What did I buy in Nov 2016?

The US presidential elections did rock the stock market a little. As usual, when it rocks, some people scamper in a hurry and dump their shares. I went in to pick up some. I bought SIA Engineering ($3.40) and AIMS AMP ($1.33 and $1.25).

Why SIA Engineering?

I like the nature of its business, specialised and will be in demand as long as there are aeroplanes to be maintained. Its debt is also very well managed over the years, which shows that the management looks at their top and bottom everyday. No reckless moves seen so far, just joint ventures. To me, reckless will mean acquisitions that result in a debt and its yield lower than the interest cost.

Why AIMS AMP?

Although I am bearish towards the Business Parks sector, the main reason why I bought AIMS was because of its 0.8 Price/Book and 8.5% dividend yield. Although there were some risks that the rental revisions for new leases will be -10%, overall, if you factor that into the yield for expiring leases this year, the yield will reduce from 8.5% to 8%, which is still decent. This purchase is intended to partially make up for the reduction in yields from my Keppel Corp purchases (average purchase price was $8 which translates to a 3.74%).

I can't predict when the market will rock again, but I feel that the market is still considered more "cheap" than "expensive". The Straits Times Index fund's Price Earning Ratio (PER) is 12, which is lower than average (about 16). However, we should also look at the fundamental individual company. If the PER is lower the average, than there is a higher chance for the price to be higher than lower in the short term.

Do I think the economy is bad? Yes, a little, but growth is still positive. Will the market crash? Usually market crashes when there is exuberance and growth, which we don't see now, so it's unlikely to crash. However, anything can happen, and we are very near to the 7-10 year market cycle, so it pays to hold cash. I am still hugging on to a 50% cash 50% investment ratio because my income doesn't grow fast. If you worry about having too little interest on your cash, try any of the following:

1. UOB One 2.43% p.a. for $50k (2 conditions)
2. Bank of China/OCBC 2.25% p.a. for $60k (3 conditions)
3. CIMB 1.0% p.a. for $50k (No conditions)
4. CIMB 0.8% p.a. up to $1M (No conditions)
5. Singapore Savings Bonds (SSB) 0.9% p.a. (1st year, average 1.8%) up to $100k

I use UOB One, Bank of China, CIMB, SSB. Bank of China's service is quite bad so I won't recommend, especially after they reduced the interest from 3.55% p.a. to 2.25% p.a. last month.

What will I buy with $3000 (Nov 2016)?

I didn't buy any stock in Oct. Will I buy any stock in Nov? I don't know.

There are a few events that make some investors jittery -- US Presidential Elections on 8 Nov, OPEC and Iraq being unable to agree on a supply cut despite saying that they will cut, Swiber defaulting on its bond payments. There are many worried shareholders, to the extent of local banks having to report their exposure to oil-related companies. I am glad that our banks are able to give the break down of their loan books.

Cooling measures are still in place, which means the government believes that prices has room to fall. If property prices do fall, cooling measures could be removed.

There are also reports on retrenchment and new jobs. Should we give Singaporeans priority in jobs? I think we already do. The paperwork and levies should deter the hiring of foreigners, but the salary expectation is probably the problem. Foreigners are willing to be paid lesser. Does the government have to specifically create jobs for jobless Singaporeans? Probably not. Eventually, the market will balance out the supply and demand which is reflected in the quality and the price of goods and services. At an individual level, I just need to make sure that I continue to learn new skills and remain as a desirable asset to my employer, while at the same time thinking about what I will do if I suddenly become jobless tomorrow. My current back up plan is to be a part time uber driver and maybe write my own application.

However if there are good buys, I may spend a bit. Thinking about the Singtel, SIA Engineering, ST Engineering, UOB, but prices aren't attractive enough yet. Otherwise, just build up warchest and collect dividends.

The writer owns shares in Singtel, SIA Engineering, ST Engineering, UOB.