Why is Warren Buffett the world's greatest money maker?

I want to thank Kelvin for providing the link to this video which I enjoyed very much.  

Anyone who is interested in a quick introduction to Warren Buffet's life and how he got to be the world's richest man would find this 47 minutes video worth watching.





Although it should be common knowledge to any experienced investor, I would like to draw attention to how 

Warren Buffet had no qualms about investing in something he was against as long as it offered good value and a chance to make decent money. 

This is somewhere 40 minutes 30 seconds into the video and it highlights the importance of being open minded and not being parochial.







Interested in the book Warren Buffet referred to in the documentary? 

You can get it pre-owned from BetterWorldBooks at a bargain with free shipping worldwide. 

See:
Intelligent Investor: The Classic Text on Value Investing

Related posts:
1. Recommended books for FA and TA.
2. Be cautious even as we accept higher risk.

Selling everything to buy more silver!

The latest issue of The EDGE provided me with much food for thought. However, the article on buying physical silver ended with a paragraph which if ingested might require us to take some digestive enzymes.

"There's going to be another big crash, we are really near it now," said Chin Kuan Yew, a businessman ... who sold all his properties, including his condominium, to buy more metal. "You have on the one hand the US printing money and the European Union is on the brink of collapse."

Although I advocate that all who can afford to do so should have 5% of their wealth in physical gold and silver as a form of insurance against the inherent flaws of fiat currencies, I feel that Mr. Chin is being somewhat extreme.

Selling his properties could be a good move because with the ongoing aggressive building, it is more likely than not that we would see a situation of oversupply in Singapore in the coming years which would mean lower rental rates and lower property prices.

Having most of his wealth in precious metals, however, smells of paranoia.

Related posts:
1. Gold and silver: Still important assets to own.
2. Never lose money in real estate and REITs?
3. Buy gold and silver as insurance.

Lightweight and good looking @ US$66.99 each:
Titanium 8mm Ring

Tea with AK71: Casio watch and The Price is Right!

In my last Tea with AK71 blog post which was about a vintage Rolex watch, I revealed in the comments section that I travel with a Casio watch. In case you think that it is a digital watch, think again.

I have not bought a digital watch since my Smash watch died years ago. I rather prefer analogue as they seem to harken back to the good old days.

My travelling companion.

I bought this watch because it just looks so clean and its bezel looks like a Rolex. How much, you ask? Let's play a game. Why not make a guess and leave your answer in the comments section?

We will see whose answer is the closest to the actual price I paid for the watch. Reminds me of the game show, The Price is Right!

Eligibility:
All ASSI readers are eligible to take part in this game. Employees of CASIO Worldwide, members of the immediate families and/or persons living in the same household as such persons and CASIO Worldwide associated agencies are not eligible to take part in this game. ;-p

Related post:
Tea with AK71: Vintage Rolex watches.

Tea with AK71: Vintage Rolex watches.

I recently have a new routine. I would wind a vintage Rolex watch every night. Yes, quaint, isn't it?

I have automatic watches, solar powered watches and, of course, the ubiquitous quartz movement watches. A manually wound watch? I haven't had one since my primary school days more than three decades ago.

Shortly after acquiring the watch, I spent some time online trying to find the exact year of its manufacture. I know, from what I found, that it has to be more than 20 years old but it could also be more than 60 years old. I was able to finally determine its age from its serial numbers.

My vintage Rolex Oysterdate 6694.

The watch was manufactured in the year 1956 which means that it is some 15 years older than me!

The watch is from a time when life was a bit less hectic than it is today, perhaps. It was a time when people would have the patience to wind their watches, perhaps. For sure, the internet did not exist then and information most probably flowed more slowly.

The daily winding of the watch is quite therapeutic, I have found. It helps to focus my mind on something simple for a few moments each day. It has a very calming effect.

When I showed the watch to my father, he said that only the rich could afford a watch like this during those days. It would have cost S$400 - S$600 when he was a young man and that was a lot of money back then. A clerk made only S$200 or so a month in those days.

