Tuesday, April 10, 2018

More free courses from Temasek Polytechnic

A friend informed me the other day that Temasek Polytechnic is offering some more free courses.

This time round, it is not limited to alumni only. It is open to the public (Singaporeans and PRs). See here for details (if the link does not work for you, google "Micro-Learning Courses Temasek Polytechnic"). Interestingly, completion of these courses could lead to partial/full module exemptions from some of their Specialist Diploma programmes.

For the benefit of those who might have missed it, Temasek Polytechnic previously offered their alumni a free course from their Temasek SkillsFuture Academy. See my previous post here for details.

Do remember that both offers are available for a limited time only.

Saturday, April 7, 2018

Q1 2018 Portfolio Update

With a blink of an eye, a quarter of 2018 is over. How has 2018 been for me? So far, 2018 has been kind to me in every aspect of my life.

Since this is an investment blog after all, I shall begin with a review of my holdings.

As I am primarily an income investor, the trend in dividends received is one indicator that I pay attention to. This does not mean that I conveniently overlook unrealized losses, stick my fingers into my ears and go "la la la, I can't hear you." I have observed new US income investors/bloggers engage in such mental gymnastics whenever an investment of theirs sours. I hope that I do not end up that way.

Over time, I realized that I have become more judicious in my entries, holding period, and exits. I have become more comfortable with the act of taking money off the table. Realizing capital gains and limiting losses are not as foreign to me as before. Concerning the latter, it is better to acknowledge my investment mistakes and protect whatever capital that is left rather than banking on hope that things will turn out fine. On a related note, my perspective has changed as well. Instead of focusing on individual counters, I try to view how each individual counter fits into my overall portfolio.

Q1 2018 Dividend Income (SGD)

Dividends received from my SGD-denominated portfolio in Q1 2018 fell, when compared to the same quarter last year. This is mainly due to profit-taking last year.

Q1 2018 Dividend Income (USD)

In contrast, dividends received from my USD-denominated portfolio in Q1 2018 rose, when compared to the same quarter last year. If you look at the y-axis, the dividends are still chump change. I am still cautious and will scale in only when a better opportunity presents itself.

In Q1 2018, I sold off my entire stake in Vicom and RHT Health Trust. After including dividends, I closed my position in Vicom with a small profit. I have been looking for opportunities to sell Vicom after my newbie mistake of buying it at an elevated valuation.

RHT Health Trust is another facepalm-able experience for me. To manage risk, I have many positions, with each position sized as a function of my knowledge of the company and the risk that the particular counter plays on my overall portfolio. I have been lulled into complacency, partly because RHT Health Trust is a small position in my portfolio and partly because I assumed it is just Business-as-Usual (BAU). I did not see the warning signs and WHAM, I got hit.

I have added precious metals on multiple occasions throughout the quarter.

Portfolio Overview
My SGD-denominated portfolio is overall green owing to my purchase of REITs early on in my investing journey. Non-REITs, on the other hand, shows pockets of mini unrealized gains and losses here and there.

My USD-denominated portfolio is overall green owing to Dairy Farm and Dairy Farm alone. The consumer staples sector is bleeding, with General Mills exhibiting the largest drop in my portfolio. The market punished it further when General Mills announced its intentions to acquire Blue Buffalo, a pet food company. I have come across Blue Buffalo before and its financials are good. As Blue Buffalo trades at a high valuation and does not distribute any dividends, I had to give it a miss. The US healthcare REIT sector is also facing multiple headwinds from rising interest rates, changes to American healthcare policy, and patient outflow due to the current flu epidemic.

Emergency Fund
I have accomplished what I have set out last August. Our emergency fund has hit the $20000 figure in January 2018. In light of the present economic outlook, I intend to top up our emergency fund further to give ourselves better peace of mind. This brings me to my next point on.....

I had a pleasant surprise the other day at work. I received my performance bonus and increment letter and the numbers within exceeded my expectations. As mentioned before, I have conditioned myself to have zero expectations. Hence, any upside is an upside. And upside is good to my net worth numbers since I did not "plan," "estimate," and "account" for it in the first place. I have seen my peers mentally traumatized when reality fails to meet their expectations. They expected more but was given way lesser.

However, my happiness was short-lived. On the same day, over at mum's side, she was identified by the CEO of her company to take on a thankless and stressful role that entails an increase in her working hours without any pay increase. Through Providence, she got off the hook.

