Monthly Review- March 2011

Natural disasters dominated the headlines this month. On 11th March, a 9.0 magnitude earthquake hits Japan, resulting in a 10m high tsunami crashing into its eastern coasts. This brought about devastaing effects as the quake and tsunami have destroyed most of the buildings. The worst impact was the partial destruction of the nuclear reactors and the power failure which caused the crippling of the cooling system. Without proper cooling system, the reactors overheat and a few hydrogen and steam explosions occurred at the site, releasing small dosage of radioactive particles into the atmosphere. Till now, the staffs of the plant are still trying to cool the reactors externally by spraying large amounts of sea water and potable water at the reactor. Fears of a meltdown of the reactor spooked the market amidst the already jittery investors' mood. This incident caused the Japan's Nikkei to plunge more than 20% in 3 days! The other asian markets were not spared. STI plunged by about 10% in 4 days, but gradually recovered as time progresses.

Counters with exposure in Japan was most badly hit. Hence upon hearing the news, I sold part of my holdings in Mapletree Logistic Trust and Parkwaylife Reit to reduce my exposure and take the opportunity to rebalance my portfolio. Indeed after the sale, Mapletree Logistic Trust and Parkwaylife Reit dropped to further lows for the next couple of days. However I missed the chance to pick them up again at the lows as market sentiment gradually recovers 1 week after the incident. During the panic selling period, I also manged to pick up a few good counters.

Wingtai was already in my portfolio. However, the panic selling that occurred during this period brought the share price of Wingtai to further lows. I had the opportunity to average down my purchase price of Wingtai through my second purchase at a much lower price. The good news is since then, the price of Wingtai has gradually recovered and it is almost at the breakeven price for me soon. I believe that Wingtai still has the potential to rise further as although the volume of sales of the mid and high tier residences are declining, but the transacted prices are stabilizing, hence any negative impact will be rather minimal. In addition, I believe the retail arm of Wingtai will perform well due to its exposure to the mass market, and Singapore's strength in the retail sector.

Furthermore, I added CapitaMall Trust into my portfolio. Share price of CapitaMall Trust has fallen by about 15% from its recent high. I believe this is a good opportunity to invest in this blue chip Reit for stable dividends and possible capital appreciation. This is also a good diversification for my portfolio into the commercial office property sector since the divestment of Suntec Reit as there is still room for office rentals to rise in this sector. Thus I believe this investment will be worth while in the mid to long term.

ST Engineering is the other big blue chip that I grab the opportunity to invest in as it has dropped approximately 10% from its high as well. ST Engineering is a huge player in Singapore in the engineering, land, aviation and marine sector. This counter provides me with the desirable diversification that I need. The potential upside as well as its decent dividend payout is also a big attraction for me. However due to its high price, I could only invest in 2 lots, which meant a high percentage rise in share price is required to cover up the commission expenses. However, I believe ST Engineering has the potential and ability to rise more than required to bring me the desired profits due to its strong performance throughout these years and in years to come.

Throughout this period, I felt that selling away part of Mapletree Logistic Trust and Parkwaylife Reit and failing to buy back more of the shares at a lower price was a big mistake that I made. I miss the chance for Parkwaylife Reit as the price has shot up to way above my sell price. As Mapletree Logistic Trust rose and hovered around my sell price for some time, I decided to increase my holding in it when there is a slight dip in share price again.

To date, I believe my investment decisions for this month has been sound, and decent unrealised profits has been churned as the share price of all the counters that I have bought this month rose. The total unrealised profits rose approximately 27% compared to last month's, due to the rebound in share prices of all counters a week after the disaster. Although the total transaction costs for this month has been rather high, but I believe with time, my diversified portfolio will help me reap the profits that outweighs the transaction costs now.

My Current Portfolio:

Lessons learnt: Dscipline is the key issue in investing. Have a plan before you invest, and stick to the plan faithfully throughout the course of investing. In the event of a sudden downturn, do not panic sell when the fundamentals of the company is still intact. Instead, buy more if you have the funds to do so to increase ur holdings at a lower price. Share price will not go south forever.

