Monday, 26 October 2020

Morning Musings 27-10-20


Good morning to you all. I trust you are well, where ever you are. Allow me to ramble if you will. 

I've just got back form a run and feel great. Nothing beats exercise in the morning for setting you up for the day. It's a happy drug for sure. All those endorphins swirling around for half the day, energising the mind and body. I'm a big fan. Weekly, I'll run 5k on a Monday and Friday. Then I go trail running on a Saturday for about 6/7k. In the past I ran lots more than this, but I find around 20k per week to be the optimal distance for extracting the maximum benefits, while minimising the chance of injury. Well, this works for me anyway. On top of this, I do a 1 minute plank every day as this keeps the core and lower back in good shape as I march on into my 40s (Yikes!)  

Channel News Asia on Youtube is my go to for 20 minutes live news on all things Singapore and in SE Asia. While watching this, I down two coffees (no sugar) and read the latest articles from The Edge (currently a subscriber) 

Lately, I've also been flirting with the idea of doing some sort of academic course online (under duress from my wife) But I really haven't a clue which one to do. The net is awash with people trying to sell this course and that and most of them look rather generic and cover information I already know. Can any of you recommend an advanced investing course? (paid or free) Usually, I find myself flicking through various Youtube channels procrastinating and getting more and more frustrated. Please let me know any good investing channels you know and use. I need some guidance on this ASAP.

Once I've exercised, watched the news, read and Youtubed, I'll usually take a look at my portfolio and watchlist to see if there are any opportunities on the day ahead. Being a long term buy and hold dividend and growth investor, I look to see if any of the companies I'm watching are trading at or below there intrinsic value. If so, I'll dig deeper into one and decide if it's time to invest. Presently, opportunities are few and far between for long term growth with US stocks trading at silly highs despite Corona, US/China relations, US election etc. etc. Only a few companies buck this trend that I can see. Namely, Berkshire B and Bank of America. 

Recently, I bought a big whack of Berkshire B at $212, for I feel this is decent value all factors considered. Also, with the conglomerate owning a proportion of BOA you get less over all downside risk. Berkshire offers up a tasty conglomerate discount as well which is attractive. Moreover, certain parts of the Berkshire portfolio look incredible moving forward. I'm thinking here of their railroad which has amazing potential over the long term.

Please share yours in the comment below as I'm always fascinated to know what my fellow human being are doing to feel good and stay sharp. Also, what's on your watchlist at the moment?

All the best and have a good one.

Thursday, 15 October 2020

Global Diversification Continues


In my last blog post, Birthday's and Berkshire B, I wrote about how I recently accumulated a sizeable chunk of Berkshire B at $212 as part of my strategy to diversify my portfolio and garner steady growth over the next 10 years. 

Looking back at the buy, I still believe this was a decent price and that the fair value of the company is closer to $300 per share.

When I started investing in the stock market back in 2015 or so my plan was to build a dividend machine that would give me a regular income and hopefully facilitate an early retirement. 

So far, this has gone mostly to plan, but in hindsight, I would do things slightly differently. 

Over the years, I have overpaid for some counters in an attempt to get stability and yield, and in doing so, I've made a few glaring errors - chasing yield being one of my main downfalls. 

Of these mistakes, the biggest are buying the following counters: Kingsman, Starhub, Singtel and First REIT. Anyone else in the  same boat here? 

I'm still holding on to these 4 counters for dear life, in the hope of a turnaround, but I don't have a ton of hope. 

That said, all 4 companies pay good dividends, but the question is for how long will this continue? 

However, I've also made some excellent purchases including Keppel DC REIT with a weighted average cost of just over $1. Also, Sheng Siong at $0.9 approx. 

There are others good picks in the portfolio as well, but I won't bore you with all the details right now.

So why the strategic move to the USA?

To be honest, I've become a little bearish on the Singapore economy over the past while. What with the US-China trade war meandering on, Covid, and the STI moving sideways at best, I feel perhaps the good times are over for the foreseeable future. 

This doesn't mean that there are not great companies in Singapore - there are - but it does mean that growth catalysts are few and far between. 

As a result, I want to spread my wings and diversify in the USA with one of the world's best run and diversified companies, Berkshire B. 

