To all my fellow investors out there, I am writing this message to remind everyone about the past two crashes we had over the past decade. While stocks were decimated, many of us took flight and joined the mass exodus exacerbating the already dire situation. What most of us failed to realized was that there were a few brave souls who boarded the boat of opportunity and bought shares while everyone was getting out. With the benefit of hindsight, those who dare made a huge fortune while those who got out, missed the boat of opportunity a few years later. This boat right now is almost empty and it is sitting in your back yard with almost no takers. This boat is even bigger and it will be a once in a lifetime event (my life at least). I know that I may be a lone voice in this mega mess but without it, the opportunity boat would not have arrived. Call it the half empty or half full cup syndrome. Or better still is the cup 1/4 full or 3/4 empty...take your choice. I\'m sure that most will see this as 3/4 empty going to oblivion... BTW: Did you know notice that Berkshire Hathaway close up when the DOW melted away last night? Don;t get me wrong. I am as fearful as everyone out there and as conservative to my next door neighbor. But that doesn;t mean that I would avoid stocks altogether...it is just the opposite. Just at the beginning of last year, I was lamenting to my better half that to get outsize returns (over 15% pa) from the market over the long term is difficult when the SGX, DOW and the HKSE was in record territory. Now it seems that the outsize returns are more than possible and maybe 15% pa is far too low..I can even see many potential 10 baggers (in 5+ years)with reasonable valuations. Again although I may sound contradictory my advise to everyone is continue to be afraid...be very afraid as this will heightened your sense of choosing only the best stocks BUT start now...in batches. If you have $10,000 to invest choose a minimum of 10 stocks and allocate an equal amount weighting to each meaning $1,000 exposure or 10% of your total portfolio for each stock. Buy using time as your friend in batches of 25% (or $250 worth) every 3 months for the next one year. In a year you should have reach the maximum single limit exposure to the stock. This method is probably the safest route as there is no telling where the bottom is and it is easier to catch the bottom this way than timing it all at once. Of course the above is only a guideline and feel free to modified it according to your own risk profile. (FYI...I only do longs and do not trade which I consider gambling plus I do not put my children\'s future at risk.) Once again everyone, the boat has no takers now and my bet is that it will leave with only a few passengers. Take care everyone...
in the last few months, every time people thought the crisis had ebbed, things got worse. now it\'s really bad with the failure of the bailout plan. dont u think there are at least a couple of months more to go before things stabilise and there\'s greater clarity? in which case, why not wait for a few more months to buy stocks? i know this sounds contradictory but i also am mindful of what Buffett once said: You pay a heavy price in the stock market for a cheery consensus.
Good point Dello, The honest answer is that I do not know where the bottom is. All I know is that it some stocks are cheap, darn cheap by any standards. There is blood everywhere on the streets...Wall street that is and yes it may get worse from here...who knows...I certainly do not have a crystal ball. The markets seems resilient today and even some of the stocks which I like a lot like China Milk is UP today!!! I expected capitulation but that did not happen so far. Another one which is FLST which the forward dividend yields is almost 21%!! So in 3.5 years, I would have gotten back all that I have invested in cash and yet still own the same amount and with the yield payout of 21.5% assuming the price stays at the same level. In other words the stock and the dividend is \'FREE\' for the rest of my life..actually more than my life since the ship (and the trust)will probably outlive me!! So as the market gets crazier deals like this only appear in a typical market dislocation between value and price. Will it get worse...sure it might but it looks darn good from here. You know what my greatest fear is right now? As the price simply becomes so ridiculous, there may be a takeover GO from a hedge fund, SWF, or whoever. If that happens, our 10 bagger will probably be only a double bagger. As to WB, I think he meant that for those who put ridiculous valuations on the way up to justify the overvalued price...as with all bubbles. To another point about the market is that it is a discounting machine and stocks tend to have their greatest move 6 months ahead of the economy. So timing the market is very difficult if not impossible...btw what happen to 90% of analyst who were saying that oil is going to $200 a barrel and gold to $2,000 an ounce???? Seems very silent...now.I think they were the same analyst(s) predicting the Nasdaq to hit 10,000 during the tech bubble. Jim Rogers telling us to bet the farm on commodities 6 months ago with the same story. I\'m sure he did not bet his farm (with leverage) if not he would be in pauper land now. You see all this noise is the typical workings of Wall Street \'bastxxxs\"that got us all into this mess and hoodwink the poor man in the street investors who will bear the brunt. All of them got in early in the party and will talk everyone in as they are leaving the party laughing all the way to the bank. Sure fortunes have been made on trend analysis but what they don;t tell you is for every one winner there is 100 losers who lost their shirt betting on the same trade. As I said the boat is empty and even value investors are extremely fearful right now...all the speculators or traders are probably dead in the water right now...and worse that they cannot short the market. I appreciate your thoughts and let us all come together and try to keep some sanity in this fearful times.
Hi, i hv just read the FIRST SHIP LEASE TRUST HY - Jun 2008 financial statement the Distributable Amount is derived from the cash generated without deducting the Non-cash adjustments. Non-cash adjustments include depreciation expenses, exchange differences and amortization of certain debt upfront fees and initial direct costs. Initial direct costs are transaction expenses incurred in the origination of new leases. These costs are capitalized and amortized into earnings in proportion to the recognition of lease income. thus, DPU which is from Distributable Amount, comes from a part of your capital. this will result in lower NTA per unit since ship do depreciate and if net profit is lower than than Distributable Amount thus the 20pct yield is more of money from left pocket to right pocket. pse pardon me if i am wrong. thank you.
hi, for your info, I just saw the following news. Sept. 30 (Bloomberg) -- Investor Marc Faber said any proposal to rescue the U.S. financial system will fail to avert a recession in the world\'s largest economy. A stock rally in the event that a package is approved will be temporary and should be used as ``an opportunity\'\' to sell, said Faber, who predicted the so-called Black Monday crash in 1987. U.S. lawmakers voted yesterday to reject a $700 billion plan worked out by congressional leaders and the administration of President George W. Bush. ``The rejection of the package is good because it shows that some people in the U.S. are still sane,\'\' Faber said in a phone interview. ``A bailout will not buy the U.S. a way out. The government is less powerful than markets in fixing this mess.\'\' is this an opportunity to sell or get out ? i do not know and i hope not.
Hi Peter, Your analysis is correct...in accounting theory at least. Step back a moment and think about it. These are bareboat charters with long leases...so the certainty of cash flow and payout are \'almost\' guaranteed for the unit holders. As for as you and I are concern as long as the payout is there at the 21% yield...that is what you\'ll be getting..period. So in about 3.5 years or so the amount invested should have paid itself off and you\'ll still be owning the shares and the dividend payout. Yes the NTA goes down but at the end of the lease the ship will be rechartered of sold BUT not necessarily at book value. It depends on the going rate at the end of the lease which is too far out to make any sensible projection. Anyway, the ships are relatively new and the useful life of these ships extend far beyond normal accounting methods of depreciation. The other options if you\'re going by the book would be RMT or PST. The other two offers lower yields but still good and it does not payout a 100% of cash flow and does provide for depreciation. However RMT is close to it\'s limit on debt to equity ratio thus may be force to raise equity at a potentially dilutive price to bring it back closer to the 1;1 ratio. From a investor risk adverse perspective; FLST is more compelling as my \'interest\' plus capital is return to me at a faster rate. After 3.5 years the ROI from thereafter is virtually infinity as the invested has already been paid back to you...in cold hard cash.
NextInsight
a hub for serious investors