Monthly Review- February 2011

This month has been the most depressing month since May 2010. Shocks from all over the globe send stock markets tumbling down non-stop. First was the higher than expected inflation numbers from emerging markets, especially from China, which made investors worry about the effects of the series of tightening measures by the Chinese goverment. This caused many investors to doubt the possibility of a successful soft landing. In addition, the unrest in the Middle East spread from Egypt to other countries like Libya. Unrest and protests turned violent and this has a huge impact on the export of crude oil. As Middle East is the largest exporter of crude oil, this hinderance caused the oil prices to soar to USD 100 per barrel. This has a huge impact on the economy as many business will be affected and worried investors flee the market.

All these events caused my portfolio to plunged southwards, almost erasing all the unrealized profits for the year of 2010 as my unrealised profits dropped a massive 28%. However, as I believe that all these events are just short term selling pressures, in the long run, the fundamentals still hold. Hence I decided to hold on to my counters and ride out this period of volatility, and when opportunities present themselves, I will try to grab the opportunity to average down the buy price of some of my counters.

Early this month, I added Wingtai into my portfolio. Wingtai is property developer of the mid and high-end properties. It's retail business also includes popular brands like Topshop, Fox, Uniqlo, Warehouse and G2000. Property and retail businesses are the 2 booming sectors in Singapore. Although the property sector is currently under pressure due to the various cooling measures implemented by the Singapore government, I believe that in the long run, property will still be a profitable business in Singapore due to the scarcity of land. Moreover, its retail brands are affordable and well-like by the general public, therefore Wingtai is a good company to invest in. However, with the selling pressure building up, its share price has plummeted to a new low at the end of the month. This caused me to suffer a rather substantial loss at this point of time. I hope with time it could recover as its fundamentals are still strong.

Amidst the depressing environment, there are still some good news to cheer about. Soup Restaurant has posted a great profit for the year and has announced a final dividend of $0.005 per share. This brings the full year dividend to $0.015 per share, which translates to 15% yield based on my purchase price. Soup Restaurant has been a great counter for the year, with its capital appreciation and dividend payout. However, the year ahead is a challenge for the management due to the introduction of the levy hike for employing foreigners. Most of the employees of Soup Restaurant are foreigners, and this hike will pose a pressure on its profits. However, I believe the management will be prudent with regards to this matter and minimise the policy's impact on the profits of the company.

Rotary has also reported a great year with a 900 million order book for 2011 and it is paying a final dividend of $0.038 per share. The full dividend for the year is $0.048 per share, which amounts to a 4.6% yield based on my purchase price. However, the year ahead is going to be difficult year for Rotary, as more than 80% of its business is concentrated in the Middle East, Saudi Arabia. Although Saudi Arabia is currently safe from the riots in Libya, however, the risk level still remains high as we are unsure how the situation in the Middle East will pan out. I can only hope for the best and wish that peace prevails soon.

Last but not least, UOB Kayhian has had a good year with decent increase in yearly profits. This year they are announcing a dividend payout of $0.09 per share, bringing the full year dividend payout to $0.095 per share. This equates to an approximate yield of 6.1% for the full year based on my average buying price. Last month, I had sold a portion of my holdings during the nice price surge. In the recent correction, I bought back more shares after its price dropped approximately 10% from the peak. I believe in the business of UOB Kayhian, especially after the takeover bid of Kim Eng by Maybank, UOB Kayhian becomes the sole listed brokerage on SGX. I believe it remains as the first choice for retail investors whom do not have large amount of cash but still hope to diversify into the financial sector.

The plunge this month has been very significant and I hope next month will be a better month and the situation in the Middle East will cease. As for now, I will continue to hold on to my investments and look out for opportunities to average down my cost. Consequently I will try to build up my cash reserves for the opportunities ahead.

My Current Portfolio:

Lessons learnt: Try to keep a portion of cash as opportunity fund as we can never time the market. Opportunity funds will prove to be very useful in the event of a correction period where share prices of fundamentally strong companies are pushed down temporarily due to the macroeconomic environment.

Monthly Review- January 2011

The start of the new year brings new hopes and new goals to all investors, including myself. From the analysis of most analysts, 2011 will be a good year for equities investors as interest rates will remain low, and with the tightening measures aimed at clamping down properties prices in Singapore, equities seemed to be the only avenue for investors to park their money.

