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Voices, noises and choices.

Saturday, June 30, 2012



The amount of information out there is enough to make one feel somewhat overwhelmed or even faint. I have not been reading blogs as much in the last one week and kept my reading primarily to Channel NewsAsia, The Business Times and Yahoo!Finance. Even so, it probably is enough to make heads spin.

Some proclaimed that the U.S. housing market has bottomed and is picking up! Conventional wisdom says that the U.S. housing market must pick up before we see a return to sustainable economic growth. On the same day, another article claimed that the U.S. economy is sliding back into recession!

Then, the stock markets around the world rallied because European banks can now be recapitalised directly from bailout funds. There are those who then said this is only a relief rally and it won't last. Their advice? Don't believe the rally! Sell the rally!

S&P500                       +2.49%
DAX                              +4.33%
What about the Singapore stock market? Some say that it is being re-rated upwards because stocks here are up 9.8% in H1. Some say that it is because of window dressing in the first half that has pushed the STI upwards. Huh? Which came first? The chicken or the egg?

Hey, don't believe me, go get a copy of the weekend edition of The Business Times today. (Er, in case some are wondering, no, this is not a paid advertorial by The Business Times although you could be helping me a tiny bit as I am a shareholder of SPH.)

OK, if you have not fallen off your chair or reached for a bottle of medicated oil by now, good.

So, what are we to do? Do we join the bullish camp or the bearish camp? Regular readers would have guessed my answer. I would say neither. Stay practical. Stay invested but have a war chest ready.

Staying 100% or mostly in cash is not a good idea. It is unproductive as higher than average inflation chips away the value of our cash on hand. In fact, The Business Times has an article today which says that although the Singapore labour market is tight and although people might receive increments to their salaries, they are seeing little gain due to high inflation. Like what we learned in economics, there is nominal wage increase but not much real wage increase.

Actually, businesses are finding rising costs a struggle to deal with. Restaurants have reduced the size of portions being served and have, in some cases, increased prices.

At Ichiban Boshi, my family like to order soft shell crabs because we find that $5.50 for 2 soft shell crabs (cut into halfs) is not too bad. However, when we ordered it again a month or so ago, we only found 3 halfs on the plate. We thought perhaps 1 half fell on the kitchen floor or something. Anyway, when we ordered it again on a more recent visit, there were still 3 halfs only.  Inflation had spirited away half a soft shell crab although price stayed at $5.50 a portion. Sheesh!

There are many costs of doing business and rent is a big one here. Rental rates in Singapore have been going up and up. Thus far, the only sector that has seen a decline in rent is in prime office space due to more than ample supply. There were signs very early on which is why I have been underweighting this sector in my porfolio of S-REITs. However, we can expect this sector to recover rapidly if the global economy picks up again. Just bear in mind that office tenants are a rather footloose bunch.

SPH's Clementi Mall.

Generally, however, it is a very good time to be landlords. For the vast majority of us who are not financially able to participate by owning shops and buildings directly, investing in selected S-REITs and SPH is the next best thing. In fact, some might say it is even better as we do not have to worry about the day to day operations of the properties. Well, there are pros and cons, to be sure.

There are many voices out there and we have many choices. However, we have to always remember not to be intimidated by all the information being stuffed in our faces. What is worse than having no information? It is to be drowning in too much information.

Know what matters. Everything else is just noise, is it not?

Related posts:
1. Office S-REITs VS Industrial S-REITs (4)
2. Staying postive on S-REITs.
3. Bearish or Bullish?
4. SPH: Better investment than retail S-REITs?

33 comments:

Drizzt said...

Sph is the kind of reit that can pay off its own debt instead of being funded by rights issue. It's levered but can go unlevered. If they build up the portfolio by 4 billion more they can replace 75% of dividends.

You have not visited a lot of the blogs that u did when u start blogging

AK71 said...

Hi Drizzt,

Well, SPH is not a REIT and does not have the obligations or restrictions which REITs have. I think we are all fairly clear about that.

I don't quite understand the rest of your comment, I am afraid...

Singapore Man Of Leisure said...

I am happy.

