3,110 Resistance

So STI breaks 3,110 level again today.

In my opinion 3,110 is a resistance. Only if this level can sustain or run up for a sustainable period then I would consider this a real bull run.

Everyone, while making money please trade cautiously too. Especially if you are going for long position at this level.

Fundamental Analysis and Technical Analysis

I'm more of a fundamental analysis person when it comes to stock investing.

There are many discussions about fundamental analysis (FA) and technical analysis (TA), advantages and disadvantages of one over the other, blah, blah, blah.

However as I tend to hold my stocks over a longer horizon, I feel a good analysis on the fundamentals of the company coupled with a look at the macro factors is an approach which works well for me so far.

5 of the most common factors that I use to screen my stocks are:

a) Dividend Yield
b) Net Profit
c) Gearing
d) P/E Ratio
e) P/B Ratio

In some cases I also look at the following:

a) 5 Year Dividend Growth Rate
b) Sales (TTM) vs Preceding Year
c) ROE

Nevertheless one cannot discount the importance of a good TA.

Many a times I find myself selling too early despite having a good entry price. Reading the charts will help judge a good exit price.

Another case in point. In a bull run like the one we are facing now, some stock prices are rising faster than you anticipated. Using TA can help you to do some quick trades and in the process, hopefully earn some quick bucks.

Conversely in a bear market, take advantage of a well-applied FA to grab solid counters at attractive prices for some long term holdings.

All in all, personally I feel FA is good for stock investment over a mid to long horizon and TA is useful when it comes to short term trading.

What do you think?

My Cardinal Rules in Investing

Cardinal Rule: A fundamental rule that is set in place and must not be broken at anytime.

There are different kinds of benefit that one can reap from investing in the equity market.

Tangible benefit - monetary gains

Non-tangible benefit - knowledge

And I found that some of the knowledge I gained from the years in the market is not only applicable to stock trading, but also applicable to life in general.

For the context of investment, I call them my Cardinal Rules of Equity Investment.

And these are:

1) Only buy what you can afford to lose.

2) Do your homework and stick to your target price.

3) Remain steadfast in your belief even when the whole world goes against you.

4) Do not touch s-chips.

5) No profit is as real as the one in your pocket.

Now I'm sure not everyone will agree with my cardinal rules stated. But I will be glad if someone can gain from taking inspiration from this sharing.

Construction Companies Comparison

Some months back I did up a comparison spreadsheet for the major players in our local construction industry.

The reason was because I was tracking some of them and I thought it would be easier to compare in a tabulated table.

As mentioned the table was done few months back so data might be a little outdated. But you should be able to get a general feel of the pros and cons of the companies in the comparison.

Hope this helps. Here it goes...

Random Thought on M1

Many people are talking about how bad the outlook is for M1.

Yes, top and bottom lines are declining. But I feel it is not gloom and doom for M1. Afterall they are still making money isn't it? Not as if they are loss-making.

I believe their turnaround will be when their new initiatives such as IoT and smart meters start to kick in and generate revenues for them.

My feeling is that the M1 now is like the SingTel years ago when they started to diversify into new income streams which they are now reaping the benefits.

Am I the only one feeling this way?

However there is a key factor to M1's future outlook as follows:

Potential upside: Ms Karen Kooi
Potential downside: Ms Karen Kooi

See See Look Look, Books and Movie

Call me wols but I just watched 'The Cabin In The Woods' recently.

It's just the type of movie I like! Full of blood, gore and nonsense.

Ideal for a de-stressing session.

Imagine werewolf, basilisk, clown, merman, wraiths, zombies and other monsters together in a movie. Not to mention a unicorn stabbing people with its horn.

What's there not to love, seriously?

On the literary side, I recently completed 'Kublai Khan: The Mongol King Who Remade China' by John Man. I started this book right after I finished another book by the same author - 'Genghis Khan: Life, Death and Resurrection'.

Next up, I'm going to complete another book which I stopped halfway some months ago and has been lying on my bedside collecting dust ever since.

I promise to complete it soon.

Do not procrastinate. Do not procrastinate. Do not procrastinate...

Lastly, just a selected short list of books which I have also completed in the past two years and felt it's worth a sharing:

1. 1421: The Year China Discovered America (By Gavin Menzies)
2. No Easy Day (By Kevin Maurer & Mark Owen)
3. The Best I Could (By Subhas Anandan)
4. It's Easy to Cry (By Subhas Anandan)
5. Patton: A Genius For War (By Carlo D'Este)
6. Hard Truths To Keep Singapore Going (By Han Fook Kwang, Zuraidah Ibrahim, Etc)

Recent Action - Comfort Delgro

Bought 2,000 shares of Comfort Delgro (CDG) at $2.38 as my first tranche yesterday morning after putting it in queue on the previous night.