The ridiculous thing is that some younglings who did not want to take up that role encouraged her to do so because it would "look good" on my mum's CV. My mum retorted that she is near retirement already and that she does not need to beef up her CV. LOL!

While recounting the situation to me, that was when my mum realized that she's grown old. The feeling that I had during the conversation was best conveyed with the latin phrase memento mori. It was a sudden, sinking feeling, the kind where you feel that your heart has just been dislodged from its original location.

I recovered quickly. Time waits for no one. I have spent enough quality time with her. This is a reminder to spend even more time with her, above and beyond what I previously did. As a gesture of appreciation, I randomly brought her to a jeweller and gifted her with a gold bracelet and voluntarily contributed a portion of my performance bonus into our shared emergency fund as a token of my love.

Cash Flow
In hindsight, one of the investment actions I took at the end of January 2018 looks incredibly idiotic. I transferred almost all of my cash into a fixed deposit. 2 or 3 days later, it was volatility week! Then the realization sank that it takes some time to convert my fixed deposit back into cash. Cash is different from cash equivalents. I'd rather lose out on some interest than to not have the cash to invest when I really need it.

I did something that is unlike me. I withdrew from my 3rd Specialist Diploma programme as I have been falling sick too much and have increased responsibilities at work. As I withdrew at the halfway mark, I'm entitled to a post-diploma certificate (e.g. half a Specialist Diploma).

In the interim, I'm just casually reading books (non-investment related) and taking up short courses/workshops at brick-and-mortar institutes. Once I've recovered from my burnout, I will be ramping up the intensity again and continue my achievement hunting spree. But that won't be anytime soon.

Net worth breakdown
Compared to the previous quarter, there has been some changes to my net worth breakdown. The cash portion has increased due to contributions from work from ~31% to ~36%. The precious metals portion has increased from ~23% to ~24%. This is strange considering how I have been accumulating precious metals throughout the quarter. The equities portion fell from ~44% to ~39% due to profit taking and the simple fact that cash contributions from work are left as cash. The pie chart below does not include my performance bonus as it has not been credited into my bank account yet. Before I forget, I will be taking a leaf out of Uncle CW's book: Bonuses are not to be spent in the year they are obtained.

Net Worth Breakdown (Q1 2018)

As per before, quoting my Q4 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."

Random Announcements
I have signed up on InvestingNote in order to communicate with Turtle Investor and Jeremy Ow as both do not have blogs. The Turtle Investor on InvestingNote is different from the Turtle Investor blogger. Jeremy Ow occasionally comments at LP's blog.

I have also signed up on Stackoverflow in order to seek answers to my programming questions. Strangely, I am able to help answer some programming questions as well. Then I got too excited trying to attempt to answer other people's questions and almost got banned for it. Moderation is key, be it commenting on other people's blogs or on forums.

That's all for now. Thanks for reading!

Thursday, March 22, 2018

A Quick look at Tootsie Roll Industries

Occasionally, I use Finviz to screen for stocks that are at their 52-weeks low. This time round, Tootsie Roll is one of the names that popped up.

tootsie roll stock chart

Tootsie Roll is not an unfamiliar name to me. I have been trying to familiarize myself with the names of consumer staples stocks to invest in, for their "supposedly" defensive characteristics. Often, even defensive investors ignore this counter for a variety of reasons. First, the yield is measly. At ~1% yield, yield-starved investors could find better deals in the market. Second, its growth pales in comparison to its peers. Third, the management team are very private individuals. They do not participate in earnings calls, industry conferences, etc. Thus, market participants have minimal avenues to pursue as to what are the plans the management have for the future as well as the trajectory that the company is taking. There is also the issue of leadership succession. Tootsie Roll is a family-owned business and there is a huge question mark as to whether leadership will be handed over from one generation to the next since pretty much everything is kept hush hush.

Based on what I have read, a couple of years back, analysts have been talking up Tootsie Roll. They identified the company as a potential target of Warren Buffet. Consequently, the PE ratio shot up as investors bought into the narrative that Tootsie Roll could offer as a special situation play.

It is only recently that their earnings multiple is contracting. I have attached their historical PE chart from Morningstar below.

