Monthly Review- August 2012

After last month's intense selling of the strongholds in my portfolio to realize most of my profits, this month has been rather stagnant.  The market has been fluctuating in a tight range for the month due to lack of any catalyst to drive the market in either directions.  However, my portfolio still bucked the trend as the unrealized profits rose by 85%, while realized profits rose by 16% with the sale of Breadtalk.

This month, FJ Benjamin announced their financial results for the quarter.  Although both revenue and profits rose for the quarter, pressure from costs and expenses remain.  This cause the dividends for the year to fall to $0.010 per share.  This may seem to be a lack of confidence in the times ahead, but in my opinion, this is positive for the company as they are keeping more cash for future growth in times of uncertainty.

In addition, seeing the defensive nature of Singpost, I decided to increase my positions in Singpost.  This is also partly due to my decision to increase the dividend counters in my portfolio after the sale of my strongholds last month.  Despite the high share price, I believe there is further upside for the counter.  In technical analysis, if the share price can break out of $1,06, the next resistence will be at $1.10, after which will be the resistance at $1.14.  However, after the uptrend these few weeks, the technicals may be favouring a slight correction.  Nonetheless, I have confidence in this counter and as I will be holding on to this counter for the long term, I will not be too overly worried about the near term movement in share price.

Next month, there are many indicators to look at.  Will European Central Bank announce further bond buying to stabilize the market?  Will FED announce QE3 to spur the financial markets in hope to improve employment rates in US?  Will China lower bank's reserve ratio to boost lending and prevent any hard landing? I believe next month we will have a clearer picture of these and hopefully the market will be cheered.

My Current Portfolio:

Lessons learnt: I need to relearn buying and selling strategies, as currently I am not following any plan to set my target price.

Breadtalk (15th May 2012 to 7th Aug 2012)

Breadtalk is an uprising powerhouse in the food and beverage sector.  With its firm and strong fundamentals, and its growing expansion in China, it is also regarded as a defensive play with good dividends.  I have witness the fluctuations in share price for the past year or so, as it rose from around $0.50 to more than $0.60, before falling to around $0.55 range after the bonus share issue. 

 

 

After studying the pattern in the range-bound repeating rise and fall, I decided to buy into the counter with the intention of short term play, as it was observed in the past year that the share price would fluctuate between $0.46 to $0.55 in the event of any sell-down. 

Opportunity presented itself soon after it went XD in May, as the share price suddenly plunge by 10% from $0.54 for no apprent reason within a short period of 2 days.  Hence I took the chance to buy 10 lots at $0.49 per share, with an intended target price of $0.55.

After the purchase, the share price dipped even further to $0.46 before a gradual rebound occurring 2 weeks to gradually move north. During this three month period of holding the counter, I was contemplating whether I should hold on to it or just sell below my target price for a minimal profit.  However, as I was not in need of cash, I decided I should stay discipline and stick to the initial plan.

My efforts soon paid off 3 months later as it rose above my expectations to $0.56 per share.  I sold off all my holdings for a decent profit.

My thoughts at that time:  As I contemplate whether to sell or not, I remembered my biggest weakness in investing is my ill-disciplined nature.  To remind myself to stick to my plan, I made the final decision to sell.

Lessons learnt:  Sticking to the plan is the best plan in my opinion, as if prices rose further, I can console myself that I had been discipline to stick to the plan, while on the other hand if prices drop, I will not have any regrets for missing the opportunity to sell at a higher price.