results”.

High current dividend yield

Go to saved screener, click on your saved screener again.

Click on “+Add More Conditions”. Then click on “Show Advanced Condition Types”.

Under Type 1, choose “Current Dividend Yield”, tick mandatory. Let’s choose a dividend yield > 4%. Click on “Add condition”. And run it.

When it is processed, you can click on “Results”.

You can now sort the counters by their dividend yield, with the highest dividend yield counters on top, and they also have low debt/equity ratio (among the top 20 lowest) and high interest cover.

Well, there you have it.

You can try out the other metrics listed within and see what lists of counters you get.

However, this screener service is only available to paid subscribers of StocksCafe. You can check out its subscription pricing here.

Nevertheless, you can use my referral code: apenquotes. Just click here. Upon signing up using the referral code, you will get to enjoy being a Trial Global Friend of StocksCafe and test out all features for free for one month!

Please follow me at StocksCafe, via my StocksCafe profile page.


Tiger Brokers

For the Singapore market, Tiger Brokers currently waive the minimum fee and only charge a 0.08% trading fee. This drastically reduces your cost as the minimum fee from other brokers (ranging from SGD 8 such as FSMOne and SCB, to SGD 25 for local brokerages) does add up and can eat into your returns.

Tiger Broker Referral Code:: GPE59H

Sign up here.

FSMOne.com

Typically I use FSMOne.com to invest in funds & ETFs (including money market funds).

If you do not have an account, you can sign up here. Please use my FSMOne referral code: P0031127, when you sign up.

Gemini

As stated by MoneySmart on Jan 22, if you’re looking to optimise trading your crypto with relatively low fees, simple-to-grasp expert UI and ease of purchase with Singapore dollars. then the best crypto exchange in Singapore is Gemini,

If you do not have an account, you can sign up here using my referral link. After you have signed up, once you buy or sell US$100 or more (or 100 USD equivalent of your domestic currency) within 30 days of creating your account, your account will be credited US$10 (or 10 USD equivalent of your domestic currency) worth of bitcoin.

Shopee

I have been using Shopee for a while and think you will like it as much as I do.

Get $10.00 off your first purchase using my code DARREB52.
Download Shopee now and enjoy hot deals at the best prices! Click here.

Happy shopping!

Posted in How to guide, Investing methodology, REITS | 2 Comments

Why I think Charlie Munger did not sell out of Alibaba (BABA)

First of all, personally, I feel that investing is really a deeply personal endeavour. There is really no right and wrong, and it is dependent on your own personal character and situations.

In my previous post, I discussed the predictions by Michael Burry.

In this post, let’s think about Charlie Munger. Charlie Munger together with Warren Buffet, are probably the best know investors around. Charlie is 98 years old and has a net worth of around USD 2.2 billion.

Charlie Munger and Michael Burry are in my opinion, great investors. They have very different styles of investing, and both are extremely difficult for small retail investors (like me) to emulate (in that sense they are similar).

Michael is able to make profits in good and bad times and has a good track record of beating the S&P 500. In good times, he is long quality stocks and in down markets, he shorts over-valued stocks (options trading).

Charlie on the other hand is the ‘king’ of doing nothing for an extended period of time. I meant that in a good way. In contrast to Michael, for Charlie, 99% of his investing is basically doing nothing and waiting. For instance, before he bought Alibaba shares in Q1 2021, his previous most recent portfolio activity was a reduction in his Posco (PKX) stakes in Q4 2014.

His inactivity is astounding.

Oh yes, he hates ‘over-paying’ for any stock. In addition, in view of his long time horizon when it comes to investing, market crashes are a given.

“The big money is not in the buying and selling, but in the waiting.” Charlie Munger

Hence, it is no wonder that when it was known that Charlie bought Alibaba shares in Q1 of 2021, the investing world was abuzz with this news. Charlie is the chairman of Daily Journal, the Daily Journal has positions in only five stocks. Through the 13F filings of the Daily Journal, the public can track the holdings’ size (and earlier trading moves made).

He started buying Alibaba shares (BABA) in the low $200s, and while the shares continued to fall, he continued to buy. In Q3 2021, he nearly doubled his position and in Q4 2021 he doubled his position again. He was quite literally doubling (or averaging) down on this stock.

However, then he did something which most people did not expect. In Q1 2022, Charlie slashed his company’s holding in Alibaba Group Holding Ltd. (BABAFinancial) by 50.17% during the quarter, selling 302,060 shares. The transaction had an impact of -13.87% on the equity portfolio. The stock traded for an average price of $115.52 per share during the quarter.

Subsequently, it holds 300,000 shares in total, accounting for 15.35% of the equity portfolio. It is estimated that Daily Journal has lost 40.25% on the investment since establishing it in the first quarter of 2021.

Charlie Munger’s Daily Journal Halves Alibaba Position (read here)

Charlie Munger Dumped Alibaba, but Analysts Are Still Bullish (read here)

So that triggered the question: Was he just tax-loss harvesting or did he indeed make a mistake?

Recently, the Q2 2022 13F filing was released (July 2022), and I reckon we finally have the conclusive answer. True to Charlie’s nature, there was no activity, no buying and no selling.

If Charlie really thinks that he has indeed made a mistake, he would continue selling and not stop at 50.17% (and probably reduce it by 100%).

Well everyone makes mistakes, even the great Charlie Munger.

Nevertheless, Charlie himself has acknowledged that there are risks in investing in Alibaba.

There was a large and incalculable risk from the tortuous structure in which BABA and other Chinese companies are packaged for foreign ownership. It was also clear that China no longer needed foreign investors as it had two decades ago and would no longer welcome investments that pulled huge profits out of Chinese enterprises. Charlie Munger could not have been uninformed of these factors. He simply saw the problem differently.

Alibaba is a growth company, not a cigar butt company with a few more puffs in it. Its growth looks uncertain, however, as the government feels free to lay demands on it as a contribution to “Common Prosperity,” the cover slogan that Xi Jinping has applied to buy submission to his authority.

Here’s what Charlie saw in Alibaba, the same stuff that everybody interested in the subject already knows:

Alibaba is a rapid growth company.

However, the last couple of years shows how it has been bloodied by the Chinese government. As fast as revenues grow, the cost of revenue numbers has outpaced them. Both gross profit and net income growth trail revenue growth since 2016.

Many would have graded Alibaba for an A+ on Profitability and a C on valuation. However, as many (critics) would have said, it is cheap for a very big reason.  It’s too cheap, and that’s not necessarily a good thing. The best comparison is to Meta (FB). It has been cheaper than its tech/media peers for a few years, and now everybody knows why. It was cheap in a bad way. That tells us that the market’s view is that it is no longer a growth company but a troubled company. It sells at a discount to the market.

Let’s refresh back on what Charlie said about Alibaba in the past (and more importantly as recent as in Feb 2022). Alibaba is a stock with some wonderful operating businesses and a single big problem (regulatory risk).

At the May 2018 Berkshire Annual Meeting, Charlie said that “Most American investors are missing China.” I’m not so sure about that. At another point, and for the life of me I can’t dig it up, he said a few good words about the model of “socialism with Chinese characteristics,” in effect the Chinese model of capitalism.

During the 16 Feb 2022 Daily Journal Meeting, Charlie said:

Why invest in China? And why Alibaba?

“China is a big modern nation. It’s got this huge population, and this huge modernity that’s come in the last 30 years. And we invested some money in China because we can get more value in terms of the strength of the enterprise and the price of the security than we could get in the United States.

We did it for a very simple reason. We got more strength per dollar invested. In China, the companies we invest in are stronger relative to their competition and priced lower. That’s why we’re in China.”

Why Warren doesn’t invest in Alibaba?

“Well, Warren, like many other intelligent people, likes to invest where he’s personally comfortable. And for some reason, I’m more comfortable with the Chinese than he is. That’s a minor difference. And — but I have all kinds of places where I’m just like Warren, and I have all kinds of things where I’m not comfortable. And I just don’t go near them. I think an old guy’s entitled to invest where he wants to invest in.”

Does the VIE structure bother him?

