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Is REIT investing better off than property investment in Singapore?

Yes but it depends on what you are looking for, i.e. whether you are into dividend income or into mid term capital growth.

To many Singaporeans, buying a property in Singapore can be their biggest financial commitments ever. And many of us are still unable to afford private properties which may cost near or over $1 million.

Affordability of a private property is a common issue to many Singaporeans. Does it mean that you can’t own any of them in your life time? If you think pessimistically, you are probably right, i.e. you cannot own any private or commercial property in your lifetime. If you think more optimistically, you might have think of REIT Investing is the way to go.

Advantages of REIT Investing
  1. Dividend income of REITs works like a cash machine. My basic principle in REIT investing is at least more than 5% annually.
  2. REIT investing income usually come in every quarter.
  3. Distribution profits of REITs to investors will need to be at least 90% of its profits.
  4. Instant diversification of properties portfolio to lower your investment risks
  5. Its performance is driven by competitive market.
  6. Level of corporate transparency is high since it is about how well the assets can bring in rental income.
  7. There is higher liquidity in REITs than in a property. You can divest them quickly just like stocks. But this is not the case for properties.
  8. The cost of owning REITs is lower than that of owning a private property. To invest in REITs, you pay for brokerage fees. But property investing will involve high agents fees and stamp duties from government.
  9. Regulatory risk for investing in REITs will be much lower as compared to property investing. REITs do not have cooling measures, right?
Disadvantages of REIT Investing
  1. Capital growth of REITs may be limited because 90% of its profits go to investors. There is only merely 10% of its profits goes into re-investing.
  2. REITs focus on only property sectors and they are prone to the impact of property cycles.
  3. REITs are highly leveraged and hence their bottom line may be affected when there is a surge in interest rate.
Start Investing in REITs To Earn Passive Income

Well, REITs are always be part of my investment portfolio. I simply in love with these cash machines. I am currently owning a few of them which include Ascendas India Trust. This REIT has given me more than 30% capital growth just on paper and generates a decent dividend income consistently for many quarters. The only risk i can think of is possibly the currency exchange risk in Indian Rupees. In my much earlier blog, i also mentioned that my two children were also owning this REIT before their age of 11. They still own it until today. So when is your turn?

The post Is REIT Investing Better Off Than Property Investing? appeared first on Value Investing Singapore Educates Smart Value Investing In Singapore.

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Reading the financial statement of a company that you want to invest in what the usual value investors will do. This may be no different from what Warren Buffett and his team will do as well.

But why understanding a company’s financial statement is so important? This is because it will give you various indicators to know if a company’s financial health is able to sustain its continual operations and thereby bring values to us in terms of dividend profits and capital appreciation over the long run.

Public Listed Companies are under the scrutiny of public’s eyes and the government. And can such companies fail you by reporting fraudulent financial statements? Yes, certainly.

Case Study of Fraudulent Financial Statement of Enron Corporation

Enron Corporation was once the fifth largest company in US quoted by Fortune Magazine in 2002. But Enron had filed for the largest bankruptcy in the history in 2001 due to a massive loss amounted to a total of $74 billions.

The reason for its collapse is largely due to the mis-management where the top executives earned millions of dollars due to offline partnerships. On the other hand, the top management falsely reported their financial statements by inflating its earning profits to the shareholders.

The deregulation of energy traders led to overconfidence in investments that Enron made. These traders thought they were in control and ended up in an over bought situation. When the market acted against them, it caused the collapse of Enron.

The collapse of Enron further led to the collapse of its auditor, i.e. one of the big four accounting firms, Arthur Andersen LLP . The saddest part of this story was to know that the key insiders had sold their stocks shortly before Enron announced the gaps to the public. Shareholders were also mis-led to buy Enron shares thinking that Enron was still making good money.

Case Study of Fraudulent Financial Statement of China Aviation Oil Singapore

Assessment of management is also important. In local contexts, we also had similar cases like China Aviation Oil of Singapore (CAO). CAO lost over $550 million in derivatives due to its CEO’s disastrous trading strategies.

