Tuesday, January 5, 2010

I Need Advice

I need some advice from all the masters and gurus out there.

The first is regarding a potential US dollar crisis. How do you buffer yourself against such a crisis? Or how can you potentially profit from it if you do know that the US dollar is going into decline in the next few years?

The second is regarding my own stock portfolio:
My wife and I have cash of close to $100,000.

I have the following stocks amounting to $85,000 ++
1. Ascott REIT
2. First REIT
3. Suntec REIT
4. NOL
5. Kingboard
6. Pac Andes
7. Innotek
8. Unifood
9. China Aviation Oil
10. Citigroup

Other than my REITs, all the rest are still in the RED. I don't wish to sell them at a loss.

But Gohsip (a fellow blogger) suggested that my focus should be on building my capital (going for capital growth) instead of increasing my so-called "passive income" through dividend yielding assets like REITs.

Can anyone give any suggestions on what I should do especially with the stock market soaring currently?

Should I liquidate all my positions and start afresh with some good stock picks for 2010?

Or should I liquidate some of my positions and then get into new positions?

I know many of you are unwilling to share in detail because you might think that I would blame you or stuff if I lose money. Don't worry..I won't =)

I just need to hear from you: What would you do if you were me? Which stocks would you sell? Which stocks would you keep? And Which stocks would you buy?

17 comments:

  1. Not sure will you like what you read ..

    http://createwealth8888.blogspot.com/search/label/Education%20-%20Trading%20-%20Portfolio%20Management

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  2. Sell those with poor fundamentals, poor financials and poor prospects. Don't see it as "taking a loss". Look at it as "re-allocating capital". Better to do this than be stuck with "deadweight". Review the business and not the share price.

    As for what to buy, I reserve comment on that as I am also searching myself. Haha.

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  3. For me, my preference is to focus on capital gains rather than dividends from REITs.

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  4. Claim your $4,276 Internet Income System for Just $1 from world's #1 Internet Wealth Advocate,. Stephen Pierce! http://tinyurl.com/yga4bvj

    ReplyDelete
  5. I think what gohsip meant is that you should focus on building a starting capital in order to get a sizeable amount of dividends. With 100k at 5% yield, it's only 400+ per month in dividend income. Account size matters a lot.

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  6. Your Personal Investment Goals

    What do you want from the Stock Market?

    1)Preserve your Wealth and fight against Inflation

    2) Build up your Wealth for future Retirement fund

    3) Generate monthly income

    1. Preserve your wealth and fight against Inflation

    Stay invested in those blue chips that are known to give at least 5% dividend yield and re-invest your all dividends back into the Market. You are most likely to achieve this goal as Stock Market by nature is upward bias over long run.

    2. Build up Wealth for future Retirement fund

    You have much bigger challenges ahead, not only you have to keep far ahead of inflation, preserve capital, and protect profits. You need to apply the principle of compounding to grow at the fastest rate. Your timing of market transactions in the possible shortest time that count.

    A lots of hard works and guts waiting ahead for you. Do you have the discipline and energy to fight the Bears and ride Bulls, and still be able to stay focused in achieving your goal. You are the Market Warrior.

    3. Generate Income.

    You are a professional trader. You know your stuff. Congratulations!

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  7. Hi FF,

    Correction there, I don't blog. I only read & comment on blogs. So I don't think I can be categorized as a blogger.

    Anyway, I can't comment on your holdings as I don't have any of them (with the exception of NOL)

    My strategy now is to save as much as I can for the next bear.

    In a bull run, nobody cares how high the P/E is. Nobody cares how high the debt ratio is. They will just play up the stock till the next bear awakes. Fyi, I like Midas & Ausgroup. Vested.

    Cheers

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  8. Hi FF,

    I think similar to musicwhiz, look at the fundamentals of the above companies. Start by looking at the consistency of Free cash flow. Just get rid of those without good fundamentals.

    Personally,i dont hold any of your stocks, i think ascott reit, suntec reit, u probably can hold on to for their dividends. i dont really go for REITS by the way.

    Cutting loss is painful ( i know), but think of it, it frees up money for better plays.

    Anyway, i got this feeling the market will correct soon, just too bullish..arrgh!!! Just an EMOTIONAL feeling..............

    Cheers
    SGDividends

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  9. FF, u r reacting like most of my clients when we meet for the first time for investment discussions. But, think about it, you are asking the wrong questions.

    1. What is my risk appetite? Do I understand all my investment options.
    2. What is my investment objective? Capital appreciation or Current income.
    3. What is the time frame? 1, 5, 10, 20 years, retirement.
    etc..

