Time to buy?

A Straits Times article on 25Sept2008 reported that some 32 companies (or perhaps more) have bought back S$86 million worth of their own shares in the past 2 weeks. This could be a signal of "insiders" indicating their company shares are under-valued.

Companies that were mentioned in the share buyback news:-
- Yangzijiang
- DBS
- Sembcorp Industries
- Hersing
- CSE Global
- Ezion Holdings
- Valuetronics
- Advanced holdings

Try out new ways.....upd 23Sep2008

Date Start: 1Jan2008
NAV = $4,127.05 as of date 19Sep2008
Returns to-date (since 1Jan2008) = -17.46%

Benchmark: iShares MSCI EAFE Index Fund (ETF)
Date Start: 1Jan2008
NAV = $3,851.04 as of date 19Sep2008
Returns to-date (since 1Jan2008) = -20.98%

First review of the Straits Times Index (STI)

GOLDEN AGRI-RESOURCES AND JARDINE MATHESON HOLDINGS TO JOIN STI IN FIRST INDEX REVIEW

Singapore, 11 September 2008 – Singapore Press Holdings (SPH), Singapore Exchange (SGX) and FTSE Group (FTSE) announced today the results of the first review of the Straits Times Index (STI) and FTSE ST Index Series.

What's In: Golden Agri and Jardine Matheson Holdings.

What's Out: Thai Beverage PCL and Yangzijiang Shipbuilding Holdings.

Read more here

Chart of Golden Agri












Chart of Jardine Matheson Holdings

United Global Healthcare Fund Sep 08 update

Update from UOBAM (11Sep2008)
==========================
The United Global Healthcare Fund (“Fund”) gained 4.61%* (on NAV basis) against its benchmark MSCI ACWI Health Care Index which gained 3.87*% in the month of August 2008. However, the MSCI ACWI Healthcare Index outperformed the broader market MSCI All Country World Index (“MSCI AC World”) for the month of August, 3.87% versus 1.13% respectively.

The MSCI ACWI Healthcare Index has decreased 6.03%, outperforming the Standard & Poor (“S&P”) 500 Index which decreased 11.93% for the year-to-date as at 29 Aug 2008. The out performance has been due to the defensive nature of the Healthcare sector relative to other sectors.
==========================
pls reply to this email waynekohwg@gmail.com so I can send to you individually via email. One file in all: 50kB.

Try out new ways.....upd 5Sep2008

Date Start: 1Jan2008
NAV = $4,222.50 as of date 5Sep2008
Returns to-date (since 1Jan2008) = -15.55%

Benchmark: iShares MSCI EAFE Index Fund (ETF)
Date Start: 1Jan2008
NAV = $3,699.54 as of date 5Sep2008
Returns to-date (since 1Jan2008) = -24.01%

Portfolio Rebalancing

Besides using "Drip In Money" as the key strategy to investment discipline, the other important aspect of investing is to control the emotions that comes bundled with it, like it or not.

Rebalancing your portfolio is as simple as managing your "emotions" in the up and down cycles of the market. In fact, investing needs to be boring. And by boring, I mean a rationalized range of value that is not too high, yet not too low. Rationalization also means certain rules are in place.

Below is an example of portfolio rebalancing with the following vital stats:
a) portfolio starting point is a 50% : 50% (Equity:Bonds) allocation
b) trigger point of rebalancing: whenever deviation of the two funds is 5% or more.

In contrast, another "Buy aNd Hold" portfolio of the same 50% : 50% (Equity:Bonds) allocation at the starting point chooses not to rebalance.
You will find that the "Buy aNd Hold" portfolio experiences a higher "high" as well as lower "low" than the "Rebalance" portfolio. All switching costs incurred during the rebalancing are accounted for.
At the end of the period, the "Rebalance" portfolio still wins by 0.8%.

In conclusion, rebalancing not only helps to smoothen out the too-high-too-low to just-nice, it actually helps the portfolio to be more rationalized, and yes, boring. And boring means getting less emotional.

Good read==> Reuters: Rebalance your portfolio

Edu Endownment vs BTITR

Recently, someone asked me whether an Education Endownment policy is worth taking up, as the returns look pretty decent.

Annual premium: S$5,700 payable for 10 years
Sum Assured: S$100,000
Maturity period: 20 years
Maturity sum: S$100,000
(payable of S$40,000, S$30,000, S$30,000 over three consecutive years beginning from 20th year);
I believe there should be some extra bonus (non-guaranteed) although it was not mentioned.
Riders attached: payer waiver of premium benefit.

