Friday, January 26, 2018

How to plot the yield curve using SGS data

Where do you get the necessary data to plot the yield curve? How do you plot the data points? How do you interpret the yield curve? These are some questions that have been on my mind for quite a long time. I have been reading the financial blogosphere and was secretly hoping for someone to address this topic. I've waited and waited to no avail.

As I'm thinking of doing some mathematical modelling with bond data in the future, I decided to force myself to search for answers to my own questions.

First, head over to the Monetary Authority of Singapore (MAS) website. Scroll down to the bottom of the page.

Singapore government bonds

Click on the link titled "SGS: Singapore Government Securities" (circled in red in the above screenshot). You will be brought to the Singapore Government Securities (SGS) page.

Singapore Government Securities

Once you are at the SGS page, click on the "Statistics" link (circled in red in the above screenshot).

Singapore Bond Price and Yield

At the Statistics page, select the "Historical Prices" link (circled in red in the above screenshot).

Singapore bond yield

You will be brought to the above page (see screenshot above). The page details the various parameters that you can tweak. Once your selections have been made, you can display the resultant dataset either on the page (by clicking on the "display" button) or in a csv file format (by clicking on the "download" button).

I'll briefly go through the parameters. "Start Year" and "Start Month" refer to the earliest data points you want in your dataset while "End Year" and "End Month" refer to the latest data points you want in your dataset. The "Frequency" parameter has one of four values for you to select from: (a) Daily, (b) Weekly, (c) Monthly, or (d) Yearly. Depending on your frequency selection, the dataset you end up with could be very huge (e.g. daily data) or very small (e.g. yearly data).

Next, we will look at the checkboxes. These checkboxes are used to select the variables that you want in your dataset. Each variable is defined in terms of its tenure (e.g. 1-year, 2-year, 5-year, etc) and either its yield or price. You are allowed to select however many variables you want in your dataset.

To digress a bit, if you display variables with similar tenure (e.g. 10-year Bond Yield and 10-year Bond Price) across a period of time, you will notice that yield and price are negatively correlated to one another. For newbies, this will help you to internalize the fact that as bond prices head up, yield decreases and vice versa.

Let's go back to actually getting the data that is required to plot our yield curve. Let's leave the Year/Month/Frequency as it currently is (2017, Jan, 2018, Jan, Yearly). Next, select the checkboxes of "2-Year Bond Yield", "5-Year Bond Yield", "10-Year Bond Yield", "20-Year Bond Yield", and "30-Year Bond Yield." (I am following the recommendations of an Investopedia article here). Click on the "Download" button, download the file, and open the file with a spreadsheet program like Microsoft Excel.

singapore yield curve data

You will end up with the above dataset. If you had chosen to display the dataset on SGS website instead of downloading it, you will realize that the time-related variables refer to the end of the period. Hence, in our above screenshot, year 2017 (row 6, column A) refers to the end of 2017 while year 2018 (row 7, column A) refers to the end of 2018. As 2018 has just started, it would most probably refer to the current yield. Columns B, C, D, E, and F reflects the yields of the 2-Year, 5-Year, 10-Year, 20-Year, and 30-Year bonds, respectively.

sg yield curve data

Highlight the data, navigate to the "Insert" tab, and select the "Line" graph option.

singapore yield curve

And there you have it. Two yield curves, with the 2017 and 2018 referring to the end of 2017 and current yield in 2018 (26 January 2018), respectively. Do note that yield curves are static snapshots, much like your balance sheet.

As for interpreting yield curves, do refer to this article by Investopedia.


Saturday, January 20, 2018

History of Cash Calls for REITs (Updated as at 20 January 2018)

Since I have some time now, I have just updated the history of cash calls for REITs list (see here for the updated list).

The last time I updated it was in March 2017 (see here). Since then, there have been a number of additions to the list (Cromwell European REIT and Keppel-KBS US REIT).

Off the top of my head, I recall that the following REITs raised cash during this period: (a) AIMS AMP Capital Industrial REIT, (b) Cache Logistics Trust, (c) Capitaland Commercial Trust, (d) CDL Hospitality Trust, and (e) Manulife US REIT.

As always, don't take my list as it is. There might be a few cash calls that slipped my mind. Do comment if I have missed out on any.


Friday, January 12, 2018

2017 Reflections, 2018 Gameplan

Hi to all my readers. I know this is very late, but here's wishing everyone a happy new year and good health to all!

2017 has been a good year to me. Though some of the challenges I've faced made me doubt myself, I somehow managed to pull through and learn from the experience.

