Seeing the world upside down

Is the glass half full or half empty? What’s your answer? When you are assessing a company and its economic context, can you see what others can’t?

Think about “areas that other people are not thinking about.” Jane Siebels remarks in the book about Templeton’s passion to “open other people’s minds and broaden their scope.”

1) Competitive Industry. Top names like SIA / Emirates / Qatar are in a highly competitive unregulated over-saturated industry. Samsung / LG / Sharp / Apple are also in the cut throat LCD TV and Smart phone industry. Tough luck – tough making money. Or as Warren Buffett might have said, it is pointless to jump a seven foot hurdle (rather than a one foot hurdle) in business.

Competitive industry bad for profit? Or is it? In fact the more competitive the industry is, the more lucrative it is for the “supporting” companies like SIA Engineering, SATs and Corning glass.

 

2) Private Property counters in limbo due to cooling measures. (read here) Overall, the Singapore Properties Equity Index, representing all property-related counters, suffered a 5.81 per cent drop in market value for the full year of 2014. Bukit Sembawang, GuocoLand, Wing Tai and Ho Bee Land, all hit by hefty share price falls. Oh no….

On the other hand, HDB will offer 24,300 flats in 2014. 25,100 units launched in 2013. But how to profit from the stock market with HDB??? Deh…

However, after the housing boom, comes the maintenance boom. :p

Eight PAP town councils to raise service and conservancy charges from 1 April 2014 (read here and here).

ISOTeam is doing booming business with more and more maintenance projects (ISO TEAM: Expanding Its Suite Of Services). Colex and 800 Super are both getting more lucrative contracts providing refuse collection services.

 

3) Recession is bad for companies. During a recession, the middle class & low income sector is feeling the pinch, companies find it hard to make a profit. Some may argue that certain industries thrive during these dark times. Stock brokers start promoting Pawnbroker companies stocks (read here and here) Vice /Sin Industry? (read here and here and here)

Think Value Max, Money Max, Thai Beverage & British American Tobacco (Malaysia).

Item 3 is a bit subjective – stock prices will probably still dip in a recession. In the case of Value Max and Money Max, their stocks have not ‘experienced’ a true recession yet since they were only recently listed (and frankly I don’t think they have strong fundamentals either). Thai Beverage and British American Tobacco share prices dipped in the 2008/09 recession. And there are the Gaming stocks that do booming business in good times as well, but share prices dipped in a recession eg. Nagacorp. But then again – it is stock prices, they may not be a true reflection of their earning growth during the recession.

 

The Matrix (1999) Quotes

  • Spoon boy: Do not try and bend the spoon. That’s impossible. Instead… only try to realize the truth.
  • Neo: What truth?
  • Spoon boy: There is no spoon.
  • Neo: There is no spoon?
  • Spoon boy: Then you’ll see, that it is not the spoon that bends, it is only yourself.

“As far as you are concerned, the stock market does not exist. Ignore it.” Warren Buffett

 

Pacific Rim (2013) Quotes

  • Construction Foreman: Ration card time! Come on, come on! Let’s go!
  • Construction Foreman: Now, I’ve got good news and I’ve bad news, fellas. Which one do you wanna hear first?
  • Construction Worker #1: Bad news!
  • Construction Foreman: Bad news, three guys died yesterday working on top of the wall.
  • Construction Worker #2: What’s the good news?
  • Construction Foreman: The good news is, I got three new job openings, top of the wall. Okay, who wants to work? Who wants to eat? Come on!

Here is what Marks writes in his seminal book, The Most Important Thing…

  • First-level thinking says, “It’s a good company; let’s buy the stock.” Second-level thinking says, “It’s a good company, but everyone thinks it’s a great company, and it’s not. So the stock’s overrated and overpriced; let’s sell.”
  • First-level thinking says, “The outlook calls for low growth and rising inflation. Let’s dump our stocks.” Second-level thinking says, “The outlook stinks, but everyone else is selling in panic. Buy!”
  • First-level thinking says, “I think the company’s earnings will fall; sell.” Second-level thinking says, “I think the company’s earnings will fall less than people expect, and the pleasant surprise will lift the stock; buy.
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About apenquotes

Born in 1976. Married with 2 kids (a boy and a girl). A typical Singaporean living in a 4 room HDB flat.
This entry was posted in Investing methodology, Portfolio. Bookmark the permalink.

4 Responses to Seeing the world upside down

  1. Jovan says:

    Hi There,

    thank you so much for spending the time and effort on writing up on the counters that you are currently looking at. I must say many of the counters that you happen to write on are those that I have vested or shortlisted on. In fact, when i see your blog I was so amazed that that is someone out there that are looking at almost the same stocks that I have vested or shortlisted.

    What you have written on indeed gave me another view on those counters from your perspective. As for myself, I personally see it as “everyday” investment where I invest in my daily life as this made my investment journey so much easier :). Many of the counters you blogged are also deem “everyday” to me.

    I must say that after seeing what you have done, it really got me thinking if I should also start to write down my thoughts on a blog. So far, they are all base on my handwritten notes or encrypt on my mind when I invest in them

    Thank you
    Jovan

    Like

  2. apenquotes says:

    Like what Peter Lynch said – Fund Managers are all very similar, uniform bunch (although I am not a Fund Manager, and have not even studied economics / finance), they basically read the same news, watch the same shows etc.
    The source I get my ideas from is probably the same as yours – The Edge Markets, NextInsight, CNA, Motley Fools, Value Buddies Forum, Share Junction Forum, Singapore Investment Bloggers, TheFinance.sg and many more random websites or analyst reports.
    In addition, if you base your findings on what is fundamental like low P/E, low debt, low EV/EBITDA, low price to book, high earning growth etc + strong narrative, it is not surprising we find the same companies. Finding good companies is the easy part, finding the right price is the hard part.

    I treat my blog as my investment diary (which will prob come in useful during market crashes). Like what Warren says – a good start is to have a diary of your investment decisions. If I don’t have a blog, I prob won’t keep track of my past thoughts. Just an amateur here. I am always impressed by the detailed calculations done by others (DCF calculations etc) . However, I always like what Warren says – the investment must literally “scream” at you that it is a bargain, that kind of “margin of safety” is priceless.

    Like

  3. Jovan says:

    Indeed I totally agree and that’s why I pen it down on my notes for now. Like what you correctly mentioned, I must start to treat it like a dairy for me to refer and most importantly reflect on my thinking process for the future stock. Like you, I am also an amateur and there are still so many things to learn and explore.

    Great job on Nagacorp write up where my friend ask me to take a look due to its excellent ratios.

    Like

  4. Pingback: My thoughts on this tiny stock: Singapore Kitchen Equipment (SKE) Limited | A Pen Quotes

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