IT HAS been the toughest of times in the market for all our 5 participants. Their strategies and best stock picks were whipsawed by event after event in the global financial crisis.
The results of their stock picks were accordingly bad – real bad. Only in one case, that of Aileen Goh, was there any reason to cheer now that our Stock Challenge has come to a close.
She barely lost anything from the hypothetical $100,000 that she started off with six months ago. For the stocks she picked and how she got in and out of the market, please go to our story archives.
In second place was Mephisto, who came back strongly with a bet on the market slumping after a stunning one-day recovery. He made a quick $11,000 on his trade in a STI put warrant – but missed a bigger pile of money as the put warrant soared over the next few days.
You could get a heart attack if you were playing with real money.
|Stock||Number of shares||Average purchase price ($)||Price sold|
|Oct 17 closing ($)||Value ($)|
|Cash||48,170 + 51,220|
Aileen Goh, 31, has been a trading representative at Phillip Securities for the past eight years since she graduated with an accounting and finance degree from Monash University. She has a mix of investing approaches: long-term fundamentals-based investing coupled with short-term trading, depending on the circumstances.
When I sold SPH, it was the best performing STI stock and I thought it would be a "sell on news" when the results are released, so I sold my position ahead of the results.
I barely lost money in the market because I adopted a very cautious view, much like what Jimmy Rogers, Marc Faber and Oei Hong Leong have been advocating: sell on rallies and stay in the most defensive stocks possible such as SPH.
I also cut loss when I felt the stocks had not performed as I expected – such as Straits Asia - thereby minimising my losses. I stayed away from the most aggressive growth stocks such as China stocks, and the most leveraged stocks such as FerroChina, and stayed mainly with defensives. And if in doubt, I chose not to do anything, as cash is also a form of investment.
|Stock||Number of shares||Price bought at ($)||Price sold at ($)||Oct 17|
Mephisto is a 30-something investor who says he is a simple man who enjoys his bak ku teh with Chinese tea every weekend morning. Having gone through the 1987-2007 booms and busts, he has a great deal of respect for Mr Market. Nevertheless, he enjoys pitting his wits against the market, which is by itself a learning experience, he says.
Sept 22: Sold 250 lots of Sunshine at 6 cents and 100 lots of Taisan at 14.5 cents.
Keeping all in cash, even though China Taisan is trading less than 3x PE and a dividend yield of almost 14%.
Oct 2: Bought Olam, Abterra and Keppel Corp.
Oct 8: Cut loss on Olam, Abterra and Keppel Corp. Market talk that Ferro China is going bust as the company defaults on convertible bonds. May affect S-chips.
Oct 13: Bought Wilmar & OCBC. Purely for trading. I believe this rally will last 2-3 days. Sold Wilmar for intra-day profit. Market is weakening faster than I thought.
OCBC trades now $6.75, $6.77. Am cutting 3 lots at $6.75. Intra-day contra loss of $150. Am putting some money on STI 2350BNPePW081230.Trades 55, 56. Last done 55.5. I am buying 100 lots at 56 cents.STI is likely to go below 2100 by this week.
Oct 14: Sold put warrant. We are facing 2 issues -- One is a banking issue, which has been
partially resolved by the equity investment by US govt and its unlimited interbank guarantee.
Two is a global recession. US is in recession, Europe is in recession and Japan is in recession. I don't see how China can fight the headwind.
Already, I am seeing some of my expatriate neighbours downgrading to heartland apartments. Worst is yet to come. I believe the high-end property market in Singapore will tumble, banks will have a hell of a time with foreclosures. The property market in Singapore is likely to be gloomy for the next 6-9 months. I am starting to look at properties with a view to buy in June 09.
|Stock||No. of shares||Price bought at ($)||Price sold at ($)||Latest market price($)||Total shareholding|
|Jardine Cycle & Carriage||3,000||17.295||2,000 at 16.80||10.30||10,300|
|6.10 cd 0.29|
6.75 cd 0.29
|5.31 cd 0.035||37,170||2,030|
|Tat Hong Warrants w130802||90,000||0.135||0.05||4,500|
Sebastian Chong has invested actively in equities since the 1970s. He is managing director of Financial Info Analysis Pte Ltd, a company he founded after he retired as an accounting professor at the National University of Singapore. He now runs his popular investing website, www.shareowl.com
The STI stood at 2,797.50 on 15 August and 2,559 on 19 September. By 17 October, it had crashed to 1,878.51. In my last report on September 19, I had said “As the market sentiment looked set to get worse in the early stage of this round, I decided to switch out of Cosco, Swiber and Sino-Environment into blue or semi-blue chips.”