Career-wise, I am thankful for the bump (in my industry, at least) to my salary. At the rate I am going, while keeping my fingers crossed, I will be hitting $100k net worth before the end of 2018 (excluding CPF and emergency fund). When I first started reading personal finance and investment blogs around January 2015, I remember coming across one of Budget Babe's post on saving more than $100k before 30.

It awakened me to the possibility. However, I would not have envisioned myself to achieve just that. Social science researchers with an undergraduate degree are at the bottom-most rung of the food chain. This is further exacerbated by low income growth and a low income ceiling. Furthermore, I did not have AWS for the first 2 years of my working life. Still, I enjoy what I do, but I warmly welcome additional pay anytime! :P

If you ask me in 2015 or 2016 what concerns I have on my savings rate, I would readily point to my salary. The numbers just do not add up; I do not think it is realistic for me to hit a net worth of $100k before 30. To manage my expectations, I have always assumed that I will be drawing fresh graduate pay with zero increment and no bonuses for the rest of my working life. Extreme, I know. But it sure beats my peers who unrealistically believe that they are worth more than they actually are. I have observed my peers setting themselves up for disappointment again and again with this type of mentality they bring before employers.

After being in the workforce for three years, I could say that I have achieved a greater degree of self-awareness. I know where my strengths and weaknesses lie. Socially, I am still rough on the edges. I am task-driven and speak in a matter-of-fact tone (I know some of my blogger friends would disagree with this after experiencing plenty of "nonsense" comments from me. Ahem). Now that I have a subordinate assisting me, I have to consciously remind myself to do otherwise.

Another area in my life that requires serious work is the way I work. I have a Type A personality in the workplace. Don't ask me why, but I have this tendency to clear work ASAP. I feel uncomfortable leaving work undone; uncompleted tasks are a bloody annoying eyesore to me. Obviously, this is not good for my health and I am experiencing some of its negative impacts already (tension headaches, stiff shoulders). I have made some headway on this. It takes some conscious effort not to get swept up in a whirlwind of faux busyness.

This leads me to my next point on blogging. There have been multiple occasions where I was too eager to publish a post. After publishing said posts, I cringed because of the following: (a) I recall a point that previously eluded me which would have been good to include in the post, (b) breaks in the thought patterns in my writings, (c) my "voice" fails to manifest and the post conveys too mechanical a feel, and/or (d) my tone did not come out right.

A good solution is to step back. Save what I have written, come back another day with fresh eyes to look at what I have written. There is no need to rush the completion of a blog post (or non-urgent assignments at work, for the matter). Allowing things to sink in and mulling over them instead of reacting immediately to events in my life.

Why the rush, Unintelligent Nerd? I want growth and I want to collect achievements. The uncertainty brings forth anxiety about my ability to meet my own expectations. As long as there is uncertainty and expectations that "should" be met, there will be anxiety.

This does not mean that, moving forward, I expect nothing of myself. I would still deliver my best. It is a small but subtle shift in my mindset. To speak in metaphors, it is coming to terms with the fact that one unit of effort may or may not always map out to one unit of achievement.

For 2018, I intend to carry this mindset with me. To continue improving myself, to sharpen my craft minus all the stress and anxiety that results from my realization of the discrepancy between what I am now and what I aspire to be. To pay the toll of hard work while I am still (somewhat) young and energetic and to build up my human capital. To be more conscious of my physiological state and to regulate it better (e.g. do not allow my blood pressure to rise when I receive a task to do over email). To divest non-core stuff in my life such as toxic friends and personal development areas-of-interest that lacks synergy with other areas-of-interest.

On the "administrative" side of things, I will be hitting the $20k emergency fund goal once my January 2018 pay is credited in (see here). Depending on how conservative I want to be, I might consider increasing my emergency fund further (at the expense of my cash allocation). This is not set in stone yet and is open for revision.

That's all for now. While some of my peers are busy relaxing in their youths, I will continue to make hay while the sun shines.

As a certain controversial financial blogger would say:

The hard road leads to the easy life
The easy road leads to the hard life


Saturday, December 30, 2017

Year 2017 Portfolio Performance and Dividend Income

With the closing of the stock market for the year, it is time to compute the required statistics to measure my performance for the year. In this piece, I will review how I have fared as well as the strategy to employ for the new year.

Similar to what I have done previously, I will go through my dividend income first. For my SGD-denominated counters, the trend in dividends received pales in comparison to 2016. This could be attributed to the following reasons: (a) profit-taking on some of my counters in the earlier half of the year, (b) poor economic conditions leading to some counters delivering lower dividends, (c) delisting of yet another income counter (Croesus Retail Trust), and (d) delays in the declaration of distributions (RHT Health Trust). In 2018, I expect dividends to drop further.