AK71 said...

Hi SMOL,

That is a cryptic one liner. Pray tell, why are you happy? :)

KL said...

Hi Ak,

It was a pleasant surprise to click and see a new post. Been doing so like I do everyday even just to read the comments which are gems in itself.
Sincerely hope you will continue to blog at own pace, of course.

I'm happy indeed.

Take care. Cheers

KL

Singapore Man Of Leisure said...

Just happy. No why :)

Do you take requests?

More pics of your travels and posts about healthy food?

Just asking.

But if I don't ask, how would you know?

LOL!

B said...

Noise will always be there in every part of our life. Otherwise, we will be leaving in a souless world :D

But can noise benefit us? (I am thinking as I wrote this)

:)

AK71 said...

Hi KL,

Thanks for the compliments. :)

Yes, in the first week of my sabbatical from blogging, I felt as if I was not on a sabbatical at all because replying to comments kept me busy. I probably wrote more than if I were blogging too. ;p

Don't get me wrong. I enjoy comments and I enjoy replying to them; well, most of them anyway. ;)

I still think of myself as being on a sabbatical but I am blogging less frequently while on a sabbatical. What a mouthful! Hahaha... Well, I think this works out well for both my readers and me.

Yes, a sabbatical I am still on and blog but less frequently I will. Let's stay happy. ;p

AK71 said...

Hi SMOL,

You are blessed indeed to be happy for no particular reason. You have achieved what few have achieved. :)

More pics of healthy food? What about unhealthy food? ;p

I haven't been travelling for a while but I must admit that I still have plenty of travel photos which I have not put up yet. Will include them in my travel blog once I have organised some.

Hey, thanks for asking. ;)

AK71 said...

Hi B,

Well, sounds are part of life. Noises are types of sounds which are regarded as disruptive. So, I am not sure that they are soulful. ;p

Of course, what is considered music to some could be noise to others. There is definitely an element of subjectivity like many things in life.

Live and let live? ;)

JB said...

It really was a pleasant surprise to see a post from you, and as a reader that has admired and read, but not commented before, I would like to take this opportunity to make my voice heard.

I would like to reiterate what many readers have already shared with you; that your blog, your writing, and you, are very much appreciated and respected. I wanted to thank you for all the generous knowledge that you share, and how graciously and eloquently you do so. I sincerely hope that you will continue to blog with fervor as you have for the past few years, because I know that, like so many other readers here... we do tend to suffer from ASSI withdrawal!

All jokes aside though, I read your blog on a daily basis, and deeply appreciate your insights and opinions. Thank you once again, have a great weekend!

Ray said...

Pleasant surprise that you blog so early into your sabbatical ;)

PAP thinks we are noise too.
Everyone has his opinion about every thing and everyone thinks he's right.
So u r right we shld just make the trend our friend and have a war chest :)

AK71 said...

Hi JB,

Thank you very much for the bracing comment. It really means a lot to me.

I would like to continue blogging because I enjoy it. I also like to share with as many as possible on the importance of financial security and how to achieve financial freedom. However, I am wary of becoming repetitive (which is something older people are prone to doing). So, continuing to blog but less frequently could be a good thing.

With proper planning (apart from financial planning, one should include education, active employment and family planning), everyone can achieve financial freedom. This, I do not doubt.

If people want something, they will have to work towards it. And if they want it bad enough, they will and my blog is here to help. :)

seth said...

hi AK, i am very happy to read your new entries again. =)

AK71 said...

Hi Ray,

Ah! Politics. I am not going there. hahaha... I fear that ASSI might get itself gazetted! ;p

By definition, a sabbatical could be anything from 2 months to 1 year. I need a longer break! I have decided that what I am doing is blogging while I am on a sabbatical from blogging. ;)

AK71 said...

Hi seth,

I am very happy to be blogging although it could be less frequent (which is the plan, anyway). ;)

JCK said...

Welcome back Matey! :)

Its been too long!

Thumbsup*

AK71 said...

Hi JCK,

Just more of the same o'rambling you guys have come to expect from me. ;p

Ben said...

Hi AK

Glad to see u back.