“When you buy Alibaba, you do get sort of a derivative, but assuming there’s a reasonable honor among civilized nations, that risk doesn’t seem all that big to me.”

The above was on 17 Feb 2022, it was right in the middle of the quarter when Charlie reduced his stake in Alibaba by 50.17%. The above quotes do not sound like coming from someone who turned negative on his latest stock pick. Moreover, I do not think Charlie is a hypocrite either (he has no need to anyway).

So with the above quotes and thoughts and the fact that he stopped selling in Q2 2022 proved that he is indeed tax-loss harvesting by selling Alibaba stocks.

Charlie sold exactly 302,060 shares (not 300,000 shares). That number is exactly the total no. of shares he bought in Q1 & Q2 2021.

It tells us he basically wants to hold around 300,000 shares. So he bought around 602,060 shares in Q4 2021 at the heavily depressed price of $110-$120 dollars, then in Q1 2022, he locked in his loss by selling 302,060 shares. And then he reset his position at his entry point in Q4 2021 for the long term.

So what is tax-loss harvesting?

During that time when he sold, the majority of Munger’s trade in the stock is still down by between 58% and 30%. Mohnish Pabrai, a value investor who reportedly plays bridge with Munger and also owned a substantial stake in Alibaba before selling out, has stated in an interview that he sold his Alibaba stake for tax loss harvesting.

Tax loss harvesting is when you sell a stock at a loss to offset any capital gains tax you may have had to pay on another asset. In most countries (including the US), this is perfectly legal as long as you don’t buy back the stock straight away. Usually, you must wait at least 30 days before buying back the stock; this is called the “Wash Sale Rule.”

Of course, the billion-dollar question is why would a 98-year-old billionaire still wants to invest for the long term (for the Daily Journal Corporation). Mind you, when we talk about the long term in Charlie’s definition, it is not months or a few years, but decades. He thinks with a 30 years’ time horizon.

Let’s just say that the time horizon for his hypothesis would likely outlive him.

As highlighted above, to quote him again: “I think an old guy’s entitled to invest where he wants to invest in.”

Well, with that being said.. full disclosure, I currently do not own any Alibaba stocks. I used to own Alibaba stocks (9988.hk). I first invested in Alibaba near the end of 2020 after reading up more on it. Subsequently in May 2022, I capitalised on the depressed price to switch the funds invested in Alibaba to Tencent (700.hk). I also have a small holding in Pinduoduo (PDD).

I felt that Tencent is a better company than Alibaba (but I may be wrong).

Stock price of Alibaba Group Holding Limited (9988.HK) continues to drop… What should I do? (read here)

I still believe that Alibaba is a great company, and believe that the regulatory risks would sort themselves out. I also have a significant portion of my dividend portfolio in HK-listed dividend counters (around 30%).

Nevertheless, to add to the negative news, on 29 July 2022, the U.S. Securities and Exchange Commission added Alibaba to its provisional list of companies that would be delisted from U.S. exchanges under the 2020 Holding Foreign Companies Accountable Act (HFCAA), meant to force U.S.-listed Chinese firms to open their books to U.S. inspectors.

The SEC’s threat to delist Alibaba is a new chapter in a years-long dispute between U.S. and Chinese regulators over how to audit Chinese companies listed in the U.S. The fight over auditing requirements puts all 261 U.S.-listed Chinese companies, with a combined $1.3 trillion in market capitalization, at risk of being forced to leave U.S. markets.

Alibaba raised $25 billion in 2014 in what’s still the U.S.’s largest IPO. Now a U.S.-China fight could kick the Chinese tech giant off Wall Street (read here)

I am sure Chinese tech stocks are not for everyone. It is difficult enough to track and review the financials and business narratives of any listed company, having another set of regulatory issues does add to the stress.

Well, I guess, to each his own.


StocksCafe

FYI I find StocksCafe useful for the tracking of my own portfolio, and especially like to use it to track my portfolio stock dividend/bond interest payouts (projected and due). You can use my referral code: apenquotes. Just click here. Upon signing up using the referral code, you will get to enjoy being a Friend of StocksCafe and test out all features for free for two months!

Please follow me at StocksCafe, via my StocksCafe profile page.

Tiger Brokers

For the Singapore market, Tiger Brokers currently waive the minimum fee and only charge a 0.08% trading fee. This drastically reduces your cost as the minimum fee from other brokers (ranging from SGD 8 such as FSMOne and SCB, to SGD 25 for local brokerages) does add up and can eat into your returns.

Tiger Broker Referral Code:: GPE59H

Sign up here.

FSMOne.com

Typically I use FSMOne.com to invest in funds & ETFs (including money market funds).

If you do not have an account, you can sign up here. Please use my FSMOne referral code: P0031127, when you sign up.

Gemini

As stated by MoneySmart on Jan 22, if you’re looking to optimise trading your crypto with relatively low fees, simple-to-grasp expert UI and ease of purchase with Singapore dollars. then the best crypto exchange in Singapore is Gemini,

If you do not have an account, you can sign up here using my referral link. After you have signed up, once you buy or sell US$100 or more (or 100 USD equivalent of your domestic currency) within 30 days of creating your account, your account will be credited US$10 (or 10 USD equivalent of your domestic currency) worth of bitcoin.

Hodlnaut

Hodlnaut is a crypto-borrowing and lending platform that helps investors improve the return on their assets.

If you do not have an account, you can sign up here using my referral link. After you have signed up, you will receive a US$20 sign-up bonus after making a deposit equivalent of US$1,000 in a single transaction on any supported assets within 1 week. Bonus payouts are paid in the same asset deposited. You may make a test deposit of any amount. The deposit equivalent of US$1,000 or more must be completed within one week of the first test deposit.

Shopee

I have been using Shopee for a while and think you will like it as much as I do.

Get $10.00 off your first purchase using my code DARREB52.
Download Shopee now and enjoy hot deals at the best prices! Click here.

Happy shopping!

Posted in Hong Kong Shares | 2 Comments

Michael Burry’s Predictions…and why I am slowing down my DCA investing

Basically, I have been thinking much lately about my warchest level, and also the rate of my DCA (dollar cost averaging) investing to my stock portfolio (esp. my dividend portfolio). Although deep down I still want to grow my monthly/annual dividend amount; however it is also torn by the need to have a substantial warchest to take opportunity of market corrections or crashes.

Since the beginning of the year (2022) markets have been volatile (dropping) but in recent weeks (or month), there has been a slight rebound or sort in the markets. Personally, I was kind of anticipating further drops. For all we know it could be just another dead cat bounce.

Regardless, with my pay still not going higher much, and warchest not up to my comfort level, I have been delaying my DCAs (stretching them for longer periods – months perhaps).

This is actually not easy for me, as I am not the patient kind of guy (but guess have more or less become more patient over the years, probably due to the many painful and expensive lessons hahaha).

Percentage wise with my portfolio much larger than my warchest, I do not think I will ever reach the anti-fragile level (as often touted by Nassim Nicholas Taleb.

Let’s talk about the tweets and comments by Michael Burry.

Michael Burry (known from The Big Short) is currently predicting a huge stock market crash for 2022. In fact, he is predicting a crash on the scale of the dot com bubble and the Great Recession of 2008.

Michael Burry

I have great respect for Michael Burry, and consider him one of the greatest investors alive.

He is famous for predicting the 2007-2008 GFC. He is also infamously known for predicting too early. Still when news about him comes about, I will take notice.

Now fast forward to recent years. In 2021, with the unprecedented money printing (trillions of dollars) by the US Fed, he made the comments that we should all prepare for inflation.

Interestingly, his user name in the Twitter account is Cassandra. In ancient Greek mythology, Cassandra was a priestess who was able to predict the future but unable to convince others to act upon her prophecies.

At that point, he was the contrarian. During that period, the inflation rate was only at 1.7%. (and in fact lower than the Fed’s target).

Now fast forward to today, US inflation is at 9.1%. So yes.. he was early, but right (again).

Even Michael Burry himself admitted that he is habitually 1-2 years early on (predicting) literally everything. His comment on the ‘broken clock status’ is with reference to Elon Musk’s comments.

