Wednesday, July 4, 2018

Added CRRC Hong Kong stock, Mu & Oil thoughts

Added CRRC , a Defensive and Growth play. In a looming tariff environment, if it happens, China will boost domestic spending by a huge amount.

Micron has been hit by a ban from China, caught in the cross-fire tensions b/w China and US.
I have stopped buying MU (even though it is undervalued) and NXPI as I think that TrXXX being the dictator and spoilt brXX is going to make life tough for China for some time, and probably they are better opportunities in Oil, which is in a cycle 1 year later than the semi-con run up.

Trump tweets have been going on to pressure OPEC pumping more oil to lower prices. Although we will be seeing a even undersupply as we approach later in the year, it is affecting sentiments now. Secondly, the trade war is also affecting demand. I think this will clear up in next 1-2 months which will again boost market, as well as oil.

Monday, July 2, 2018

OPEC June Meeting and Trump asking SA to increase Oil Production

This is game theory 101. Basically it is Trump telling SA, if you increase oil productions by 1.5 M, we will sanctions Iran. And so SA played this game with Trump. After OPEC meeting, the market is calling the bluff of OPEC. It is like Poker, where SA is saying OPEC is increasing production substantially , but it is likely production increase will be very little , and will not be sufficient to offset disruption going on everywhere from Venezuala, Libya, Angola, Nigeria and with Iran looming.

Your salary and your team salary is too high. - Trump

Yes boss, we will work more by 10% and ask everyone to cut our salary by 10% - OPEC.

I really read with amusement when many analyst articles state stupid comments about what is going on - that SA is heeding Trump's call to increase production and trying to bring down oil prices.

Call their bluff. We will see $90 oil by end this year and spike $130 oil next year if Iran sanctions begins. 

Wednesday, June 20, 2018

2015 , 2016, 2017 and reaching a new milestone in NW 2018 YTD

Haven't been blogging for quite some time as had been quite busy with family and work.

2015 have been rather inactive - selling of MTQ , buying ERX on the bounce and shorting oil DWT later in the year betting the SA will continue to pump oil to kill off shale,  but regretfully not holding it. (~  -3%).
Lesson learnt for MTQ is not to buy too big and not more than the daily volume of the counter. I took several weeks to dispose of MTQ (same as Food Empire previously)  which dropped quite a bit. Another lesson learnt is to track Macro , where oil plunged due to Shale.

2016 Earned some through DWT and YANG but got burnt when it rebounded. Lesson learnt is not to short when the major trend has changed. After that mainly buying NUGT, JNUG, but some losses near the end as the trend changed, but was lucky as I was not greedy. Later near the end bought DLPH due to electrification / Autonomous Driving. Also dabbled with UGAZ, but was too greedy. went up from 25-> 50 in a 1.5 months (Late Oct to early DEC) but later drop to 36 when I went on vacation. (~ +20%)

2017 bought BABA late last year (87), but was trying to time the market by shifting to others after Q1 earning report (103) . was a mistake as it raced to 160. Also traded MU (24 - 28 , 30-34, 37-43,), AMD push into server market with INTC has almost 100% market share  (13.8->12.5), WDC , USXY in May and Aug,  DELPH. (~ +20%).
Lesson learnt here is should have just bought 5 big good companies at a good price and hold at least 1 year (BABA , MU) would have landed be about 50%.
Shifted to oil stocks from Sep.

2018 June up YTD 120% , mainly CRC, others Gear Energy and Orocobre , traded GUSH and MU and traded NXPI (when it plunged, and sold when news that it has received approval). This year my NW hit another digit more, this was from probably 12 years back in 2006.  Oil with years of underinvestment is poised to continue the bull run with (besides US and Canada and some spare capacity from Russia n SA) barring any disaster. Read up Twilight in the Desert for some insights of SA oil reserves, an old book but I think is even more relevant now. Singapore Counter currently holding Sunright and PEC. From my initial injection of funds, I am about 40X up. Targeting another 40X in next 7 years.