Before its collapse, CAO was responsible for filling virtually all of China’s jet fuel requirements. China Aviation switched its trading strategy from trading oil-related derivatives to hedge its jet-fuel purchases against fluctuations in the price of oil, but moved to using the derivatives to bet on market trends.

Their traders did not follow the rules and exceeded the trading limits. CEO tried to conceal the huge losses but eventually could not hold the truth anymore.

Conclusion

The case study of Enron and China Aviation Oil has served a good lesson to all of us. We should be careful in reading the financial statements and assessing the management’s credibility. Corporate governance of a company becomes an important aspect of our due diligence check in value investing.

So, the next question is whether due diligence check becomes more complicated and tedious for value investors? This is a myth.

Technology Assisted Stock Hacking solution can help you to watch out for financially fraudulent companies before committing to invest their shares. Its feature called WP Rating to do this job with just a click away.

Come to our free Value Investing Workshop to learn more about the latest technology tools available.

Good luck in your value investing!

The post Can Financial Statements Be Fraudulent? appeared first on Value Investing Singapore Educates Smart Value Investing In Singapore.

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Technology stocks are deemed to be highly cyclical. SGX quoted the reason of an increased global demand for electronic products and services in recent years has coincided with expansion and new entrants within the Technology Sector. This adds to competition within the sector that has the economic impact of weighing both prices and margins.

The US announced in May 2018 that it would impose tariffs on industrially significant technology. And the local bourse noted that trading of electronic products and services has been pressured by the US-China trade disputes.

Coming May 2019, it is crucial to have a conclusive trade deal agreement between US and China. If this happens, it will definitely boost our local economy including technology stocks sectors. If not, we may expect a hit in technology stocks which will be affected by the US tariff.

SGX Screened List of Technology Stocks

Here is the technology stocks update in April 2019. The below SGX stock screener list is sorted with PE Ratio in an ascending order.

Company Trading NameCodeMkt Cap ($M)Tot. Rev ($M)P/EYield (%)
Datapulse TechBKW54.9761.0541.334
Serial SystemS6983.3322079.3093.439.35
Ban LeongB2627.96156.195.557.29
MiyoshiM0331.85952.0566.173.85
ExcelpointBDF70.3241710.1366.345.08
AzeusBBW1221.5677.052.71
ISDNI0799.094301.998.472.98
ValuetronicsBN2302.755485.0598.625.04
Sunningdale TechBHQ257.373726.7958.685.56
SUTL EnterpriseBHU50.57919.888.723.42
UMS558399.64127.9399.286.04
AEMAWX317.037262.3259.442.93
MDRA2764.963264.869103.1
Memtech IntlBOL138.24262.04310.313.13
CEIAVV87.495140.3311.581.45
Powermatic DataBCY59.07516.9711.93.03
Multi-ChemAWZ66.67431.3311.985.96
PCIP19262.811327.03512.032.27
PNE IndustriesBDA64.61679.84412.286.49
CSE Global544268.355376.78713.295.29
Maruwa Yen1kM1282644.96140656.95713.790.69
VentureV035581.1873484.60313.843.63
NeraTelN01113.998167.52814.77.94
Avi-TechBKY49.93230.67314.776.32
Silverlake Axis5CP1375.201208.92820.982.55
TPV TechT184104.86371738.523.870.57
TeleChoice IntlT4199.973491.71725.297.27
GRPBLU25.18130.80326.373.85
Chuan HupC33343.461378.77328.282.7
SunrightS7151.579144.77330.390.71
CDWBXE44.131122.87932.798.52

Source: SGX.com (Dated 26 Apr 2019)

Do your own due diligence check or using the latest Technology Assisted Stock Hacking Tools to breeze you through the work of stock screening and identifying the gems in the technology sector.

Appreciate what TASH can do for you. Learn to leverage this powerful technology tool in the next available workshop. Sign up using our online form now!

The post Technology Stocks Update April 2019 appeared first on Value Investing Singapore Educates Smart Value Investing In Singapore.