‘Big Short’ investor Michael Burry warns stocks will crash and rallies won’t last. Here’s a roundup of his recent tweets and what they mean. (read here)

On 3 May 2022, Michael tweeted: “The S&P 500 index has rebounded strongly from the pandemic crash in the spring of 2020, rising from a low of 2,192 points to 4,089 points as of Tuesday’s close. However, it could plummet by 54% to 1,862 points in the next few years.

Basically, he is saying the next market crash bottom will be 10 to 15% lower than the previous market crash bottom. So 15% lower than the March 2020 Covid low will take us to S&P 500 at 1,862. At the time of writing on 6 Aug 2022, the S&P 500 is at 4,120.

That is like another 55% drop (Ouch!).

S&P 500 Chart

Which will bring us to the historical norm of the Shiller PE ratio (at 16).

Now let’s take a pause and let it sink in. Think about our investment holdings, think about it being lower than the March 2020 lows, and how it is in relation to current levels…..

Yeah…It’s not pretty. Unless you are shorting the markets.

It is a bold prediction, which has met with many criticisms online (as always).
Especially as mentioned earlier, in recent weeks (month) we have seen the markets in general (and S&P 500 in particular) bounce back up a bit.

S&P 500 Chart

However, short-term “dead-cat” bounces (up) are quite typical during the long term downward trend. And Michael Burry has tweeted about this before.

Basically, he is saying we are in the early stages of a much bigger crash.

He also mentioned about the increasing low trading volume in recent times.

And although generally, the sentiments are bearish with the high inflation, looming recession, Russian- Ukraine war, the selling has not really started. Money is still flowing into the markets. Michael is predicting more selling volume in the next few years.

He showed the below 10 year S&P 500 charts. In white the run up of the S&P 500 today. In yellow, the run up to the dot-com bubble (2000). In green, the run up to the great depression (1930).
It is pretty scary how similar they are. Micheal seen this part of human nature numerous times.

I guess beyond this charts, it is really the underlying economy. With high and rising inflation and rising interest rates, consumers usually have less money to spend as money is used to service their debt.

And this will start a self-fulling downward spiral.

Basically, we can take clues from Amazon’s earning to see this slow down (esp. in retail).

Amazon: It’s No Longer The Fast Growing Behemoth (read here)

Well, since Michael is notoriously known for predicting too early (by 1 to 2 years), I do hope I have sufficient time to bulk up more on my warchest, while slowly (but still) building up my (dividend) portfolio.
On the other hand, I do not think I can completely just stop investing (in stocks) or liquidate my holdings and transfer all my income or cash to my bank account or SSB / money market funds.

Beside inferring from Michael Burry’s tweets, there are also many other thoughts on my mind, which I won’t go into details in this post (too long for one post).

I guess crashes are unavoidable, and no matter how much I prepare for it, I will never be really prepared.


StocksCafe

FYI I find StocksCafe useful for the tracking of my own portfolio, and especially like to use it to track my portfolio stock dividend/bond interest payouts (projected and due). You can use my referral code: apenquotes. Just click here. Upon signing up using the referral code, you will get to enjoy being a Friend of StocksCafe and test out all features for free for two months!

Please follow me at StocksCafe, via my StocksCafe profile page.

Tiger Brokers

For the Singapore market, Tiger Brokers currently waive the minimum fee and only charge a 0.08% trading fee. This drastically reduces your cost as the minimum fee from other brokers (ranging from SGD 8 such as FSMOne and SCB, to SGD 25 for local brokerages) does add up and can eat into your returns.

Tiger Broker Referral Code:: GPE59H

Sign up here.

FSMOne.com

Typically I use FSMOne.com to invest in funds & ETFs (including money market funds).

If you do not have an account, you can sign up here. Please use my FSMOne referral code: P0031127, when you sign up.

Gemini

As stated by MoneySmart on Jan 22, if you’re looking to optimise trading your crypto with relatively low fees, simple-to-grasp expert UI and ease of purchase with Singapore dollars. then the best crypto exchange in Singapore is Gemini,

If you do not have an account, you can sign up here using my referral link. After you have signed up, once you buy or sell US$100 or more (or 100 USD equivalent of your domestic currency) within 30 days of creating your account, your account will be credited US$10 (or 10 USD equivalent of your domestic currency) worth of bitcoin.

Hodlnaut

Hodlnaut is a crypto-borrowing and lending platform that helps investors improve the return on their assets.

If you do not have an account, you can sign up here using my referral link. After you have signed up, you will receive a US$20 sign-up bonus after making a deposit equivalent of US$1,000 in a single transaction on any supported assets within 1 week. Bonus payouts are paid in the same asset deposited. You may make a test deposit of any amount. The deposit equivalent of US$1,000 or more must be completed within one week of the first test deposit.

Shopee

I have been using Shopee for a while and think you will like it as much as I do.

Get $10.00 off your first purchase using my code DARREB52.
Download Shopee now and enjoy hot deals at the best prices! Click here.

Happy shopping!

Posted in Investing methodology | 4 Comments

Can Singapore retirees afford to be ultra-conservative in a high/rising inflation rate environment?

Well, I reckon the short answer to the above question would probably be: It depends on how much the retiree has in his/her retirement fund?

However, for many of the newly retired who might not be exactly ‘rich’… this might be the question that is in their minds currently.

With the recent inflation rate rising at such a fast pace, it seems like most people in Singapore are already feeling the pinch.

To quote this article: “More than nine in 10 Singaporeans said inflation has affected their lives, with 37% indicating a “significant” impact, according to the poll based on interviews with 758 people aged 20 and above.”

In fact, in this article, it states: core inflation – which excludes private transport and accommodation costs – went up to 3.6 per cent in May, from 3.3 per cent in April.”

Singapore core inflation hits 13-year high of 3.6% in May amid rising food prices (read here)

On the other hand, stocks as a whole have performed terribly since the start of 2022.

Stocks Close Out Worst First Half Of A Year Since 1970 (read here)

Year to date, the STI index is down by approximately 6.6% from the high in Feb 2022. There seems to be nowhere to hide as the Federal Reserve continues to raise interest rates to combat the rising inflation. Bond prices likewise are under pressure.

With rising inflation, retirees like many will likely see the value of their cash on hand shrink. However, with less human capital on hand, and with no active income, it is all the more important to watch the basket of assets on hand carefully. If these retirees have a portion of their retirement funds invested in stocks, the value of these stocks would have likely dropped since the high in the early part of the year.

For some retirees, having a high allocation of their retirement funds in risky assets like stocks and REITs might not seem like a good idea now.

Seems like either way (invested or not invested), one would hit…

Inevitably, for a newly retired retiree, he/she might be wondering, since either way he/she is going to ‘lose’ anyway, why bother with the stress of investing, and just stick to ultra-safe assets like bank deposits, CPF and Singapore Saving Bonds?

I was wondering, hypothetically if a ‘newly retired’ retiree is to play it totally safe and go for the ‘safest’ assets/ investments possible other than cash, how much he/she requires to survive and for how long?

After all, there is always a ‘price’ to pay for everything…

Commentary: Too few in Singapore understand the impact of inflation on investments and savings (read here)

There are a few parameters which need to be listed first:

1) Safe ‘assets / investments’

There are a few ‘safe’ assets, and with the rising interest rates and volatile markets, there are compelling reasons to go for these assets. These ‘safe’ assets, in the Singapore context, would be the CPF, Singapore Saving Bonds, and bank deposits (and maybe money market funds)….I may have missed out some.

Singapore Saving Bond: The Monetary Authority of Singapore (MAS) has launched the latest August 2022 tranche of Singapore Savings Bonds (SSBs), offering a 10-year average return of 3% per year. The August 2022 SSB will pay out a coupon rate of 2% in year 1 alone. 

Singapore bank deposit rates: As per the article below, one can safely obtain around 2% for a tenure of 24 months with minimum deposits of $20,000.

Best fixed deposit rates in Singapore (July 2022) (read here)

In view of the above, with a mixture of SSBs and bank deposits, one can probably get around 2% to 3% yield (average 2.5%).

