Five Cents Ten Cents

Panzer’s Equity Portfolio as at 20 Nov 2009

Panzer is no Warren Buffet, as some Channelnewsasia Market Talk forummer commented, there are a lot of Warren Bluffets around, people who make predictions about equity prices going up or down depending on whether they are taking a long or short view of the market.

What Panzer realises from investing his own monies since 2003 till date is that the returns on cash have been quite poor especially in the last 2 years or so.

Interest rates are so low that local banks are giving 0.1% or so for savings deposits. What this means is that your money when left in the bank is actually depreciating in purchasing power when inflation is minimally 1-2% annually. It was as high as 5-6% last year prior to the global financial crisis that wiped out much of equity values as well as destroyed economic activity throughout the entire world.

What Now Panzer?

So Panzer realises he must stay invested in the stock market but focus more on dividend yields rather than capital appreciation or quick punts for true growth in his investible portfolio.

Let’s examine Panzer’s holdings and why he is holding onto the stock as Panzer will be tempted to take profits but must keep focused on the long-term i.e. 20 years when the dividends and (potential) capital gains would be available for use for his daughter’s university fund.

Panzer’s Holdings (in no order of merit)

Long-term holdings – mainly for dividends and longer term capital appreciation

1. Singpost

2. Singapore Press Holdings

3. DBS

4. FSL

5. Starhub

6. F&N

7. Singtel

Short-term Trading

8. Keppel Corporation

If you realise from Panzer’s holdings, most of the companies are GLCs and blue-chips. So far, Panzer’s portfolio unrealised loss is around $4.6k level which is a vast improvement of -$70k at one stage.

So far, the main clunker has been FSL bought when prices and valuations were high but we know now how the shipping industry has also been hit by the financial crisis.

A number of his buys are recent (i.e. within the last 3-6 months or so).

Panzer feels that this portfolio should not be too actively traded and can be earmarked for Panzer’s daughter college fund to mature sometime in 18-20 years.

In the meantime, Panzer knows that still the bulk of his savings will have to be derived from earned income not spent and he will continue to practice his professional arts in internal auditing.

How do you review your own portfolio and how do you decide to sell/hold/buy more?

Share with Panzer in the comments section.

Be well and prosper.

Finatiq Cash Investment Account Interest Rates Decline to 0.125% p.a.

Previous rates:

Panzer’s 2009 Interim Results Announcement

It’s that time of year again when Christmas decorations are being put up in malls all across Singapore. People look forward to a “white Christmas” although Singapore has no snow but lots of rain towards the end of the year.

Besides spending on Christmas gifts, feasts and other treats, a custom that Panzer likes to do is to take stock of his financial performance from being the fund manager of Panzer’s Net-worth cum daughter’s colleague tuition fund.

Analysis of the year gone past (so far)

The following chart shows how Panzer has performed in the months of 2009.

Generally, Panzer has been making steady realised gains from dividends (36%), capital gains/losses (59%) and blogging income (5%). July saw a big realised loss because Panzer cleared out many of his old holdings bought at high prices when he was young and ignorant. Now that Panzer is older and still ignorant, he has done a round of housekeeping to only buy quality stocks, in general blue chips with very solid business fundamentals.

August 2009 saw Panzer reap capital gains from sale of SPC to PetroChina resulting in a net gain even after realising his losses from sales of (crap) stocks he had mistakenly bought in his ignorance and bout of irrational exuberance.

Panzer’s Portfolio

The current older and still (slightly less) ignorant Panzer now manages his portfolio on at a level of 50:50 cash-equities ratio with investment limits on equities set to 75% of his investible net worth. On a steady state, Panzer should have 50% of his net worth in cash/cash equivalents allowing himself 25-30% core holdings in strong dividend yielding stocks while the remainder 20-50% is available for punts.

He has decided to temporarily put on hold his investment property plan in the light of possible asset bubble in the private residential segment and also because it’s easier to sleep at night holding onto to more cash than an illiquid asset such as investment property which typically yields only 3-5% after expenses. Panzer also wishes not to deal with the stuff that comes with being a landlord for the time being.

