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Sabana REIT: Recent developments.

Friday, August 12, 2011


The REIT has proposed the acquisition of 39 Ubi Road 1. The property has a remaining tenure of about 40.4 years and is valued at $32m. The vendor, Ascend Group Pte. Ltd., will take a master lease of the entire premises for a term of 5 years. Extension works is ongoing and will add approximately 41% to the building's existing gross area. The acquisition will be funded by debt and will increase gearing level from 25.1% to 27.7% upon completion. My thoughts? With what information is available at this point in time, I like it as it would probably bump up DPU marginally for unitholders without asking us for more funds while gearing level remains very comfortable.  See announcement here.

Al Salam Bank Bahrain BSC increased its investment in the REIT by 1,909 lots at a price of 94c per unit on 2 August 2011. It now holds a 5.14% stake in the REIT. See announcement here.


The REIT received a 'BBB-' long term corporate credit rating from Standard & Poor's Rating Services. This reflects "Sabana REIT’s moderate leverage with good access to diversified funding channels and stable cash flows. The ratings also take into account the quality of Sabana REIT’s industrial property assets in Singapore and minimal capital expenditure needs. The stable outlook was based on the REIT’s balanced business risk profile as well as its adequate cash flow protection measures" and "is a significant first step that will allow Sabana REIT to access investment grade Shari’ah compliant debt and capital markets." See announcement here.

Rules for investing in difficult times.

Thursday, August 11, 2011

There isn't very much that I want to say tonight because I have probably said all that I want to say in my recent blog posts. 

I just did some reading which is something I do every evening and came across an article by Aaron Task who is someone I enjoy watching on Tech Ticker.





Aaron shared 4 time honoured rules:

1. If you can't take the heat, get out!  

This is something I did not talk about but I have said time and again that investors should just do what they feel comfortable with. 

Anything we are not comfortable with, avoid. 

Aaron is quite specific in who are the people who should get out.






2. Don't panic! 

This one sounds very familiar. 

Aaron says that many investors simply cannot take the pain and are cutting and running. 

Historically speaking, many investors sell out of stocks at important market bottoms. 

This is a reason why I refuse to sell when prices are forming new lows and would only sell if they rebound to test resistance. 

Aaron is quite specific in who are the people who should not panic and should stay the course.






The 8 immortals each had his or her own way of crossing the sea.

3. Have a plan! 

Sounds familiar again. 

Aaron says it differently from me but the essence of the message is the same. 

We must understand our motivations for investing in the stocks we are invested in. 

The tools we employ and the attitude we have must be appropriate to our motivations. 

That way, we will stand a good chance of doing better with a consistent strategy and this is so both financially and emotionally!






4. Learn from your mistakes! 

Do we need to say more about this? 

Life is about learning and more learning. 

Regular readers would know that I am still learning and would have read my story. 





New readers might be interested in reading this: 

Excuse me, are you an investor?

Aaron ends his article by asking us to ask ourselves three questions, go read his article and see how you would answer these three questions. 

Could be revealing. 

Enjoy "4 rules for the see-saw market".




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Why do I not panic? Added Sabana REIT.

Wednesday, August 10, 2011

In my last blog post and probably a couple more before that, I mentioned that we should stay calm and rational, have a plan and act upon it. This is my personal mantra and it has not changed.


Some wonder how I could act so confidently and decisively. Here are some reasons:

1. I am not investing using borrowed funds or funds which I need in the near future for other purposes.

2. Of my total investible cash, only 50% or so has been deployed in the stock market. In the last few sessions, it could have bumped up by a few % points.

3. I am informed by FA on a counter's value and by TA on a counter's price. I buy when I see value and when prices are at supports.

4. 80% or more of my investments in equities are for passive income and I sleep well with the knowledge that I will have regular cashflow from my investments.

5. I know I will divest partially if prices should rebound to test resistance levels. Yes, I am not one to fall in love with my investments.

This list is probably not exhaustive but they are five reasons off the top of my head.


Today, the only counter that hit my target buy prices is Sabana REIT at 88c and 87c. At these unit prices, we are looking at distribution yields of slightly more than 10% per annum. My overnight buy orders at these prices were filled.


Some ask me if I will be buying more units of Sabana REIT if its unit price were to weaken. Looking at the chart and using three sets of Fibo lines, I have identified stronger supports at 83c and 80.5c. If the immediate support at 86.5c should break, those are the prices where I will be adding to my long position.

Related posts:
Seven steps to creating passive income from the stock market.
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STI drops 2.2% to 2,821.09 at closing
Wednesday, 10 August 2011

Bloodbath continues and AK71 went shopping!

Monday, August 8, 2011

Another day of heavy selling. Lots of panic! Pandemonium even! What should we do? Stay calm and be rational. Have a plan and execute it. I took my own advice and did exactly that.