Nevertheless, although SSB and bank deposits’ yields have increased, they are still a tad less than the inflation rate (Core inflation rate is 3.6%, while the headline consumer price index, or overall inflation, rose to 5.6 per cent year-on-year in May 2022). In other words, SSB and bank deposits are unable to beat inflation (unless inflation rates dived suddenly).

2) Age of retirement and life expectancy

On 1 July 2022,  the retirement age in Singapore was increased from 62 to 63, while the re-employment age was increased from 67 to 68. (read here)

The life expectancy of Singaporeans is among the highest in the world at 81.4 and 85.7 for men and women respectively in 2019, according to the latest public sector report released in Nov 2020. (read here)

3) How much is needed for ‘Basic standard of living’

How Much Do You Need for a ‘Basic’ Standard of Living in Singapore? 5 Things I Learnt From What People Need in Singapore: A Household Budgets Study (read here)

As per the Oct 2021 Seedly article above, it states that single elderly would require around $1,421 per month for a basic standard of living.

By basic needs, it went beyond subsistence living to include also having enough to enable one to thrive in one’s golden years.

4) How Much CPF Savings Average Singaporean retirees have

Here’s How Much CPF Savings Average Singaporeans Have According to Their Age Group (read here)

According to the July 2022 Seedly article above, for people between the age of 60 to 65, their median CPF balance would be approximately $160,000 to $180,000.

5) How much monthly CPF payout the average Singapore retiree might receive

Using the CPF Life estimator, we can roughly work out how payout much a 63-year-old male (eg. born in 1959) with $170, 000 in his CPF would receive if he chooses (a) Escalating Plan (b) Standard Plan (c) Basic Plan.

Assuming (b) Standard Plan, it would look like the below.

That would be around $1,010 per month. Decent amount of money. However, this amount still falls short of the average monthly $1,421 a single retiree would need for a basic standard of living in Singapore.

Scenarios

Let’s assume a few scenarios with varying starting retirement amount (excluding the value of property in which the retiree is staying in), and varying inflation rates but keeping the few parameters as mentioned earlier constant.

In gist,

a) Variables:

– Starting retirement fund amount (war chest)

– Annual core inflation rates

Note: Core inflation, which excludes accommodation and private transport costs, came in at 3.6 per cent year-on-year in May, up from a previous 10-year high of 3.3 per cent in April…The last time Singapore reported higher year-on-year growth was in December 2008, when core inflation was 4.2 per cent. (read here)

b) Constants:

– 63-year-old ‘newly retired’ male (in the current year 2022), and expected to live until age 81 (retirement income to last for at least 18 years)

– $170,000 in CPF, paying him around $1,010 per month.

– He needs around $1,421 per month for a basic standard of living. Hence he needs to withdraw around $400 per month or around $4800 annually from his savings (SSB or bank deposits). This withdrawal amount will increase annually as per the rate of core inflation.

Using this website, we are able to see, how long his war chest can last him.

Scenarios based on the current core inflation rate of 3.6%

1) Starting retirement amount: $500,000 (in CPF, SSB, bank deposits)

a) $170,000 in CPF (assuming he does not touch this amount)

b) $330,000 in SSBs and bank deposits yielding 2.5% annually.

c) Annual core inflation rate remains high at 3.6%.

2) Starting retirement amount: $300,000 (in CPF, SSB, bank deposits)

a) $170,000 in CPF (assuming he does not touch this amount)

b) $130,000 in SSBs and bank deposits yielding 2.5% annually.

c) Annual core inflation rate remains high at 3.6%.

3) Starting retirement amount: $250,000 (in CPF, SSB, bank deposits)

a) $170,000 in CPF (assuming he does not touch this amount)

b) $80,000 in SSBs and bank deposits yielding 2.5% annually.

c) Annual core inflation rate remains high at 3.6%.

What if core inflation rates continue to trend higher in Singapore? After all, the core inflation rate in Singapore was much higher around 2008 – 2009.

In the US, on 13 July 2022, it was reported that excluding food and energy, core CPI rose 5.9%, compared with the 5.7% estimate. (read here)

Scenarios based on the projected core inflation rate of 6%

1) Starting retirement amount: $500,000 (in CPF, SSB, bank deposits)

a) $170,000 in CPF (assuming he does not touch this amount)

b) $330,000 in SSBs and bank deposits yielding 4.5% annually. (assuming these yields are around 1.5% lower than core inflation)

c) Annual core inflation rate became higher at 6%.

2) Starting retirement amount: $300,000 (in CPF, SSB, bank deposits)

a) $170,000 in CPF (assuming he does not touch this amount)

b) $130,000 in SSBs and bank deposits yielding 4.5% annually. (assuming these yields are around 1.5% lower than core inflation)

c) Annual core inflation rate became higher at 6%.

3) Starting retirement amount: $250,000 (in CPF, SSB, bank deposits)

a) $170,000 in CPF (assuming he does not touch this amount)

b) $80,000 in SSBs and bank deposits yielding 4.5% annually. (assuming these yields are around 1.5% lower than core inflation)

c) Annual core inflation rate became higher at 6%.

In gist

It seems that a retiree with a limited war chest and an ultra-conservative investment mindset would find it difficult if the inflation rates were to remain high or trend much higher.

Even with a quarter million in CPF, SSBs and bank deposits, if inflation rates remain high or trend higher … he/she might not have enough for the full length of the retirement years. A mere increase of $50,000, with a retirement fund of min. $300,000 makes a big difference. However, that is assuming that there is no major cash emergencies, and if the core inflation rate does not trend higher (and remains much higher for long).

However, this a just a hypothetical study, flawed in many ways.

In fact, there are many other considerations.

For instance, should the headline inflation rate be used (instead of the core inflation rate)? Eg. if the retiree is renting his/her accommodation or continues to drive his/her own private car.

Would inflation be constant through the 18 retirement years or varies widely?

Would medical expenses be higher as one gets older (70s, 80s yr old)?

What if the retiree lives beyond 81 years old and is in poor health in his 80s or 90s or beyond?

Would SSB and bank deposit yield remain at around 2% to 3% if the inflation rate further increases?

The retiree might also have other sources of income (eg. the retiree’s children may give him/her a monthly token sum) and the retiree can choose to monetise the property he/she is staying in.

Ultimately, life is unpredictable. So back to the question: Can Singapore retirees afford to be ultra-conservative? Well, I guess it is the keyword ‘afford’. It really depends on one retirement fund, needs & wants, available passive income, character, and time horizon… For some, they invest in riskier assets due to greed, while for others, they have to invest cause they do not have the choice.


StocksCafe

FYI I find StocksCafe useful for the tracking of my own portfolio, and especially like to use it to track my portfolio stock dividend/bond interest payouts (projected and due). You can use my referral code: apenquotes. Just click here. Upon signing up using the referral code, you will get to enjoy being a Friend of StocksCafe and test out all features for free for two months!

Please follow me at StocksCafe, via my StocksCafe profile page.

Tiger Brokers

For the Singapore market, Tiger Brokers currently waive the minimum fee and only charge a 0.08% trading fee. This drastically reduces your cost as the minimum fee from other brokers (ranging from SGD 8 such as FSMOne and SCB, to SGD 25 for local brokerages) does add up and can eat into your returns.

Tiger Broker Referral Code:: GPE59H

Sign up here.

FSMOne.com

Typically I use FSMOne.com to invest in funds & ETFs (including money market funds).

If you do not have an account, you can sign up here. Please use my FSMOne referral code: P0031127, when you sign up.

Gemini

As stated by MoneySmart on Jan 22, if you’re looking to optimise trading your crypto with relatively low fees, simple-to-grasp expert UI and ease of purchase with Singapore dollars. then the best crypto exchange in Singapore is Gemini,

If you do not have an account, you can sign up here using my referral link. After you have signed up, once you buy or sell US$100 or more (or 100 USD equivalent of your domestic currency) within 30 days of creating your account, your account will be credited US$10 (or 10 USD equivalent of your domestic currency) worth of bitcoin.

Hodlnaut

Hodlnaut is a crypto-borrowing and lending platform that helps investors improve the return on their assets.