Using the above figures, I calculated the internal rate of return (IRR) to be 3.46%. This is a decent figure, provided inflation stays around or below 3% for the next 20 years. Note that this is achievable because the premiums are squeezed into a 10-year period, therefore giving the money its time long enough to compound.

As always, there is a better way to achieve the above results through BTITR (Buy Term Invest The Rest), reasons being:-

1) there is a maturity sum to work on;
2) there is a maturity date to work towards.

Using the parameters as above, I used a term insurance to cover all contingencies needed (sum assured of S$100,000 on child's life, payer benefit on parent's life and critical illness etc). After setting aside the money needed for the term insurance, the bulk balance is channeled into a "Drip in Money" investment plan.

This is what could be achieved at different annualized returns:-
a) @ 5% p.a ==> S$108,653
b) @ 6% p.a ==> S$125,732
c) @ 7% p.a ==> S$145,402
d) @ 8% p.a ==> S$168,041

Two things that are better comparing BTITR vs the Education Endownment policy :-
a) Using BTITR: assuming the returns is 7% p.a, the destination amount is S$145,402, 45% more than what is given in the insurance policy.

b) Using BTITR: assuming the returns is 7% p.a, the annual premium payable could have been S$4,042 instead of S$5,700 to achieve S$100,000 at the 20th year. A savings of S$1,658 (29% less) annually, totaling S$16,580.

However, for most people who are not investment savvy enough, the tendency to take the "prescribed" route (i.e products packaged by insurance companies, except pure term insurance without cash values) is fairly high, mainly due to the lack of knowledge and self-confidence, and some are just "bo-chap", i.e do not bother to do a little more homework.

Suntalk-Saver-Callback-Plan

Recently, a good buddy of mine introduced me to a callback service which he has been using for a while.
I took the "plunge" and downgraded my mobile phone service plan with MobileOne (M1) and picked up one of the callback cards at a mom-and-pop shop. The voice quality is actually not bad, to my surprise. But my main objective is the savings that accompanies the change:-
As you can see, the savings of 58.8% is significant. Not only that, the unused talk-time on the callback card can be "rolled over" for 6 months (i.e 424 minutes of talk-time must be consumed within next 6 months, which is not an issue). And the best part is, I still get to send 500 SMSes, same as before, through the lower, cheaper MobileOne plan.

To conclude, here are some good and bad sides of the change:-

Good (tangible benefits):-
a) savings of 58.8% !
b) same SMSes to send : 500
c) I actually get a "value-added service" (Caller Number Non-Display) along the way; People receiving my call on the other end sees my number as a "private number". This service would have cost me $5.35 per month with MobileOne (M1).
d) Free UNLIMITED calls to 3 M1 Friends that I choose; (p.s: but soon I realized there are not many friends with M1 numbers).

Good (intangible benefits):-
a) need my "RAM memory" to work harder, therefore improving my brainpower (hopefully); I also hope to be able to memorize the phone numbers of my friends through this as I need to physically key in the numbers in the callback service.

Bad:-
a) A bit inconvenient when trying to key in the numbers while doing something else, such as driving.
b) Worrying about the sustainability and stability of such small-scale companies; But my liability is limited to the $9.00 that I paid for the card.

Many thanks to my buddy for this!

MMF Update

This is a follow-up to MMF rtn vs Bank deposit rates which I post on a monthly basis.
Remarks: $1,000 parked in MMF would have yielded $7.58 more than savings rates YTD since 1st Jan2008. I am comparing MMF to savings because of their withdrawal flexibility.
Other figures as shown above. Fixed Deposit, on the other hand, is not as flexible when it comes to withdrawal.
Fixed Deposit rates reference: MAS

MMF annualized returns as of 29Aug2008 since 1Jan2008: 1.401% p.a

Feel free to contact waynekohwg@gmail.com / 8288.9005 (mobile) for details and clarifications.

Quote (032-2008)

"Both the poor and the rich gamble.
The rich think they can take more risks,
the poor think they have nothing to lose."

===== DR ARTHUR LEE =====
Head of the Institute of Mental Health's addiction medicine department, cautioning against generalising gambling habits based on income levels

Extracted from : More low-income earners gambling bigger sums