Well, I guess I may have done it again. I may have succumbed to the falling market and my over-cautious mood last week.
I have sold C&G, Techcomp, Tuan Sing and UE at low prices and even loss-making prices. On hindsight, my portfolio may have performed better if I have not sold them.
On hindsight, I do not even have to sell most of them in the first place if my margin of safety is larger. Since I may not own them in the first place. Hence, I decide to increase my required margin of safety before I should buy a stock. A higher margin of safety should also help in lowering number of trades.
Well, let's hope that a higher margin of safety works out for me.
Friday, October 26, 2007
Sunday, October 14, 2007
Porfolio as at Mid-Oct
My portfolio:
C&G
China Precision
Fujian Plastics
Techcomp
United Engineers
Hongwei
Tuan Sing
1 HK Stock
1 Hk Stock
Over the past few weeks, I have been paring the Techcomp stake since Techcomp has announced a placement of shares. The Techcomp proceeds are used to purchase United Engineers, Tuan Sing and 1 HK stock.
The purchase of United Engineers is mainly due to a NRA research report (seen in SGX website). The report states that United Engineer is trading at a XX% discount to its sum-of-parts valuation. Furthermore, upon a look at the Annual Report, it seems that United Engineer may have the intention of disposing of non-core business which may help to unlock some of the asset value. Hence this is more of an asset play to me, where the catalyst lies in the possible unlocking and further enhancement of asset value. (Despite the fact that Unitied Engineer is trading at 1.3 NAV.)
The purchase of Tuan Sing is also more of an asset play to me, where the catalyst lies in the re-valuation of its two CBD office blocks at end of year and sale of its developed China Property in perhaps 2008. However, as my knowledge in properties is limited, my stakes in both United Engineers and Tuan Sing are smaller than usual.
And perhaps, I may end up selling them someday to raise cash for other more undervalued stocks. But then, I do not see any undervalued stocks recently. Hence I shall wait.
C&G
China Precision
Fujian Plastics
Techcomp
United Engineers
Hongwei
Tuan Sing
1 HK Stock
1 Hk Stock
Over the past few weeks, I have been paring the Techcomp stake since Techcomp has announced a placement of shares. The Techcomp proceeds are used to purchase United Engineers, Tuan Sing and 1 HK stock.
The purchase of United Engineers is mainly due to a NRA research report (seen in SGX website). The report states that United Engineer is trading at a XX% discount to its sum-of-parts valuation. Furthermore, upon a look at the Annual Report, it seems that United Engineer may have the intention of disposing of non-core business which may help to unlock some of the asset value. Hence this is more of an asset play to me, where the catalyst lies in the possible unlocking and further enhancement of asset value. (Despite the fact that Unitied Engineer is trading at 1.3 NAV.)
The purchase of Tuan Sing is also more of an asset play to me, where the catalyst lies in the re-valuation of its two CBD office blocks at end of year and sale of its developed China Property in perhaps 2008. However, as my knowledge in properties is limited, my stakes in both United Engineers and Tuan Sing are smaller than usual.
And perhaps, I may end up selling them someday to raise cash for other more undervalued stocks. But then, I do not see any undervalued stocks recently. Hence I shall wait.
Saturday, October 13, 2007
Measuring Portfolio Performance
How can we measure portfolio performance? Do you know that the returns that are seen in the blogs or newspaper may be imprecise?
Recently, Interative Investor Blog (IIB)has two posts that cover them. I find them quite interesting and relevant. The posts:
http://blog.iii.co.uk/2007/10/08/249/
http://blog.iii.co.uk/2007/10/12/returnagain/
Prior to reading the posts, I use unit value method and monthly time-weighted method to compute my portfolio performance. The unit value method is used to give me a weekly price of my portfolio, while I use the monthly-weighted method for a real-time returns. The returns are year-to-date returns.
IIB's posts introduces XIRR (a form of internal rate of return computation) method. I have tried out the XIRR. XIRR measures the yearly internal rate of return. Hence, it would give me a higher percentage return (compared to the returns I am already computing) This is becasue XIRR would adjust the year-to-date 2007 return to an annual return. Or a higher return in a shorter period would translate to a higher annual return.
Hopefully, IIB will have a one more post to round up the discussion on measuring portfolio returns.
Recently, Interative Investor Blog (IIB)has two posts that cover them. I find them quite interesting and relevant. The posts:
http://blog.iii.co.uk/2007/10/08/249/
http://blog.iii.co.uk/2007/10/12/returnagain/
Prior to reading the posts, I use unit value method and monthly time-weighted method to compute my portfolio performance. The unit value method is used to give me a weekly price of my portfolio, while I use the monthly-weighted method for a real-time returns. The returns are year-to-date returns.