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Below are the list of STI Constituents or Top 30 SGX stocks which made up our STI Index in 2019. These are heavy weighted stocks with market capitalisation ranging from over 1 billion to 50 billion. They provide a clear trending where STI will be heading to as their total market value may account to 70% of the total value of SGX listed companies in Singapore.

On a quarterly basis, this list of STI Constituents will be reviewed to ensure only the top 30 SGX listed companies are selected.

STI Constituents Identifier
Ascendas ReitA17U
CapitaCom TrustC61U
CapitaLandC31
CapitaMall TrustC38U
CityDevC09
ComfortDelGroC52
Dairy Farm International HoldingsD01
DBSD05
Genting SingG13
Golden Agri-ResE5H
HongkongLand USDH78
HPH Trust USDNS8U
Jardine C&CC07
JMH USDJ36
JSH USDJ37
Keppel CorpBN4
OCBC BankO39
SATSS58
Sembcorp IndU96
SIAC6L
SingTelZ74
SGXS68
SPHT39
ST EngineeringS63
ThaiBevY92
UOBU11
UOLU14
VentureV03
Wilmar IntlF34
YZJ Shipbldg SGDBS6

Source: SGX.com (Dated 22 April 2019)

Are These STI Constituents Overly Priced in 2019?

The overall PE ratio of STI is 13.90 as of 22 April 2019. I can say that it is not too high from an overall perspective. Though STI may be going a gradual upward trend to hit its historical peak at 3593, we are still technically in a flat market.

As a recap, STI does not give any indication whether a particular stock is undervalued or overly priced. But it does give a price movement indication of these STI constituents in the current market condition.

Conclusion

In conclusion, I am reluctant to be in aggressive in our local stock market. The outcome of Brexit, US-China Trade War and North Korea are still uncertainties. Whatever come high will come low. The story will repeat by itself again and again. The only difference as compared to the last stock cycle is the current flat market holds for a longer period of time before it starts to plunges. I think the best strategy now is still dividend play for those fundamentally good stocks and only a few selective undervalued stocks in overseas stock markets.

The post What Are STI Constituents In 2019 appeared first on Value Investing Singapore Educates Smart Value Investing In Singapore.

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With a good stock screener tool, the days of doing due diligence checks manually by value investors are over.

A good stock screener helps value investors to filter off stocks that are not matching their value investing criteria. Finding what stocks to buy in Singapore or in any other stock market is not an easy task. Why? The list of listed companies is getting longer and the information available online is overwhelming. There are tons of endless corporate announcements and online resources for investors to digest before the right information can be put into good use.

Many investors lose money because they spend time in listening to rumors, analyst news and friends. Emotion and greed are the two major causes of making a mistake in stock investing. And often, the mistakes made can be deadly to some. On the other hand, good investors spend time to analyse the available data and they do due diligence check to confirm if a stock is worthwhile to buy.

Doing due diligence check is a must for value investors. Today, there are still quite many value investors are still using spreadsheets to work out on the financial ratios. This is not productive. If you are serious in value investing, you need have a good stock searching tool to help you out.

List of Stock Screeners

There are many stock screeners available in the market. Some are paid versions while others with limited options are free to the public to use. Here is the non-exhaustive list as follows:

  • SGX Stock Screener
  • Yahoo Finance Stock Screener
  • Finviz
  • Uncle Stock Screener
  • Fidelity Stock Screener
  • Market Watch Stock Screener
  • TASH Stock Screener

I have personally tried a few of them before such as those which are offered by SGX, Yahoo Finance, Finviz and Uncle Stock. These are generally cool and easy to use tools.

There is also a locally developed tool called TASH Stock Screener which i like the most. It has the most popular filter criteria which matches my value investing principles. These filters are as follow:

  • stock market
  • Margin of Safety
  • WP Rating
  • Profitability
  • Financial Health
  • Growth Stocks
  • Dividend Play
  • Asset Play

These tools are a great resource when searching for undervalued stocks, growth stocks, dividend stocks or defensive stocks. They help to save up your time to do the due diligence check manually at a click of a button. This will make you life as a value investor for easier. If you are not using one today, consider one today.

Check out how you can leverage on system tools like the above to help you out in your value investing journey by signing up our free full day 4 hours Technology Assisted Stock Hacking Workshop Singapore here.