Why not invest in the S & P 500?

The answer to this question is easy enough:

1. I think Berkshire B is better value than the S & P 500.

2. I think Berkshire B can weather the bad times more effectively than the S & P 500.

3. I like Berkshire B's railroad and insurance businesses

4.  Passive funds buy stocks when they are expensive and sell when they are going down

5. I don't like passive ETFs. They have done amazingly well over the past 10 plus years because of QE, but what their future holds I'm not so sure.

6. I believe in paying for the quality business ethos and philosophy that Berkshire has now and which will continue into the future - with Buffet or without Buffet.

So, I have no doubt this is a quality counter moving forward, and one that will continue to add to when opportunity arise. This is the key cornerstone in my diversification plan.

Are you only diversifying in the USA?

I've also picked up a chunk of ICBC as I feel China's growth will move in tandem with this banking giant. Of course, I recognize the headwinds of mobile payment and loans etc. but traditional banking isn't going to disappear overnight. Also, ICBC has a history of paying handsome dividends, so it's nice to tap into this wellspring. 

OK, so that's where we are presently. More soon. The beat goes on...






Tuesday, 13 October 2020

Birthdays and Berkshire B!


Well, well.... Would you believe it? Singapore Dividend Collector has turned 40! 

It's one of those milestones in life that happens to other people, isn't it? It'll never happen to me, for I'm still too youthful and sprightly. Ha!

News flash! It has happened. Happy big 40 to me! (a few days ago)

So, what the heck have I been up to then?

Well, I recently made a rather large investment into Berkshire Hathaway B. This has been something I've been obsessing over for a long time, and I finally pulled the trigger at $212. According to my calculations, this is a decent price moving forward, considering Buffet, Munger and the rest create about a 10% return for shareholders. As always, this is a stock I intend to hold for a long time, and why not considering the quality of the businesses Berkshire owns, the amazing business culture there and also the potential for the company - with or without WB or CM. I'm not one of those investors who runs after the next big thing (although I might do with ??) I feel paying $212 is still decent value, and obviously so did Buffet as this was the average price he bought shares back over the past year or so. Thus, if it's good enough for the great man, then, my God, it's good enough for me.

This is my first foray into the US stocks, and presently I'm happy with my decision. Honestly, I researched this purchase in micro-detail to avoid any slip ups. In the past, I've been a little trigger happy and make some mistake, but I've learned from these and have grown as an investor. 

So, my plan moving forward is to use my Singapore portfolio to harvest dividends which I'll continue to reinvest into STI counters when the price is right. Also, Berkshire will be my steady growth engine (slow and steady wins the race etc.) 

I'm comfortable with this approach, so let's see if it works moving forward.

What do you think out there in internet-land?


Wednesday, 16 September 2020

Obsession with Money and Things.



Seneca's quote on happiness resonates deeply with me:

True happiness is…to enjoy the present, without anxious dependence upon the future. 

Thus...

Why are so many people obsessed with money and materialism? 

This is a question that reverberates around my skull for large portions of the day. And the more I think about it, the more it makes sense.

We've all heard stories about super-rich people involved in corruption, being sent to jail or being crippled with mountain of debt. What is it that drives so many people to such extremes? What is it that they are seeking to discover by accumulating more wealth? Do they even know themselves?

In physiological terms "minds obsessively fixate on the idea of making money, without considering the consequences of their obsession." 

This definition reads almost like a definition of addition: "A person with an addiction uses a substance, or engages in a behavior, for which the rewarding effects provide a compelling incentive to repeat the activity, despite detrimental consequences." (Psychology Today)

Now, please don't misinterpret my thoughts here. I'm not saying that making money is a bad thing in itself. We all need a certain amount if money to fulfill our basic needs of having food, shelter and a few treats every month. But where do you draw the line? Once our basic needs have been met we are usually happy, but how much happier can someone be if they live in a penthouse surrounded by fawning servants? Honestly, I doubt they would be any happier at all.

With increased levels of wealth come more responsibilities such as mortgages, staff, cars, stock market crashes etc. which make us more anxious and hyped up than those with less material possessions. So, why do people constantly push for more money and things when we all know it won't make us any happier than just having enough to meet our basic needs?

