How to Pay $50 to Exchange for $100 in Hongkong Land?

Posted on May 27, 2016 Written by

We could apply discounted asset strategy to buy good business at undervalue price.  One simple method is to buy strong property stocks with low Price-to-Book ratio (share price divided by net asset value).  Hongkong Land (H78.SI) is a property stock listed in Singapore with commercial properties in Hong Kong, Singapore and China.  Currently Price-to-Book ratio is exactly 0.5, at its historical low (see chart below), owing to falling share price and consistent growing net asset value.  If an investor owns Hongkong Land at current share price (about US$6), it is as good as owning a portion of Hongkong Land properties at 50% discount. This is a combination of value investing (buying at discount) and growth investing (company with growing business, share price went up 8 times over the past 15 years).

However, a trader or investor needs to apply optimism strategies to know the investment clock, when to buy and sell Hongkong Land.  Due to cooling measures of property in Hong Kong and Singapore with slowdown in economy, the market sentiment has corrected Hongkong Land to 26% Optimism.  It means the stock has 26% downside and 74% upside from long term perspective, Reward to Risk Ratio (RRR) nearly 3 to 1.  Optimism is a probability calculator, we could know the chances for trading or investing in short term, mid term and long term.

Ein55 Newsletter No 029 - image - Hongkong Land

Currently Hongkong Land is under both Level 2 crisis (bearish Singapore property market) and Level 3 crisis (Hong Kong Hang Seng Index at low optimism), suitable for medium term trading but technical analysis should be applied before entry.  For long term investing, this stock may be considered during Level 4 crisis (global financial crisis) one day when optimism of world stock indices are low.

Filed Under: Market Optimism, Stock Market, Stocks A-Z, Uncategorized Tagged: , ,

Temasek Acquisition of Eu Yan Sang at Low Optimism

Posted on May 18, 2016 Written by

Ein55 Newsletter No 028 - image - Eu Yan Sang

We have learned from Dr Tee to buy giant stocks at low optimism for investing. However, nowadays fund managers have become competitors for retail investors for such investing opportunities.  Recently a consortium including Temasek, has offered to acquire Eu Yan Sang.  Let’s analyse further based on optimism strategies.

The earning ability of Eu Yan Sang has declined over the past few years due to slowdown in local and regional economy but still it is profitable. Net Asset Value (NAV) of Eu Yan Sang has increased consistently over the past 10 years since IPO (see chart below).  Temasek and partners made the offer when Eu Yan Sang share price is still at low optimism (<25%). Even at current share price of $0.63 (slightly higher than offer price of $0.60), the Optimism is only 26%.

Ein55 Newsletter No 028 - image - Temasek Acquisition

This implies that Temasek and partners have acquired a valuable business at a relatively low price with consideration of its value.  Although the current stock price is 3 times compared to IPO price 16 years ago, it is still relatively cheap for a growing business. We could not compare with only the historical low price based on technical analysis, the fundamental of the business has to be considered as well.

 

Filed Under: Fundamental Analysis, Stocks A-Z Tagged: , , , ,

Opportunity in Best Bank Stock in Malaysia – Public Bank

Posted on May 13, 2016 Written by

Ein55 Newsletter No 027 - image - Public Bank Photo

Due to slowdown in economy in Malaysia, combined with Oil & Gas crisis and falling of Ringgit currency, many giant stocks in Malaysia are at attractive low price.  Public Bank (1295.KL) is a growing bank in Malaysia, share price went up 5 times from $4 to $20 in the last 15 years while earning per share (EPS) went up about 3 times consistently over the same period with strong ROE (see chart below).

Following traditional value investing principle, it is hard to buy growing stocks below the intrinsic values, unless there is a major market crisis.  Public Bank share price has been stable in the last few years but Ein55 Optimism has dropped to 24% while the earning is still growing steadily.  It means the stock has 24% downside and 76% upside.  Ein55 Optimism is a probability calculator, no one could know the future, but we may use knowledge of probability wisely to protect our investment.