IIB's posts introduces XIRR (a form of internal rate of return computation) method. I have tried out the XIRR. XIRR measures the yearly internal rate of return. Hence, it would give me a higher percentage return (compared to the returns I am already computing) This is becasue XIRR would adjust the year-to-date 2007 return to an annual return. Or a higher return in a shorter period would translate to a higher annual return.
Hopefully, IIB will have a one more post to round up the discussion on measuring portfolio returns.
Saturday, October 6, 2007
Book Review: The markets and The media
This post is a review on 'The Markets And The Media' by Thomas Schuster. It can be borrowed from NLB (at 332.63222).
The book has three chapters, a afterword and tons of references since the three chapters are drawn from many sources: academic papers, books and articles etc.
Basically, if you are interested in how the media may influence the market, you may want to read the book. And perhaps if you have read Nassim Taleb's book(s), you may better understand why Taleb prefers to read literary stuffs than to be exposed to the media after you have read 'The Markets And The Media'.
Learning points:
1) The book explains that stock recommendations by the media (tv shows, newspaper, internet forums) tend not to outperform the market (indices). The stocks mentioned in the media may have moved before their appearance in the media. Hence any news on the stocks may have already reflected in the prices.
2) It is difficult to explain stock price movements using media as the main reason. There are times where significant news occur with little market movement and times where significant market movement occurs with little significant news.
3) The media tend to emotionalize the news due to the competition in the media industry as emotionalized news would grab more attention. Certain news may also be repeated in several media at different times.
4) The emotionalized news and its repetition may be part of the reasons why media can lead to increased feedback effects, further amplified market movements and thus adding to the boom/burst cycle in the market. Hence the media can be a destablizing factor to the market.
5) Due to the reflexive interaction between the media and the market, an upmarket would tend to lead to increased optimistic news in the media. An optimistic media may lead to a more optimistic outlook on the market. These cyclic influences may play a role in the formation of the market euphoria. Similarly, pessimistic cycle may play a role in market crashes.
The book has three chapters, a afterword and tons of references since the three chapters are drawn from many sources: academic papers, books and articles etc.
Basically, if you are interested in how the media may influence the market, you may want to read the book. And perhaps if you have read Nassim Taleb's book(s), you may better understand why Taleb prefers to read literary stuffs than to be exposed to the media after you have read 'The Markets And The Media'.
Learning points:
1) The book explains that stock recommendations by the media (tv shows, newspaper, internet forums) tend not to outperform the market (indices). The stocks mentioned in the media may have moved before their appearance in the media. Hence any news on the stocks may have already reflected in the prices.
2) It is difficult to explain stock price movements using media as the main reason. There are times where significant news occur with little market movement and times where significant market movement occurs with little significant news.
3) The media tend to emotionalize the news due to the competition in the media industry as emotionalized news would grab more attention. Certain news may also be repeated in several media at different times.
4) The emotionalized news and its repetition may be part of the reasons why media can lead to increased feedback effects, further amplified market movements and thus adding to the boom/burst cycle in the market. Hence the media can be a destablizing factor to the market.
5) Due to the reflexive interaction between the media and the market, an upmarket would tend to lead to increased optimistic news in the media. An optimistic media may lead to a more optimistic outlook on the market. These cyclic influences may play a role in the formation of the market euphoria. Similarly, pessimistic cycle may play a role in market crashes.
Saturday, September 29, 2007
Another fall into my behavioral biases
My past posts in June and July suggest that I am having a separate view of my investments and of the general market. In late June, I have a dim view of the market but a optimistic view of my own holdings. Hence, I have been too over-confident about my stocks and suffer from the disparity between intellect (on the general market) and emotions (on my own holdings).
This few days, I have been feeling my behavioral biases again. And I have succumbed to these biases. For the past few days, I have been (too) eagerly searching for stocks to buy, since I have disposed of my holdings in China Print & Dye due to my gradual dislike in its huge leverage.
I have looked around and today afternoon, having chance upon a NRA report of United Engineers. The report states that UE is trading at around 39% of sum-of-parts valuation. Due to a combination of time constraints (lunchtime about to end), desire to add to property sector and the eagerness to use the cash to buy something, I decide to buy in UE after less than 10 min in looking at the report.
While I do not know whether UE would turn out to be good or bad, I recognize that I have been too hasty in buying UE. That’s anther fall into my behavioral biases.
Sunday, September 16, 2007
My portfolio as at 16 Sept
My portfolio currently are:
Hongwei
Techcomp
China Precision
China Print & Dye
C&O Industrial
A HK stock
Currently, my portfolio is around 10% below its July peak. I did not have any trades except adding to the HK stock for the past week.