The post Why Stock Screener Is Important To Value Investors appeared first on Value Investing Singapore Educates Smart Value Investing In Singapore.

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With a good stock screener tool, the days of doing due diligence checks manually by value investors are over.

A good stock screener helps value investors to filter off stocks that are not matching their value investing criteria. Finding what stocks to buy in Singapore or in any other stock market is not an easy task. Why? The list of listed companies is getting longer and the information available online is overwhelming. There are tons of endless corporate announcements and online resources for investors to digest before the right information can be put into good use.

Many investors lose money because they spend time in listening to rumors, analyst news and friends. Emotion and greed are the two major causes of making a mistake in stock investing. And often, the mistakes made can be deadly to some. On the other hand, good investors spend time to analyse the available data and they do due diligence check to confirm if a stock is worthwhile to buy.

Doing due diligence check is a must for value investors. Today, there are still quite many value investors are still using spreadsheets to work out on the financial ratios. This is not productive. If you are serious in value investing, you need have a good stock searching tool to help you out.

List of Stock Screeners

There are many stock screeners available in the market. Some are paid versions while others with limited options are free to the public to use. Here is the non-exhaustive list as follows:

  • SGX Stock Screener
  • Yahoo Finance Stock Screener
  • Finviz
  • Uncle Stock Screener
  • Fidelity Stock Screener
  • Market Watch Stock Screener
  • TASH Stock Screener

I have personally tried a few of them before such as those which are offered by SGX, Yahoo Finance, Finviz and Uncle Stock. These are generally cool and easy to use tools.

There is also a locally developed tool called TASH Stock Screener which i like the most. It has the most popular filter criteria which matches my value investing principles. These filters are as follow:

  • stock market
  • Margin of Safety
  • WP Rating
  • Profitability
  • Financial Health
  • Growth Stocks
  • Dividend Play
  • Asset Play

These tools are a great resource when searching for undervalued stocks, growth stocks, dividend stocks or defensive stocks. They help to save up your time to do the due diligence check manually at a click of a button. This will make you life as a value investor for easier. If you are not using one today, consider one today.

Check out how you can leverage on system tools like the above to help you out in your value investing journey by signing up our free full day 4 hours Technology Assisted Stock Hacking Workshop Singapore here.

The post Why Stock Screener Is Important To Value Investors appeared first on Value Investing Singapore Educates Smart Value Investing In Singapore.

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REITS Singapore 2019 prices are at a high side. It may seem to be overvalued for most of the REITS Singapore as of now. If you are looking for a dividend play, you should perhaps start to use your value investing techniques learnt in our value investing bootcamp to compile a shopping list here. Compiling a shopping list does not mean that you have to start buying stocks. It is to set the right mindset which stocks are good for value investing. When it’s price meets the entry point, then buy it!

My take for local Singapore stock market including REITS Singapore 2019 sentiment remains to be consistent. STI Index has become flat if not declining. Perhaps, it just need either a strong negative new to shake it up. Quite a majority of REITS are still overvalued in this year. And, this is somewhat de-link from US market where Dow Jones may test its next highest breakthrough at 26,000.

