There is lot of fear in the stock market, crypto market, perhaps employment market too with some news of layoff and retrenchment. So it is the right time to buy stocks, or crypto if you believe in that particular token or coin. Everywhere, there are huge discount if the story remains intact. But yet, people often do the opposite, going in high and selling low to escape from further lows.
In the stock market where I am rational, I am looking to purchase more of the stocks that I owned, if the price falls below my purchase price, as long as the story remains intact, or the price of the stock trading below the NCAV price, and the dividends remains. Singaporean are yield hungry, when the dividends yield falls, most investors cash out irregardless of whether the story of the company remains intact, like banks when the Singapore government capped bank dividends at 60% of their previous declared dividends, local bank stocks price came crashing down about 20 to 30% in early 2020, only to recover back towards end 2020 and went on to new highs from then on. There were of course uncertainty due to Covid, and this analysis is on hindsight where we studied the history, and the chart of the stock. But it really shows one important thing that I have observed in my years of investing in Singapore stock market, Singaporean are very focused on dividends yields. Our REITs’ yields are well known around the world.
The stock portfolio is at
+3%, and has a good cash percentage at 30% ready to deploy, while the remaining 70% in stocks has to work extra hard due to the high cash position.
Buying and selling of stocks are quite balanced, buying are focused on stocks trading below NCAV, while selling stocks at their new highs to lock in some profits in this period of high volatility.
Some stocks that i sold:
I have held Multi-chem since 2016 where i purchased them around $0.5, it was one of the stocks which I could categorised into the Magic sixes group, named by Peter Cundill. It is one of my all time best winner, and because the story was still intact, i averaged up a few times, and it is now at its all time high close to $2.00. I have sold a big position of it, and a small amount remains in the portfolio, happy to take some profits off the table, and also continue to enjoyed it’s good dividends.
A simple NCAV case, with no dividends declared in FY 2019 when i purchased it in July 2020, maybe that is the biggest reason why its price went below NCAV level, and then dividends resumed, up to 8% yield based on my purchased price, its price went up, and I got out at the good 100% profit.
NCAV case, got in around 2016 at about 20 cents, did not managed to sell at its 2018 high of $1. Average up along the way, sold some at a loss after its price started going down, overall still a slight profit.
NCAV, Benefited from aggressive company share buyback, got in end of 2019 at around 0.09, with good dividends yield of around 5%, company started share buyback in 2022, highest price sold back to company was 0.163, while collecting good dividends.
NCAV, purchased in 2018, IT products distributor company benefited from Covid lockdown, and WFH, with good dividend yields, managed to sell most of Ban Leong stocks at very good profits, might have more upside, but happy to take profits off the table.
This year to me, is more about taking profits off the table and buying stocks at discounted price when everyone is selling.
The concept of NCAV investing, or value investing is not new, you can pick up a few books in the library and be on your way to investing, however, the investor temperament and personality determines whether it will be suitable for you or not, I believe that value investing is one of the easiest bottom up approach to understand based on my personality, yet I agreed that many are not suitable for it. It does not have that kind of adrenaline pump that few are looking for, that trading mentality, on which stock next to buy, that herd mentality that most adopts listening and waiting for others to validate your decision, value investing to me is lonely, it is boring, it is independent, you are not right or wrong because other people says so, but because your data show otherwise.
Value investing is unglamorous. Showing people my scoresheet, is more like telling people, i went to the market, and the veggies were on discount, the frozen meats are so much cheaper than the fresh ones, and they all taste similar, it is always how cheap it is, how much i save etc. It is often refer to as the cigar butt approach investing, there might be some few good puffs left, but that is it. Telling people you invest in Telsa, or you dabble in crypto would impressed more people that telling them a local penny stock company, that most have never heard of. At last year high, Telsa was trading close to 30x of their PSR, or 45x their p/b, but no one think it was high until it came down and people realised how unrealistic it had been on hindsight. People would talk about the success stories of Amazon, facebook, apple etc that they all too traded at extremely high psr and p/b at well.
Company falling into the NCAV category normally has their own issues, some major, some minor, some due to its cyclical cycle. And very few will go on to be very successful again, and so I agree that most of the times, there are only some good puffs left. 90% of companies in NCAV are pretty bad in terms of assets and profitability, a lot of S-chips in NCAV, which I avoid at all costs, because there are no accountability to local investors if things go wrong. But yet there are money to be made in that few puffs, and some company can become very successful again, it is good to hold when their stories remains intact, you would get a few multi bagger along the way.
Gone are the days where people would only invest in profitable companies, and partake in the company profits. Because not all of us can be good business owner, we put our savings into other people companies through the stock market, to let other people grow our money. Now people are more interested in the stories and their presenters.
I started eating durians last week, and prices are quite affordable as compared to off peak season. Before the durian season starts, there will be articles and news, talking about the bad weather, the demand and supply issues, and why durians will be more expensive etc, then when you look at the price of the durian in local stalls, they are still the same. This is really like investing, ignoring the bells and whistles, because no one can really predict the future. Being a value investor means I am skeptical and wary about what people tell me, i see with my own eyes, and make my own judgement, whether it is true or not, and sometimes, my eyes can be mislead too. But most of the time, by thinking first after we have seen, and pausing first before we speak, you will do better than majority out there.
To read unbiased news seems to be near impossible nowadays, as every news has their own agenda, it is more like feeding news, because over time, our defense will go down, and we will choose to accept whatever is given.
The boiling frog is an apologue describing a frog being slowly boiled alive. The premise is that if a frog is put suddenly into boiling water, it will jump out, but if the frog is put in tepid water which is then brought to a boil slowly, it will not perceive the danger and will be cooked to death. – Wikipedia
News mentioned, durians will be more expensive, durians will be more expensive, durians will be more expensive. Ok, I will be anticipating more expensive durians, thus I will increase my budget and bring more cash on hand. Subconsciously, we are influenced. If durian prices are the same, you can buy more with my increased budget, good for you, but actually you do spend more on durians without realising it and thought you got a good deal.
Too many fine example of news feeding, just to capture our attention to a particular subject, some of the methods very blunt and direct, once or twice, we will complain to the people around us, “So obvious!”, but over time we forgot about it and accept it.
I think not reading news and social media can be more beneficial in terms of value investing and a happier life.
Back to the mundane life then.