I am currently about 50% invested in the stock market. Of this 50%, about 80% is invested for income and much of this is from S-REITs. Currently, my five largest investments in S-REITs are:

1. AIMS AMP Capital Industrial REIT
2. Sabana REIT
3. First REIT
4. LMIR
5. Cache Logistics Trust

In my last blog post on AIMS AMP Capital Industrial REIT, I suggested that 20c would be a very strong support and that I expected many to want to buy at 20c. So, why not queue 1 bid higher at 20.5c too?

Today, my buy order at 20.5c was filled while the buy order at 20c was almost half filled. However, as my buy order at 20c was some 10 times bigger than the buy order at 20.5c (which was more of a hedge), I am quite happy that almost half of it was filled.


Regular readers would remember that I partially divested AIMS AMP Capital REIT at 21.5c/unit to get more Sabana REIT at 92c/unit some time back. So, buying at 20c today was a sweet moment for me. Having only bought back some 25% of what was sold at 21.5c/unit, I am fully prepared to buy more if price were to retest the REIT's historical low of 19c/unit.


Last Friday, I loaded up on Sabana REIT at 92c. Today, I loaded up again at 91c and 90c which were the two support levels identified in my last blog post on the REIT. 90c is the historical low and more than half of the total units that changed hands today happened at 90c.


There is some support, no doubt, but if support at 90c were to be compromised, we could see unit price hitting 88c or 87c if the Fibo lines are anything to go by. At 88c and 87c, we would be looking at a distribution yield in excess of 10% per annum and I would not be able to resist buying more.


Finally, I loaded more units of First REIT. If you refer to my last blog post on the REIT, you would see that I drew 3 horizontal lines at 77c, 76c and 74.5c. These were the supports I identified. The buy orders I put in at all three levels were filled today.


A these prices, we are looking at a distribution yield of about 8.5% on average. With more acquisitions in the pipeline, distribution yield could increase and the very low gearing the REIT currently has means a lower chance of equity fund raising.

Could we see price going lower to test 72.5c or 71.5c? We could. Then, I would buy again.


CapitaMalls Asia: Did I panic and sell?

CapitaMalls Asia did not start the day higher than the closing price of the last session. So, the bullish reversal signal formed in the last session failed to deliver and price touched a lower low of $1.21.

So, did I panic and sell? No, I only sell when prices test resistance, not when they are going lower. Downtrends are rivers of hope.


The MACD still looks like it could form a positive divergence although it would look less probable with each successive down day. Trading volume is lower today as price moved lower, suggesting that there is some fatigue on the part of sellers.

Indeed, a cross between a white hammer and a white spinning top was formed at the end of the session. Another reversal signal. We could see a rebound in the next session and a gap close at $1.325 could happen. If that were to happen, I would reduce exposure to this counter.

Waiting to increase exposure to AIMS AMP Capital Industrial REIT and First REIT.

Sunday, August 7, 2011

Continuing from my last blog post, which I said we should get ready and be greedy, I am interested in accumulating more units of AIMS AMP Capital Industrial REIT and First REIT as well if prices should weaken in the next few sessions.

AIMS AMP Capital Industrial REIT, as mentioned in my last blog post, has the honour of closing with its unit price unchanged in a sea of red in the last session.

I suppose Mr. Market recognises the REIT's stronger numbers and astute management. However, Mr. Market is also known to be whimsical. If there should be a sell down, I am ready to buy more. Buy? At what price?

Since April, price moved higher as the MACD formed lower highs. A negative divergence. So, buying recently at 22c or 22.5c would have been unrewarding. In fact, selling some would have been a good idea. A correction is to be expected.

Where is a strong support? I see 20c as a very strong support. Apart from being a nice round number, it is also where we find the 138.2% and 150% Fibo lines approximating, both golden ratios.


Fundamentally, 20c would be a very nice price to add to my long position as well. That would give a distribution yield in excess of 10% per annum and it would be purchasing at a 30% discount to NAV.

Regular readers would remember that I divested some of my investment in the REIT recently as I balanced its weighting in my portfolio with that of Sabana REIT. With its stronger numbers which includes a higher DPU and plans to redevelop 20 Gul Way, accumulating on weakness is what I will be doing.

However, many are also queueing to buy at 20c. So, one bid higher? 20.5c? Why not?


As for First REIT, its very low gearing and defensive quality of its assets are very attractive. The management also has a very good track record to boot. Closing at 79c, it is now offering a distribution yield of more than 8% per annum once more.


The uptrend on the MACD has been broken in the last session. Could price go lower? It could and if it does, I expect strong support at 77c next. That is a natural support level as it was the top of an interim basing process. It is also where the rising 100dMA will be approximating soon. Buy more at 77c? Probably.

Related posts:
AIMS AMP Capital Industrial REIT: Higher DPU and 20 Gul Way.
First REIT: 2Q 2011 results.


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