As I fast approach forty and have an 8 month year old baby, this question has been bothering me. 

For the past 11 years I have - with some help - built up a successful company with a small, loyal workforce. We are well respected for the service we provide and help many people. However, anyone who owns their own business knows full well the stresses that come with the territory. As I slip over the imaginary horizon of young adult into a fully fledged middle aged fella, my attitude towards work/live balance is shifting rapidly. 

In the early years, for example, it was head down, struggle and get shit done. Now though, I feel my concentration being pulled in other directions: family, exercise, meditation and poetry. Honestly, I can't see me being motivated to work the same way I have done for another 10 years. At a push, I could stretch to 5 years, for after that I would be more than financially comfortable and able to focus more on the present moment with my family and meditation practice.  

I know many people buzz with excitement of making enough for the boat or the vacation penthouse, but, as nice as they are, material trappings, or the thought of them, do little for me. 

Flashy people of the world go forth and do your thing. Buy more gold. Buy more property. Upgrade your BMW to the newest model if this is what makes you happy. For me... I just don't feel the need. I would rather explore the inner regions of my mind and, hopefully, become a more grounded and selfless individual. 







Tuesday, 1 September 2020

What are the lemons, the keepers and the stars in your Singapore portfolio?

 


Right, so here we all are into another new month. Can you believe it's September 2020 already? It's hard to fathom, isn't? Well, take a deep breath folks, it's true. 

What a year it has been so far for investors with some counters blasting into orbit and others sinking down to the dark depths. Let's have a look at this and decide whether I should cut my losses on a few bad performers (lemons) or hold on for dear life and pray for some divine intervention.


Here's my portfolio 2-9-20 which I have been building since 2005.


SATS
Keppel Corp
Singtel
Keppel DC REIT
ThaiBev
AimAMP Cap REIT
CapitaMall Trust
Capitalcom trust
Ascenads REIT
Nikko AM ETF
SGX
Singpost
Starhub
UOB
Kingsman Creative
Sheng Siong
DBS
Accordia Golf Trust
AscottREIT
Capital land Commercial Trust
First Reit
Global Investments
Frazer Comm Trust
Wilmar International
Ascendas-h-trust
ICBC (HK)
Centurion

As you can see I invest primarily for dividends which I reinvest back in to the portfolio 3/4 times per year.

The Corona pandemic has not been good to us investors, and my portfolio has suffered. Thus, I will divide it into three parts:

1. Lemons (stocks I might dump)
2. Keepers (stocks performing understandably in the current circumstances, but I like it's dividend/future potential)
3. Stars (stocks shining brightly in the sky)

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1. The Lemons

Singpost

I bought this back in 2016 when finding stock picks was like pissing in the dark. I hadn't a clue where to aim. My thinking at the time was that Singpost would do well from the emerge online retail markets and than it paid an ok dividend. I saw it as a long term, safe, dividend play. Well, the dividend is still there - currently 3.86% - but the stock has been hammered - currently trading at 0.7. It was 1.97 in Jan 2015. That quite a drop, and with the divided so low, a terrible investment. What the future hold for this stock doesn't look promising.

Starhub

I bought this stock again for the long term dividend opportunities, not really digging any deeper. As we all know, its fall from grace has been rather dramatic and its dividend unsustainable. Dam you Starhub!

Kingsman

When I bought this back in 2016, I was attracted by its decent balance sheet and dividends. That said, the last few years have not been kind. Presently, it dividend looks a bit silly at over 11%. How much longer can this small cap last in world with restricted travel and cancelled conferences?

---

2. The Keepers

SATS/Keppel Corp/ThaiBEV/AIMS REIT/CapitalMall/CapitalCOM/Ascendas/NIKKO ETF/UOB/DBS/Accott Trust/Capitalland Comm Trust/First REIT/Global Investments/Frazer Com Trust/ Ascendas H Trust/ICBC

A few notes on this lot. 

SATS has been shafted by Corona for sure, but I'm staying vested for the long term. People will travel when they can.