Ein55 Newsletter No 027 - image - Public Bank Optimism

While waiting for the giant stock to recover, the Public Bank pays about 3% dividend yearly to shareholders, which is comparable or better than interest rate of fixed deposit in bank which has no capital appreciation.  One should learn to take calculated risk, investing in bank stocks (as a partner of bank), instead of lending money as cheap loan to bank (as a customer of bank), because the difference in long term investment return is tremendous: average of 15% yearly return in stock investment vs 3% yearly return in fixed deposit return.

Investment in good bank stocks are suitable for longer term investors who have holding power of a few years.  At the moment, Public Bank is an opportunity with Level-2 (sector) crisis.  If one could wait even more patiently, Level-3 (country) and Level-4 (global) crisis is even a better time to buy Public Bank and other giant stocks globally.  Ein55 Optimism investing strategies developed by Dr Tee will help to grab these golden opportunities in future.

Ein55 Newsletter No 027 - image - SGD-MYR Optimism

There is additional advantage for Singaporeans to invest in Malaysia stock market from forex perspective.  SGD vs Ringgit has reached a new high of 3.0 in the past 1 year, this is the second weakest time of Ringgit in the past 20 years (since Asian Financial Crisis in 1997, see forex optimism chart above). This implies that Ringgit has higher potential to grow. If one could buy a Malaysian giant stock at low optimism, holding until high optimism of stock price one day, likely the Ringgit will be stronger at that time.  We could have double advantages, enjoying higher potential upsides of both low optimism of Malaysian stocks and low optimism of Ringgit (high Optimism of SGD).

We should learn to find the top 10 global bank stocks with excellent business for our investment portfolio, buying at discounted price at low optimism, ahead of other potential big buyers who are also looking for these valuable assets.  Certain Bank stocks could be in crisis when there is global economy slowdown with high debt.  Therefore, we should only consider giant Bank stocks with strong fundamentals, not just any stock with price discount, buy low and sell high or hold patiently for both capital appreciation and passive income.

Filed Under: Forex, Market Optimism, Stock Market, Value Investing Tagged: ,

Stock & ETF Investing Opportunity in BRICS – Emerging Countries

Posted on May 1, 2016 Written by

Ein55 Newsletter No 026 - image - BRICS

Due to global economy slowdown in the last few years, stock markets in the emerging countries have suffered significant corrections, resulting in Level-3 (country/region) crisis.  The leaders of emerging countries are BRICS (Brazil, Russia, India, China & South Africa), stock prices are now at very attractive prices.  When the global economy starts to recover and accelerate, these emerging stock markets will benefit as well.  One could use ETF to trade or invest global stock indices.

Due to economy and political instability, Brazil stock market now is at 18% Optimism, after 57% correction in stock prices (see chart below).

Ein55 Newsletter No 026 - image - Brazil

Russia has suffered from falling in global oil price, economy is severely affected. Russia stock market now is at 16% Optimism, after 65% correction in stock prices (see chart below).

Ein55 Newsletter No 026 - image - Russia

India is relatively stronger compared to other BRICS, stock market now is at 34% Optimism with only 13% correction in stock prices (see chart below).

Ein55 Newsletter No 026 - image - India

China is world No 2 economy, although Optimism is similar to India at 34%, stock prices have heavily corrected by 43% after the last round of speculative bull run, falling down from peak of 5200 points (see chart below).

Ein55 Newsletter No 026 - image - China

South Africa is relatively smaller in economy size, Optimism now is at ideal 25% Optimism with only 20% correction in stock market (see chart below).

Ein55 Newsletter No 026 - image - South Africa

The level-3 crisis and opportunity mentioned above requires longer investing strategy because global economy recovery is a gradual and longer term. Political economy is also crucial for the recovery of stock markets.  BRICS have to compete with US which is now at moderate high Optimism of 68% (see chart below) with more bullish economy, challenging the next historical peak in stock prices.

