Networth Update for Feb 2010

Networth as of Feb 2010 is estimated around $652,000. A slight drop from Jan 2010.

The decline in networth was due to a slight drop in my entire investment portfolio as a result of the market correction.

Also worrying is my negative cash flow at the moment as the net income that the entire family is drawing in is less than our expenditures. It is likely to stay that way for sometime unless a job comes along soon.

Prudential to takeover AIA. What will happen to AIA policyholders?

I just read the news that Prudential will takeover AIA for US$35 million dollars. And I have a policy with AIA!!

Given this scenario, what will happen to AIA policyholders?

Will AIA still exist as a company or will all existing policies be taken over by Prudential?

I would like to think that AIA will soon stop existing as a company and that Prudential will just take over all existing policies in due time. This will be the most efficient way to run the business if I were the CEO.

Sometime back, Manulife bought over John Hancock and all policies were taken over by Manulife. John Hancock (JH) simply ceased to exist as an entity in a certain sense as you do not see any new JH policies or any JH agents around here in Singapore.

What do you think?

Price is What You Pay, Value is What you Get

As the common saying goes: "Price is what you pay, value is what you get."

This saying is supported by people who support fundamental analysis. These are the faithful followers of legendary investors like Buffet, Fisher, Graham and the like.

Not too long ago, I wrote a short post on the 7 Investment Sins many investors make. Today, I am expanding on one of these "sins" which is basically people ignoring a stock's valuation when they purchase it at a certain price.

But before we can even go there, there is a difference we need to make between the PRICE of a stock and the VALUE of a stock.

In fact, Warren Buffet notes that there is really no distinction between value investing and growth investing as both are so integrally linked that any true investing must be based on an assessment of what the relationship is between price and value. Wise words indeed. Buffet goes on to suggest that any investing strategy which does not employ a comparison between price and value is tentamount to speculation.

So What is Price?

The price of a stock fluctuates from day to day. It's price can easily be determined either by turning to the Bloomberg channel or by checking up with your local stock broker. The price of a stock is what Mr Market offers you on a particular time and day. It changes from time to time and seems to be irrational at times.

Benjamin Graham's Mr Market is used to describe the price fluctuations that take place in the market. He appears daily and names a price where he would either buy or sell you a certain stake in a certain business.

Mr Market being moody and prone to maniac swings from joy to despair offers prices that are sometimes higher, sometimes lower than the value of businesses that are being traded on the stock exchange.

To put it simply, the price of a stock DOES NOT EQUAL to the value of a stock.

What is Value?

Valuing a stock is based on certain principles. Many people use price multiples. This include the simple price to earnings, price to sales and price to book ratios. These ratios however are based on price and basically compares what investors are paying for one stock to another stock. It does not really tell you anything about the value of a stock.

Morningstar believes that stocks should be purchased because they are trading at some discount to their intrinsic value. The value of a stock is calculated based on the present value of its future cash flows. To calculate an intrinsic value, the following steps are used:

1. Estimate cash flows for the next year
2. Forecast a growth rate
3. Estimate a discount rate
4. Estimate a long-run growth rate
5. Add the discounted cash flows to the perpetuity value.

After this is done, one goes on to calculate the Margin of Safety. This margin of safety is basically the discount price of the stock compared to your calculated valuation. It has been suggested that an average of 30 percent to 40 percent margin of safety should be present before the fundamental analyst purchases a certain stock.

The question is this: "Do people even bother to calculate intrinsic value and the margin of safety they have before they purchase a stock?" Do you?

Thoughts on Singaporeans Migrating

(Image by kwerfeldein)

A few days back, I wrote some thoughts about the Grass being Greener on the Other Side. In it, I touched upon some reasons why people often have ideas or thoughts that the grass is greener on the other side.

Today, I was interested to find out how many Singaporeans actually felt that the grass is greener on the other side and it made me realise that this could be quite a prevalent thought amongst Singaporeans. The reason for this is the number of people migrating or leaving Singapore's shores for "greener pastures" elsewhere.

I saw this old thread over at Stomp and am summarizing it here for your benefit. If you are interested in looking at the thread, you can view it here.

1. Over 10 years, 97,990 Singaporeans left the shores of Singapore and applied for permanent residency elsewhere. This figures do not include children but include students going overseas for studies and businessmen.

2. In a survey, two-thirds of participants said that they have considered retiring in other countries due to the slower pace of life and lower cost of living.

3. Australia and New Zealand feature high on the Singaporean's migration destination list.

Anway, it seems astounding that while foreigners are flocking to Singapore, Singaporeans themselves are trying to get out! Of course, the survey results could be pretty skewed and perhaps some of the Singaporeans do intend to come back after sometime. I guess it is also good in terms of Singapore's globalisation efforts.

But nevertheless, being such a small country, every single person counts. Wouldn't it be good if we managed to stop the outflow of Singaporeans to other countries? What are some of the things that need to be changed in Singapore to help it retain its people?

Suggestions to Stop Singaporeans from Migrating
First of all, I must qualify that I am not a policy maker and these are just some suggestions that I have gathered from viewing various forums. The ideas expressed are not mine.