The counter has fallen below my target price for buy in recently and my first thought was maybe I should enter after their latest financial results are released on this Friday.

However I decided to do some study on their 3Q16 results.

In summary the 3Q results are not bad but not sterling either. In other words, the business remained quite stable.

Likes:

Stable operating profit.

Net cash position.

Gearing remains low.

Capex was lower compared to 3Q15. This shows the company is putting effort for sustainable growth.

Diversified businesses including non-vehicular business such as 3rd party testing house, Setsco.

Concerns:

Decreased revenue from bus BU due to the new Bus Contracting Model.

Taxi BU will continue to face headwinds from Uber and Grab. But I trust CDG will take reactive measures to tackle this. Furthermore Uber and Grad drivers are required to get a vocational license by this year.

Also expected decrease in revenue from other BUs such as the bus station, automotive engineering services, inspection & testing services and car rental & leasing should be able to be offset by the increase in revenue from the rail business especially as riderships on NEL and DTL continue to grow!

Going to ride on NEL and DTL more frequent!

CDG share price as of point of writing is $2.43.

I probably got lucky as news came out yesterday on the mandatory requirement for private-hire car drivers from operators such as Uber and Grab to get vocational license.

Hopefully the latest results on this Friday would be favourably viewed by the market as well.

Good luck and cheers to all who are vested.

Property Loan Refinancing

Like many first-time HDB flat owners, my wife and I took up the HDB loan when we got our unit more than 3 years ago.

It's so convenient - we could settle it right at HDB hub when we were there. Furthermore we have so many other things to settle.

One and a half years down the road after we collected our keys, we began to look closer at the home loans offered by the banks. Even then, we were only looking casually.

Refinancing is very far back in our minds... Until one fine day when we decided to do a simple spreadsheet to see how much we can save...

For our HDB loan, my wife and I were paying $300+ a month each from our CPF. No cash involved. Repayment period was spread over 25 years.

At that time POSB was offering a home loan which was quite attractive in my opinion. The interest rate of the home loan is based on a fixed 1.58% + the prevailing fixed deposit home rate (FHR) up to the prevailing interest rate under CPF OA.

Simply said, the POSB interest rate will only go up to a maximum of 2.5% which is lower than the HDB's loan interest rate of 2.6%.

So wifey and I went to a branch on a weekend to find out more and the rest as they said, is history.

We refinanced with POSB home loan with a repayment period of 8 years. Why 8 years?

Because POSB guaranteed the interest rate to be lower than HDB's for the first 8 years only.

At the time of our refinancing, the FHR was 0.4%. So our interest rate was 1.98%.

After the refinance, we are now paying about $750 a month each. The repayments are still coming from our CPF accounts without touching our cash.

So what's our savings achieved from this action?

Remember I mentioned about a comparison spreadsheet we did to estimate the savings?

To make the comparison simpler, we used a total monthly repayment amount of $1,500 for both cases and monthly interest rates are set as 2.6% and 1.98% for the HDB loan and POSB loan respectively.

The savings achieved is about $4,400.

If compared to our original monthly HDB loan repayment amount of $600+ and repayment balanced period of 23.5 years, the savings would be even greater at $34,300!

In other words by switching our original HDB loan to the bank loan, we saved $34,300.

What led us to go for the refinancing with POSB:

1) Guaranteed lower interest rate than HDB's for the first 8 years.

2) Legal fee of $1,600 and valuation fee of $200 were reimbursed to us by the bank. (Although we have to pay the $14 GST on the valuation fee)

Cons:

1) Need to make time for the valuer to come to your house for a valuation.

2) Need to go to the law firm to sign some documents on a week day. But hey, just take a day's leave and treat it as a break to enjoy the day.

All these to us are minor inconveniences.

More importantly, remember the bank loan's interest rate is subject to change depending on the prevailing FHR.

At this point of writing our rate is 2.18%. Still lower than the 2.6% from HDB.

Another important point to note is that you must do your own calculation to see how much you can afford to pay from both of your monthly CPF contributions while leaving some portion in your CPF accounts as a buffer for rainy days.

Whether it's worth to refinance or not, remember to do your homework to help yourself make a better decision.

Last but not least, Happy Lunar New Year to everyone!