A quick search on eBay for similar Rolex watches found asking prices of between US$1,600 to US$2,990. The only unit available from the same era as the one I have was asking for the highest price of US$2,990. Antiques have higher valuations, I guess.

A friend said that it is creepy that I should have such an old watch and not know who were the owners before me. I don't feel that way. This is a piece of history and I am privileged to be its new custodian.

Related posts:
1. Bought a new car.
2. Parting with an old friend.
3. Money well spent.

2012 full year passive income from S-REITs.

After a few requests by readers for me to blog about my 2012 full year passive income from S-REITs, I was pleasantly surprised to receive advice from a reader that I should not blog about it. Since I was of two minds whether to go ahead, I started a poll on 11 December to see what readers want. The poll ran for two weeks, ending on Christmas Day.

Readers have spoken and here is the blog post by popular demand.

This year, I sold some of my investments in S-REITs as their unit prices moved higher and their distribution yields compressed. Of course, the plan is to possibly increase my long exposure again should their unit prices experience any significant correction. If their unit prices were to continue moving higher, my portfolio would continue to benefit from capital gains.

However, higher unit prices would create a problem as my remaining long positions in S-REITs are part of my core investments for income which means that if I were to further divest even partially, I might not be able to achieve my target annual passive income level. Some might say that this is a happy problem to have but it remains a problem.

I also made an opportunistic purchase of units in Saizen REIT when its unit price plunged 15% as its warrants expired middle of the year. So, I was able to increase my long exposure to the REIT again at a relatively attractive average price, locking in a rather high distribution yield of 9+% on cost, almost quadrupling my position in the REIT within a few days. This highlights the importance of having a war chest ready to seize opportunities when they present themselves. Saizen REIT is once again an important part of my portfolio of investments for income.

An apartment building in Japan owned by Saizen REIT.

My five largest investments in S-REITs are now:

1. AIMS AMP Capital Industrial REIT
2. Sabana REIT
3. Saizen REIT
4. First REIT
5. Lippo Malls Indonesia Retail Trust

I also have five smaller long positions in:

6. Cache Logistics Trust (CLT)
7. Cambridge Industrial Trust (CIT)
8. Frasers Commercial Trust (FCOT)
9. Suntec REIT
10. Keppel REIT (formerly K-REIT)

An advance distribution from First REIT was paid out on 26 December because of a private placement and this bumps up (and distorts) total income received in 2012 from S-REITs a bit.

Overall, despite some divestments to lock in capital gains, my larger investments in Saizen REIT (due to aggressive buying as its unit price plunged middle of the year) and LMIR (due to aggressive buying of nil-paid rights a year ago) resulted in higher total income from S-REITs this year.

Total income received from S-REITs for the year 2012:
S$ 123,873.80

In the year 2013, with regards to S-REITs, I will fill my war chest while waiting for potential rights issues as well as opportunities to buy more at lower prices.

With First REIT having made an advance distribution, I could receive less income from the REIT in 2013. There is also possible dilution of DPU from First REIT's private placement. The DPU dilutive actions of LMIR this year and the weakening JPY which should impact income from Saizen REIT in S$ negatively would all put some downward pressure on my total passive income from S-REITs in 2013.

Definitely, it is almost impossible now to get a 10% or even a 9% distribution yield from S-REITs. We could in fact continue to see yield compression as central banks around the world are bent on increasing monetary supply.

Any correction in the unit prices of S-REITs would probably see opportunistic buying as they remain a compelling proposition in the current low interest rate environment. Sentiments having turned decidedly positive on S-REITs. Mean reversions could become less probable.

To all readers on the same journey to passive income generation, this has been a very good year for our portfolio of S-REITs.

Congratulations!

Related posts:
1. 2011 full year passive income from S-REITs.
2. $120K annual passive income from S-REITs next?
3. Saizen REIT: Why did I buy and would I buy more?
4. Staying positive on S-REITs.
5. Made and still making money from S-REITs.
6. REITs: When to buy?
7. Never lose money in real estate and REITs?

Counting our blessings.