REITS Singapore 2019 List

Company NameCodeP/EDiv. Yld.in %P/BV
Fortune Real Estate Investment TrustF25U3.135.29%0.583
Sabana Shari’ah Compliant Industrial Real Estate Investment TrustM1GU6.2617.76%0.714
Mapletree North Asia Commercial TrustRW0U6.3037.6%0.95
IREIT GlobalUD1U6.9767.79%1.05
Keppel-KBS US REITCMOU8.6979.33%0.833
Mapletree Commercial TrustN2IU9.0155.03%1.221
Frasers Commercial TrustND8U9.4866.36%0.954
Mapletree Logistics TrustM44U9.8155.65%1.116
OUE Commercial Real Estate Investment TrustTS0U10.6336.89%0.708
EC World Real Estate Investment TrustBWCU10.7048.37%0.837
Parkway Life Real Estate Investment TrustC2PU11.154.6%1.491
Soilbuild Business Space REITSV3U11.9928.88%0.862
First Real Estate Investment TrustAW9U12.2577.75%1.007
CapitaLand Mall TrustC38U12.2664.85%1.176
Frasers Centrepoint TrustJ69U12.2845.33%1.084
Mapletree Industrial TrustME8U12.5165.99%1.358
CapitaLand Commercial TrustC61U13.1284.6%1.027
Keppel DC REITAJBU13.3185.05%1.356
Frasers Logistics & Industrial TrustBUOU13.6466.11%1.201
AIMS AMP Capital Industrial REITO5RU14.0117.34%1.014
Starhill Global Real Estate Investment TrustP40U14.8876.28%0.789
Manulife US Real Estate Investment TrustBTOU15.566.01%1.038
BHG Retail REITBMGU15.8447.81%0.893
Ascendas Real Estate Investment TrustA17U16.5845.77%1.253
Suntec Real Estate Investment TrustT82U18.1185.28%0.895
CDL Hospitality TrustsJ8518.3125.54%1.094
SPH REITSK6U18.8065.43%1.08
Ascott Residence TrustA68U19.2636.17%0.826
Frasers Hospitality TrustACV22.4636.48%0.911
Lippo Malls Indonesia Retail TrustD5IU23.12710.2%0.68
Keppel REITK71U28.1864.67%0.823
Cache Logistics TrustK2LU31.2248.26%0.943
Ascendas Hospitality TrustQ1P47.1077.03%0.864
Far East Hospitality TrustQ5T52.1046.02%0.759

Source: SGX.com (Updated 9 Feb 2019)

Remember that a high dividend yield to you means that your entry point to buy and own it must be right. You really need to exercise with caution in this 2019 to do your due diligence. It must be tempting to acquire those with the highest dividend yields. I am not surprise to see that there are people continue to acquire more stocks this year in attempt to earn more dividends.

Warren Buffett’s Quote :

The post REITS Singapore 2019 appeared first on Value Investing Singapore Educates Smart Value Investing In Singapore.

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Never mix up the trading process with the complex system

You may think about the trading process in the Forex marketplace is all about trading with adaptation. But the reality is, traders will have to be themselves and make a decent trade from their side. Only one thing will be done with the markets. That is proper market analysis. Still, your planning must not be changed for any specific condition or signals. If any trader can master the trading process with proper stability, there will be a lot of positive risks to profit ratio. Most of the trades will be bringing good profits for the Singaporean traders. In this article, we are going to talk about the proper maintenance of the trading business with the right planning. But you will have to keep them fixed for all of the time in this trading profession. With time, there can be a change in the strategies. The executions of the trades must not be influenced by the signals. So, let’s get going and learn about the proper maintenance of the trading business with regulations and strict planning.

Trade with a unique plan

For your own good, you will have to learn that, your trading plans are best ones for you. There will be a lot coming in between the business process which can seem legit to you. But the actual results from those do not come well for the traders. You may earn some money from a particular trade with some different strategy. In the long run, your own trading edge will come in handy all the time. There will be a matter of acceptance in between your ideas and your executions of the trades. So, believe in your own trading performance and concentrate on the things. We are talking about the position sizing, market analysis, and risks management. They are the most important things for the proper trading approaches.

Find a reputed broker
You must find a reputed broker like Saxo or else you will become a successful trader in the exchange traded funds community. Saxo offers one of the most reliable trading platforms which helps the retail traders to make high-quality trades in the Forex market. Stop thinking about a low-grade broker even though the minimum deposit requirement is extremely low. Unless you maintain a premium trading environment, you will never be able to make money in the long run. Be a smart trader and you will slowly understand the proper way to place a trade without high-risk exposure.

 

Always look for improvements

It will not be possible for the traders to be a pro from the start of the trading career. You will have to learn about fixing the right risks. Then the position sizing will also need to be right with decent profit targets. You may not be able to do the market analysis. For that, the traders will have to learn about the proper understanding of the trend and then the key swings. With time, the traders will also have to learn about the Fibonacci tool to research the past signals to know about the future. So, these are all improvements in the trading plans. You will have to do them all by yourself. Because it is your own business and there can be hardly anyone interfering into your retail trading.