Keppel has been in the news as 
Temasek bottled the deal at the last minute. I still think this beast will bounce back and is still an OK long term hold. 
Aims REIT has been going sideways, but pays a solid divided and has good management.
CapitalMall will be grand long term as its malls are great locations. And let's face it, what else is there to do in Singapore?
Capital Com will be fine long term.
Ascendas has not been hot too badly and is a quality company. Long term hold.
NIKKO EFL was a silly investment for me after reading a Boogle book. Singapore continues to go sideways without innovative tech companies.
UOB/DBS/ICBC will be fine in the long term and pay good dividends.
Ascott has great locations and will be fine as the super rich need somewhere to stay in big cities.
Global Investments pays a good dividend and is steady enough. No debt as well. Hold long term.
Frazer Comm trust is solid, pays a good dividend and is backed by a strong sponsor.
Ascendas H Trust is fine in the long run.
ICBC is getting hammered at the moment, but will continue to grow as China does.
Centurian should cash in on the new government rules for Corona housing for workers and students. They are the main player and have a dam fine management team. Long term hold with a tasty dividend.

Note: I am holding on to FIRST REIT as it's down too much to let go at this stage. The sponsor is a joke and I don't have high hopes, but let's call this a white knuckle hold. Perhaps they will prove everyone wrong.

3. Stars

Keppel DC

What can I say...? Amazing

Wilmar

On fire and with investments in the company in place, this looks set to continue long into the future. They should raise the dividend in the future as well.

Sheng Siong

Thank you Corona...Thank you so much. People gotta eat etc etc.

Accodia Golf Trust

With the big meeting on the 16th Sept and the new deal, it looks like the deal will go though. This will be a big payout for us investors. 


---

OK, so that's about it. I could waffle on more but I won't. Let me know your thoughts below if you have an opinion.

Have a great day ahead.






Thursday, 9 July 2020

Invest in Thai Farm land or Keep Things Simple with Olam/Wilmar?



My wife and I have been thinking about buying land in rural Thailand and growing palm as a cash crop. Thus, we made a few inquiries and make a trip to the depths of Phang Nga province in Southern Thailand to investigate.

For those of you unfamiliar with the Geography of Thailand, Phang Nga province is about a 90 minute drive from Phuket, nestled deep in lush hilly jungles of the south.

Sarasin Bridge in Phuket
Sarasin Bridge
Here's a map for your info. You can see Phuket at the extreme south of the map which links to Phang Nha via a bridge (see pic below)

Phang Nga Province - Wikipedia

By the way, as most foreigners making this trip are coming from Phuket, I'll let you into some local knowledge. While crossing Sarasin Bridge from the Phuket into Phang Nha, make a you turn as soon as you get off off the bridge and make your way to the water front. Here you'll stumble upon Rimpan Restaurant which serves amazing, authentic southern Thai cuisine. I've been stopping here for years, and it never disappoints. I hope you like spicy food as this part of Thailand has the best spicy food in the world!



The Sarasin Bridge

Anyway, don't get me sidetracked with gastronomy, especially of the Thai nature. This is an investing blog post remember?

After feeding and watering we drove north on the upgraded road. Years ago, this drive was for the intrepid adventurer with a near-death experience every few 100 meters, but now it's a smooth drive all the way to Khao Lak.

We stayed for a night in Khao Lak.  If you never been here before, it has an old-school charm when compared to Phuket and feels like you have just exited a time machine twenty five years ago. Yes, it's set up for tourists, but it's is still oozing with southern Thai charm.

The beaches are world class, and with international airports still closed at the time of writing, I had the place all to myself. I joke you not... My wife and I were the only people in our hotel and on the sand.

Khao Lak Beaches - Discover Khao Lak and Phang Nga Province Beaches

After some phone calls we drove to the north east of Phang Nha provice to Kapong district to view land. Our contact was a retired policeman who was more than happy to show us various plots of land and share some of the local gossip at the same time.

Kapong feels like the end of the earth with its verdant hills and scantly clad residents. A feeling of calm washed over me as we drove off-road down bumpy tracks surrounded by the music of the jungle. Families huddled close together inside metal huts to our left as we ventured deeper into the dense greenery. A  young boy dressed in his boxers smiled the biggest, toothiest smile I have ever seen when he saw me through the window. This place is unseen Thailand, real Thailand, a place steeped in centuries old tradition and superstition.