In contrast, the dividend payout from my USD-denominated counters increased. This is primarily due to capital injections into such counters. Percentage-wise, it looks like huge gains. However, I would like to point readers to the y-axis. In dollar terms, it is insignificant. I intend to build-up this portion of my portfolio slowly. Partly to get my feet wet and ease myself into the US stock market and partly to minimize the damage in case of a market correction. Whenever the US market allows, I will continue to nibble at counters in my watch list.

In Q4 2017, I could not resist the temptation and bought quite a number of counters, albeit in small quantities. 

I purchased small quantities of Yeo Hiap Seng for their investment properties. Technically, it is not an asset play (stock price < cash + real estate + securities), but I am treating it as such. Yes, this is a new position.

I initiated a new small-ish position in SATS in October when the price fell. Using technical indicators, the counter was at its 52-week low and is on a downtrend. However, its historical PE trend indicated otherwise. Being cautious, I intend to gradually increase the size of accumulation in proportion to the extent of price depression. However, the price rebounded shortly after my purchase. Anyway, I am holding this counter for its income-generating ability.

I added to my Singtel position in November when the price fell.

I initiated a new small-ish position in HongKong Land in mid-November when the price fell. Similar to SATS, I intend to gradually increase the size of accumulation in proportion to the extent of price depression. Based on historical trends, HongKong Land usually trades at a ~50 percent discount to book value. If, however, you value it using current yield, HongKong Land still has more room for its price to drop (7% yield at its best during the GFC, see here). 

I added to my position/averaged-up in Welltower REIT just last week after monitoring its performance for the past one year (I first initiated a position in the REIT in December 2016). My position is still small. 

I initiated a new small-ish position in Thai Beverage just a few days back. I have been mulling over Thai Beverage for quite some time. "Valuation looks good, but what if the market corrects and I could get a better deal?" "Oops, I think I missed the boat." "Let's wait for that entry price again." "Doesn't seems like it will ever hit that particular price again unless there's a market crash." Similar to SATS and HongKong Land above, I intend to gradually increase the size of accumulation in proportion to the extent of price depression.

I have also added some more (physical) gold to my portfolio.

Using the XIRR function in Excel, my portfolio returns is as follow:

For my SGD-denominated portfolio:
Returns for Year 2017: 19.00%
Annualized returns since portfolio inception (March 2015): 11.60%

For my USD-denominated portfolio:
Returns for Year 2017: 20.09%
Annualized returns since portfolio inception (March 2016): 19.61%

My USD-denominated portfolio includes SGX counters that are traded in USD. Specifically, Dairy Farm, Mandarin Oriental, and HongKong Land. 

There's no typo error in the portfolio inception date. The first counter which I purchased that is traded in USD was Dairy Farm in March 2016. The very first counter which started my investment journey was Nikko AM STI ETF in March 2015.

Oh wow! The returns from my USD-denominated portfolio comes as a real surprise. I vaguely recall all of my US consumer staples stocks bleeding very badly just last month. They have rebounded quite well. The high returns probably come from my holding of Dairy Farm since March 2016 as well as my complete divestment of Mandarin Oriental in Q2 2017 after the company tried to place the Excelsior on the market (see here). 

Meanwhile, the returns for my SGD-denominated portfolio is boosted by the high-quality REITs (MIT, PLife, First REIT, FCT, CMT) as well as other yield stocks (ST Engineering, SGX, FCL) which I have collected cheaply and have been holding on tightly ever since. In Q2 2017, I have taken profit/cut loss on a number of counters, which could have contributed to the returns (see here).

Moving forward, I expect my returns to fall.

Bleeding ones
It would not be fair if I do not point out the duds in my portfolio.

When I do not include dividends, the following counters are in the red: Nera Tel, Starhill, Vicom, Singtel, Kingsmen, QAF, RMG, Yeo Hiap Seng, and Thai Beverage.

After taking into account the dividends received, the following counters are still in the red: Nera Tel, Singtel, Kingsmen, QAF, RMG, Yeo Hiap Seng, and Thai Beverage.

I am not too worried. The potential damage that some of the more-worrisome counters could do to my portfolio is contained through position sizing while I am keen to build a bigger position for some of the other bleeding counters.

So much for trying to time the market and anticipating a market crash. I exited T Rowe Price, iFAST, and Hong Leong Finance thinking that these counters would be hit the hardest in a market crash. Apparently, the market hasn't crashed yet and I look like a complete fool. In fact, I exited T Rowe Price and iFAST at a loss. As of today, T Rowe Price continues to hit higher highs.