Forget about the sceptical remarks by others. You have a choice.

The best way is to ignore it and move on. No point wasting time to give your inputs on such remarks. Time can be better spent with interacting with people who want to exchange ideas and learn the good investment techniques from one another.

Ben

AK71 said...

Hi Ben,

I hear you and some others have suggested the same thing. However, I believe it to be common courtesy to make an effort to reply to anyone who has made an effort to comment in my blog or send me an email.

If I see people making sarcastic or lopsided remarks in other websites and blogs, I would also feel the need to step in with my point of view in the hope of providing some balance to the picture painted.

It is just like how I appreciate readers who might point out deficiencies in whatever I might be doing and I have been fortunate enough to have had quite a few of such readers in my blog. For sure, I do not know everything.

Anyway, I have made some adjustments which would hopefully limit my exposure to less desirable behaviour. I think it is working.

Thanks for being concerned. :)

LCF said...

AK, you nailed it - it's easier to spot undervalued REIT than undervalued commercial properties.
Loved your last remark - "Know what matters" :)

LCF

AK71 said...

Hi LCF,

The nice thing about REITs is that there is plenty of transparency. Most information is readily available to investors.

Of course, there is also plenty of regulation which could be a good and a bad thing. I am of the opinion that it is more good than bad.

Some REITs like AIMS AMP Capital Industrial REIT have also been praised for timely communication with investors and for having a high level of corporate governance.

In today's environment, it is much harder to buy a commercial property at below valuation. It is however still possible to buy into an undervalued REIT. :)

Ray said...

"...I have decided that what I am doing is blogging while I am on a sabbatical from blogging..."

I paused for like 5 seconds before a big "huh???".

LOL

AK71 said...

Hi Ray,

A mouthful, isn't it? This is how I look at it now. I will blog as and when I fancy (and about anything I fancy too, I guess). So, am I blogging like I was before or has something changed? ;p

tt said...

The new post from you made my Monday =)

Farhat said...

Does SPH pays divident quarterly?

AK71 said...

Hi tt,

I am working on a few blog posts now with one of them being more contentious than the rest. I could get flamed (again). Look out! ;)

AK71 said...

Hi Farhat,

No, it doesn't. You could find out a company's dividend payout history on SGX's website. :)

Unknown said...

What is noise and what is not, is the matter.
What if it is real? Stock price got more to go down.

ECRI, said US is in recession mid 2012. They are accurate in recession forcast. But it will not be in record till end of the year.
We normally know a recession have occur only 6 months later.
But ECRI said it is a mild one.

JCK said...

Flame on!
No contention, no fun....blogs will be like gaveyards... :)

AK71 said...

Hi Unknown,

Traders would be very concerned with the ups and downs of stock prices as that is how they make their money. I do a bit of trading too. So, I am also interested.

However, as my portfolio is made up mostly of S-REITs and I am more interested in regular income streams, I am less concerned with price movements.

So, depending on our motivations, we would react differently to all the information that is out there. What is noise could be quite subjective, therefore. :)

AK71 said...

Hi JCK,

Oh my, no fanning of the flames of contention please. I would end up having to put out the flames (alone) again. :(

I enjoy discussions or even debates but I would like them to be civil. A steady flame from a candle would create a nice ambience but not a roaring fire from a witch hunt. ;)

AK71 said...

Hi tt,

I do not know how to publish your comment, leaving out the second half like you requested. I don't think it is possible. Haha..

Anyway, I copied the section which you said is ok to share with everyone:

"Hi ACK71, Can't wait to see your posts. Discussions are fine, I don't understand why your personal views will cause flames of contention and a witch hunt. It is YOUR personal view. I am glad that you are "covering" SPH..."

Well, this is a complex world we live in and you know what the Chinese say about 1 type of rice feeding 100 types of people. So, there is diversity which is why I also say there are many roads to the same destination. Some accept this and some might not.

Of course, not all roads are made equal. We just have to choose which road to take.

As for SPH, there really isn't much to say most of the time. It is a strong and boring company that pays great dividends. Haha.. I like it very much. :)

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