If you do not have an account, you can sign up here using my referral link. After you have signed up, you will receive a US$20 sign-up bonus after making a deposit equivalent of US$1,000 in a single transaction on any supported assets within 1 week. Bonus payouts are paid in the same asset deposited. You may make a test deposit of any amount. The deposit equivalent of US$1,000 or more must be completed within one week of the first test deposit.

Shopee

I have been using Shopee for a while and think you will like it as much as I do.

Get $10.00 off your first purchase using my code DARREB52.
Download Shopee now and enjoy hot deals at the best prices! Click here.

Happy shopping!

Posted in CPF, Personal Finance | 2 Comments

What I read about Digital Core Reit from Digital Realty Trust (DLR) Q1 2022 Earnings Call

The stock markets have been volatile since late last year, with a slight respite in recent days.
Among the various stocks / Reits in my portfolio, many are still holding up.

Having said that, for my dividend income portfolio, my main focus will always be on the sustainability of the dividend income and not the short-term price movement.

However, among the counters in my portfolio, one that caught my attention due to the recent share price drop is Digital Core Reit.

Digital Core Reit only recently IPO-ed on the Singapore market on 6 Dec 2021. The Reit closed some 14.8 per cent higher than its initial public offering (IPO) price of US$0.88 at US$1.01 on Monday (Dec 6), as it made its trading debut on the mainboard of the Singapore Exchange (SGX).

Things were looking rosy until Jan 2022. In a short span of time (around 6 months), its share price has crashed some 37% lower.

Personally, for me, I always deem Reit holdings as long-term holdings. One needs to hold it long-term, for the incremental dividend payout to work its wonders (of slowly building up one’s passive income). Moreover, the fluctuations of many of the bigger cap Reits aren’t really that volatile (relatively speaking esp. compared to smaller cap growth stocks).

Typically with such a big price swing, I would start to question what triggered it, and should I continue to hold on to my position, buy more or sell (at a loss).

Brian from 3foreverfinancialfreedom (3Fs) Financial Independence and Alvin Chow from Drwealth both wrote good articles explaining the potential reasons that could have caused the price decline.

Digital Core REIT (SGX: DCRU) Has Crashed 33% Since Hitting The Peak Just Months Ago. Is It Time To Accumulate or Run? (Read here)

Why are data centre REITs falling? (Read here)

I shall not go into the details here, and I feel that the points are very clear in their articles.

In addition, from the media, we can clearly see two opposing views.

On one end, we have the group led by Investment manager Jim Chano who believes that data centres in REITs and, that are not owned by Alphabet, Microsoft and Amazon are going to be behind the curve so to speak. 

Jim Chanos’ latest big short: data centre REITs (read here)

Jim Chanos

While on the other end, we have the bank analysts (led by DBS Group Research analysts Dale Lai and Derek Tan, UOB Kay Hian’s Jonathan Koh), who remain positive on Digital Core Reit (and data centre Reits in general).

DBS says it remains buyers of Digital Core REIT after further downside in price (read here)

UOBKH disagrees with Chamos’s ‘big short’ on data centers, maintains ‘buy’ on DCR and MINT (read here)

Digital Core REIT has upside, analysts say (read here)

“Citi has initiated coverage on Digital Core REIT with a buy recommendation and a target of US$1. Citi says Digital Core REIT’s portfolio of US$1.4 billion is valued at a historical capitalisation rate of 4.25% compared to a capitalisation rate of 4.7% based on NPI forecasts for FY2022.”

In May 2022, BofA did a presentation for Digital Core Reit at the 2022 APAC Financial, Real Estate Equity and Credit Conference.

I particularly find the research reports by DBS insightful (read here and here).

By the way, DBS is a issue manager, global coordinator, bookrunner and underwriter as stated in Digital Core Reit IPO Prospectus. Likewise for Citigroup and BofA. UOB is a co-manager.

These pieces of information are readily available online, and if you are like me, curious about the insights into the price decline, the above links are good sources. Nevertheless, with this current information, these are all views through the ‘rear view” mirror. Perhaps what is more important to me is what’s ahead.
Perhaps Howard Marks said it best in his memo titled “Something of value”, see below extract.

In gist, instead of readily available quantitative information, a good investor needs to be good at knowing qualitative factors and have a good grasp of how events will unfold the future.

I guess my opinions are biased in the sense that I am currently vested in Digital Core Reit. However, personally, I am not concerned about some of the points put forth by Jim Chanos.

1) Rising interest rates: On April 21, the manager announced that it had established a minimum target of 50% fixed rate debt, and entered into a US$175 million interest rate swap to mitigate interest rate risk. The REIT has some US$500 million of debt, of which US$350 million has been drawn down, and the remaining US$200 million is undrawn. The amount that is on fixed rates is just US$175 million. Cost of debt is 2.1%.

2) Google Cloud, Microsoft Azure and Amazon Web Services, the so-called trio of “hyperscalers” prefer to build data centres to their own design rather than moving into existing ones. When they do outsource, they typically offer low returns to their development partners.

These are known quantitative facts, even prior to the IPO.

Perhaps Andy Power — President and Chief Financial Officer said it best in response to this question: “So we’ve heard some very large deals in the first quarter. What’s changed in the market that would lead to these massive deals? “

Andy Power — President and Chief Financial Officer:

While Digital Core has only 50% fixed rate debt, in Digital Realty’s case, a little over three-quarters of their debt is non-U.S. dollar-denominated, reflecting the growth of their global platform while also acting as a natural FX hedge for investments outside the U.S. Over 90% of their debt is fixed-rate, guarding against a fixed a rising rate environment, and 99% of their debt is unsecured, providing the greatest flexibility for capital recycling.

“I assume you’re seeing large leases, large multiple megawatt leases. I mean — I think the theme — the growth in the sizing of customer requirements on the hyperscale front has been building for some time, not necessarily a completely overnight phenomenon. And I think you witnessed in the first quarter this year or the fourth quarter of last year, other quarters of last year and the year prior.

I think you guys are seeing this continued cloud adoption broadly, continued opening of new regions, opening an offering of new services. And you’re seeing this digital transformation wave in the cloud customers despite the volatility and the uncertainty of an economic backdrop or the war and the like leaning in and securing infrastructure to future-proof their runway for their end customers. So it doesn’t feel like the — one record quarter after another is a little bit of an unusual outcome. But it doesn’t feel like the pace of demand is really slowing on the hyperscale front.

And I think what’s also helped in that backdrop of this continuing steady demand, it’s just become more challenging to be a provider. You have the inflationary pressures, you have supply chain challenges, you have labor challenges and you even have moratoriums in certain parts of the world see some demand. And I think going to the part of how do you get ahead of this is that you’d be in this business for the long run, with Digital Realty been in this business for almost 20 years. You build a scale and capital sources to support our customers through good times and bad.

You make sure you have the runway to future-proof their growth. That’s the acres and acres of often contiguous expansion capacity. You secure your supply chains so that you’re on time and under budget, wherever possible and be that trusted infrastructure partner. I think those are the key ingredients to our recipe.

Digital Realty CEO refutes Chanos short claims, says data center “demand has never been stronger” (read here)

Perhaps we are surprised by the sudden rise in inflation and the 75 basis point rise in interest rates by the Federal Reserve recently, however, from a long-term perspective and the rising demand for data centres, these can be overcome.

What does one expect anyway? Near-zero interest rates for the next decade (after the past 15 years of low-interest rate environment)? At some point, interest rates will rise (which acts as gravity to stock and Reit prices).

Or perhaps it is the sudden bankruptcy of Digital Core REIT’s fifth largest customer – a privately held IT service provider occupying 2.7 MW of the capacity in Toronto also revealed that perhaps the Reit does not have the “high quality and growing data centre customer base” as touted in its prospectus.

Digital Core Reit is a relatively small and young data centre Reit in the Singapore market. In terms of the total market value of the data centres in its portfolio, Digital Core Reit is still behind Keppel DC Reit and Mapletree Industrial Trust.

However, it has the added advantage of tapping into the expertise of its big brother Digital Realty. Both Keppel DC Reit and Digital Core Reit have a relatively low percentage of Shell and Core data centres.