My wife and my interest in all this lies in cultivating palm which, if done right can generate a tidy profit. We looked at three pots and it's still cheap here.

The first plot was 12 rai (about 5 acres) of flat, mature palm plantation with a family of workers already living on the land. It was priced at 2 million THB or about $89,000 Singaporean. After  a few quick calculations, I worked our that you could make about 15,000THB per month ($700 Singaporean)

Here's a pic of plot 1:



The second plot was was thick jungle and had a lovely view, but I passed on this one immediately because of the Sisyphean task of clearing and planting etc.

Here's a pic of the second plot:



The third plot was sloped and commanded a wonderful view from the top of it 35 rai (about 14 acres)

Here's some pics of the third plot:





What beautiful countryside, don't you agree? 

Imagine yourself spending a few days their a week breathing in the fresh air and listening to the sounds all around. Perfect eh?

This plot was price at about 4 million THB or $170,000 Singaporean. The land was cultivated the year before and contained about 500 new palm trees. The fruit from these will be ready to sell in another 12 months time and the land could potentially yield about 35,000THB or 40,000THB per month ($17000 Singaporean)

I'm sure you'll agree the returns look great on paper, don't they. But they don't come without considerable risk.

Risk 1: Fake documents

All the plots of land are in the middle of nowhere and if the land deeds are fake, then what are you going to do? After all, your agent is a retired local policemen, so whose door are you going to knock if the deal is a bluff? Good luck!

Risk 2: Bad workers

You will need a family of workers you can trust, and locals informed me that the going rate is 60/40 on profit in favor of the landowner. This is easy to consider in an idea world with squeaky clean mindsets, but you're not in Singapore now. Real poverty exists in every direction and many could try to take advantage of an absentee landlord before they disappear into the jungle.  This is a tricky problem to solve and some mutually-beneficial relationship building is required .

Risk 3: The price of palm

Palm is not going to make you rich over night, but can provide a decent side income if done right.
That said, the price does fluctuate - as the locals will tell you immediately. So, this is a real worry.

Risk 4: Theft

Remember your plot is in the middle of the jungle without mains electricity or water supply. It'll be dark at night and don't expect your workers to brandish arms and fight any intruders. The best you could expect is a phone call the following morning once you land has been stripped of palm. The risk of losing a few kgs is high, but losing to lot is low. It might be an idea to employ an armed guard for a fixed monthly rate, but tell him not to be to trigger happy to avoid a war with the locals.

So there you have it. These are the main risks I see after examining the land.

After surveying the three plots, we made our way make to Khao Lak and had some beers on the beach to mull the trip over.




When thinking about this investment the big question is the following? Is it worth the risk and effort when you could invest in a company that does something similar but on a larger scale such as Olam or Wilmar?

The more my wife and I though about this the more we start gravitating towards the latter.

Olam has a proven track record internationally, is Temasek backed and has a juicy yield of almost 6% at the time of writing. Its drawbacks are its burdened by a heavy debt.

Wilmar, we already own a healthy chunk of. It's a well run company with decent growth potential both for capital gains and dividend.

Final thoughts...

My wife and I drove back to Phuket convinced that we could make the land work, but unsure if we would be any better of in the long run when we could invest in stocks instead. Yes, of course, the land would diversify our portfolio further, but at what cost to our passive income? Also, the land is so deep in the jungle that it's unlike to go up in value anytime soon, and would be difficult to sell.

Thus, as we stood watching the sunset from Sarasin Bridge once again, we clinked or beers with our minds' made up.

The land can wait for another time. Wilmar or Olam it will be.

SDI










Saturday, 4 April 2020

How are you reacting to the craziness?



Lane Dean, Jr., felt sun on one arm as he pictured in his mind an image of himself on a train, waving mechanically to something that got smaller and smaller as the train pulled away. 

This quote comes from David Foster Wallace's short story entitles 'Good People' which I've had the pleasure of discovering this week.

Let's come back to this wonderful quote in a bit as it made me think about the current Corona situation.

Stay with me.