Use of demo trading accounts
When we were talking about improving the trading edge, it was not meant to be with live accounts. The traders will have to do experiments and improve their edge with the demo accounts. Because it is a very good environment to practice in. You see, the demo account gives the traders fake money to work with. So, the tensions of losing money will not be there inside the trader’s heads. So, they can learn properly about the advanced techniques. So, take advantage of the resources the Forex trading business has to offer you.

The post Never mix up the trading process with the complex system appeared first on Value Investing Singapore Educates Smart Value Investing In Singapore.

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Check out 35 SG REITs

 

Here is the list of 35 SG Reits. To follow from our June 2018 update, this SG REIT table covers PE Ratio, Dividend Yield and PBV ratios. Certainly, these financial ratios make sense to decide which REITs outperform to their peers. Please refer to the below table which is sorted by the ascending order of PE Ratio.

35 SG Reits – Investing Choices
Company NameCodeP/EDiv. Yld. in %P/BVMkt. Cap.in S$ mmTot. Rev.in S$ mm
Fortune REITF25U2.8675.51%0.5823,121.20356.4
Mapletree North Asia Commercial TrustRW0U5.6436.74%0.843,506.40360.5
IREIT GlobalUD1U6.9427.70%1.065479.355.1
Mapletree Logistics TrustM44U7.2996.10%1.0064,099.60404.6
Frasers Hospitality TrustACV8.2647.10%0.8391,299.10158.7
Mapletree Commercial TrustN2IU8.5315.51%1.1034,734.90434.3
CapitaLand Retail China TrustAU8U8.5357.13%0.8311,392.40221.7
OUE Commercial Real Estate Investment TrustTS0U8.7647.45%0.655931.4174.4
EC World Real Estate Investment TrustBWCU10.2588.67%0.749545.293.4
Frasers Centrepoint TrustJ69U10.355.41%1.1062,075.10197.7
CapitaLand Commercial TrustC61U11.1724.76%0.9576,589354.9
CapitaLand Mall TrustC38U11.4815.29%1.0577,559.20688.3
Mapletree Industrial TrustME8U11.6476.04%1.3263,697.90365.9
Ascott Residence TrustA68U12.7136.41%0.7612,335504.7
Frasers Commercial TrustND8U12.9876.72%0.9361,270.70142.1
First Real Estate Investment TrustAW9U13.2597.04%1.12959.8114
Manulife US Real Estate Investment TrustBTOU13.6296.41%0.9571,380.50158.1
Frasers Logistics & Industrial TrustBUOU14.779.47%1.1642,154.90180.8
Starhill Global Real Estate Investment TrustP40U15.4136.41%0.7781,548.70208.8
AIMS AMP Capital Industrial REITO5RU15.4897.20%1.044980.4115.3
SPH REITSK6U16.3895.56%1.0542,559211.7
Ascendas Real Estate Investment TrustA17U16.4066.15%1.1918,050.90865.9
OUE Hospitality TrustSK716.5497.08%0.941,299.90131.2
Parkway Life Real Estate Investment TrustC2PU16.7084.86%1.5411,633.50111.1
BHG Retail REITBMGU16.7647.70%0.84935768.3
Viva Industrial TrustT8B19.2438.38%1.175873.3124.1
Suntec Real Estate Investment TrustT82U20.2745.40%0.8794,934.80449.5
Lippo Malls Indonesia Retail TrustD5IU20.77610.78%0.692769.8200.7
Keppel DC REITAJBU20.8565.23%1.351,837.90152.2
Keppel REITK71U21.524.76%0.8174,054.70287.1
Cache Logistics TrustK2LU33.198.25%0.92788.6116.1
Far East Hospitality TrustQ5T49.7146.22%0.731,186.90107.3
Ascendas Hospitality TrustQ1P52.2727.23%0.803917.5200.1
Dasin Retail TrustCEDU107.2678.95%0.58481.373.5
Sabana Shari’ah Compliant Industrial Real Estate Investment TrustM1GU238.658.10%0.76431.882.3

 

Source  SGX.com (Updated 25 Sept 2018)

 

A Thinker For Novice Investors

Can you spot some of these SG Reits with a fairly low PE and yet having an annual dividend yield of more than 7%? Please do your own due diligence to select your desired choice for your REIT investing. Value Investing Graduates know what to do to screen for the better ones with value from this entire list.