At the beginning of the month, STI revisited the high point above 3300 due to improved sentiments on the recovery of the US economy. Things were looking positive and positive sentiments filled the air. It was also at this point of time when any negative news will bring about a correction as investors take profits off the table gained from the rally. Indeed, soon enough China announced its tightening measures again as inflation rose and brought prices of food and commodities to new highs. This announcement gave investors the reason to realize their profits and that cause the market to tank. Things were worsen with the news of social unrest in Egypt which may spread to the rest of Middle East countries.

This month, I sold part of my holdings in UOB Kayhian and all my holdings in Suntec Reit. UOB Kayhian has a great run up in share price, benefited from the buyover bid of Kim Eng by Maybank at a premium price. With this news, the share price of UOB Kayhian shot up by 8.7% in a short period of 3 days. I decided to take some profits off the table to reduce my average holding cost as well as retain some holdings so that I can further benefit from its dividend payments and further possible capital appreciation in the future.

Suntec Reit was a counter that I have held on for more than 1 year. In the year, I have collected a bountiful dividend of about 9.0% based on my buying price. Although the capital appreciation has also reaped in much profits for me, I decided to sell off all my holdings due several reasons stated in my previous post.

In addition to the realized profits from the sale of counters, it is also the quarterly earnings reporting season. Mapletree Logistic Trust has announced a total dividend of $0.0155 per share for the quarter. This is the same as that of previous quarter, showing that their dividend payment is sustainable and there will be room for dividend yield growth with more acquisitions completed in this quarter. Consequently, sister share Mapletree Industrial Trust announced a dividend of $0.0152 per share. This is much higher than the initial proposed dividend payout, signifying the optimism in its future prospects. However, as I am only holding 1 lot from IPO, I will hold on to it to collect dividends until the share price rise to a very high level.

First Ship Lease Trust has also announced a dividend of USD 0.0095 per share. With the proposed exchange rate of US $1: $1.2772, that equates to $0.01213 per share. The sustainable payout is good news to me as the dividend payout is gradually making up for the losses from the drop in share price. However, there seems to exist a trend in the share price of First Ship Lease Trust. Right after the declaration of dividends, its share price will tumble back to the low $0.40, while before the announcement date, there will usually be a run up in share price. This may present an opportunity for me to do further cost averaging down in the near future so that I can possibly benefit more from the share run up.

Furthermore, Parkwaylife Reit has declared a dividend payout of $0.0238 per share for the quarter. This is a huge increase compared to the previous quarter due to the profitable acquisitions of nursing homes in Japan. I believe more acquisitions may be in the pipeline and in the event of any placement, I will definitely increase my holdings further.

Overall, this month has been a rollercoaster ride. At mid of the month, my profits rose steadily, but it took a dive at the second half of the month, wiping out all of my profits and even registering an unrealized loss compared to the previous month. I hope the correction period would be soon over after the lunar new year season. During this period, I will continue to look out for undervalued stocks due to panic sell.

My Current Portfolio:

Lessons learnt: Value investing requires patience and capital. Having the capital but without patience will just end up in buying the right stocks at the wrong time. Have the patience but no capital will result in an opportunity missed. Hence always try to maintain a backup fund and patience for possible value investing.

Suntec REIT (17th Nov 09 to 24th Jan 11)

Suntec Reit always had a strong foothold in Singapore. With its exposure in the retail and office sector, it provided me with the diversification that I need. In addition to that, Suntec Reit also has a good history of above average quarterly dividend payout. All these attractive factors made Suntec Reit an irresistable counter to invest in for the long term for both possible capital appreciation and bountiful dividend payouts.

However, not all was smooth sailing. It all started out due to greed. Having seen the promising rise in the share price of Suntec Reit, I committed the mistake of chasing after the share price and buy at an all time high of $1.35 in 2009. As I thought that the share price has more room to rise, it all turned out to be a wishful thinking of my part. It was proving to me that greed blinds, as at that point of time, all indicators have clearly shown that Suntec Reit was in a seriously overbought situation and a much awaited correction could hit anytime. However, instead of taking notice of all the signals presented, I took the plunge and bought it at the high price. Soon enough, Suntec Reit's share price took a turn, went south and remained below my purchase price for an extended period of time.

At that point of time, I saw much prospects in Suntec Reit due to the faith that the recovering economy will boost the retail and office sectors, which Suntec Reit had a part of the pie. Hence even though I am suffering from paper losses at that point of time, the good prospects and promising dividend payout gave me faith to hold on this counter.