Tuesday, September 30, 2014

10 Most Popular Leveraged ETF

This was published in 2012

Over the past decade, Exchange Traded Funds (ETFs) have gained tremendous popularity due to many advantages and flexibility that they offer investors. Some of the factors point to tax efficiency when compared to mutual funds, cost effectiveness and transparency as well as entry and exit flexibility.
Clearly investors have embraced these factors as total ETF industry assets currently stands at $1.3 trillion after 34% year on year growth as of 30thSeptember 2012 (as published by the ETF Industry Association).
The beauty of these products is that they allow investors to express their views about a particular asset class/economy/industry in the most efficient and cost effective manner, without the worries of a single company blowing up the return. Nevertheless, with over 1,400 products available in the market today, investors are more paralyzed by choice than anything (see Q3 ETF Asset Report: Investors Back in the Market?).
At this point, knowing one’s investment objective, time horizon and risk tolerance becomes top priority. At the same time, knowledge about individual products that they are investing in and their workings also become extremely important.
Most often investors fail to understand the inner workings of certain products that they invest in (especially the complex ones) and end up losing a great deal. For example, leveraged and inverse ETFs can certainly be great money making avenues for day traders or for a very short period of time. However, investors seeking to make money from these instruments by employing a traditional ‘buy and hold’ strategy are seem likely to lose over time (read Three Biggest Mistakes of ETF Investing).
Leveraged ETFs in Focus
Traditionally, leveraged funds provide 2x or 3x the return of the benchmark performance. For example, a fund that provides 2x the exposure will rise by 2% if the benchmark rises by 1%, however, the flip side also holds true. If the index falls by 1%, the ETF will lose 2%.
On the other hand an inverse leveraged ETF bets against the positive movement of the underlying index, usually over a single day. Basically most of these products rebalance at the end of every session and are built to only give investors the corresponding amount of leverage over a single trading period.
This works really well over a short period of time, where the actual compounded positive returns of the fund exceed the standard compounded returns of the index. However, during oscillating markets marked with periods of high volatility, this phenomenon can hurt the investor leading to larger losses than what some investors might initially expect (read Leveraged and Inverse ETFs: Suitable Only For Short Term Trading).
Therefore, in order for the investors to profit from these highly complex instruments it is prudent for them to understand 1) What actually is the product betting on?, 2) How does it plan to achieve returns 2x/3X the index?, 3) How often does it trade on a daily basis in order to ensure tight bid ask spreads?
This last factor, high trading volume which often leads to tight bid ask spreads, is very important for investors seeking to achieve the best price for their trade. For this reason, and given how volatile the leveraged market can be, obtaining a good price can be vital for overall returns.
In the light of the above statement, we have highlighted 10 of the most popular (i.e. with maximum average daily volume) leveraged ETFs that are available to investors.
The following table summarizes the key attributes that are prudent for any investor to consider before investing in these leveraged ETFs. While we have briefly described some of the key attributes of each below the table:
Table 1