The post List of 35 SG REITS appeared first on Value Investing Singapore Educates Smart Value Investing In Singapore.

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The difference between technical analysis vs fundamental analysis may not be clear to many Singaporeans especially to those who do not invest. In my earlier post, I had introduced both fundamental analysis and technical analysis. This post is mainly to highlight the key differences between the two investing approaches.

 

What’s Good About Fundamental Analysis Vs Technical Analysis
Pros of FAPros of TA
Pick value stocks by studying a list of key financial ratios such as net profit margins.

Value investors will know if a stock can be bought below its intrinsic value with a safety of margin. Often, investors will have their own shopping lists and waiting for a good entry point to buy or sell. A high price to buy does not mean the stock has a low value.

 

By using system tools and technical indicators to study the price movements 

Price information reveal how the market moves with consensus of the stock buyers and sellers. Often, investors can automate the trading by system settings, e.g. to set exit selling price and cut loss price. 

Get rich steadily over a period of time.

We have highlighted various value investing gurus such as Warren Buffett, Charlie Munger and Peter Lynch. These famous investors built their wealth over decades by holding value stocks. In Singapore, we have Seah Sean, the Asia Buffettologist. 

 

Get rich faster with an aim to get a higher risk reward ratio

TA investors use a risk/reward ratio to compare the expected returns of an investment with the amount of risk undertaken to capture these returns. The risk/reward ratio is often used as a measure when trading individual stocks. The optimal risk/reward ratio differs widely among various trading strategies. 

 

Good knowledge of the company

Value investors study the different aspects of a company e.g. historical records of financial statements,  annual reports, management competency, nature of business and industry.

Do not need to know the in-depth details of the company

Technical analysts focus a lot of their time in analysing system charting and uses technical indicators. They do not spend time reading quarterly annual reports and financial statements.

What’s Bad About Fundamental Analysis Vs Technical Analysis
Cons of FACons of TA
Value investing requires patience

Valuation of a stock needs patience because they need to study the company in great details. Value investing play will also depend on the industry itself. Investors need to have a circle of competency about a particular industry to shorten their learning curve.

Trading results can be interpreted differently

Same charting result could be interpreted differently by different investors even through the system leverage.

Fundamental Analysis derived from the available information of a company and that can be biased or at times presented in a wrong way

Information of a company comes from the same company which can be in favour of the company. Figures can be bloated.

Chasing over a hot stock can be a deadly mistake

Chasing over a hot stock by many investors in a short time will result a sudden change of price movements. Their fear of losing out could be a start of a stock or market crash.

Knowing the track record of a company but without knowing current market momentum can be less effective.

Some undervalued companies can lie low for a period of time before it starts to gain momentum. When a strong momentum of the stock is ignored, the undervalue stock can become overvalue quickly and hence, opportunity may be missed.

Looking back history does not help to anticipate sudden market movements.

Stock reactions to negative or positive news can be seen in their historical charts but they cannot be used to predict sudden changes of price movements. Investors can suffer lost quickly in the next day when they wake up. At times, traders can see certain stocks either shoot up by more than 50% or plunge more than 50% in a single day.

 

CONCLUSION

Any form of investing will carry risks and it can be costly. You need to maintain the control of your own emotions toward investing.  Regardless of the investing approach, you need to know the pros and cons of each analysis before you embark on your investing journey. Both aim to reduce the risk of investments. For me, I tried both methods. My preference is to lean towards value investing rather than stock trading. We need to protect our downside and think deeper. Value stocks may carry intangible or tangible assets. If you own undervalue stocks, how high can the risk be?

The post Technical Analysis vs Fundamental Analysis appeared first on Value Investing Singapore Educates Smart Value Investing In Singapore.

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