Throughout these fourteen months holding this counter, there were ups and downs in its share price. Opportunities presented themselves for me to average down my purchase price, but I dare not increase my exposure in this counter. Luckily, the efforts and patience paid off as the share price steadily climbed northwards. This is especially encouraging with the announcement of the acquisition of one-third stake in MBFC, which will increase Suntec Reit's foothold in the Grade A office sector.

However, as time passes, risk-reward ratio seemed more and more unfavourable as share price continues to hit new highs since the crisis. This is aggravated by the fact that the quarterly results all these while have been rather disappointing, and its DPU had not improve all these quarters. Consequently, the indicators at this point of time is once again pointing in the direction of the overbought region, which gave me a sell signal. Therefore, all these made me come to the conclusion that it is time for me to realize my gains on this counter as fundamentals of Suntec Reit are becoming unattractive at this point of time.

My thoughts at that time: I was not too hesitant to realise my gains in this counter as its results for Q4 2010 has been rather disappointing. In addition, with the total gains of more than 20% from both capital appreciation and dividend payout, I am contented with the profits.

Lessons learnt: Do not be deluded by greed. Always remember the initial reason for the purchase of the counter. In the event that the fundamentals have changed, do not hesistate to realise the gains and channel the funds to more profitable areas.

Monthly Review- December 2010

It is the final month for 2010 and the dip in November seemed to be the correction and consolidation period for STI prior the final leg rally before the year ends. Despite further news from China on monetary tightening or the news of lowest jobless claims in 2 years from US, markets have been rangebound and rather unresponsive to the macroeconomic news due to the thin trading volume and the fact that many traders have settled their positions for the year.
The rally for the last month of the year boosted my portfolio to a new high as my unrealised paper profits increased by approximately 90.5% compared to the previous month. FJ Benjamin proved its worth with its 10% run up from its recent low. This boosted my confidence in this counter, especially with the Year-End sales and Christmas sales, I am sure the performance by FJ Benjamin for the quarter will be spectacular. Hopefully the great performance can be reflected in the share price soon.

In addition, with the rise in price of crude oil due to the extreme cold winters experienced in Europe and US, the share price of counters in the oil and gas sector were boosted as well. Rotary has once again returned to levels above $1.00. I hope in the new year the prospect for the oil and gas sector will be more bullish and Rotary can regain its long lost shine.

Mapletree Logistic Trust has also reached a new high for the year. The prospects for this counter is great with possible increase in rentals of industrial and commercial properties in the new year. The funds raised in the previous placement has been used in the acquisitions of all the four proposed warehouses and properties. With all the great prospects for this counter, I will definitely hold on to it for its growing dividends and further possible capital appreciation.

Overall, this year has been a great run for the stock markets flushed with liquidity and that has a positive effect on my portfolio. Based on the total accumulated capital used in investments for the year, the total average weighted return for the year (including dividends) is 13.1%. I am pleased and contented with the returns from my portfolio for the year. 2010 has come to an end and I hope 2011 will be a better year.

My Current Portfolio:

Performance for the Year 2010:

Lessons learnt: Homework is absolutely necessary to find value buys, and the best time to purchase such counters is when fear is all around. Although doubt and uncertainty sets in, be confident with the homework of analysis and study that has been done, just buy, hold and wait for the returns to be reaped.

Monthly Review- November 2010

Things were not smooth sailing this month at all. After the continuous bull run for 2 consecutive months, the time for a breather sets in. The correction and consolidation period was much expected. However, what was unexpected was the gloom and doom that arose in the month. First was the reignition of the Eurozone crisis. This time, it is Ireland that requires a bailout. The IMF and Eurozone immediately approved a bailout loan package for Ireland, but worries still linger as many feared that Spain and Portugal will be the next.

Before the fears from the Eurozone crisis could settle, next came the news of shelling of South Korea by North Korea. The tensions in the Korean Peninsula sparked fears around the globe and stocks around the region slumped. The STI was not spared and selling pressure sets in.

The only change in my portfolio this month is the addition of FJ Benjamin back into my portfolio. Due to the selling pressure, the share price of FJ Benjamin has since corrected by approximately 15%. I believe that this should be a good opportunity for me to snap up some shares of this counter now, as retail play is still profitable in Singapore. Although I did not manage to buy the shares at the lowest price and in the immediate term I am suffering from some paper losses, but I know that it is impossible to time the market and I believe when the macro-environment turns more positive after the fears and worries died down, FJ Benjamin still has its market, especially with the festive seasons just around the corner.