I overheard a conversation two women were having while I was waiting for my bee hoon to be prepared. One of them is concerned that her son wants to get a license for riding motorcycles because his friends are all doing it. The other one, with a sharp intake of breath, immediately launched into an argument against it.

"Aiyoh, ride motorcycle very dangerous one. Flesh wrap steel leh. If car bang into you, sure die one. If not die also badly injured. Maybe, become handicap for life liao. One arm gone or one leg gone. Worse, maybe become a vegetable! Then how? Tell him don't lah. Learn to drive car better. At least steel wrap flesh. Got protection. You can afford mah. Offer to buy him a car lah."

Lucky boy.

I remember when I asked a student of mine why did he want a motorcycle rider license, he told me it was so that he could work and make some money. I was curious and asked him to tell me more. He told me that his family income was very low and, being the eldest, he should try to share the burden. Having a license meant he could help to distribute newspapers for his father when his father who was not well was unable to work. It also meant he could be a part time courier and fast food delivery boy.

The conversation the two women had triggered this memory in me and I decided to share it here in my blog to remind all of us to count our blessings during this festive season and, if we can afford to do so, consider making a donation to a charity of our choice.

I recently revealed in a reply to SnOOpy168 a list of charities which I make donations to annually in Singapore. The charity which I have the softest spot for is Singapore Children's Society because children are probably the most helpless. They are the most innocent and have no way of supporting themselves. Very often, they are also the most easily abused.

To find out more about Singapore Children's Society and to make a donation, please go to:
Singapore Children's Society.

For greater convenience, donations can also be made online using a credit card.

While I am at it, if you are thinking of buying books in future, do consider helping the environment and funding literacy for the less fortunate at the same time by visiting BetterWorldBooks:



Find out more about BetterWorldBooks at:
ASSI is an affiliate of BetterWorldBooks.

Have a blessed Christmas!

A Christmas collection of charts.

Hello Kitty Christmas Tree!
Minneapolis - St. Paul International Airport

It is now the evening of Christmas and I have spent Christmas Eve and the whole of Christmas Day at home. I slept a lot and drank a lot of herbal tea. I ate mostly porridge. You guessed it. I am ill.

Here are some charts and my gut feel. Not much rigour but in the spirit of Christmas, I hope readers would be a bit more forgiving.

Target: 28c.

Target: 42c.

Target: $1.10

Target: $3.90

Target: 62.5c

Target: 83c

Take note that these are weekly charts and I am not expecting to make any fast money.

Ho, ho, ho! Merry Christmas!

Second Chance Properties Ltd.

In reply to a comment from Desmond: here.

Some have said that Second Chance Properties Ltd is a company that is REIT like. This perception could be due to the fact that much of its success stems from its timely investments in real estate at depressed prices.

They announced an annual dividend of 3.3c and a special dividend of 0.5c this year. NAV/share is 35.72c. So, buying some shares closer to the NAV/share would give an attractive dividend yield, discounting the special dividend. At the last closing price of 40c/share, a 3.3c dividend would be a nice 8.25% dividend yield if the payout should be repeated next year. Seems like a decent proposition.

However, I would draw attention to its earnings per share (EPS) which has declined year on year. For 12 months ended June 2011, EPS was 7.2c. For the 14 months ended August 2012, EPS was 5.62c. 2 more months of earnings and EPS was actually 22% lower? Has its earnings declined? Although not comparable, for want of any available alternative, its net profit actually improved 1.37% for the period reported.

So, it could only mean that the number of shares in issue has increased significantly. As the founding family of the company has 81% of its shares and routinely accept dividends in scrip plus the fact that there are many outstanding warrants (expiring in 2013 and 2017), further dilution of EPS is to be expected, all else remaining equal.

Valuation of a company's shares could be based on many things. However, let us look at P/E ratio which is used more during good times compared to NAV/share. At its highest in June 2011, it was 39c/share and with an EPS of 7.2c then, its P/E ratio was 5.42x. Share price went to a high of 45c as punters chased its shares after the dividend announcement. With EPS at 5.62c, its P/E ratio was 8x then.