Ein55 Newsletter No 026 - image - US

If there is still a last global rally in stocks, BRICS may recover strongly with US stock market may rise to new historical high.  Other smaller emerging countries stock markets (eg. Southeast Asia) and many individual stocks may follow BRICS as well. However, after the next bull run, there could be another perfect storm waiting ahead, level 4 global financial crisis may severely injured all the global stock markets, both US and emerging counties. The ability to know when to sell to take profit will be crucial.

 

 

Filed Under: Macroeconomy, Market Optimism, Market Outlook, Stock Market Tagged: , , , ,

Oil & Gas Stocks – Time to Buy or Sell?

Posted on April 28, 2016 Written by

Ein55 Newsletter No 025 - image - oil & gas

Global oil & gas related stocks have experienced significant corrections over the past 1 year, many stocks including blue chips are at attractive low prices.  Although investors know that crisis is an opportunity, the share price could become lower with time, therefore few people dare to grab the opportunity.

Is it time to buy or sell Oil & Gas stocks? The answer is to align the strategy with personality (short term trader vs long term investor):

1) Long Term Investor

For a long term investor with at least 3 years of holding power, oil & gas crisis presents a rare opportunity for entry to buy low.  As shown in the Optimism Chart below for Oil & Gas Stocks Index, long-term optimism is 22%, an attractive low price, having RRR (Reward to Risk Ratio) of 3 times.  However, no one will know the true bottom, therefore the best strategy is to buy low enough (below 25%), not to depend on luck to wait for the lowest point.  The investors enter with long-term low optimism require 3 additional weapons to be successful:

  • Know what to buy for giant oil & gas stocks. Some weak stocks may not survive through this storm, losing business with high debt could break the camel’s back. Giants with strong fundamentals will last and revive as final winners.
  • Holding power of at least 3 years to wait for the recovery of oil & gas
  • Ability to control the fearful emotion during crisis, certain stocks may fall in price further due to market sentiment.

Ein55 Newsletter No 025 - image - Oil & Gas - LT

2) Short Term Trader

For a short term trader, the holding power is shorter (a few weeks to a few months), therefore the strategy is totally different from long term investor.  A trader has to align with the short term market sentiment which is still bearish over the past 6 months.  With the recent recovery of oil & gas prices, the short-term optimism is high at 77% (see chart below).  For a short term trader, the upside is limited, downside is 2 times, having RRR (Reward to Risk Ratio) of 2 times if shorting strategy is applied.  Of course, a short term trader could also wait for stronger breakout above 100% Optimism, if still want to long the market for a short period.

The traders who long/short the oil & gas stocks require the following strength:

  • Know what to buy for trading, either for long or short, choices are different from investing.
  • The ability to cut loss when direction is wrong based on risk tolerance level, knowing when to take profit, not to be too greedy. Winning or losing is a probability game in trading. Retail traders may have hard time to manage own emotions as the trades are their own capital, they could be forced to hold the stocks from short term to long term when direction is wrong, finally ending up sell low when price breaks below their psychological limit one day.

Ein55 Newsletter No 025 - image - Oil & Gas - ST

When Optimism Strategies are combined with Fundamental Analysis (value investing & growth investing), Technical Analysis (support / resistance / trends), and Personal Analysis (mind control of greed and fear), it is very powerful when one is able to take the right action (Buy, Hold, Sell, Wait or Short) at the right time aligning with own personality.

The unique Optimism Strategy developed by Dr Tee provides a special advantage to know which investment (stock, forex, property, commodity, bond, etc) to buy safely, when to buy, when to sell, including option of long term holding.  So far over 10,000 audience have benefited from Dr Tee high quality free courses to the public.  Take action now to invest in your financial knowledge, starting your journey towards financial freedom.

Brexit has created new stock trading and investing opportunities globally.  At the same time, British Pound is severely corrected, one could apply Forex Optimism to maximize the gains in stock market.   The fear factor has supported the bullish gold price and gold related stocks (eg. gold miners), analysis with Commodity Optimism is needed.  Every crisis is an opportunity, provided one knows how to position.