Total Assets
Average Daily Volume
Expense Ratio
Leverage Factor
$618.41 million
10.97 million
Russell 2000 Index
$1.57 billion
7.07 million
S&P 500 Index
$1.13 billion
5.97 million
Russell 1000 Financial Services Index
$608.19 million
3.72 million
NASDAQ 100 Index
$311.91 million
2.32 million
S&P 500 Index
$255.05 million
1.55 million
Energy Select Sector Index
$693.30 million
1.55 million
Russell 2000 Index
$980.26 million
1.48 million
Silver Bullion
$215.82 million
Dow Jones Industrial Average Index
$19.81 million
Barclays Capital U.S. 7-10 Year Treasury Index
For investors seeking for a leveraged play on the broad market via large cap basket we have highlighted four products. The ProShares Ultra S&P500 ETF , ProShares Ultra QQQ ETF , ProShares UltraPro S&P500 ETF and ProShares Ultra Dow30 ETF are some of the large cap leveraged ETF which are most liquid.
As is evident from the table above, SSO and UPRO both track the S&P 500 Index. The former seeks investment results that correspond to twice the daily returns of the index whereas the latter seeks to provide 3x the returns of the S&P 500.
Despite having different investment objectives, both of these ETFs charge the same expense ratio of 95 basis points. Both these ETFs use swap contracts to achieve the leverage that they strive for.
It is also very important to note that both of these ETFs are rebalanced at the end of day, therefore generally on intraday basis the ETF returns will not be equal to stated objective of 2x or 3x the index returns (see more in the Zacks ETF Center).
Thankfully, the ETFs provide the cushion of high traded volume and a substantial amount of popularity. SSO has an asset base of $1.57 billion coupled with an average daily volume of 7.07 million shares. On the other hand, UPRO has attracted $311.91 million in its asset base with an average daily volume of 2.32 million shares.
The ProShares Ultra Dow30 ETF (DDM) is the appropriate choice for investors seeking for a leveraged play on the Dow Jones Industrial Average Index. The Dow is by far one of the oldest stock indexes in the world. Its components are price weighted and it consists of only 30 large cap stocks (read Inside the Dow Jones Industrial Average ETF (DIA)).
The ETF has been able to amass $214.96 million in its asset base since its inception back in June of 2006. DDM is rebalanced on a daily basis and provides exposure of 2x the daily returns of the Dow Jones Industrial Average Index. It uses a variety of Index swaps to achieve its stated leverage.
The ETF has an average daily volume of about 518,000 shares and charges 95 basis points in fees and expenses.
Launched in June of 2006, the ProShares Ultra QQQ ETF (QLD) seeks to provide 2x the daily returns of the Nasdaq100 Index. The NASDAQ 100 index includes the largest non financial companies from the U.S. as well as abroad.
The ETF has a fairly large asset base of $608.19 million and charges 0.95% as expense ratio. The ETF enters into swap contracts with different financial institutions to provide the leveraged exposure. QLD also has a very high average daily volume of around 3.72 million shares (see The Apple Effect and Nasdaq ETFs).
Having discussed some of the large cap leveraged ETFs, let’s now focus on a couple of small cap ones.
The Direxion Daily Small Cap Bull 3X Shares (TNA) and ProShares Ultra Russell2000 (UWM) are two ETFs which provide leveraged play on the Russell 2000 index.
The Index measures the performance of the small cap segment of the U.S. equity markets and is a subset of the Russell 3000 index. The benchmark is composed of 2000 stocks which make up roughly 10% of the total market capitalization of the Russell 3000 index.
TNA provides 3x leveraged exposure whereas UWM provides twice the daily returns of the Russell 2000 index. With an average daily volume within striking distance of 11 million shares, TNA is by far the most heavily traded leveraged ETF available in the market. The ETF also exhibits popularity as indicated by its asset base of $618.41 million (see Three Small Cap ETFs with Impressive Yields).
On the other hand, UWM also enjoys a high average daily volume of more than a million shares and has been able to amass around $694 million since its inception in January of 2007.
Also, both of these ETFs utilize index swaps to provide the stated leverage. TNA charges an expense ratio of 95 basis points; however, UWM is slightly more expensive than TNA charging 0.98%.
The financial sector has been one of the top performing sectors this year. It has been pretty much leading the market rally so far this year after a disastrous performance last fiscal year.
The Direxion Daily Financial Bull 3X Shares (FAS) is an ETF that provides a leveraged play on the financial sector. It seeks investment returns that correspond to 3x the daily returns of the Russell 1000 Financial Services Index.
The index includes stocks of financial services companies from the entire spectrum of market capitalization (read Inside The Top Zacks Ranked Financial ETF). With an asset base of $1.13 billion, FAS is one of the most popular leveraged financial equity ETFs. It charges investors 0.95% as expenses, and on an average does about 5.97 million shares daily.
The Direxion Daily Energy Bull 3X Shares (ERX) provides a leveraged exposure on the energy sector. It strives for 3x the daily returns of the Energy Select Sector Index, which measures the performance of companies from the oil and gas, consumable fuels, oil and gas equipments and services etc.
ERX aims for the leverage by entering into index swap contracts with different financial institutions. It charges an expense ratio of 95 basis points and does about 1.55 million shares daily in volume. It has an asset base of $255.05 million (read Uncertain about the Economy? Try Market Neutral ETFs).
The ProShares Ultra Silver ETF (AGQ) seeks 2x the daily returns of silver bullions which are U.S Dollar denominated for London delivery. This means that along with the volatility in the individual commodity price, the ETF will also be subject to currency exchange rate between the U.S Dollars and the Pound Sterling.
Obviously being a leveraged ETF the fund takes long positions derivative instrument like silver futures and enters into silver forward contracts with different financial institutions to gain leverage on the underlying asset class (i.e. silver bullion).
The ETF is also rebalanced daily and charges investors 95 basis points in fees and expenses. AGQ has a fairly large asset base of $980.26 million and an average daily volume of about 1.48 million shares.
ProShares Ultra 7-10 Year Treasury (UST) is a daily rebalanced leveraged long ETF which is designed to generate 2x the daily returns of the Barclays Capital U.S. 7-10 Year Treasury Index. The index measures the performance of intermediate term Treasury bonds which have a residual maturity ranging from 7 to 10 years.
Most fixed income ETFs, especially long dated Treasury bonds, have seen tremendous rally in the recent past mainly thanks to the risk aversion of investors fuelled by the Eurozone debt crisis and concerns over global economic slowdown. The Federal Reserve’s ultra low interest rate policy is also responsible for attracting investor appetite towards these instruments.
However, from the third quarter onwards, investors have started to show interest in the ETFs from riskier asset classes and high yield bond ETFs for higher current income thereby reducing the demand for the lower yielding Treasury bonds.
This has caused massive asset outflows from the Treasury Bond ETFs and negatively impacted the intermediate and longer dated Treasury Bond ETFs within this time frame (read Long Term Treasury ETFs: Ultimate QE3 Play?).
Nevertheless, this seems to be a short term phenomenon as it is quite evident from the Fed’s actions (such as Operation Twist) that the low interest rate scenario, especially in the Treasury bond front, is most likely to remain for quite some time.
Investors could go for a magnified exposure to the 7 – 10 year Treasury bond segment should consider UST for short term trades. The product has around $20 million in its asset base and on an average does a good daily volume of around 476,000 shares. It charges an expense ratio of 95 basis points.