Another issue for the month will be the private placement exercise by Suntec Reit to raise funds for its acquisition for the one-third stake in Marina Bay Financial Center. This exercise has some dilution effect in the near term, hence the share price of Suntec Reit dropped to a 3-month low. However, as the acquisition will boost the DPU by about 1%, hence in the long term, the deal is still beneficial to the shareholders. Hence I will continue to hold on to this counter despite the dilution and collect its dividends to fight inflation.

In conclusion, this month has not been rosy and selling pressures in the market still lingers. My total paper profits has already decreased by about 26% in a single month. As the volatility continues, I hope that with the festive seasons round the corner, the picture will improve and be more rosy next month.

My Current Portfolio:

Lessons learnt: Do not try to time the market. When you have done your homework and researched on a stock, and you think that it is at a reasonable value, just buy and hold on to it. Patience will pay. Do not panic in times of downturn, and stay away from the market if required. This will prevent the often made mistake of buy high and sell low.

Monthly Review- October 2010

This month's performance has been a continuation of the rally in September. STI rose to a new 2-year high, closing above 3,200 during mid-October, before losing its momentum to end at around 3,140 for the month. My portfolio also posted its largest total cummulative gain since January this year.
Major events for the month included the listing of the two Mega-IPOs in SGX, namely Global Logistic Properties, owned by Singapore GIC, and Mapletree Industrial Trust, owned by Temasek Holdings. These two listings were viewed as great investment opportunities by both institutional and retail investors, hence their listing resulted in an influx of liquidity into the market, creating a support which drove the markets to higher levels.
As one of the retail investors interested in the IPO of Mapletree Industrial Trust, I subscribed MIT shares via ATM. This is the first IPO that I had taken part in the subscription process. Thanks to lady luck, I was successfully allotted to 1 lot of MIT shares at the IPO price. The debut of MIT was exceptional, as its first day gain was 29% above its IPO price! However, as the exuberance died off and the rationality of investors returned, the share price of MIT retreated to a more sustainable level. In the event the price dipped to around $1.03 to $1.05, which gives an approximate dividend yield of 7.0%, I will add on my holdings for this counter. However if the opportunity did not come before the IPO of its sister share, Mapletree Commercial Trust, I will sell this counter to buy MCT.
Consequently, as posted previously, I have sold all my holdings in Noble. I realized my gains as I think that Noble has a good run up in a short period of time due to favourable acquisition news and a possible correction may be in sight. In the event the gap in share price is closed at $1.80, I will buy into Noble again, as it is still a strong commodity counter with growth potential.
In addition, Mapletree Logistic Trust has announced a dividend of $0.0154 per share for this quarter. This is a slight increase compared to the previous quarter and it reflected the good management behind this counter. The dividend for the period from 1st Oct to 15th Oct 2010 will be announced later and the cummulative dividend will be paid together next month. One great news was my application for the excess units during the rights issue was approved and I ended up with no odd lots. I will continue to keep this excellent counter for its excellent dividend play as well as possible capital appreciation.
Furthermore, Suntec Reit has also announced a dividend of $0.02502 per share for the quarter. This was lower than the distribution in the previous quarter and its overall performance for the quarter was not spectacular. However the announcement that Suntec Reit will invest in one-third stake in Marina Bay Financial Center halted my thoughts of divesting in the counter, as I believe MBFC will be the future gem for Grade A offices and it has the potential to push Suntec Reit's performance to higher levels.
First Ship Lease Trust has also announced a dividend of USD 0.0095 per share for the quarter. With the proposed exchange rate of US $1: $1.2962, that equates to $0.01231 per share. This shows that the dividend payout after all the defaulting issues is sustainable. However, being below the expectations of many investors, the share price of FSL Trust suffered a great dip. With my current holdings and average price, the performance of FSL Trust has already been above my expectations, and I believe its dividend payout will continue to be sustainable and improve in the near future.
In summary, this month has been a good month. However it also seems like the market needs to take a breather from the rally. Possible upcoming correction in sight, but hope the correction is a mild one.

