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.

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

I didn't post what I will buy with $3000 in Jul and Aug 2016 because I wouldn't have bought anything. My last purchase was $3000 worth of SPH REIT in Jun. I felt that it was worthwhile to adopt a wait-and-see attitude because traditionally, the second half of the year usually performs worse than the first half of the year.

Without spending $3000 x 2 for the 2 months, it means I have $6000 more in my opportunity fund (aka warchest). I had also been trying to digest the statistics, in particular, unemployment statistics. The reason is there had been many reports of company retrenchments worldwide in sectors that are facing lower demand and higher automation. Unemployment rates inched up a little. For the quarter ending Jun, it's 3.1% for Singaporeans. Overall, including foreigners, the rate is 2.1%.

The next number I was looking at was job vacancy rate, which means jobs that have not been filled. For example, you want to hire a waitress, you will contribute to this job vacancy number that is measured every quarter. This is no data for the quarter ending Jun, but the job vacancy to unemployed person ratio is 1.03 for Mar, which means there are more job vacancies than unemployed persons. This rate is quite similar to the rate in 2012, but circumstances are different. In 2012, the property fever had not been tamed. In fact, the cooling measures had the reverse effect of buyers rushing to buy properties for fear that there will be more cooling measures that will prohibit them from buying in future. STI in 2012 was around 3000 points, versus 2800 now, for the same timeframe of Aug-Sep.

What will I buy in Sep? More bank shares if it heads back into the low range. If not, I will just add the $3000 into my warchest and continue to hug my warchest tight. Read my earlier bank stock review which shows the low range prices.

The writer owns units in SPH REIT, DBS, OCBC and UOB.

SGX Stockfacts Screener

There are 728 companies listed on the SGX. For the first-timer, or relatively new investor who have had fewer than five transactions, you are probably still conforming with social proofs -- a bias that believes that if everybody is doing something, it can't be too wrong.

As a non-conformist, and I say that because I will probably be the out-lyer in most social experiments, I am conscious of all these cognitive biases and human natures, hence I consciously act on raw, hard, facts that will stare at my face while I concurrently tear away any emotions.

Here's my simple criteria to selecting stocks, backed by sound financial fundamentals.

1. Low Debt/Equity (D/E) ratio You can never be any safer than following this ratio. A company with little or no debt means that the company has superb money management. They watch their top and bottom very tightly. This is very suitable for new investors because of the loss/risk aversion bias.
2. Minimally 3.5% yield Bank of China pays 3.55% p.a. on balances up to $60k if you credit your salary, spend $500/month on credit card, and pay 3 bills. It's safe to have dividends higher than the savings interest rate. A metric to look at for over-valued companies are extremely low yields, such as tech companies that cost a bomb before they even start to make enough money to pay you dividends higher than the savings account interest of 0.05%.
3. Price/Earning ratio < 13 which is an STI average This is also an arbitrary anchor to make you see feel safer that you are buying a stock that is below the average, which has a lower chance to be over-valued compared with another company that is above the average.
4. At least $800M market capitalization This is an arbitrary number I took from someone else's study (I can't remember) that companies in the 70-th percentile in terms of market capitalisation have the best performance. The companies are big enough to secure funds/loans for expansion, likely have established corporate governance structures, but are also small enough to grow and transform to seize opportunities, usually have one boss to call the shots. The very very large caps (e.g. >$10B) with very established businesses will not be able to adjust as quickly because of multiple layers of management to manuverve and many stakeholders with vested interests. They tend to be over-valued as well because the market pays a premium for their track record and reputation.

With these simple criteria, I present you a screen shot of only 20 companies that can satisfy my selection criteria from SGX Stockfacts Screener...

Here's how you select the criteria, if you don't know how.

Here's the shortlisted 20 companies.

This is the easy part. Now, start reading up on each company to find a business that resonates with your beliefs. You are one step nearer than 728 companies staring at you.

The writer owns shares in SIA Engineering, Keppel Corporation and Keppel REIT.

[Updated on 27/8/2016: You can also check the market statistics that SGX compiles every month to show which are the performing sectors. In this year, until Jul, Consumer Goods, Telco and REITS were the top 3 performers. How I use this data is to look for those sectors that are negative and study the companies in those sectors to look for under-valued stocks. Those that are positive, I will just verify with my stock selections to see if I had performed better than the average. For example, telco 12.84%: my singtel share bought at $3.60 last year is $4.20 now, so it's +16.67%, so I had performed better than the average.

Annual Sectorial Performance of Singapore Securities

]

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

The media reports about consecutive slowdown in the economy and government downgrading outlook forecasts. Do you read into the positive growth figure of 1-2%? or do you read into the consecutive quarters of economic slowdown? Although I am not an economics expert, there are some logical ways to understand what growth figures mean.

Singapore settles for slower growth for rest of decade - May 27, 2016, Business Times

For example, there is a report that the median salary has increased from $3,705 (2013) to $3,770 (2014). At a national level, it means that salaries for each worker had gone up, which may seem like a good thing. However, that does not mean that you will get a salary increment. It also does not mean that your job will always be there for you. In fact, if you are drawing a salary lower than the median and you get retrenched, you are helping to move the average higher.