Good People by David Foster Wallace is a re-working of Hemmingway's 1927 classic Hills Like White Elephants, a story in which two young adults discuss getting an abortion. Wallace's story shares many elements; namely a young couple and lots of talk about abortion.

What makes Good People different though is the majority of the story consists of internal dialogue in Lake Dean's head, whereas in Hemingway's story the drama unfolds via external dialogue only. Lake wrestles with his own conscience and perception of his girlfriend, Sheri, who is pregnant and confused. As they sit on a picnic bench contemplating aborting their unborn child, Sheri sighs. 

These are Lake's thoughts:

The whole thing felt balanced on a knife or wire; if he moved to put his arm up or touch her the whole thing could tip over. 

Sheri sits meditatively seemingly lost in the moment while Lake's head is torn apart with ambiguous thought running this way and that. He feels 'frozen' torn between what he perceives to be the right thing to do and what his racing mind is urging him to do, namely force Sheri to abort their child. 

He pretended it had no name. He pretended that not saying aloud what he knew to be right and true was... 

Lake's mind flitted from how life would be if they got married and have the kid, to how life would be if Sheri has the abortion.

Selfishly, Lake feels that his life will be less impacted should Sheri go ahead and have the operation, letting him off the hook. Once again, he would be a free man, a player, able to party and experience more of life. He doesn't want to be a father at his age. Fatherhood's for old people, people who are ready, and he is most definitely not ready.

This has to be one of most difficult decisions anyone has to make in their life, and especially if you are in your early twenties or late teens and not yet emotionally mature. One wrong move and you could spend the rest of your life thinking 'what if...?'

This leads me back to our initial quote:

Lane Dean, Jr., felt sun on one arm as he pictured in his mind an image of himself on a train, waving mechanically to something that got smaller and smaller as the train pulled away. 

The image Lake presents here is powerful: standing on the platform and waving goodbye to your biggest fear and glowing with excitement as it slowly disappears into the distance. What a feeling that would be especially if you were an young man not yet mature enough to rationalize the impact of your decision on not only your own head but that of Sheri's. 

This image made me think of the current situation the world finds itself in. Life is now very different than two months ago. It's like everything we trusted and knew to be true has been turned upside down and shaken violently - like Lake's world. Old patterns of thought and movement, ones that we valued and cherished and held close for so long, have evaporated in front of our faces. One minute life was good, the next minute we're staring down the barrel of a existential crisis. 

How do you feel? Do you feel like Lake watching your career, your plans, your friends, your portfolio gradually get further and further from your reach? How much long can this go on until we lose sight of all the things that made our life what it once was?

Most people, presently, feel just like Lake, torn between confusing, paralysing and dejecting thoughts. Round and round they go like a machine in a laundromat, endlessly and tirelessly spinning, spinning, spinning. 

It's a tricky one, isn't it? A Depression era decade of poverty, uncertainty, unemployment, anxiety and despair lies just ahead for many people, and there's little most can do about it. 

That said, I think we all, like Lake, have options. 

Lake could either persuade his girl to go through with the abortion, or he could take responsibility and raise his child. Likewise, we can either sit at home and allow of head to fry in our skull or we can balance ourselves and think.

If we do think, what are our options? 

What I'm doing is trying to take back some head space through meditation and not watching the news. This I have been doing now for the past two weeks, and it words for me. 

I refuse to watch images of bodies being loaded into cold storage units and armed security personal lining the streets. These are images I can do without and add no value to my life, and in fact increase my fear and anxiety. 

So, while trying to breathe, be calm and upbeat I'm trying to come up with new online revenue steams. There's money to be made online if you have the right ideas and execute properly. Of course, it's not going to be easy with millions of people trying the same gig, but who knows? Getting creative and giving your all is better than sitting watching Netflix all day don't know think? This a shit time for all, but why not use it to explore new avenues and try to get income from another source? We all have a skill so why mot try and monetize it when we need it most.

So, I refuse to let my head pickle like Lake in the story. I refuse to procrastinate and try and block out the obvious mess glaring up at me. This is not a time to fester in self-pity reminiscing about the good times. Shit happens and the times have changed. It's time to stay focused, calm and see where creativity and hard work can take you.










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Morning Musings 27-10-20