Tootsie Roll Historical PE

According to Morningstar's site, their 5-year average PE is 32.6. Furthermore, Tootsie Roll might appear cheap if you compare the TTM PE of 24.1 against its historical PE trend.

Using data from yahoo finance and some fiddling with R, I got the above dividend history of Tootsie Roll. As mentioned previously, there is some differences in how I compute dividends per annum versus how the company could report it. In my case, I compute payouts in a given calendar year. Tootsie Roll may adopt a financial year that does not coincide with the calendar year. Each bar on the x-axis represents a single year, with the least recent year appearing on the left-hand side of the bar plot.

Dividend growth, from 2000 to 2017, could be described as increases followed by a flatline. Percentage-wise, which cannot be obviously seen from the bar plot, the increases are huge. ~10 % increases from 2005 to 2006 and from 2014 to 2015. 

As one of my investing aims is to look for consistent dividend growth counters in the US, I think I shall give Tootsie Roll a miss for now. Am hoping for a better valuation and a greater margin of safety before parking my money in it.

Saturday, March 10, 2018

Making a CPF nomination

I have just made my CPF nomination recently. As it is still fresh in my mind, the following is how the process went for me:

1). Head down to one of their CPF Service Centres (see here for a list of CPF Service Centres). I went with my nominee (The person/s who will be receiving your CPF monies if anything untoward happens to you).

2). Produce your NRIC to the staff, answer some questions related to the nomination (Name, NRIC, Nominee Name/s, Nominee NRIC/s, relationship to Nominee/s, marital status). Staff emphasized that any change in my marital status would require another new nomination to be made.

3). Wait, as the staff fills up the CPF nomination form on your behalf.

4). Verify that the information on the CPF nomination form is correct. Signs it.

5). Staff serving me signs as one of the witnesses. Staff informs me that another colleague would ask me some verification questions (my name, NRIC, nominee/s name, relationship to nominee/s). After the verification is completed, staff's colleague signs as the second witness.

6). Requested for a photocopy of the signed nomination form. Staff informs me that my nomination will be reflected on my CPF account in two weeks' time.

That's all. The entire process took around 10-15 minutes. Hope this is helpful for those who are wondering what the process is like. Cheers!

Tuesday, March 6, 2018

Jan 2006 to Dec 2006 Singapore Government Bond Yield Curve

In one of my previous post, I spammed my readers with a bunch of yield curves from January 2007 to December 2009. The idea is to eyeball the data and verify whether was a yield curve inversion present before/during the Global Financial Crisis (GFC) and how well do changes in the yield curve over time provide us with ample warning of a stock market crash.

Unfortunately, the endeavour did not bear much fruit. The yield curve became more normal as the GFC unfolded. Still, I did observe that the yield curve was pretty much flat during the first quarter of 2007. Could I simply have selected the wrong period for analysis? Maybe the yield curve inverted before January 2007, became flat during the first quarter of 2007, and gradually became more normal?

In this piece, I shall continue spamming my readers with yield curves. This time round, the yield curves are from January to December 2006.

Fire up R! Automate the churning of the yield curves!

January 2006 SGS Yield Curve

February 2006 SGS Yield Curve

March 2006 SGS Yield Curve

April 2006 SGS Yield Curve

May 2006 SGS Yield Curve

June 2006 SGS Yield Curve

July 2006 SGS Yield Curve

August 2006 SGS Yield Curve

September 2006 SGS Yield Curve

October 2006 SGS Yield Curve

November 2006 SGS Yield Curve

December 2006 SGS Yield Curve

In the first half of 2006, the longer duration bonds yielded more than their shorter duration counterparts. However, the yield differential between bonds of different duration is not as wide as, let's say, June 2008. If you look at my previous post, the June 2008 yield curve looks the most normal, with longer-duration bond holders receiving higher yields for the risk they are taking.

Yet I digress.

It is only from September 2006 onwards do we observe the T-bills yielding higher than the longer duration bonds. Yes, there is some evidence of inversion, but the effect is muted. Coincidentally (or maybe I am reading too much into it), the inversion occurred at September/October 2006. If you take the collapse of Lehman Brothers (September 2008) as the start of the GFC, the small inversion preceded the GFC at ~2 years.

Do take my ramblings with a pinch of salt. It is just a mere eyeballing of the data and the conclusion that I draw from the data could be totally spurious.

I will be doing more investigation into this topic.