Tuesday, August 19, 2014

2014 Aug YTD

YTD Performance up 15%, cash 7%

Sold off WynnMac as its PE was abit stretched... should have realised it much earlier.... and abit apprehensive of China property market/economy as a whole.

Sold off Gazprom.... again due to US market emotion ....have to control.

Sold of Vicom...high PE recycle into CES

Valuetronics took up top spot due to its low PE (7+), high dividend yield (6%) (investor friendly), cash and no debt, good business (LED segment mass production which should continue to grow albeit lower margins due to price sweet spots and government push)

MTQ slided 20% since its top due to its poor results. Continue to hold as the sub-sea segments is delayed. And as last year, the sub-sea is contract based usually for 2 quarters. Is important to have good competent management , and also management which look after minority shareholders.

Continue to hold Great Eastern. Will be a beneficiary of OCBC purchase of Wing Hang w/o taking a hit on its B/S (OCBC)...great company.

CES & LKH ...obviously undervalued

Zagro...Hold...bad 1st half at NAV...and MS bought at around current price.

Spindex , Cheung Who and Spindex.... low PE... and manufacturing is recovering.

1 Valuetronics
3 Great Eastern
4 ChipEngSeng
8 Spindex
9 Cheung Who
10 Fischer
11 Boustead

Reflections on Investment last 10 years

Some reflections of  my last 11-12 years investments performance. 
IRR respectable 24% but could be much much better.

FY06 was extremely good which probably won't be repeated as the portfolio was heavily stacked on 1 stock.
FY09 / FY10 /FY11 /FY12 was when I was extremely busy for various reasons and no time to evaluate investment positions.

Of cos I started my investment journey way back in 2001 when I was starting a dot-com (which failed) and dabbled in US shares, options, shorting which was completely disastrous. It was only after several reading up of investments books, understanding business fundamentals, industry fundamentals, investment fundamentals and spending time reading/evaluating business/investments/  did I adopt a more rigid and discipline approach to investing. It was also in 2003 that my Dad gave me a lump sum of money to start investing.

Going forward with the size of my portfolio, it will be much harder to repeat such performances. Many penny stocks in Singapore do not suit me as especially this year where my investment was wrong, I could barely exit my position without taking a v big hit (Food empire).

Looking back at each year's end portfolio, if I were to maintain those positions, it would have severely underperformed my current portfolio. My portfolio is quite actively managed (good & bad) . The good is I can switch to better performing business , but the bad means sometimes (emotions take charge) and I lose very very good positions (eg. Visa , APB , CerebosP, NDAQ).

To continue double digit performances,
1) I need to spend more time reading on businesses / investments / research etc which I feel right now I still have not done enough.
2) Businesses which are excellent, I have to have enough conviction and patience to continue to hold through a bad trough.
3) Businesses which I have bought stocks on the US market, several times I have been emotional affected due to the late nights (inadequate sleep - VISA, Gazprom) etc. Therefore I have to maintain a greater disregard to the stock market movement (not the business)

I am again facing a cross roads with my career. My colleagues (who are not as capable and have not proven themselves) are moving up while my position have been stagnant. End of the year, the company is restructuring again. I am contemplating whether I should move on......

The good thing about this company is that it has more flexible hours, near my place and when it is off peak, I have sometime to do my analysis. However I cannot stand incompetent people (younger than me also) moving further up higher than me.....

I do not blog regularly currently as with 2 young kids (have to spend time to teach and educate them - the primary school education system is not easy), a full-time job and time to do my investments research.