 

 

 

Filed Under: Commodity Market, Market Optimism Tagged: ,

Opportunity to Buy Stocks during Level 1 – 4 Crisis

Posted on April 15, 2016 Written by

Ein55 Newsletter No 024 - image - Crisis is Opportunity

“Be Greedy when Others are Fearful”, Warren Buffett. 

Many people buy stocks when they feel safe and comfortable, after seeing other people making money, only then they chase after the opportunities, sometimes caught again when market sentiments start to change.  A safe way of buying stock is to wait for crisis, when people worries about the stock market, only then they will sell their best value stocks at discounted price to us.  Every crisis is an opportunity!

There are 4 levels of Crisis:

Level 1 (individual stocks)

– company with falling share price or business, eg. Noble, Keppel Corp, Golden Agri, etc.

Level 2 (sector / industry)

– sector correction, eg. Oil & Gas stocks, Casino stocks, Shipping stocks, etc.

Level 3 (country / region)

– stock market correction, eg. Hong Kong Hang Seng Index, China Shanghai Index, etc.

Level 4 (world)

– Major economy slowdown, eg. China

For a falling stock price (Level 1 crisis), it is only worth considering if it is related to sector correction, not mainly because of own business is declining.  A business may go bankrupt but entire sector/industry would nearly always come back after the winter time is over.  A trader would require minimum Level 2 crisis to buy stocks, currently there are many opportunities for Oil & Gas stocks, commodity stocks, retail stocks, casino stocks, shipping stocks, etc.

However, an investor with higher profit target will need to wait for larger scale of crisis, either Level 3 (country / region) or Level 4 (global market).  The golden investing opportunity of life time is to buy stocks which consistently make money in business (even during crisis) but the stock prices drop more than half because people worry the sky will fall down during global financial crisis.

It can be very easy or can be very tough to grab on the trading and opportunities above to buy low during Level 2-4 crisis. If we follow majority of people to trade/invest normally, usually will end up buy high because we feel more comfortable in a bullish market.  If we could follow abnormal strategies like Warren Buffett did in the past, wait patiently for the giant stocks to fall down, buying them at great discount in Global Stock Sales (as if Great Singapore Sales, GSS) when other traders/investors are very worried, the reward could be significant.

 

 

Filed Under: Market Cycle Investing, Personal Analysis, Stock Market Tagged: ,

How to Choose Stocks which Could Grow 30 Times in Price?

Posted on April 8, 2016 Written by

Ein55 Newsletter No 023 - image - Jardine Banner

Jardine Matheson Holdings (JMH) / Jardine Strategic Holdings (JSH) has over 180 years of history, the group includes famous brands such as Dairy Farm, Jardine Cycle and Carriage, Hong Kong Land, Mandarin Oriental, etc.  Although JMH and JSH were removed from 30 STI components in 2015, it is still considered a blue chip, suitable for investing.

The chart below shows the stock price history of JMH over the past 18 years.  For long term investors, there are 2 strategies for capital growth to achieve higher stock price:

1) Market Cycle Investing (Buy Low Sell High)

Long term optimism chart developed by Dr Tee could show the timing to Buy Low Sell High (circled, see chart), upside potentially in a few years usually could be around 50% – 200% (3X).  This is an investing strategy integrating trading principle of buy low sell high, following the market cycles to buy/sell blue chips.

2) Value Investing (Buy Low Hold Forever)

Some investors prefer to buy and hold the stock over the lifetime. If the right stock is chosen, one could benefit from passive income (consistent yearly dividend) and also tremendous capital gains.  From the chart shown, one could earn 30X if able to buy and hold JMH for the last 18 years.