Although shell & core data centres may seem the most attractive as it requires minimal management and does not carry any operational risks, landlords of colocation and fully fitted facilities could potentially generate higher profits from the individual smaller tenants with the right operational experience.

And from what we can see from the example of the bankruptcy of its fifth-largest customer, its financial muscle as well.

Digital Realty Demonstrates Commitment to Digital Core REIT (read here), To quote:

“In keeping with Digital Realty’s continued commitment to the success of Digital Core REIT, it has reached an agreement in principle to guarantee the rental income stream to Digital Core REIT in the event of a near-term cash flow shortfall due to the customer bankruptcy.  Given the current customer stance as well as the strength of the Toronto market and the cash flow guarantee, the customer bankruptcy is not expected to have a material impact on Digital Core REIT’s distribution per unit, or DPU. 

“Digital Core REIT is a strategic capital partner, and we are pleased to demonstrate our commitment to their success,” said Digital Realty Chief Executive Officer A. William Stein.  “This support is a direct reflection of the strength of Digital Realty’s global platform as well as the depth and breadth of our large and growing installed customer base.” 

Digital Realty Trust (DLR) Q1 2022 Earnings Call Transcript

As mentioned by Howard Marks, perhaps the key to successful investing is via the good judgement of the qualitative factors and future events. So what are these qualitative factors? One is the management team.

As stated in Digital Core Reit’s prospectus:

Management team and board of directors comprised of longstanding Sponsor team members with extensive data centre experience, along with real estate and finance industry veterans serving as independent directors.

Digital Core Reit just IPO, hence the next best thing I could get a sensing from was via Digital Realty April 22 earnings call transcript.

I was trying to gauge the competency of the management team via reading the transcript, and in the process found some information about Digital Core Reit and the bankruptcy of its fifth-largest customer.

Digital Realty Trust share price itself has also been on a downtrend. About 29% decline from end 2021.

Digital Realty conducted its earning call on 28 April 2022. You can read the transcript here.
During the earnings call, there were mentions about Digital Core Reit and the bankruptcy of its fifth-largest customer.

This same customer is also Digital Realty’s 23rd largest customer and leases approximately 10.5 megawatts directly from Digital Realty across six facilities in four markets, totalling approximately $22 million of annualized revenue, or 0.7% of Digital Realty’s total revenue. 

While Digital Core has only 50% fixed rate debt, in Digital Realty’s case, over 90% of their debt is fixed-rate, guarding against a fixed a rising rate environment, and 99% of their debt is unsecured, providing the greatest flexibility for capital recycling. A little over three-quarters of their debt is non-U.S. dollar-denominated, reflecting the growth of their global platform while also acting as a natural FX hedge for investments outside the U.S.

Andrew (Andy) Power has served as Digital Realty’s President since 2021 and as Chief Financial Officer since 2015. 

1) Question about why the customer became bankrupt:

Andy Power — President and Chief Financial Officer:

“I think what’s more relevant is that customer obviously got, call it, sideswiped by two particular issues. One, obviously, a part of their business what’s not common in our customer base was disaster recovery for office, which has obviously got impacted by the Zoom-ification during the pandemic; and then secondly, the elevated power prices, especially in Europe at incremental liquidity constraints. I don’t see that as a really recurring theme in our customer base, especially the first piece of what I described.

And this customer is going to obviously work through with this bankruptcy process. And I think we’ve been taking active steps not just related to this customer but in general, to continue to streamline and focus our portfolio on core assets that we have — we see robust and long-term demand, multicustomer facilities, less single stand-alone facilities. And quite frankly, why we entered the colocation interconnection business several years ago was not only was the growth to our business but also to be prepared in the event that some of our colocation resellers ran into financial times and we had to step in and support their end customers only in the event that leases are rejected, obviously.”

2) Question about core FFO per share growth

Ques:  I think you outlined core FFO per share growth on a normalized sort of constant currency basis this year would be north of 7%. I know, Andy, I think in the past, you’ve talked about mid- to high single core FFO per share growth on a forward basis. Just wondering, all else equal, as we start thinking about 2023, without giving specific guidance, is that sort of 7-ish percent rate that’s on the Slide 22, a good sort of framework or start point to think about as we think beyond this year? Thanks.

Andy Power — President and Chief Financial Officer:

“And then, Matt, on your second question, I mean we just reported the first one quarter of 2022. So obviously, not prepared to put 2023 guidance out just yet. But obviously — but you can see on a constant currency basis, we’re now north of 7% on the bottom line core FFO per share that extraordinary FX headwinds this year, if you look back the last several years, you had, call it, currency fluctuations in the, call it, two to five or so percent. And this year, the year, call it, soon to be like 9% delta.

The headwinds — or could be a tailwind, usually we’re in the 50 to 75 basis points range. And now we’re, call it, north of 200 basis points of headwinds. I think — look, the goal from the beginning of the year, as well as last year is to continue to accelerate bottom line’s earnings growth. Last year, we came out of the gate with guidance of 4%.

We ended up with 5%. This year, we came out with guidance of 5%, which we are affirming in this call, despite these FX headwinds as well despite a customer bankruptcy. And our goal is to kind of again keep consistently putting up mid- to high single digits bottom line growth.”

3) Question how the bankruptcy affects the FFO outlook

Ques: And maybe I missed it, but the bankruptcy, is that in the FFO outlook? And what’s the impact from that, if it is?

Andy Power — President and Chief Financial Officer:

“Bankruptcy, aside from a, call it, noncore straight-line right add back that’s not in core FFO, we basically already absorbed about almost $4 million of a hit for the first quarter due to, call it, pre-petition receivables, which I mentioned earlier on the call. And then we’ve made an assumption as to additional, call it, $6 million of headwind for the remainder of the year because quite honestly, we’re kind of just handicapping the outcome of events because the customer is obviously going to go through the court process and either accept or reject leases. The last time this go around, I think almost all of the leases were accepted. I’m not sure or that will be the case this go around.

And then there’s the scenarios as to if a lease is rejected and their end customers could be essentially absorbed by Digital Realty. So $6 million of incremental and on top of the $4 million, taken in the first quarter is our essentially hit or adjustment due to the bankruptcy for the year.”

My thoughts

There are a number of questions in my mind pertaining to the initial fears which probably triggered the price decline for Digital Core Reit.

1) The rising interest rate and Digital Core Reit low percentage of fixed-rate debt.

As stated by Brian: While the REIT might be lowly geared at only 26%, the debt profile is based on 50% fixed and the other 50% on floating rate. Given that the entire debt is in USD and interest rate is increasing, the cost of debt might increase from here onwards, although we would argue that this is likely the case for most of the REIT with gearing not on fixed rate.

If one is to compare among the Reits listed in the Singapore market, Digital Core Reit does indeed have a really low fixed rate debt percentage.

Extract from post from Reit-tirement below:

Fixed debt % ≤ 50%:

1) BHG Retail REIT

2) Dasin Retail Trust

3) Digital Core REIT

4) Lippo Malls Indonesia Retail Trust

Now the interesting part is that the Reit was IPO-ed in Dec 2021, However, only in April 2022, the manager announced that it had established a minimum target of 50% fixed-rate debt, and entered into a US$175 million interest rate swap to mitigate interest rate risk.

The Reit has some US$500 million of debt, of which US$350 million has been drawn down, and the remaining US$200 million is undrawn. The amount that is on fixed rates is just US$175 million. Cost of debt is 2.1%.

Keep in mind that Digital Realty Trust (Digital Core Reit Sponsor) has 90% fixed debt ratio. They are keenly aware of the importance of this ratio (after touting this in their April 2022 earnings call).

Now, can Digitial Core Reit manager change this fixed debt percentage?

I am sure there will be implications. For instance, floating rates interest will be lower than fixed rates interest, and by doing so will incur more interest payment, thereby reducing the distribution income (and reducing DPU/dividend payouts).

Would that be an option to explore to address the achilles heel of this Reit? Given how fast events unfold, I would not be surprised.