The recent announcements of more land supply for the mass market private residential segment also means there is less upside and more choices going forward. Panzer may still consider investment property if yields can sustain higher than 5% which would be challenging under present conditions.

Panzer’s holdings currently comprise: SPH, Singpost, Starhub, FSL, F&N and Singtel (CPF). He intends t0 hold them for LONG TERM but then LONG TERM can mean < 1 year if he feels like it because Panzer follows Temasek and GIC’s approach to investment.

Going forward

Panzer feels that this past year of investing (with lots of recent punting) has revealed to him a few things.

One – there are no rules to investing in the market.

Two – your guess is as good as mine.

Three – make sure you have sufficient cash for opportunity buys or to cushion your own mistakes.

Panzer wishes one and all a Merry Christmas.

Be well and prosper.

HLF Savings Account Promotion (up to 0.5% p.a.)

Reference: http://ping.fm/zIUGq

Get up to 0.8% pa interest on UOB i-Account

Reference: http://ping.fm/yEbkR

Channelnewsasia Market Talk Forum 1 Nov 2009

When you are investing or trading in equities, you are playing against both institutional investors as well as retail investors and they come in all shapes and sizes. The interesting thing about monitoring stock forums such as Channelnewsasia Market Talk forum is to see for yourself the tangible manifestation of GREED and FEAR in the various threads started and contributed by the investors, punters and other people in the forum.

I’ve decided to do a wordle word cloud to show a snapshow of what the forummers are posting today 1 Nov 2009.

Not too surprising that the key words for today are that there will be a selldown on Monday on STI because Dow Jones Industrial Average lost about 2.5% or 200+ points on Friday.

Be well and prosper.

Hong Leong Finance (HLF) City Square Mall Fixed Deposits Promotion

Source

Flow: More Thoughts on Optimal Experience

Following my post about “Flow: The Psychology of Optimal Experience“, I begin to see how important our own perceptions play in determining if we are happy or not under all circumstances.

One of the benefits of trading in stocks and shares is that it forces you to confront your naked fear and greed whenever you are about to buy or sell shares. Nothing strips away how good/bad you are at stock trading (or investing) then looking at your profits and losses incurred on the trade.

You feel happy when you’ve made the right call and you feel terrible if you’ve lost money and even worse if the loss is realised.

It is from this experiences that I realise financial freedom by itself will not make me happy. It is how I make use of the financial freedom status to create for myself an optimal flow experience in all aspects of my life. Even the euphoria of trading wins fade after a while and I look out for the next “high” from jeeping/panging an equity position.

Happiness and sadness that is dependent on market conditions sets us up for a life of emotional roller-coaster. This cannot be the receipe for a life filled with optimal experiences.

So how can you structure your life into a flow experience even as you pursue financial freedom?

How pursuing financial freedom helps you achieve flow

A challenging activity that requires skills

Moving from a net-worth position that is negative to a positive one is challenging. It requires you to have skills in budgeting, controlling your desires to spend and to live within your means.

Merging of action and awareness

As you track your net worth towards a bigger and bigger positive number, you tend to feel that your day to day thriftiness does translate into a bigger goal i.e. bringing you closer to financial freedom where your income from savings and investments is able to fund your day-to-day living expenses.

Clear goals and feedback

Nothing clarifies more than your net worth position at the end of the month and whether you’ve spent more than you’ve saved or you’ve manage to live way within your means.

Concentration on the task at hand

Just as you focus on eating that bit less, refraining from softdrinks and living a healthy lifestyle to keep healthcare costs low, energy levels up for work and play, you tend to align your daily goals to the overall plan of being financially free.

Paradox of control

The more your net worth comes into your direct control, the more powerful you feel in your ability to control your financial destiny in life.

Loss of self consciousness

Whether you keep up with the Alis, Lims or Muthus is not so important when you focus on financial freedom. It’s not about what watch you wear but how big is your net worth.