My Current Portfolio:

Lesson learnt: When in doubt to sell or hold, stay away from the market. Impulse buying and selling is one of the worse thing to do. Stay calm and rational to evaluate the pros and cons of buying or selling. Itchy fingers will result in heart-breaking circumstances.

Noble (19th May 10 to 7th Oct 10)

Noble has always been a strong commodity counter, and it has been consistently expanding its business in the region. However, the share price of Noble was way above my financial ability to purchase any meaningful number of shares previously. It was until the announcement of both bonus share issue and dividend payment which brought my attention to this strong counter, as any possible dilutive effects in the share price may present an affordable buying opportunity for me.

Indeed, after the bonus issue and dividend payout, the share price dropped to about $1.80 per share. With this opportunity presenting itself, I immediately snapped up some of Noble's shares. However, things were not in my favour after the purchase. After the dilution effect sets in, the share price of Noble undergone a period of high volatility. The share price was in the positive territory for a short period, then it plunged to a low of $1.54.

This period of volatility was a cause of worry as my investment in this counter has been in the red all this while. However, with my belief in the management and the business of Noble, I took this opportunity to add on my positions in this counter. Indeed, my efforts paid off as the price bottomed out and reverse into the positive territory. From then on, the share price of Noble climbed up gradually and steadily. It was further boosted by the good news of acquisitions of profitable businesses in the commodities and energy sectors.
With the continuous run up in the share price, I decided to sell off part of my holdings in Noble to reduce my holdings in the counter and average down my buying price. Initially my plan was to hold on the remaining lots for the long term. However as time passes and STI reached the 2 year high of 3,190 in the overbought situation, the worry of a substantial correction sets in. This is aggravated by the presence of a price gap between $1.80 and $1.84. There may be a possibility that the magnitude of the correction may extend to close this price gap. With this in mind, I decided to realized my gains after comparing the risk-reward ratio and the factor of time in this run up.

My thoughts at that time: I was rather reluctant to sell as I believe Noble still has room for growth and its fundamentals have not changed. However after comparing the risk-reward ratio, I decided to cash in the profits and not let greed take charge. In the event that my analysis of the closure of the price gap during correction comes true, I will definitely buy back this strong commodity counter for investment and portfolio diversification.

Lessons learnt: The differentiation between discipline and emotions of fear and greed is fuzzy. Setting unrealistic price targets due to greed and sticking to that "plan" is not being disciplined. Being disciplined or not, depends on the how the analysis was done and what was the buy and sell strategy.

Monthly Review- September 2010

This month is a month of rally due to better than expected economic data from the US. STI broke through the previous high of 3,043 and reached a new 2-year high. This boosted the confidence of many investors previously staying at the sideline to participate in the rally. However, near the end of September, things looked a little subdued as markets were overbought and worries of the Eurozone returned to send jitters to the markets.
For my portfolio, the decision to add on my positions in Noble when the opportunity presented itself last month proved to be the right move. This month, Noble announced the acquisition of the retail commodity marketing operations of the joint venture between Sempra Energy and the Royal Bank of Scotland. This move will boost the portfolio of Noble and its earnings per share is projected to increase by approximately 10% with this acquisition. This boosted the share price of Noble to shoot up by 8% in a day and it prompted me to sell off part of my holdings in Noble to lower my average buying price to a safe $1.46. I will continue to hold on to this strong commodity counter until fundamentals change.
Another big event for me this month is the announcement of the placement of new shares by Mapletree Logistic Trust. The purpose of this placement is to raise funds for further acquisitions and pay down debts to strengthen its portfolio. Part of the new shares is for institutional investors and part is for existing shareholders, who will be eligible to purchase 2 shares for every existing 25 shares at $0.815. This is an expected move by Mapletree Logistic Trust, hence I will definitely add on my positions in this strong counter, and hopefully be able to apply for excess shares so that I won't end up with odd lots. With further acquisitions up and coming, I believe there is still upside for its yield. Hence when opportunity presents itself, I will definitely buy more shares for consistent dividend play.
In addition, Parkwaylife Reit had a spectacular performance in September until a private equity firm announced that it will sell off its 9.3% stake in Parkwaylife Reit at a price range of $1.56 to $1.62. This move caused Parkwaylife Reit's share price to drop by about 5.4% in a day and I made use of this opportunity to add on my positions in this counter. With this purchase, I also decided to sell off my positions in Yongnam at a slight loss due to commissions to free up some cash for better investing opportunities, as explained in the previous post.
Overall this month has been a good month and my portfolio's unrealized profits rose to the highest level for the year to date. I hope the macroeconomic conditions for the coming months will continue to be sustainable and the upcoming 3rd quarter results will continue to thrive with good dividend payments. It has been expected that growth in the 2nd half of this year will slow, hence the upcoming results will not be as spectacular as the 1st half of this year. Nonetheless, I believe my counters are still fundamentally strong, and as a long term investor, in the event of a dip, I will add on my positions.