Most fortunately I did. Well, if I had not gotten out of Cosco, Swiber and Sino-Environment, I would have been in really deep trouble. Just to recap, on 21 August I sold 7,000 Cosco at $2.09 (now $0.755), 10,000 Swiber at 1.59 (now $0.47) and 24,000 Sino-Environment at $1.18 (now $0.38).
On 22 September, I also sold 2000 shares in Jardine Cycle & Carriage at $16.80 and bought 5,000 more shares in SGX at $6.75 cum dividend of 29 cents per share as I expected SGX to be more resilient than Jardine C&C.
And it turned out to be so. However, my timing wasn’t quite right in my switch to Tat Hong 2013 warrants from Parkway Holdings. At 13.5 cents each, 90,000 warrants cost $12,150 but on 17 October, they were worth just $4,500 at 5 cents each.
Since they only expire in August 2013, the chances of the warrant multiplying 10 to 20 times within the next 5 years still remain.
Since SGX and Jardine C&C are blue chips, I thought that holding a modest amount in a wild card with a 5-year life like Tat Hong warrant would not be too much of a gamble.
With hindsight of course, I should have waited till a few days ago to purchase the warrant at 5 cents.
The portfolio is now worth only $54,271 with the key stock being SGX worth $37,170 on 17 October. I am still very bullish about the long-term value of SGX despite SELL calls by investment banks notably Citigroup and regional brokerages like Kim Eng and DBS Vickers.
They argued that in the shorter term, the falling revenue from clearing fees for equities trading would not be able to offset the rising revenue from derivatives trading. The only financial house with an Overweight call on SGX is JP Morgan who adopts a longer-term view of SGX as a powerful franchise. Most investors would agree that it is a powerful franchise alright but many are prepared to buy it only at lower prices and they are prepared to time the market.
|Stock||No. of shares||Price bought at ($)||Oct 17 price||Total share value $||Vested dividend|
|SMB United||123625||0.145||$0.12||14,835||-||Valuation is stupendous at half-NTA plus hope of good dividend.|
|$0.285||14,247||-||Deepwater exploration play.|
|$0.20||11,751||0.013||Strong brand equity suggests sustainable momentum.|
|Silverlake||50,000||0.40||$0.15||7,500||0.005||See my article titled SILVERLAKE AXIS: Software solutions for Asian banks.|
|Dividend of $0.0545 for 31500 shares|
DanielXX is a 30-something investor who is well-known in certain online investing forums as well as for his blog, where his writings on investing reflect depth of thought and analysis.
As of Oct 17, the total value of my portfolio = shareholding value + dividends = $50,800.
It is down by 49.8%. A thoroughly disastrous year this is. On hindsight, of course, should have stayed in cash. Let’s hope the next year will be better. There might be a respite like in 1997 where the market had a strong 30% bear market rebound before collapsing once again in 1998 due to recession and capitulation.
Then, the ultimate recovery was driven by US rate cuts following LTCM. Can’t really see where the catalyst is going to be from this time. I have a feeling it will be from Asia. Good luck to all!
|Stock||No. of shares||Price bought at||Oct 17 price||Value of shareholding ($)|
|Li Heng||75,000||53 cts||24 cts||18,000|
|China Hongxing||132,000||35 cts||17.5 cts||23,100|
Audi Wong, 35, is a commercial pilot who has invested very successfully in stocks and properties, especially in recent years. He graduated from the University of New South Wales with a bachelor’s degree in aviation.
I cannot state where the market will be next week, month or even a year from now. But what I do know is when a stock is cheap, perhaps even selling significantly below its intrinsic value ( and now, even below its cash per share value) by a huge amount. To the readers out there: This is not the time to sell but think of buying good businesses now as sowing the seeds for the future. And when the sun comes out again, you'll be reaping a healthy harvest!
Previous story: STOCK CHALLENGE: Aileen Goh is way ahead going into the last lap