Similarly, if manufacturing exports are decreasing, it can mean that the value of exported goods had decreased, or the goods are no longer in demand, or there had been a reduction in manufacturing companies because cost-conscious companies had shifted their manufacturing operations offshore. Does it mean that the economy is headed for a really bad time? Tuition centres are definitely sprouting up everywhere. The positive growth and negative growth still add up to a positive growth, which means that businesses are still adjusting to new business models, or the government is simply faking numbers.

The key to knowing what to invest in is to understand what is relevant to you and the world today. Learn relevant skills. Invest in relevant companies. There are certain industries that you know will disappear in 10 years time, some that you don't know or will not. Sometimes I also ask myself whether the mobile phone will be replaced. Does it matter? Will your land disappear? Will the need for food and energy disappear? Does Singapore still need the skills you have?

One thing I am not so sure about is the opening of flagship stores along Orchard. What impact does an Apple flagship store at Knightsbridge Mall beside Paragon have on Paragon? What impact does Uniqlo flagship store have on Orchard Central (a mall whose layout I seriously dislike) and its neighbour Centrepoint? Will crowds be drawn away from hot favourites Ngee Ann City and Paragon?

I am still placing my money in SPH REIT.


1. SPH REIT* $0.93, 5.9% yield. 5.5 cents/share. If you buy 3,000 units, you can expect to get $160/year. Pros: Easy to visit Paragon and Clementi Mall to see how the shopper crowd is like. Occupancy is consistency maintained at 99.9% to 100% for both malls.

Read the financial statements before putting your money on any stocks.

The above is by no means a fail-proof recommendation to buy. Stock prices fluctuate and buyers need to be aware of the risks.

The writer owns stocks marked *.

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

Hug money and hold tight for a mini roller coaster ride. I will still be recommending the same stock this month.

1. SPH REIT* $0.93, 5.9% yield. 5.5 cents/share. If you buy 3,000 units, you can expect to get $160/year. Pros: Easy to visit Paragon and Clementi Mall to see how the shopper crowd is like.

Read the financial statements before putting your money on any stocks.

The above is by no means a fail-proof recommendation to buy. Stock prices fluctuate and buyers need to be aware of the risks.

The writer owns stocks marked *.

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

STI has been hovering around 2800 points and it's quite safe to buy income generating stocks at 5% yield or higher when you are not caught in an upturn wave. When income is generated, you don't really need to worry about whether the market is good or bad. It's similar to a hawker centre set up -- just because 99 stalls keep changing owners because business is bad doesn't necessarily mean that the 100th stall that constantly enjoys long queues of customers will be unable to make money.

1. SPH REIT* $0.95, 5.7% yield. If you buy 3,000 units, you can expect to get $160/year. Pros: Rental from Paragon and Clementi Mall are expected to be stable despite reports about retail shops closing down and high vacancy rates in a handful of Orchard district retail malls. The reasons why the units are vacant are probably why Paragon enjoys 100% occupancy -- location, location, and location.

2. Boardroom* $0.59, 5% yield. If you buy 5,000 units, you can expect to get $150/year. This company has 3 business areas: Secretarial services, depository services, business solutions. There are many similar companies (at least 50 companies) offering similar services except for the depository services where they help CDP with the shareholders registry. Whenever you buy shares, it has to be recorded somewhere, and the service is provided by Boardroom. If you look at its financial report, it has been consistently operating at positive cash flow. Profit margin is around 10%. The downside is that there is very little float in the public market (just 15%) and you will be just waiting for one of the 400+ shareholders to sell their shares to you. Limited upside.

Read the financial statements before putting your money on any stocks.

The above is by no means a fail-proof recommendation to buy. Stock prices fluctuate and buyers need to be aware of the risks.

The writer owns stocks marked *.

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

Read more about First Stock Series.

Over the past one month, stocks have risen ~5%. If anyone made money out of it, it would have been pure luck. Nobody would have expected Saudi Arabia and the 70% of the oil suppliers to agree to freeze oil output. They could have done this 1.5 years ago, but they didn't.

In Singapore, manufacturing output decreased, which was not surprising as Singapore's labour costs had been growing the past 10 years and factories shift out. Office supply is adding pressure on rentals, which is also expected (we all knew this when these projects started construction 4 years ago), so the market has priced that in. If you look at how each industry contributes to Singapore's GDP, you will know why a manufacturing output drop is deemed to be a sign of a technical recession coming our way. Finance and business services (e.g. consulting) are growing.

Extracted from Statistics Singapore 

For me, as long as the population grows, businesses will always be in business, (of course) subjected to prudent financial management. The growth investor may want to invest in businesses that benefit from higher population densities. Trains breaking down more often doesn't count. Examples of such businesses are food, medical services, waste disposal, high-tech construction, logistics, etc.