Now, closing at 40c/share in the last session, using the EPS of 5.62c, its P/E ratio is 7.12x. With a P/E ratio of 8x or lower, shares of Second Chance Properties Ltd. do not seem expensive. Why does Mr. Market not ascribe a higher value to the company then? Ah, good question.

They always say that the market is forward looking. If I were to hazard a guess, I would say that Mr. Market is concerned about the potential dilution to the EPS of the company which could, of course, lower dividend payout per share in future. With an increasing number of shares in issue, it is also hard to expect greater upside in share price as valuation per share finds little improvement.

Would I buy shares of Second Chance Properties Ltd.? I would, as usual, question my motivation for thinking about investing in a stock. Am I after income or growth? As an investment for income, with the company's track record, it is likely that they would continue to pay dividends. However, unlike S-REITs, there is less certainty. Also, with declining EPS, it is possible that dividend per share could reduce in future.

As an investment for growth, we have to be prepared for some headwind as real estate prices have very likely peaked. With more supply coming on stream, rental rates and property values could face downward pressure in the coming years. This coupled with economic malaise that is expected in the near future could also see retail businesses affected negatively.

All in all, I would say that Second Chance Properties Ltd. is in a position of strength and should be able to weather the economic malaise ahead.

If we are able to accept the potential dilution of EPS and its possible effect on dividend payout per share, and if we are not overly concerned about the probable lack of meaningful appreciation in future share price, this seems like a good company to invest in.

See financial report: here.

Related posts:
1. Don't be a yield pig. Be a hardy pig.
2. Be cautious as we accept higher risks.
3. Good debt is always good?
4. Mr Market is always right.
5. Never lose money in real estate and REITs?

ASSI celebrates third birthday!

On the Christmas Eve of 2009, ASSI was born. ASSI turns 3 today!

Blogs take a lot of energy and time to maintain. Of course, everyone has only so much energy and time. So, it is not surprising that with changes in one's priorities and interests, the amount of energy and time allocated to different activities in one's life would change.

Some bloggers have become very sporadic in their blogging efforts while others have stopped updating their blogs altogether. Of those who stopped, most just faded away quietly without any announcement or fanfare. Some of these blogs were updated for a few years while some for a few months.

Personally, I have been spending relatively less time blogging compared to when I first started. At various points in time, I also entertained thoughts of taking a long break from blogging for various reasons. Unless blogging is a livelihood, there is really no harm in taking a break from blogging. The fear is how a break could become a permanent leave of absence.

By some accounts, personal blogs which are still actively updated 3 years on are much rarer. ASSI now joins the ranks of these blogs.

This was taken in Shinjuku, Japan, last December.

MERRY CHRISTMAS!

Related posts:
1. ASSI celebrates second birthday!
2. A sabbatical.
3. Happiness in 2012.
4. Top 1,000 websites in Singapore.
5. My tickets to Value Investing Summit 2013.

Change to become richer. A need or a want?

Much of my writing is geared towards having people making positive changes in their lives. I also blogged about how some people told me that I should have good debt in life and how I have been described by some to have a peasant mentality towards wealth building. Are these people also trying to encourage me to make positive changes in my life?

There are so many types of people in this world all with their own ideas on how things should be. They have their own realities which are very much conditioned by their own beliefs. While it is true that what works for some might not work for others, we do not want to be dismissive. Why? What if it could work for us? We should keep an open mind, shouldn't we?

People often say, "If you don't try, you won't know."

There is a second half to this which is often not said, "Some things, you should not try."

So, we should not blindly adopt ideas and hope that they work for us. Then, how do we know which ideas to try out? There are so many ways to approach this but I feel that "self" is the most important consideration.

Sun Tzu said, "Know thy enemies and know thyself and be victorious in every battle."

We might have also heard the saying, "We are our greatest enemy." So, knowing thyself is more important than knowing thy enemies.

At the very basic level, we have to question our ability to see something through. This is, however, not enough. We also have to question whether we have the temperament to make an idea work for us. If we do not have the right temperament, it would be hard to have a strong will.

So, for example, I keep saying that one should take risk to protect and grow one's wealth but should a risk averse person do this? His temperament is clearly against this. Even if he had the ability to do this, he might not have the will to do so. He would worry too much and could suffer from anxiety.

