Sound Investment

Many think stock market is a place to make fast bucks. During bull market it is easy to make money. Many bought into stocks without understanding their business. Worse of all they bought into penny stocks of which most are in the red for many years. They tell themselves everything has been fine so far. They are some even ignored obvious red flags.

Often we start of with a plan that offers a clear margin of safety. Then slowly, we allow ourselves to take just a bit more risk. Most of the time, we do not even recognize we are doing it. Eventually our perception of risk goes down. We start to feel safe and as a result we move into territory that we previously labelled out of-bounds.

The process repeats. Increase risk till bull turn to bear market. Then lost more then what we gained.

When stock market does well, we start to believe it will always do well. Stock market go in cycle. The greedy believe they can double their profit on pennies. BB are the one who power up penny stocks. They are the one capitalize on pennies. The greedy are the one who will end out losers.

In recent months, declining oil prices and currency volatility and most likely interest rate will increase this year. We have to be very cautious and manage the risks carefully. I am maintaining strong cash position for buying opportunities.

This week:
Crude oil plung further to just above US$44 per barrel. This is bad news for oil and gas producers, rig-builders and marine-related business. On the other hands it mean lower energy cost and fuel cost.
MAS surprise move to tweak its exchange rate policy and ease the rise of the Singapore dollar. US$1 rise to S$1.35, highest in 6 years. So far singdollar has strengthen against Malayian RM and Australian dollor but weaken against RMB and HK$.

US Federal Reserve will probably increase interest rate by June this year as strong growth in the US economy and stronger US greenback will lift US consumer spending. The volatility before & after interest rate hike should not be something investors are too worried about because that creates buying opportunities into equities. US Fed will most likely increase by only 25 basis points in order not to rock the boat.

Tax incentive for Singapore REIT was first introduced in 2005. If they pay out at least 90 percent of their income as dividends, REITs are exempt from paying tax on the dividend receive. This was only for 5 years and renewed in 2010.

This year the tax sweetener will expire on 31st March. Come Feb 23 Budget Day, if it's not renew it will have an impact on RIET total dividend pay out and share its share price.

The strong growth in the US economy, stronger US greenback & currency volatility. The timing of US Federal Reserve probably increase of interest rate. The plung of crude oil price. All these events had resulted in market on the bumpy ride. We have to be very cautious and stay very patience waiting for any buying opportunities.

Rock wrote:

Tax incentive for Singapore REIT was first introduced in 2005. If they pay out at least 90 percent of their income as dividends, REITs are exempt from paying tax on the dividend receive. This was only for 5 years and renewed in 2010.

This year the tax sweetener will expire on 31st March. Come Feb 23 Budget Day, if it's not renew it will have an impact on RIET total dividend pay out and share its share price.

The tax sweetener has extended to March 2020 for another 5 years from March 2015.

GEMS, POTENTIAL GEMS OR LADDER AND SNAKE STOCKS

Past 5 years performance of these stocks:

SARINE
20/1/2009 at 8 cents - 24/1/2014 at $2.02
From the chart Sarin moving uphill with minor profit take all the way up.
Sarine 5 years increased by 2425% - GEM

ERATAT
20/1/2009 at 8.5 cents - 24/1/2014 at 10 cents
During the 5 years Eratat had increased up to 26.5 cent on 26/1/2011 and goes down hill to as low as 7.8 cents on 3/9/2012.
Eratat 5 years performance increased by 17.6%. - Ladder and snake stock

MIDAS
20/1/2009 at 48.5 cents - 24/1/2014 at 47.5 cents
During the 5 years Midas had touch high at $1.13 on 12/4/2010
Midas 5 years performance downed by 2% - Lader and snake stock

STRACO
20/1/2009 at 8 cents - 24/1/2014 at 43 cents
From the chart Straco moving uphill with minor profit take all the way up.
Straco 5 years peformance increased by 437.5% - GEM

DUKANG
2/2/2009 at 22 cents - 24/1/2014 at 29 cents
During the 5 years Dukang had touch high at 92 cents on 5/4/2010
Dukang 5 years performance increased by 31.8% - Ladder and snake stock

CORDLIFE
IPO in March 2012 at 49.5 cents - 24/1/2014 at $1.205
Cordlife less than 2 years performance increased by143.4% - Potential Gem

Sarine comes up top among these 5 stocks but not very widely discuss in the forum. Eratat, Midas and Dukang are the most popular stocks hotly discuss in the forum. These 3 stocks which I classified as Ladder and snake stocks. I believe BB and traders are the one that capitalised on these 3 stocks. Newbies are the one who are lossing money or are holding onto these stocks.


========================================

The above was posted on 25/1/2014. Reviewing all these stocks on the share price closed this week:

SARINE - $2.02 increased to $2.85
Increased by 41%

ERATAT - Suspended most likely totally write-off.

MIDAS - 47.5 cts decreased to 32.5 cts
Decreased by 31.6%

STRACO - 43 cts increased to 79 cts
Increased by 83.7%

DUKANG - 29 cts decreased to 11.5 cts
Decreased by 60.3%

CORDLIFE - $1.205 decreased to 95 cts
Decreased by 20.4%

For the above stocks I'm vested only on Straco and Cordlife.
Straco - I had rated Straco as 'GEM' so I bought more shares at around 50 cts.
Cordlife - I had rated as 'Potential Gem' but during the year I had gradually sold down this stock.
Sarine - Waiting for buying opportunity as it is trading at too high PE.
Eratat, Midas and Dukang - These 3 stocks were hotly discuss in the forum. I classified these 3 stocks as Ladder and snake stocks. Midas already suspended for more than a year and likely totally write-ff. Midas seem to be Analysts favourite but lost 31.6%. Dukang lost by 60.3%. Not vested on all these 3 stocks.