Strangely, I am at peace with my decision to divest those counters. I guess it must be my inclination to rather protect my capital from potential losses in a market crash rather than reveling in unrealized gains. 

The only counter which I really have to kick myself is United Industrial Corporation. I chickened out and locked in my profits as I am uncertain how the market would react to asset plays during a crash. Oh well.

Along similar lines, I have also divested my STI ETF in Q2 2017. So much for market timing a market crash. -.-

If there is a market crash, I will be reinstating my POSB Invest Saver account to automate the collection of STI ETF on the cheap.

My investing strategy entails focusing on income from multiple sources. There should not be any sort of over-reliance on any one or few counters. As a result, I diversify/diworsify (depending on how you see it) a lot. 

What I currently have are small positions across many counters. At one time, my largest counter has a market value of $9000. On average, the market value of each of my counters stands at around $1500. Even though I am sitting on plenty of unrealized gains, it makes absolutely no sense for me to lock in profits for some of my smaller positions. I am unable to sell half of my holdings since commission charges would wipe out the returns (good % returns; poor $ returns). Conversely, selling all means killing the golden goose permanently.

Come hell or high water, I would have to be comfortable with seeing my unrealized gains evaporate in a market crash.

Net worth breakdown
Compared to my Q3 2017 update, there does not seem to be much change in my net worth breakdown. Phew! With all the buying in Q4 2017, I am quite surprised that the pie chart did not change much.

As per before, quoting my Q3 2017 update, "The pie chart depicts the breakdown in my net worth across the various asset classes in percentage (pie chart neither includes my CPF nor my emergency fund). To be conservative, I computed my precious metals allocation at spot price even though I am holding everything in physicals."

Strategy moving forward
I'll continue to build up my cash reserves. As and when the market allows, I will continue adding small positions or small amounts to my existing positions.

With plenty of consumer staples (Dairy Farm, Sheng Siong, Thai Beverage, Yeo Hiap Seng, QAF, Kimberly Clark, J.M. Smucker, Hormel Foods, General Mills) and healthcare (PLife, First REIT, RHT Health Trust, RMG, ISEC, Welltower REIT, Abbott Laboratories) stocks, a relatively high precious metals and cash levels, I hope to ride out the market crash.

Thanks for reading!

Friday, December 22, 2017

What will I do after achieving Financial Freedom (part 2)

This is a continuation of my previous post (see here). After some thinking, I think it is not wise to blab about my interests as well as the potential areas of interests that I am keen to develop. Else, I will really overdo it with the number of "parts" there are to this post.

To make it more relatable, I think it would be better to show how I could potentially fill up my schedule with various activities over a 1-week time-span. For this hypothetical scenario, let's assume that I wake up at 8am each day and head back to bed at 10pm.

Why 10pm? I am a morning person who rise early and rest early.

To make scheduling "easier", I'll divide the time into 2-hour blocks. Hence, there are 7 such blocks in each day (8am - 10am; 10am - 12pm; 12pm - 2pm; 2pm - 4pm; 4pm - 6pm; 6pm - 8pm; 8pm - 10pm). This is just to make the blog post less-complicated; I am not going to really restrict myself in this way.

Other key assumptions have to be made before I begin. I assume that I will be single all the way and have no major financial commitments.

Here is what my schedule could look like after achieving financial freedom.

Okay, definitions, and their corresponding elaborations, are up next.

Exercise: Includes "low-intensity" exercises such as brisk walking to more "moderate intensity" stuff such as swimming, badminton, etc. Technically, I am not supposed to do any exercise as per the doctor's instruction owing to my medical condition. Hence, I expect to spend most of my "exercise time" on brisk walking through the various park connectors. When I was a student, I have brisk walked across park connectors countless of times. It is therapeutic, helps me to work up a sweat, and I could gamify the sub-routes to take. Beautiful scenery too, if you know which paths to take. :)

I have contemplated on more "exotic" physical activities such as swordplay and jousting before. On second thought, it may or may not materialize anyway.....and I don't think it is good for my health.

Spinning stuff is also a decent form of exercise once you achieve some form of competency in it. As there are multiple divisions which require different skill sets, it could be both a challenging, rewarding, and definitely time-consuming hobby to pursue.

Since we are on the subject of skilltoys such as yoyos here, it reminds me that I have other skilltoys such as glowsticks (see here for a visual demonstration), astrojax, and devil sticks collecting dust somewhere at home. The thing is that some motions cut across skilltoys and practising one of them could very well have a synergistic effect on my growth in the others.