The transformation of time

Time flies when your daily activities are aligned to your life goals. The main thing I realise about pursuing financial freedom is that the process is enjoyable by itself. Seeing my month end balances with savings makes me look forward to the passing of each day and month as I move closer to my goal of financial freedom. The journey is just as fun as the destination.

Be well and prosper.

Flow: The Psychology of Optimal Experience

One of the areas I continue to develop towards financial freedom is to open my mind to positive influences and ideas from quality sources. Many of the new books I read nowadays are the result of recommendations from other authors and blogs that I follow.

The current book that I’ve just finished reading is “Flow: The Psychology of Optimal Experience” by Mihaly Csikszentmihalyi. The book basically shares with us the steps towards enhancing the quality of life.

Reading is arguably the most important avenue to learn new knowledge. Many great thinkers, philosophers and practitioners in the fields ranging from financial freedom to human pyschology have already documented their great ideas, thoughts and wisdom in the written word. Why not tap on their knowledge, expertise and experience to gain some insights about how one should go about living one’s life?

It is with this mindset that I approached “Flow”.

What “Flow” is about

The book’s blurb shares what “Flow” is about. It really documents how the author

has been studying states of “optimal experience” – those times when people report feelings of concentration and deep enjoyment. These investigations have revealed that what makes experience geniunely satisfying is a state of consciousness called flow – a state of concentration so focused that it amounts to absolute absorption in an activity.

The main idea that the book leaves with us is that:

Flow: The Psychology of Optimal Experience reveals how this pleasurable state can, in fact, be controlled, and not just left to chance, by setting ourselves challenges – tasks that are neither too difficult nor too simple for our abilities. With such goals, we learn to order the information that enters consciousness and thereby improve the quality of our lives.

What I got from Flow

The main lesson that I got from “Flow” was that the elements of enjoyment comprises the following:

1. A challenging activity that requires skills
2. Merging of action and awareness
3. Clear goals and feedback
4. Concentration on the task at hand
5. Paradox of control
6. Loss of self consciousness
7. The transformation of time

What this means is that for many people, work or career is actually when we are enjoying ourselves when we get immersed into what we do. Being financially free will free us to engage in leisure activities full time, but such activities won’t make us happy unless they meet the elements above.

My own experience in moving from a crappy job environment to a more pleasant and fulfilling one has reinforced the reality of what flow means. Somedays at work, the hours just while themselves away as I’m engaged in my audit assignments and working with my team.

Literally, the movement of time from Monday to Friday happens so fast that I sometimes wonder where it all went. I count myself fortunate that my current work place gives me a lot of job satisfaction and allows me to function in a flow on majority of the days I am in office.

Meaning in “Flow”

Hence, I’ve increasingly come to realise that achieving financial freedom while being an important goal, is not important just for itself. It is equally important to structure your life to do something meaningful and is able to involve the elements of enjoyment.

A life of pleasure seeking everyday without much meaning and purpose after being financially free can potentially result in empty and hollow lives. That’s why sometimes we read in papers of rich and famous celebrities who have it all in material wants but still end up with wasted lives through alcoholism, drugs and suicide.

Even as I continue on my journey towards financial freedom, I become more aware that paradoxically, it’s not just about hitting my target of $xxx,xxx in investible net-worth so that I can become financially free that will ultimately make me happy.

Happiness has to come from within instead and whilst working towards the my target of financial freedom, I need to seek challenges that continue to allow me to practice my skills, abilities and to create meaning in my life.

How do you think you can achieve flow?

Would it be where you are now or only if you achieve financial freedom?

Share with Panzer.

Be well and prosper.

Want to do, don’t be scared! (Five Cents Ten Cents 1 year ago)

The hokkien expression goes, “要做就不要怕，要怕就不要做！”. (ai zo mai kia, ai kia mai zo) Loosely translated, it means, “if you want to do something, don’t be scared, but if you are scared, then don’t do it!”

Read more here in Panzer’s old blog Five Cents Ten Cents at Blogspot.