Investment is a psychological game

Recently I bought a few lots of Boustead. Since then, I seldom check the price of the stock.

I was trying to practise what Warren Buffett taught. When you buy a stock, you buy thinking that the market will close for the next 5-10 years. If you can't do this, don't even think of buying and holding the stocks.

My investment goal every year is to invest a fresh 10k into stocks.

This is a goal that is attainable. Although my ultimate goal is to make a million dollar, I need to start small and 10k a year is my baby steps.

I had a lunch conversation with my colleague last week and we briefly talked about stocks. She told me her mum bought SIA when it was 15 dollars a share and is holding onto it as the price have drop to around 10 dollars.

It reminded me that when buying a stock, it is no different from buying a property. You would want to make the purchase at a reasonable price. Hence the entry price of a stock is very important.

For me, when I bought my HDB, I looked at past transaction prices. Same for stocks, I would look at the price history for the past 10 years. Coupled with the nav etc, I could determine a reasonable buying price.

Boustead SG - a chanced discovery

Boustead, a long established company in Singapore.

I came across this company today while continuing my research on SG stocks.

I must admit when I first came across this stock, I was a bit skeptical as I cannot associate anything with the name. Maybe I was not as well read as I thought I was.

Nevertheless, I decided to pry abit deeper.

Using my own criteria, the company has enough cash holdings to settle its current liabilities. It is listed in SG since 1975 and has weathered so many financial storms.

From a business point of view, it's business is spread across energy, real estate and waste water, mainly focused on energy.

As oil and gas industry is still far from recovering, the company still manages to be in the black.

And holding onto cash now is better given the uncertain times, hence I am certain the company can ride out the tough times.

It's share prices have halved and although it is still trading above its NAV (something I used to measure my margin of safety), I decided to give this company a shot.

Dividend payout is not great but still decent. @ a price of 0.865, the 2 cents divident payout is 2.3% (still better than the bank rates).

This is one company that I may consider buying soon.

Dry spell

Recently after ditching the idea to invest in reits. I have not found any stocks that I thought could invest in long term.

Guocoland came up recently in my radar, as well as wheelock properties.

These 2 counters are trading below their NAV by a large margin. But when I look at the stock price for the past few years, the stock has stagnated at the price it is trading.

Of course, price history does not really tell you how high the price could rise in future. But without a history, I find it difficult to take a leap of faith.

Gleaning some insight from Warren Buffet whom bought Apple shares recently. He bought Apple shares when the stock was dropping. He discontinued to buy after the stock starts to pick up. Of course the idea is not to buy blindly into any stock just because its stock price is falling. The lesson that I picked up is that no matter how good the company is, the price of the stock is important and if it exceeds the price that you have of this stock in mind, it is not worth while to buy as demonstrated by Warren Buffett.

Meanwhile, the hunt for sg stocks to invest my monies continues.

Reits

I have been thinking about investing in Reits the past 2 months mainly because of the dividend/distribution yields.

I did some googling (these days one can easily find information on the web) on sg reits and came across some very detailed analysis covering this topic in some financial blogs.

Overall it would seem that the analysis are positive towards sg reits.

But after thinking about the business model - Reits distribute out most of it profits and grows it business by buying more assets to generate a higher revenue. I could not convince myself on the business model - Reits does not retain its profits to fund its purchases, the monies has to come from the shareholders by issuing new reits and taking out debt.

Low debt is one of my criterion for picking stocks. Af some mulling, I decided not to add sg reits to my portfoilo.

My misses

In my previous posts, I had mentioned my hit stocks, stocks which had made me money.

In this post, I will share my misses.

When I first wanted to start investing in stocks, I know I want to do the investing myself but back then I did not even know where to start. Should I open a brokerage accounts with banks or other firms?

Then my elder sister opened an account with POEMS and started buying stocks. She encoraged me to do and coincidentally POEMS had a temporary booth at clementi MRT and I just approached the guy there and sined up for my POEMs account.

Next, I learnt the mechanics of how to buy stocks using my POEM account from my sister.

Some of the first few stocks I bought were 1) Super Group 2) Raffles medical 3) ASL Marine 4) Comfortdelgro.

I bought in small quantities around 2-3 lots per stocks using cash.

It was quite an exciting moment to key in the quantity to buy and the price.

One of the stocks that i have lost money in was ASL marine.

I boughts 3000 shares in 2008-2009 at $1.01/share.

That was almost 8-9 years ago. I didn't keep a diary to record down my reasons for buying the company. I only started to do so from 2013 onwards.

Back then, I vaguely remembered that I just solely looked at the company's financial statements without considering the industry's oversupply that had plagued many similar companies and whether ASL had the ability to ride out the crisis.

The stock price went down and even down when there was a bonus share given, i was given a bonus of 1200 more shares and the share price continued to stay down around 0.68 and that was when I threw in the towel and sold off my shares to free up monies that I could use to buy better shares that were trading at bargain prices.

I lost approximateky $200 and this was my first real paper loss.

I counted myself lucky that I only lost this bit of money but I learnt from the mistake.  I have forgotten to ask myself honestly if I believe the company can survive tough times.

Then on, I had some reservations whenever it comes to buying smaller player companies because I was not confident if the company can survive tough times.

Of course big companies do fail such as the Lehman Brothers case. But I felt that the chances of big companies failing are definitely lower than that of small cap companies.

I steered clear of penny stocks and also china based stocks.

Some food for thoughts

The past few months had been a roller coaster ride especially for holders of Keppel Corp (KC) stocks.

The oil prices had been going up and down. I find the behavior of oil prices similar to Mr Market (a term that Warren Buffett had used to describe the stock market).

It is quite an excruciating experience to see the rises and falls of KC price along with the oil prices. Where possible, I would try not to look at the stock market prices but I find myself checking the stock price almost twice a day.

It is quite difficult to detach your emotions especially if you see red (red color meant the stock prices have fallen compared to the day before).

How i cope with the roller coaster ride is by treating the stock market as Mr Market. From the perspective of a seller, on days where the stock counter shows red, I would imagine that Mr Market is in a foul  mood and is offering you low prices for the stock that you hold and he will return again with a quote the next day regardless you reject his offer today or not.

On days where the stock counter shows green (price has risen compared to the day before) I would imagine that Mr Market is in a euphoric state and is offering you higher prices for the stock that you hold. Once again he will return you with a quote the next day regardless whether you have accepted his offer.

Warren Buffett would tell you not to buy stocks if you could not stop checking the price of your stocks. Yes, this is true but with many phone application that allows one to view the sg stock price at a simple touch . It is a bit tad hard to put this into practice. Nonetheless I personally use the stocks app to monitor the prices of stocks that I held or am interested in, NOT because I want to sell my stocks but to make a decision to BUY MORE.

SMRT

I bought 15,000 shares of SMRT in 2014 at around 1.07 a share.

Why i bought SMRT?

I know it will never fall even though it was rattled with lots of complaints due to the frequent breakdowns.

Because of that, its stocks plummetted.

The price of 1.07 was one of the lowest prices that SMRT has dropped to before.

I knew it is a recession proof stock because people has to take the mrt to work/school regardless good times or bad times.

I did not consider too much because it was not a good dividend paying stock. I bought it purely because it had the potential to move upward.

Sold all my stock in Feb 2016 @ S$1.625.

As i wrote this, SMRT had already been privatised and delisted.

Sharing this piece to show how my strategy would change if I saw an opportunity.