Read: I am being very broad here and am playing around with semantics. This could include just plain reading of books, both fiction and non-fiction. It also includes Massive Open Online Courses (MOOCs) such as Coursera, EdX, and other similar online education providers. It also includes any formal or professional education that I may take up just for interest's sake or to try to get an insider's view of another field just to broaden my horizons (in a way I'm doing the latter now....).

With less constraints, I foresee myself spending more time in the library devouring books. The end goal (if it is even appropriate to call it a goal!) is to develop myself to become a well-rounded individual with exposure to various schools of thought.

Gaming: This includes both computer games and console games. As it is, I have a "backlog" of computer games to play. If arcades still exist in the future, I would occasionally visit them for their music/rhythm games. This ties in with the above point on exercise as well. Once you reach some form of competency in music/rhythm games, they could qualify as exercise.

Besides the more traditional conceptions of "gaming" above, I used to engage in tabletop wargaming. What you do is you purchase miniatures, assemble them, and hand-paint them. Besides admiring your accomplished work, you also take these miniatures to the field. You deploy them on a table with various terrain against other players and fight it out. Christopher Ng of Growing your tree of prosperity does this too. Something like the below picture.....

Back in Upper Primary/Lower Secondary, I used to host my own free-form text-based roleplaying website. You create characters and stories purely with words and get others to do the same, weaving their characters and yours together in a journey of epic proportions. I probably will attempt to revive my website after I attained financial freedom.

Reflection: Some may get this while others may not. I need time alone to reflect. It could be on anything. It could also be just soaking in the moment, being present in the here and now. 

I need to reflect on the stuff I learn/experience, to internalize it and make it personal. To progress from a shallow understanding to a less-shallow understanding. I need to have ample room to bounce ideas in my head, to think absurd thoughts. A cognitive playground for me to play in, so to speak.

I need to be a detached observer, like a scientist who curiously observes his or her target specimen.

Visiting museums and reflecting on the exhibits.

I could do this by staring at the ceiling (like what SMOL would do), observe how my pets (specifically, crayfishes and shrimps) behave (like what AK and Cory would do), or observe fellow human beings in their natural habitat. You can learn a lot through observation and it makes you think.

Job: As I have shared in my previous post, I like what I am doing. If there are interesting, meaningful, and challenging problems to solve at work, and since I get paid for doing it, why not continue working? One issue that I observe with this mentality of mine is that my health could suffer as a result.

Ideally, a scaled-down version of work would provide me with a good mix of "job" and "me-time." But you never know. Such arrangements may not materialize.

Hence, I have also thought of doing part-time jobs to keep myself mentally and socially alert. Preferably holding a part-time job in the area of my spiritual community. Firstly, to be part of a spiritual community and second, using the spiritual community's connection to the wider society as a platform to reach out to disadvantaged people in society. Of course, I am already "somewhat" doing this as a social science researcher since my work deals with the disadvantaged people in society. 

Social: Meeting with friends and family. Spending time together and creating memories. Nothing much to elaborate on for this.

Spiritual: This ties in with what I have briefly mentioned in the "Job" section. To be a mere participant/learner in a spiritual community and the possibility of working as a part-time staff in an organization aligned to my spiritual community. I get "spiritual nourishment" and I get some form of interaction with others who subscribe to the "same" spirituality.

Most likely, I will be topping up credits and upgrading my postgraduate cert to a complete postgraduate qualification to go into academic religion research in a niche area which I am interested in.

Of course must keep it hush hush. Last thing I want is a leadership position and meeting the expectations of others. @_@

Personal Projects: PP stands for Personal Projects. I have mentioned some of them in my previous post. To reiterate, I want to learn how to grow my own food and automate the process of growing them through the use of Arduinos and the like. I want to improve on my programming skills. I want to improve on my miniature painting skill and branch out to other areas of painting. I want to re-pickup a certain musical instrument and learn totally new ones. I want to re-pick up a certain language and learn totally new ones. I want to sharpen my investing skills. I want to learn gardening and help out as a volunteer at gardens. I want to keep more/different marine pets. I want to develop my own game. I want to learn how to design my own character sprites to be used in the games I create. Bla bla bla, yada yada yada.

Could I do all these things while I am still working? Nope. I have to be selective.

Will I be satisfied with merely dabbling in each of these activities? Sure, why not? I could spend my non-working hours on some of them. 

Are you reeeaaaaallllyyy sure with that? If have, have. If don't have, don't have. I am contented as it is. :)