1. Slow down the pace of life.
2. Reduce the cost of living for Singaporeans
3. Make Singapore more EXCITING
4. More free speech
5. Focus less on foreign talent
6. Improve the education system

I must still say that I do not understand why people want to leave when the tax rates here are so much more favorable compared to other countries. Yes, of course with the same amount of money you can buy a bigger car and bigger house overseas...so that perhaps tilts the equation back..

Dividends and Passive Income for Feb 2010

(Image by kwerfeldein)

While it is not the end of February yet, I think it is possible for me to record down all my dividends and passive income for the month.

Dividends (from Ascott REIT and Suntec REIT) = $455.58
Trading Income = $39.31
Interest from Savings Account = $7.35

Total dividends and passive income for Feb 2010 = $502.24

I also expect to increase my earned income as I have started taking on some tutoring assignments. This is not so much for the money but more for the experience of teaching students in a one-to-one context and basically because I like to teach. I have enjoyed it thus far.

On the job front, I am still on the look out for jobs that might interest me. Still waiting for the replies from several job applications and hopefully I get a reply by March 2010.

The Grass is Greener on the Other Side

The grass always seems greener on the other side. Doesn't it feel so?

Where you are right now in life, you always feel that someone out there probably has a better life than you.

That's perhaps the reason why people change jobs, migrate, get divorced, have children, move houses and more.

The greener grass syndrome can perhaps be accounted for because of the following:

1. We fail to see how green the grass is on our side.

2. There is perhaps more shit on the other side, and that is why it looks greener.


Failure to be Contented

We fail to be contented as human beings. We always want more and more. God gave Adam and Eve all the trees to eat from in the Garden of Eden. Yet, they chose to eat from the one tree out of ALL the tress that they were commanded not to eat from. The rest is history.

As a man, the failure to be contented can be due to many factors like peer pressure, ambition, wanting to look GOOD infront of others, and many more. Society places a lot of pressure on us and if parents or parent-in-laws are not understanding, they might place this pressure on you to "succeed" in life by getting a bigger house, nicer car and perhaps a better paying job.

Driven by these pressures, we fail to be contented with the little that we have and start to strive and focus our attention on the things that we do not have.

This is one of the reasons why the grass is always greener on the other side.

There is simply more fertiliser...

The reason why someone else has a higher paying job is perhaps because the job has a lot more stress, pressures and work that comes with it. This in turn results in companies willing to pay good money for people to fulfill the role.

So even though the grass is indeed greener, it simply comes along with a lot more fertiliser or should I say crudely, shit.

And with this greener grass comes the added responsibilities, the need to have your handphone on 24/7, the mindless churning of papers and reports, responding to emails during the weekends or simply working OT. There are sacrifices to be made and we all must be aware of it.

The Lesson

I guess the lesson is simple. We must learn to be content with what we have yet continue to strive to become better human beings. Knowing that with a bigger house probably comes greater stress and responsibility should make us think twice before jumping at the next job offer or migrating to far away countries just to chase after some idealism.

Singapore Holland Village

There are some places that will almost remain special to each one of us. For me, Holland Village is one of those places.

Apart from having lots of watering holes and eateries, Holland Village has a certain laid back feel to it. Perhaps it is the number of expats who can be sighted there.

The thing about this place is that it always gets me thinking. Whenever I observe the sights and sounds there, I become slightly more contemplative about life and become more acutely aware about the enjoyment of life. The place reminds me that I have to enjoy life while it lasts.

Rich people also seem to like to frequent this place so there must be a certain charm and attraction to it which they are clearly drawn by.

My Favorite Haunts & What to Eat

I like Provence, Yakun and Crystal Jade that can be found there. When I was dating, we used to go to Coffee Bean that was located at one secluded corner. Every now and then, we also visit the laksa stall that can be found just opposite Provence. The Sushi Tei outlet has now moved and can be located at the cross junction just opposite Crystal Jade.

Provence - the bread of course.
Crystal Jade - dim sum or porridge
Yakun - Kaya toast, french toast and a cup of coffee
Breadtalk - the bread here is good too. Their breakfast set is made fresh on the spot!

Where to Walk

Go to Cold Storage or browse through magazines at Thambi's Magazine Corner which sells all kinds of magazine. At the building which houses Cold Storage, there are lots of shops that sells really cool antiques and furniture. One can walk amongst it and be amazed at the wide range of household accessories there are. The only problem is that the escalator leads up and you will have to take the stairs back to the ground level.

Where to Park

I used to park at the HDB multi-storey carpark and walk across to Holland Village. This is recommended especially during weekends and peak periods (dinner). Otherwise, the carparking at Holland Village itself should suffice.

Holland Village = Starbucks Inspiration

The reason why I am writing so much about Holland Village is because many of the inspirations for my posts in this blog comes when I am there eating my breakfast or just walking around.

It is the same kind of inspiration that I get when I visit Starbucks and smell the aroma of coffee and the buzz of the coffee machines.

This place always remains on my list of favorite haunts. I however do not like to visit it during the weekends. Weekday breakfasts are the best times for me especially when there are no crowds and the carparking is readily available.

What is the one place in Singapore that gives you the most inspiration whenever you get a writer's block?