Ein55 Newsletter No 023 - image - Jardine Matheson Holdings

The strong fundamental stocks with consistent earning could help to sustain the growing price over many years.  Whether to Buy Low Sell High or Buy Low Hold Forever, it depends on investor personality.  Not everyone can be a long term value investor because it involves 4 knowhow:

1) Know What to Buy

– not every stock is suitable for long term investing

2) Know When to Buy

– one could lose money if buying blue chips at high price, the ability to buy low will create safety margin to reduce the future risk

3) Know When to Sell or Continue to Hold

– a good stock now may not be a good stock in future, careful monitoring of yearly business performance is a must for long term holding

4) Holding Power

– emotional management of Fear and Greed is needed

How to find more stocks like Jardine which may have tremendous growth potential in stock prices? What are the potential of Jardine component stocks such as Dairy Farm, Jardine Cycle and Carriage, Hong Kong Land, Mandarin Oriental, etc? It will be interesting to understand these investing opportunities, from Level 1 (individual stocks), Level 2 (sector / industry), Level 3 (country / region) to Level 4 (world).

 

 

 

 

 

Filed Under: Stock Market, Stocks A-Z, Value Investing Tagged: ,

Personal Investment Plans vs Singapore Budget 2016

Posted on April 1, 2016 Written by

Ein55 Newsletter No 022 - image - Budget 2016 v2

Lao Zi: “Govern a Great Nation as You would Cook a Small Fish.”

老子: “治大国若烹小鲜”

Singapore government just announced the national budget 2016 with surplus of $3.45 billion.  In fact, without inclusion of investment return from Temasek, this could be a budget deficit.  This shows the importance of investment in all levels: from national level, company level to personal level.

A nation sometimes is like a mega corporation with many departments (ministries).  At the level of personal finance, we could also learn from planning of national budget:

1) Budget Surplus

Our total personal income of the year should always be more than total yearly expenses to generate a positive net yearly income. If the projected income is unstable, personal expenses should be reduced accordingly based on the priorities, aligning with personal goals.  Alternatively, we need to find ways to increase the income by keeping the same level of expenses.  A life with budget deficit could not last long, personal saving will be depleted eventually.  When we buy a stock, also look for business with sound financial planning to generate positive net income and positive cashflow.

2) Bonus

Government has to redistribute the wealth, helping more for those needy people or motivating certain practices with financial reward.  Company pays bonus or dividend to share the earning with shareholders during good time.  At personal level, we could also pay bonus to ourselves, eg. going for an overseas vacation, buying a luxury handbag, dining in a high-class restaurant, etc.  Similar to a nation and company, bonus can be paid only if there is a surplus, either there is positive net income or positive free cashflow, meaning your personal bank account $ figure in year end should be higher than in beginning of the year.  If a person, a company or even a nation, paying bonus while making loss, this is a danger signal.  Do not assume a company or stock which pays dividend yearly is a good company, this could be a value trap.

3) Investment

Although we may not be able to control our own profession to have consistent income, we could look for investment partners who could make money consistently.  These partners could be found by carefully buying stocks of excellent businesses.  The passive income from investment will help to supplement the possible budget deficit at personal level, especially when our own jobs could not earn enough or consistent active income.  Even after retirement, the return from investment will help to grow our wealth, we could continue to enjoy our lives by paying bonus to ourselves.

 

 

Filed Under: Fundamental Analysis, Personal Analysis Tagged: ,

Ein55 Charity Course: High Dividend Stocks (Learn Investing & Helping Needy People)

Posted on March 13, 2016 Written by

Ein55 Newsletter No 021 - image - Charity Course

The first charity course on REITs / Business Trust in Nov 2015 was a success (read report here), helping Ein55 Graduates in enriching the investment knowledge, helping other needy people at the same time. Chye Tin, an Ein55 Graduate Mentor and successful investor, together with Dr Tee, have organized the second Charity Course (High Dividend Stocks) on 12 Mar 2016.

The responses from Ein55 Graduates were overwhelming, about 230 students have attended this Charity Course, learning how to choose high dividend stocks, when to buy and sell them in future with investing-for-income strategies, using Fundamental Analysis, Optimism Methods and Technical Analysis.