Nevertheless, with the reduction in DPU… it would bring us to the 2nd point below… would it contradict the growth mandate (aren’t DPU supposed to rise by 5.26% in PY 2023)?

2) Lowered price and rising yield, and a mandate for growth

From a typical owner’s perspective, he may or may not be that disturbed by fluctuations or even drops in stock prices, as they typically do not fundamentally affect the day-to-day runnings of the business.

However, in the case of Reits. It is not that simple.

To qualify as securities, REITs must payout at least 90% of their net earnings to shareholders as dividends, leaving very little left (for expansion). And more so for a newly IPO Reit with key strategies plainly listed out in the prospectus (see below).

Digital Core Reit IPOed with an offering Price of US$0.88 per Unit. The yield expected for forecast year 2022 is 4.75%, with a distribution per unit of 4.18 cents.

With the current share price US$0.76, the yield (assuming DPU is still 4.18 cents) is now a high of 5.5%. Assuming the share price stagnant (unlikely), and with the DPU expected to go up in FY 2023 to 4.4 cents, the yield will jump to approx. 5.8%. If share price tank further, yield will even go higher into to 6% to 7% range.

Given that DigiCore Reit was listed as a perpetual long-term vehicle for Digital Realty to divest and recycle its assets, I would be really interested in how Digital Core Reit can acquire accretive assets given its increasing yield.

In this 2021 Savills article, it states: In the USA, the most liquid market, prime yields range from 4% to 12%; a wide range which very much depends on size, tenure and various locations across the country.
In Japan, prime data centre yields range between 4% and 5%, in Western Europe between 5% and 7%, in Singapore between 6% and 7%, in Malaysia between 7% and 7.5% and in China between 8% and 12%.”

In this Feb 2021 PGIM Investment Research article, it states: “The U.S. data center market is the most transparent compared with Europe and Asia Pacific, given the relative maturity of the market and availability of data on leasing fundamentals and pricing. Data center yields, currently at 5.8% according to Green StreetAdvisors, have been compressing over the past two years while maintaining an attractive spread over major commercial real estate sectors except retail (exhibit AM4). Listed data center REITs have performed well relative to other real estate sectors throughout the COVID-19 pandemic market volatility, suggesting market confidence in longer-term structural drivers that the data center sector offers.”

Would Digital Core Reit honour its commitment to acquire Quality income-producing properties to achieve a 5.26% increase in DPU amidst the falling share price? A drastic sharp fall in share price does not make things easier.

In simple terms, from the Reit manager’s perspective, it would not make sense to acquire a data centre yielding lesser than the Reit’s own dividend yield. Investors would be unhappy with this move (them being the potential source of funding for the acquisition). And if Digital Core Reit dividend yield rise to 6% to 7% or more…it just further reduces (or eliminates) the options available and the job harder. The Reit manager would be caught between a rock and a hard place.

In addition, the customer which went bankrupt is also Digital Realty’s 23rd largest customer and leases approximately 10.5 megawatts directly from Digital Realty across six facilities in four markets, totaling approximately $22 million of annualized revenue, or 0.7% of Digital Realty’s total revenue. 

So likewise, Digital Realty (Digital Core Reit’s sponsor) is also impacted.

However, Andy Power (President and Chief Financial Officer) has affirmed Digital Realty’s core FFO per share growth to be 5% despite these FX headwinds as well despite a customer bankruptcy.

Note: Digital Realty Trust increased its core funds from operations (FFO) by 5% to $6.53 per share in 2021. 

Nevertheless, it is worth noting (as stated in Digital Core Reit prospectus):

Close to 100.0% of existing leases by Base Rental Income for the month of June 2021 and NRSF as at 30 June 2021 have built-in annual rental escalations. The annual rental escalations generally range from 1.0% to 3.0%, with a weighted average of 2%.
Approximately 85.2% and 62.2% of existing leases are triple-net leases, based on NRSF as at 30 June 2021 and Base Rental Income for the month of June 2021, respectively, which shields Digital Core REIT from increases in real estate taxes and property expenses, which are absorbed by or passed on to customers.

And the prospectus has stated a number of risks:

Closing thoughts

As mentioned earlier, I do not deem this counter as a short-term play, and I do intend to hold on to this counter for the time being and to judge further on how events unfold.

The bankruptcy of a key tenant is an unfortunate but possible event. More so for a newly listed Reit with a concentrated portfolio (10 assets concentrated in top-tier data center markets across the U.S. and Canada valued at $1.4 billion).

What is important is how it was managed.

Although the management team for the newly listed Digital Core Reit is newly formed, the management team and board of directors are comprised of longstanding Sponsor’s team members with extensive data centre experience, as well as real estate and finance industry veterans serving as independent directors.

However, looking at the previous appointments of the executive officers, many previously worked for BofA, Citigroup, DBS – aren’t these banks the syndicate that forming the issue managers, global coordinators, book-runners and underwriters of the Digital COre Reit IPO?

Ultimately Digital Core Reit and Digital Realty are tied at the hips. With the former being considered as Digital Realty’s highly strategic capital partner. (Key word being ‘capital’; especially during this period when liquity is sucked from the markets).

From reading the transcript of Digital Realty earnings call, I have no doubt about the expertise and professionalism of the management team (of Digital Realty) eg. CEO Bill Stein and President and CFO Andy Power. Chief Investment Officer Greg Wright, Chief Technology Officer Chris Sharp, and Chief Revenue Officer Corey Dyer. They were forthcoming, candid and good in their area of expertise. They also tend to finish each other’s sentences and tackle questions related to their scope well.

However, they did come off from the high of the Covid induced strong growth phase and they did acknowledge that but seem to be prepared for the future. Nevertheless, probably more need to be done for Digital Core to succeed in the Singapore market, with yield-hungry Singapore investors being spoilt for choice.


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Lessons from Brian Banks

From time to time, I would come across movies that leave a lasting impression on me.

Recently, I watched the show “Brian Banks” on Netflix. Unfortunately, if you intend to watch it now in June 2022, the show is no longer available on Netflix Singapore.

It is a simple feel-good movie with a strong underlying message.

The show revolved around the inspirational true story of Brian Banks, an all-American high school football star who finds his life upended when he’s wrongly convicted of a crime he didn’t commit. Despite the lack of evidence, Banks gets railroaded through a broken justice system and sentenced to a decade of prison and probation. Years later, with the support of Justin Brooks and the California Innocence Project, Banks fights to reclaim his life and fulfill his dreams of playing in the NFL.

In June 2002, Wanetta Gibson, 15, accused junior Brian Banks, 16, then a standout football player at Long Beach Poly High, of dragging her into a stairwell and raping her. 

According to Banks, who was 17 at the time and being tried as an adult, he believed the plea deal was the less risky choice. This was at the urging of his attorney, who was hoping Banks would get probation, not the maximum of six years. The deal was that if he pled no contest to one count of sexual assault that he would undergo what’s called a 90-day observation at Chino State Prison.” His attorney assured him that after the 90 days, the counsellors and psychologists would give him a favourable report and the judge would agree to give him probation.

If Brian Banks didn’t take the deal, the true story confirms that he was facing a potential sentence of 41 years to life in prison if found guilty (California Innocence Project). He had just 10 minutes to make the decision and said he wasn’t permitted to speak to his mom. He was told there was no time.

In the end, he decided to plead no contest.

He did not get a favourable report, and the judge did not give him probation.


He ended up convicted of rape in 2002, Banks spent five years and two months in prison, in addition to five years of high-custody parole, during which time he was required to wear a GPS tracking device on his ankle. He also had to register as a sex offender, which significantly hurt his chances of finding a job.

So yeah, for that 17-year-old all-American high school football star… life served him a serious curve ball, and his once stellar future seems to be all but gone.

He was a frightened, fustrated, angry and confused teenager in a prison surrounded by men who committed actual crimes.

However, he did not give up.

A teacher Brian encountered at Juvenile Hall by the name of Jerome Johnson, who became a mentor to Brian. In the film, he tells Brian, “your despair can become a doorway” and that “all you can control in life is how you respond to life.”