    All the gurus can say FA, TA and give predictions. No one has the crystal ball as to what to keep, what to sell, what to buy. But what you should be assessing is yourself, your objectives and risk to determine your portfolio.

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  10. Thanks all for your advice.

    Yeah..I have been trying to refine my investment strategy and so I guess it is good to get counsel from ppl like all of you who have probably spent a lot more time in the markets.

    I am now struggling with whether I shd focus my efforts on dividends or capital growth. Every now and then, I get the feeling that I should abandon my dividend strategy and just aim for capital growth first.

    I can be considered a more FA kind of person. However, looking back at all the stocks that I have picked...I always end up disposing of them after sometime because they ended up having some flaws which I overlook when I bought them. It has become so common that I am sort of wondering whether there is a single stock in the SGX which I would just like to accumulate for the next 10 years. That is perhaps one of the reason why I hold on to so much REITs.

    Anyone care to share which stocks they will dump if they were me?

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  11. Hi FF,

    Based on what I know:

    1. Ascott REIT - Beneficiary of Asian growth and recovery. Keep.
    2. First REIT - Indonesian healthcare mostly. I like Indonesia's economy and currency. I like healthcare. I like the low gearing and high yield. Keep.
    3. Suntec REIT - Beneficiary of recovering economy, tourism (IRs) and circle line. Comfortable gearing and high yield. Keep.
    4. NOL - I don't like shipping. Overcapacity still an issue. Ships depreciate over time. Consider selling if it moves up.
    5. Kingboard - Can't advise.
    6. Pac Andes - Can't advise.
    7. Innotek - Can't advise.
    8. Unifood - I dumped years ago!
    9. China Aviation Oil - Can't advise.
    10. Citigroup - Can't advise.

    Those I don't have any knowledge of, I cannot offer any opinions. You have $100k in cash? If that is more than what you need over a income-less 6 months, consider putting some in Saizen REIT and Healthway Medical for capital gains and dividends. You can read more about these two stocks in my blog.

    I base my stockpicks on FA. I decide on when to buy or sell based on TA. Good luck, buddy. :)

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  12. Hi AK71,

    It seems like you love REITs too.

    I was thinking of disposing First REIT because it is currently trading at $0.86 and that is already close to its NAV of 90 over cents. So far, I don't think First REIT has ever traded above its NAV so I am thinking whether there might be a slight drop in price.

    Its DPU has served me well over the years though and February should be the distribution date again. So I am torn between cashing out of it now and switching to a more "stable" REIT that is not focused on Indonesia

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  13. Hi FF,

    I think First REIT is very stable. Look at the chart and you will see it is not volatile at all. It depends on what you are after. If you are after capital gains, sell. If you are after dividends, keep.

    If you visit my blog, you will see that building passive income is most important for me. So, REITs and business trusts are natural parts of my strategy.

    I also like capital gains and will go for these whenever there is a chance but it's the regular passive income that will see me through good and bad times.

    Examples of counters with reliable dividends which I'm vested in: SPH, First REIT, ST Engineering, Suntec REIT, CitySpring and HWT.

    Oh, I happen to like Indonesia. :)

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  14. If you are starting out, you need to know what you are after. Usually, the result will come if you have focus on the right process.

    The most important thing when starting out is to know your investment temperament(trader or investor) and lay out your Investment Policy. This is my initial draft investment policy if you are interested to peruse, but you could always find a lot of suggestions from books of proven gurus.

    http://thewealthjourney.blogspot.com/2009/12/writing-your-own-investment-policy.html

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  15. I agreed with goship suggestion that for people with small capital base, you should try to grow your capital base and focus on stocks that give you higher probability of capital gain instead of dividends.

    Compounding is very essential for small capital base by buying under-valued and selling over-valued, so that your profit can be re-invested into another higher probability event.

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  16. Thanks for all the inputs.

    I really need to sit down and write out an investment policy and treat the management of my funds like a professional fund manager.

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  17. Hi FF,

    It appears that you are in the phrase of searching for the right investment philosophy (i.e. FA, TA etc) and the right investment strategy (High Dividend, low PE or low P/B etc).

    I suggest that you read these two books to gain more insight and hopefully that they will shorten your search duration:

    1) Trade your way to Financial Freedom by Van Tharp
    2) The Winning Investment Habits of Warren Buffett & George Soros by Mark Tier

    If you're interested, I have one blog post that may be of use to you: http://thinknotleft.blogspot.com/2010/03/secret-to-investing-success.html

    Cheers.

    ReplyDelete

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