In the subprice downturn, I have added to or re-initiate (for Techcomp) all my positions. Perhaps, I do feel a tinge of regret that I did not buy Metro at 0.85-0.89, even though I have pointed out to a few friends and my family that Metro can be bought at that level.
I have also looked at my past post in June and July. It seems that I have been too over-confident about my stocks, while I feel pessimistic about the market. In future, I shall try to view my dissonance between my over-confidence in my stocks and my pessimism about the market as a contrary indicator. This implies that I will start to go into cash when I am quite pessimistic about the euphoric market, perhaps in a bid to reduce downward volatility if the correction comes in future.
Hongwei
Techcomp
China Precision
China Print & Dye
C&O Industrial
A HK stock
Currently, my portfolio is around 10% below its July peak. I did not have any trades except adding to the HK stock for the past week.
In the subprice downturn, I have added to or re-initiate (for Techcomp) all my positions. Perhaps, I do feel a tinge of regret that I did not buy Metro at 0.85-0.89, even though I have pointed out to a few friends and my family that Metro can be bought at that level.
I have also looked at my past post in June and July. It seems that I have been too over-confident about my stocks, while I feel pessimistic about the market. In future, I shall try to view my dissonance between my over-confidence in my stocks and my pessimism about the market as a contrary indicator. This implies that I will start to go into cash when I am quite pessimistic about the euphoric market, perhaps in a bid to reduce downward volatility if the correction comes in future.
Book Review: Trade with Passion and Purpose
This post is a review on Trade with Passion and Purpose by Mark Whistler. The book is recently published in 2007. Mark Whistler, as he mentioned in the book, is a staitisical arbitrage trader.
Basically, the book belongs to trader psychology literature. However, it brings about a slightly different dimension when compared to other trader psychology's psychology book as its chapters are arranged by charactor traits: Honesty, Humble, Courageous, Fear, Adversity and Anxiety; and followed by EQ, gratitute, relaxation and a last section on developing a game plan. Developing a game plan touches on trading plan and risk understanding.
Some interesting points:
1) The book starts by having a mission statement and using Morita therapy: acknowledging and accepting your own feelings as they arise. For example, if you feel worried about a trade, you should acknowledge and accept your feeling. Personally, I do find that acknowledge and accept my own feelings would help me in investing as well as other matters.
2) The book does encourage one to express gratitute often. It even cites an academic study that suggest the act of frequently find things to thank for in life would help a person to be more happy.
3) Surprisingly, the book also covers a few breathing technique to help a trader or person to relax. For example, a breathing technique is to breathe in while counting to 10. Hold the breath for 15 seconds. After that, breathe out until you are out of air. Then repeat.
4) Interesting, the author puts up a list of items he is willing to risk in terms of trading and writing under the "Understanding Risk" section. When you are at a bookshop browsing through, you may want to look for this book and go through the author's list of riskable items. Maybe it would remind you, as I am being reminded, that it is not easy to be a competent full-time trader (or for me, a part-time investor).
All in all, the book will be useful for people who actually puts their money in the market. I cannot speak for traders as I do not really trade. However, if you are wondering why you are feeling this and that during market downturn or how you can better manage your emotions, you may wish to take a look at this book and see if it helps.
Basically, the book belongs to trader psychology literature. However, it brings about a slightly different dimension when compared to other trader psychology's psychology book as its chapters are arranged by charactor traits: Honesty, Humble, Courageous, Fear, Adversity and Anxiety; and followed by EQ, gratitute, relaxation and a last section on developing a game plan. Developing a game plan touches on trading plan and risk understanding.
Some interesting points:
1) The book starts by having a mission statement and using Morita therapy: acknowledging and accepting your own feelings as they arise. For example, if you feel worried about a trade, you should acknowledge and accept your feeling. Personally, I do find that acknowledge and accept my own feelings would help me in investing as well as other matters.
2) The book does encourage one to express gratitute often. It even cites an academic study that suggest the act of frequently find things to thank for in life would help a person to be more happy.
3) Surprisingly, the book also covers a few breathing technique to help a trader or person to relax. For example, a breathing technique is to breathe in while counting to 10. Hold the breath for 15 seconds. After that, breathe out until you are out of air. Then repeat.
4) Interesting, the author puts up a list of items he is willing to risk in terms of trading and writing under the "Understanding Risk" section. When you are at a bookshop browsing through, you may want to look for this book and go through the author's list of riskable items. Maybe it would remind you, as I am being reminded, that it is not easy to be a competent full-time trader (or for me, a part-time investor).
All in all, the book will be useful for people who actually puts their money in the market. I cannot speak for traders as I do not really trade. However, if you are wondering why you are feeling this and that during market downturn or how you can better manage your emotions, you may wish to take a look at this book and see if it helps.
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