Nearly a decade after his conviction, Gibson recanted her statements and has acknowledged she fabricated the whole story.  The California Innocence Project presented this evidence of Banks’ innocence to the Los Angeles District Attorney’s Office who launched an investigation into the case.  After a thorough review of the evidence, the District Attorney’s Office conceded that Banks was wrongfully convicted.

On Thursday, May 24, 2012, Judge Mark C. Kim of the Los Angeles Superior Court reversed Banks’ conviction and ended his nightmare of wrongful conviction. “There comes a time when you have to let go in order to move on. The only thing I wasn’t going to let go was this fight,” Banks said outside of the courthouse after his exoneration.

I don’t know about you. However, in recent months there are days or weeks or months for me when everything seems to go out of wack.

There are days whereby I woke up, peeked at the laptop screen, and just see this (see below). It makes me wanna shut the laptop down and go back to sleep (and never wake up).

I go to work, and everything seems to go against me.
It sucks. (probably like how Ronny Chieng would say it – SUCKS! – with capital letters).

After work, I go home… wifey told me that our neighbour downstairs complained that there are leaks coming from our toilet to her toilet. Groused about other stuff.

I again look at the stock portfolio with my tired eyes, and see that the losses for that day are more than what I can make in a month; on some days they can run up to five figures losses… and that has been happening consecutively for the past few days/weeks…. how much longer is this gonna last?

So yeah, I know the magnitude is nothing compared to what Brian Banks felt… but I can see the parallel in some of these.

Life like the stock market is something which I can’t control. Man, if I am not invested in stocks… and have my cash safely kept in the bank…markets’ volatility would mean nothing to me. I would be blissfully unconcerned about the rising interest rates, inflation fears, war in Ukraine, Fed reserve announcements, lockdowns in China, the recent ban on the export of Indonesian palm oil – and what these fears do to the stock markets.

But nooo…. it seems that I have to pay the ‘fees’ to stay invested.

And probably like Brian’s mentor said: “all you can control in life is how you respond to life.”

So when it comes to my stock investments, it is back to calmly looking through the recent companies’ narratives, financial reports, annual reports, the valuations, and free cash flows of the underlying companies.

Holding on to a diverse basket of stocks… and be thankful for the incoming dividends.

And to slowly add on to my investments.

It is what it is… life goes on.

Frankly, all stocks are risky. Different sectors (or even different markets) have different sets of risks and (from another angle) different sets of potentials.

If I look past the head-lines news (of doom and gloom), of the looming recession, rising inflation, rising interest rates, Russia-Ukraine conflict, Covid lockdowns, the social unrest in HK, regulatory risks (when it comes to China-related stocks)…

I can see that profits are rising for many of the stocks in my portfolio.

For my portfolio:

The recent results of The Trade Desk, Mastercard, Pinduoduo and many of the REITs, are improving.

Mastercard posted adjusted earnings of $2.76 a share on $5.1 billion in adjusted net revenue, well above estimates calling for $2.18 in earnings per share and revenue of $4.91 billion. Adjusted net income was $2.7 million, up 55% from the same period last year. Operating expenses increased 11% due to a 6-percentage point increase from acquisitions, and increased spending on advertising and personnel costs.

The Trade Desk earnings were 21 cents per share, up 50% from a year earlier. Revenue rose 43% to $315 million.

Pinduduo posted a solid quarter. Net income came in at 2.6 billion yuan ($410.1 million), a turnaround from a loss of 2.9 billion yuan last year. Both monthly active users (MAU) and active buyers reached all-time highs of 751 million and 882 million. The balance sheet remained strong with 95.2 billion yuan ($15.0 billion) in cash, cash equivalents, and short-term investments.

Google’s revenue came in at $68.01 billion, growth of 23% from the same period last year. That’s a slowdown from 34% growth in the first quarter of 2021, when the economy was reopening from the pandemic.

Better days ahead for Tencent and Alphabet, I hope.

HK Reits like Link Reit have improving financial results and their debt ratio (compared to their Singapore peers) is way low.

On 1 June 2022, Link Reit announced that its key performance indicators reflect resilient business performance despite the ongoing macroeconomic challenges and uncertainties. Occupancy has improved from 96.8% to 97.7% in Hong Kong retail as of 31 March 2022. Over 660 new leases were signed in Hong Kong retail portfolio in addition to renewals in full year. Excluding the discretionary distribution 7 cents, distribution per unit (DPU) for the year grew by 8.2% to 298.67 cents.

Sun Hung Kai properties and CK Asset also reported better results.

In Feb 2022, Sun Hung Kai Properties announced that reported profit and reported earnings per share attributable to the Company’s shareholders were HK$15,186 million and HK$5.24 respectively, compared to HK$13,578 million and HK$4.69 for the corresponding period last year.

For CK Asset, with the reopening of their pubs, the profit margins are improving. CK Asset has unitholding interests in three listed real estate investment trusts, namely Hui Xian REIT (stock code: 87001), Fortune REIT (stock code: 778), and Prosperity REIT (stock code: 808) – and their results are also improving.

In March 2022, CK Asset announced that the Group’s profit attributable to shareholders for the year ended 31 December 2021 amounted to HK$21,241 million (2020 – HK$16,332 million). Earnings per share were HK$5.77 (2020 – HK$4.42), an increase of 30.5% as compared to last year.

In May 2022, HongKong Land reported that underlying profit in the period was higher than the first quarter of 2021, principally due to a higher number of Development Properties completions on the Chinese mainland, while the contribution from Investment Properties was broadly unchanged.

Straco is starting to pay dividends again. Results have yet to improve. Hopefully, with the easing of lockdowns in China, it will get better.

Growth in income for Ascott Residence Trust and Mapletree Commercial Trust has improved.

For ST Engineering, in Feb 2022, ST Engineering announced that the group posted a 7.5% increase in Group revenue to $7.7b from $7.2b a year ago in the same period contributed by all its business segments. Group EBIT grew 13% year-on-year (y-o-y) to $673.6m from $596.4m. Group Profit before tax (PBT) grew 19% y-o-y to $637.6m from $534.4m. Group Profit attributable to shareholders (Net Profit) grew 9% y-o-y to $570.5m from $521.8m.


Banks (DBS, BOC HK, HSBC) – not stellar results – but steady. In general, they are achieving steady business growth with financial indicators remaining healthy. Dividends have gotten better this year.

May is typically a good month for dividends, and this year I had a ‘bumper crop’ in May.


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For the Singapore market, Tiger Brokers currently waive the minimum fee and only charge a 0.08% trading fee. This drastically reduces your cost as the minimum fee from other brokers (ranging from SGD 8 such as FSMOne and SCB, to SGD 25 for local brokerages) does add up and can eat into your returns.

Tiger Broker Referral Code:: GPE59H

Sign up here.

FSMOne.com

Typically I use FSMOne.com to invest in funds & ETFs (including money market funds).

If you do not have an account, you can sign up here. Please use my FSMOne referral code: P0031127, when you sign up.

Gemini

As stated by MoneySmart on Jan 22, if you’re looking to optimise trading your crypto with relatively low fees, simple-to-grasp expert UI and ease of purchase with Singapore dollars. then the best crypto exchange in Singapore is Gemini,

If you do not have an account, you can sign up here using my referral link. After you have signed up, once you buy or sell US$100 or more (or 100 USD equivalent of your domestic currency) within 30 days of creating your account, your account will be credited US$10 (or 10 USD equivalent of your domestic currency) worth of bitcoin.

Hodlnaut

Hodlnaut is a crypto-borrowing and lending platform that helps investors improve the return on their assets.

If you do not have an account, you can sign up here using my referral link. After you have signed up, you will receive a US$20 sign-up bonus after making a deposit equivalent of US$1,000 in a single transaction on any supported assets within 1 week. Bonus payouts are paid in the same asset deposited. You may make a test deposit of any amount. The deposit equivalent of US$1,000 or more must be completed within one week of the first test deposit.

Shopee

I have been using Shopee for a while and think you will like it as much as I do.

Get $10.00 off your first purchase using my code DARREB52.
Download Shopee now and enjoy hot deals at the best prices! Click here.

Happy shopping!

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