The net income from this charity course is donated to Tzu Chi to help more needy people.  It is an honour that the CEO of Tzu Chi慈济(Singapore), Mr Low Swee Seh, also attended this charity event, sharing how Tzu Chi has helped numerous needy people regardless of races, religions and nationalities.  Through the combined effort of all Ein55 Graduates, we have donated an amount of $15,100 to Tzu Chi in this second Charity Course.

We hope to inspire more Ein55 Graduates to reach out the society, helping others who are in need.  More importantly, they have also learned the secrets of making money through passive income investing. When more Ein55 Graduates are as successful as Chye Tin, they could also contribute back to the society to help more people in future.

Here are a few useful learning points from Chye Tin in this High Dividend Stocks course:

1) We shall always ask will the dividend SUSTAINABLE and will the dividend continue to Grow? We should understand what are the factors affecting their business income? A companies without Free Cash-flow will not able to sustain the dividend pay out for long term.

2) Telecom, Utilities and Consumer Staples are considered defensive sectors that can make money in any economic environment. People are not going to shut off their power, give up their mobile line or Internet or stop buying toothpaste, food & drink when times get tough. The more predictable the revenues and earnings, the easier it is to give back some profits to shareholders.

3) For dividend investing, even in the right sector, we shall seek for the right stock that exhibited high dividend characteristic, then we shall study in detail the financial reporting of each sectors and do the peer comparison of the selected stocks in the same sector.

Filed Under: Uncategorized Tagged: ,

High Dividend Investing with Bank Stocks

Posted on March 5, 2016 Written by

Forum - 2016-03-04 - mentor - CT - Bank Analysis

An investor could invest safely for passive income through dividend earning from various global banks such as ICBC, OCBC, Public Bank, etc, which have very consistent business performance each year.  The 3 major banks in Singapore have corrected more than 20% in share price over the past 6 months, presenting excellent opportunities to the investors and traders.  Let’s learn how to invest in banks:

Invest in bank is like saving in Fixed Deposit in bank. The difference is one will only gain interest from bank for the money in saving account.  If invest in the bank, one will receive the interest plus potential capital growth.

Bank is the most important sector that drives the economy of any countries. So long the country is continuing developing and the population keeps growing, the economy shall continue the growth. The banks in the country will benefit because any activities will need financial support.  The big thing to focus on bank is the 2 different types of bank income that form the total income of the bank.

  • Net-interest income
  • Non-interest income

The core business of a bank is to make money by borrowing at one rate (via deposits and debt) and lending at another higher rate (via loans and securities). The spread is net interest income.

Meanwhile, non-interest income is the money the bank makes from everything else, such as fees on mortgages, fees and penalties on credit cards, charges on checking and savings accounts, and fees on services like investment advice for individuals and corporate banking for businesses.

In addition, 2 key ratios that indicate the strength of capital position of a bank:- 

  • Capital Adequacy Ratios (CAR)
  • Non-Performance Loan (NPL) v.s. Allowances

Capital adequacy ratios (CARs) are measures of the amount of a bank’s core capital expressed as a percentage of its risk-weighted asset.  MAS required Singapore-incorporated banks to meet a minimum CAR to ensure local banks are safe even under stress condition

‘Non-performing Loan (NPL) – A sum of borrowed money upon which the debtor has not made payments for at least 90 days. A non-performing loan is either in default or close to being in default. Once a loan is non-performing, the odds that it will be repaid in full are considered to be substantially lower and allowances should be provided. Similarly, MAS provide guidelines on loan grading and provisioning for local banks.

The amount of NPL and provision made by the bank will directly affect its net earning declared. Hence, it will affect its dividend payout. 

We should learn to find the top 10 global bank stocks with excellent business for our investment portfolio, buying at discounted price at low optimism, ahead of other potential big buyers who are also looking for these valuable assets.  Certain Bank stocks could be in crisis when there is global economy slowdown with high debt.  Therefore, we should only consider giant Bank stocks with strong fundamentals, not just any stock with price discount, buy low and sell high or hold patiently for both capital appreciation and passive income.

 

Filed Under: Fundamental Analysis, Stock Market Tagged: , ,
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