FY03 1.37  
FY04 0.88  
FY05 1.67  
FY06 2.55  
FY07 1.36  
FY08 0.94  
FY09 1.09 Co Restruct
FY10 1.42 Dad's Condition
FY11 0.79 3 jobs - Dad's company etc
FY12 1.16 Co Restruct
FY13 1.32  
FY14 1.16  
Avg IRR 25.7%  

Monday, April 21, 2014

Being Rich the easy way

Many of us like things to be easy. How about being rich the easy way? Can it be easy? Your parents most probably told you that there's a price to pay to be rich. You need to work hard, sacrifice and have lots of stress to earn a lot of money. That's a lot of hard work. If you want to climb up the corporate ladder, most likely your workload will increase as your pay increases. The amount of responsibility and stress increases as well. But do you know there is a hard way of being rich and there is also an easy way to being rich? Here i'm talking about being rich and not getting rich. You can be rich but not have time or you can be rich but have all the time in the world. The easier way is of course the latter.


The harder way of being rich

In my company, the senior management is always busy. They have meetings scheduled back to back, phone calls to answer consistently, emails to reply even at midnight and a lot to answer for if things doesn't work out well. Sometimes me and my colleagues wondered if its worth it to work so hard just to earn that amount of money? They have the money but do not seem to have the time to enjoy it. This is the hard way of being rich.

The easier way of being rich

What if I tell you there's an easy way to become rich? Now, before i go on further, I have to say I'm in no way implying that getting rich is easy. However, we can make the process get easier and easier towards the end. The key is in making your money work for you. Once money is successfully working for you, your life gets easier and you do not even have to worry about getting retrenched or about not having enough money.

Work for money or money work for you?

Here's the difference between someone working for money and another person letting money to work for him:

A person who works for money can only work to a certain age. The older he gets, the higher chance he would get retrenched. If this person gets retrenched, he has no income and may find it hard to find another job. At retirement age, his income goes to zero and he will have to rely on his savings to survive.

A person who lets money work for him does not worry about losing his job. When he reaches retirement age, he still has income even though he's not working and does not even need to use his savings to survive. This person can retire as long as he wants. On the other hand, the person who works for money can only retire up to the day his savings is depleted. Once that happens, he may have to go out to work again.

This does not mean that we do not have to work for money at all. Yes, in our younger days, we'll have to work for money. But, learn to use the money you work for and slowly let it work for you. Passive income is the money generated when money works for you.
4 ways how money can work for you

By now, you should be wondering how money can work for you. How do you create passive income? Imagine money still coming in when you're travelling overseas or even when you're sleeping? This may be a bit exaggerated but that is the gist of what passive income is all about: Money working for you.

Here are 4 simple ways how money can work for you:

1) Invest in properties
The easiest to understand way to generate passive income is by buying a property and renting it out. The rent you collect every month ensures a constant flow of income for you. The tough part is saving up your money for the first property. It does require a substantial amount of capital.

2) Invest in Stocks
By far this the most common way anyone can generate passive income for themselves. Passive income comes in the form of dividends from stocks. You can start with little money but to build up a strong portfolio, you still need a strategy plus more capital. This investment may seem easy at first but it actually requires knowledge and experience to do well in it. Lifelong learning and patience is the key.

3) Start an Online website or business
The internet is the new age of technology for at least the past 10 years. Many people have created websites which generates income in thousands of dollars monthly. Income can be generated through affiliates program, pay per click advertisement, direct advertisers etc. If you're able to attract traffic to your site, money will surely flow in and advertisers will look you up.

4) Using your talents to create your own intellectual properties
If you have the talent and passion for music, you can consider producing your own music albums. I had a friend who did just that. Or if you have a passion for writing, you can consider writing and publishing a book. I've seen many other bloggers who published their own book. I think its quite an achievement to write a book numbering 200 plus pages. I heard it takes years just to write a good book so its not easy at all but it'll be well worth it once its completed.

There you go. 4 simple ways on how you can create passive income. Well, it doesn't look that simple now but if you work at this direction, then you'll surely be able to generate that passive income which you desire. Most people choose to strive and work hard in their careers but don't know that earned income may be a risk in itself. You may lose your career in just a matter of days especially in our challenging and competitive world now. Don't get me wrong. You still need your career now and yes, do work hard at it. But along the way, learn to use the money you earn and save, to let it work for you. The knowledge of generating passive income will stay with you for the rest of your life. The passive income, generated successfully after years of hard work, will pay off eventually