Now, I have a preference not to have debt in my life, given a choice. I like the peace of mind that comes from being debt free.

To anyone who is thinking of taking on more risk, a pertinent question to ask is, therefore, how much risk would our temperament allow us to take on comfortably. Then, ask if we are willing to push beyond the limits of our comfort zones.

All of us would like to be comfortable in life. Is there any reasonable person who would rather be uncomfortable? However, sometimes, we cannot afford the comfort and that is when we would have to go out of our comfort zones. Sometimes, we are forced to make changes.

So, some need to change to become richer while some do not need to change to become richer although they might want to change to become richer. To change or not to change? This could be a question of necessity for some and a question of desire for others.

Related posts:
1. Good debt is always good?
2. To be a happy peasant.
3. Money making.
4. Three point turn.
5. A good cat.

Seeking Alpha.

In my early days as a blogger, I was much more active in commenting on other platforms.

Just now, I visited "Seeking Alpha" and found an old Instablog I did for them and some comments which I wrote as well. I think these must be at least 2 years old.

See the Instablog:
http://seekingalpha.com/user/736173/instablog

See the comments I wrote:
http://seekingalpha.com/user/736173/comments

I am giving in to nostalgia today. Hahaha... The good old days.

Related post:
REITs: When to buy?

A reader won a hamper from Yomeishu!

I make a modest amount of money from ads in my blog. Most of the ads are pay per click in nature and if readers should be interested in the ads and click on them, I get some pocket money (e.g. 20c per click from Nuffnang).

I particularly like ads from companies which offer good deals to consumers, are socially and environmentally responsible and give my readers a chance to get something for free. This way, the ads which appear on my blog are win-win-win in nature. A win for the advertisers. A win for my blog. A win for my readers.

A few days ago, a reader sent me an email to say that she won a hamper by clicking on one of the ads which appeared in my blog. She was so happy that she took a photo of the hamper and emailed to me. Here it is:

Very nice!

To the lucky reader, thank you for sharing this happy news with me and, once again, congratulations!

There will be 20 winners each week and I believe that the last round of the contest (5th week) ends 26 December 2012. You might want to try your luck and see if you could win a hamper too at: Yomeishu Guess & Win!

Would be a nice Christmas present, wouldn't it? :)

Related post:
Yomeishu: Win Megumi and a beverage mixer!

Old Chang Kee: Special interim dividend.

Shares of Old Chang Kee are trading higher today at 42c a share. A special interim dividend for the half year ended September 2012 has been declared. The amount? 5c per share.

Incidentally, I bought some Old Chang Kee curry puffs just yesterday! Yummy curry puffs! So is this special dividend.

This certainly brightens up the holiday season for all shareholders.

Read announcement: here.

Related post:
Old Chang Kee: Initiated long position at 26c.

Unhappy Singaporeans.

Apparently, Singaporeans are the unhappiest people in the world if we believe a recent survey.

People here were less “upbeat” than those living in war-torn places like Iraq, Armenia and Afghanistan, Gallup suggested, based on a poll of 1000 respondents in each of 148 countries.

Nearly 150,000 respondents were posed five questions on whether they experienced a lot of enjoyment the day before the survey and whether they felt respected, well-rested, laughed and smiled a lot, and did or learned something interesting. While about 50 per cent of people in Armenia and Iraq did, only 46 per cent of Singaporeans could say the same.

Singapore came in first, ahead of Armenia, Iraq, Georgia, Yemen and Serbia, for being the least positive.

This led Gallup partner Joe Clifton to suggest that “higher income does not necessarily mean higher wellbeing,” given Singapore’s poor faring even though it ranks fifth in the world in terms of GDP per capita.

Personally, I am rather sceptical. Why?

1. To me, the sample size of 1,000 respondents from each country is too small.

2. I would also ask how were the respondents chosen? Are the 1,000 respondents representative of the national population of the country?