I probably will recommend the first-time investor to buy on weakness, i.e. wait for the current wave to subside to a support level before making any purchases. Steer clear of bank and oil stocks if you can't survive a market shock.

1. SPH REIT* $0.95, 5.7% yield. If you buy 3,000 units, you can expect to get $150/year. Pros: Rental from Paragon and Clementi Mall are expected to be stable.

2. AIMS AMP Capital REIT $1.33, 8.5% yield. Pros: Diversed industrial properties (business parks, light industrial buildings, warehouses) on rental with continual asset enhancement activities (i.e. rebuilding/renovating old buildings). Buy 2,200 units, and expect to get $249/year.

Read the financial statements before putting your money on any stocks.

The above is by no means a fail-proof recommendation to buy. Stock prices fluctuate and buyers need to be aware of the risks.

The writer owns stocks marked *.

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

Read more about First Stock Series.

Across the world, stocks continued to fall and we had reached a point where all the "psychological support levels" were broken. After throwing a few months' worth of budgeted investment money into the market, and suffering immediate paper losses, I also sat out for a large part of it to wait for the next level of new lows. Wherever the market would go in Feb would be anyone's guess. However, traditionally, before the Singapore Budget announcements in Feb, there would be a stock rally of some-sort.

1. SPH REIT* $0.91, 6% yield. If you buy 3,000 units, you can expect to get $165/year. Pros: Rental from Paragon and Clementi Mall are expected to be stable.

2. Singapore Technologies (ST) Engineering Ltd* $2.70, 6% yield. If you buy 1,000 units, you can expect to get $160/year. Pros: Cost-conscious management, ever-increasing defense budget that contributes to increasing revenue.

I am conscious that the overall sentiment is rather weary, and for a first-timer to decide to take the first plunge in a time like this is going to be hard, so I am recommending just two companies which I think will weather any shocks in Feb, if any more were to come our way.

There you go! Google search, read the financial statements, before putting your money on any stocks.

The above is by no means a fail-proof recommendation to buy. Stock prices fluctuate and buyers need to be aware of the risks.

The writer owns stocks marked *.

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

Read more about First Stock Series.

On 7 Jan 2016, the China market suspended its stock market after a 7% drop in prices for the second time in a week. It was the government's way of stablising the market. The Singapore stock market also fell to a new low and closed at 2,729.91 points. Lots of guts is needed to buy when everyone is panic selling. What will happen tomorrow is anyone's guess.

1. Singapore Press Holdings* $3.76, 5.3% yield. Pros: Diversified investment strategy (property, retail, childcare) to mitigate risks of falling media revenue. Buy 800 units, and expect to get $160/year.

2. SPH REIT* $0.95, 5.7% yield. If you buy 3,000 units, you can expect to get $150/year. Pros: Rental from Paragon and Clementi Mall are expected to be stable.

3. DBS* $15.70, 3.8% yield. Pros: Banks are usually the first to rebound in market upturns. If you buy 200 units, opt for scrip dividend payouts to get about $120/year. Depending on the share price, scrip dividends round up anything more than 0.01, so you can easily get 1 unit free. Example, when the payout is $0.30 per share half yearly, 200 units x $0.30 = $60. If the share price is $16, $60/$16 = 3.75 units. DBS will pay you 4 units. Two payouts will give you 4 x 2 = 8 units. 8 x $16 = $128, which is more than $0.60 x 200 = $120 if you have opted for cash payout. What's more? You reinvest your dividends without paying commission fees to SGX and your broker!

4. Singtel* $3.46, 5% yield. Pros: Diversed recurring income from mobile subscription in Singapore, Australia, Indonesia, Philippines, Thailand, India and Africa. Stable income from government sector. Buy 800 units, and expect to get $134/year. Read a recent Stock Review.

5. AIMS AMP Capital REIT $1.33, 8.5% yield. Pros: Diversed industrial properties (business parks, light industrial buildings, warehouses) on rental with continual asset enhancement activities (i.e. rebuilding/renovating old buildings). Buy 2,200 units, and expect to get $249/year.


There you go! Google search, read the financial statements, before putting your money on any stocks.

The above is by no means a fail-proof recommendation to buy. Stock prices fluctuate and buyers need to be aware of the risks.

The writer owns stocks marked *.

First Stock Series: What will I buy with $3000?

I decided to start a new series called "What will Ï buy with $3000?" The plan is that every month, I will pick 5 stocks (ball park) that I will consider buying with $3000. This is to cater to my friends who have about 10-20k of savings and would like to start investing. Don't ever showhand in one transaction... please. $3000 is a reasonable amount for 1 transaction so as not to overpay the commission charges to the brokerages.

While reading blogs, I also find it difficult for a person to pick the first stock. Of course, it can be as brainless as buying Singtel. If it's a stock review, it's a rather in-depth analysis, else it will be a show and tell about how much the writer has earned from a certain stock. I thought that one approach is to help the person focus on a few stocks to study first, hence I decided to write a First Stock Series.

I am merely documenting my thought processes as I am also on a constant lookout every day for value-for-money buys.

The writer owns shares in Singtel.