My Current Portfolio:

Lessons learnt: A reminder to myself that patience is a virtue. For fundamentally good stocks, continue to hold on to them until their fundamentals changed or their share price outran their fundamentals. Else a good amount of profits will be missed. In addition, remember to rebalance the portfolio by weeding out the losers and holding on to the winners. Selling away underperforming counters to minimize losses is an important skill to learn.

Yongnam (26th Jan 10 to 23rd Sep 10)

Yongnam is a company in the construction sector specialising in steel structures. It has a strong balance sheet and good fundamentals. Its order book is also healthy with many potential contracts to be clinched along the way. The above are some of the reasons why I invested in this counter in January.

Although Yongnam is a value stock in my opinion, it is not a "hot" stock. Through the 8 months that I held on to the stock, there were only 2 short profitable periods. Overall investing interest in this counter was low, and during the 2 profitable periods, interests in this counter was strong, but not sustainable. During the first rally, I was overcome by greed and thought that with patience, the rally would be sustainable and the price could go higher. However my expectation was not realized, and the share price came tumbling down soon after, leaving it in the red for a long time. It was till much later that I learnt that for penny stocks, the rally for them is a sharp spike, but only for a short period of time. Hence, for penny stocks I should just realize my profits when the tide turns.

I thought I have learnt my lessons after missing the first rally, but that was not the case. In the recent rally, instead of realizing my gains after the share price rose to the profitable region, I insisted on my target price of $0.30 and held on to it. In my disappointment, my target price was not reached, and the price retreated soon after.

Things took a turn when the share price of Parkwaylife Reit suddenly plunged by 5.4% in a day when a private equity firm sold their holdings in the counter. With this event, I decided to sell my holdings in Yongnam for the following reasons.

Firstly, Yongnam has been stagnant for a long time. This caused my money to be stuck in this counter for a long time with almost no returns, especially with my high initial buy price. The situation is aggravated by the low dividend yield of Yongnam, making this counter less and less attractive for me as this signifies a loss of opportunity cost.

Consequently, I came across the investing strategy share by an analyst recently: "Let the winners run, and weed out the losers". All this while, I do not have the courage to do so because I am very reluctant to realize any losses. It was till the counter returned to my buying price that I decided to sell off this counter with the losses stemming only from commissions, so I can finally free off this amount of strapped cash for more profitable investments.

Lastly I sold it off because a better investment opportunity has presented itself. Parkwaylife Reit has always been a stable counter generating good dividends every quarter. With the sudden plunge in the share price, I believe a good buying opportunity is presented amidst the panic selling. My belief is further strengthened by the outperformed call by an analyst.

With the above reasons, I believe there are more pros than cons for me to divest my money out of Yongnam and invest into Parkwaylife Reit. Even with the loss realized from the commissions, I believe that in the long run, the profits and dividends from Parkwaylife Reit will make this short term loss worthwhile.

My thoughts at that time: I was in a dilemma on whether to sell or to wait. I cannot foresee how the share price of Yongnam will turn out in the following weeks. If it rises, that will be great news, but if it continues to drop, that may mean I have to wait for another long cycle before any possible rally begins for this counter. With a better investment opportunity presenting itself before me, I decided to sell the counter despite the small losses from commissions.

Lessons learnt: Buy-and-hold strategy is not advisable for penny stocks with low dividend yields. Penny stocks usually have their long dormant periods and short spike rallies. If a rally is missed, a long time may be required for the next one to come, and this may mean the loss of opportunity cost when the money is stuck in a counter in the red, with little or none dividend payout during this period. Hence always be decisive when the rally for penny stocks seems to end and the tide has turned. It is always better to realize a smaller than expected profit than trapped in a losing stock.