3. Are the questions posed sufficiently exhaustive to conclude that Singaporeans are a unhappy lot?

While I agree that making more money might not make a person happier, I find it hard to believe that Singaporeans feel less positive compared to the nationals of war-torn countries like Iraq and Afghanistan! Of course, this represents my personal opinion.

Read: Singaporeans unhappiest people in the world.

Recommended books for FA and TA.

I used to have a little widget in my blog which listed the books I would recommend to anyone who might be interested in learning about Technical Analysis and Fundamental Analysis through self-study. 

Unfortunately, that widget from Amazon slowed down the speed at which my blog was loaded and, so, I removed it.

Since then, I would have to list the books for readers who might email me for a book list. 

So, I have decided to provide the book list here in a blog post. 

This would make it easier for both readers and me. This is, perhaps, long overdue.







For fundamental analysis (FA):

1. Warren Buffett and the Interpretation of Financial Statements: The Search for the Company with a Durable Competitive Advantage.
See:
Warren Buffett and the Interpretation of Financial Statements: The Search for the Company with a Durable Competitive Advantage


2. Fundamental Analysis For Dummies.
See:
Fundamental Analysis for Dummies
What's the key to multibillionaire Warren Buffett's five-decade run as the most successful investor in history? Fundamental analysis. Now, "Fundamental Analysis For Dummies" puts this tried and true method for gauging any company's true underlying value into sensible and handy step-by-step instructions.

For those who prefer e-books:
Fundamental Analysis For Dummies

For technical analysis (TA):

1. Technical Analysis Plain and Simple: Charting the Markets in Your Language (3rd Edition).
See:
Technical Analysis Plain and Simple: Charting the Markets in Your Language

For those who prefer e-books:
Technical Analysis Plain and Simple


2. Technical Analysis For Dummies, 2nd Edition.
See:
Technical Analysis for Dummies

For those who prefer e-books:
Technical Analysis For Dummies


3. Candlestick Charting for Dummies.
See:
Candlestick Charting for Dummies


You could possibly borrow these books from the local libraries. 

If you would like to buy the books instead, please consider buying them from BetterWorldBooks to help save the environment and fund literacy for the less fortunate. They ship free globally.

Visit BetterWorldBooks here:


Find out more about BetterWorldBooks at:
ASSI is an affiliate of BetterWorldBooks.

Related post:
Why is Warren Buffet the world's greatest money maker?

Saizen REIT: Daily share buy backs.

A friend told me he is waiting for Saizen REIT's unit price to weaken before he buys some. I informed him that Saizen REIT has been buying back units from Mr. Market. So, there could be some support for its unit price in such a situation.

Daily share buy backs:
14 Dec 12 - 330,000 units @ 17.2 c
13 Dec 12 - 310,000 units @ 17.332 c
12 Dec 12 - 310,000 units @ 17.36 c
16 Nov 12 - 360,000 units @ 16.78 c
12 Nov 12 - 400,000 units @ 17.2 c
9 Nov 12 - 400,000 units @ 17.3 c
16 Oct 12 - 350,000 units @ 16.73 c
15 Oct 12 - 900,000 units @ 16.6 c
12 Oct 12 - 350,000 units @ 16.6 c
8 Oct 12 - 900,000 units @ 16.6 c
3 Oct 12 - 330,000 units @ 16.48 c
25 Sep 12 - 680,000 units @ 16.4 c

Although Saizen REIT's unit price has advanced since hitting a low in the middle of this year, I feel that it is still rather undervalued.

Fundamentally, the only negative I see for unit holders now is the weakening JPY which is probably going to decline further in value against the S$.

In a recent blog post, I made some assumptions which could be useful for anyone thinking of parking some funds in this REIT. See: REITs: When to buy?

It is, perhaps, also worth taking note that the units bought back from the open market were cancelled instead of being held as treasury stock (for possible re-issue in future). With less units in issue, the expected lower DPU in S$ terms due to a weakening JPY, everything else remaining constant, could be less of a concern.

Technically, the rising 100d MA should provide some support at 16.7c. Failing to hold could see price testing the 200d MA for support which is rising and approximates 15.5c now. If unit price should go that low, I could possibly add to my long position.

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Related post:
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