18 June, 2018

"Investing is like taking a train"

A short post here to share on an analogy which came upon because I was too focused on my phone and took the wrong direction of the train early in the morning to work. On other occasions, I did not alight at my stop because I was not paying attention. To explain my foolishness, this is actually quite a common habit as validated by fellow colleagues.

I would like to relate how taking a train is like how investments work. There is usually an expected outcome which we desire to happen in each of our investments. That outcome is the destination in our train ride. Every time we feel rash of selling our shares, think of this. Will we leave the train when we have not reached our destination?
We will only if we expect the train to crash or halt.

The awareness which we gather comes from the homework we have done. By doing so, we prevent ourselves from taking the wrong train Or alighting at a wrong destination. In return, we save time and loses less money (to price depreciation or brokerage fees).

Taking the wrong direction (similarly in share prices):
  • It is similar when investing in a wrong company or in a right company at the wrong time, we will have to wait for a recovery. In the worst case, we will have to incur losses.
  • When we are unaware, we will continue going in the wrong direction (holding our losses).
Alighting at the wrong stop: 
  • Missing your destination (alighting earlier/later) means that we are not getting our optimal results within given time frame. With that, we have to sacrifice added effort and time to achieve the same results. 
  • This applies to buying or selling too early or too late.
Just my random thoughts. 

Now that World Cup is here along with 2 books on hand to read, it will mean lesser sleep and a busier month ahead. I have placed a small bet on the Cup winner and considering to add bets on dark horses such as Portugal to "diversify" lol. These are totally speculative.

I have also been crazy lately on frugality, trying out expense tracker apps to further cut down on unnecessary money wastage. We should however be aware that saving is just one step, earnings have to be ultimately increased to give us the ability to save and spend more.

And a sudden question struck me with fear and doom, can couples still save money when they have kids??

09 June, 2018

Analysis: The Fast Growers

Before we start, I have recently added my stakes in Singtel and Lippert Components at SGD 3.26 and USD 86.00 respectively. This makes Singtel the majority in my holdings. I may have to re-adjust Singtel shares again due to such exposure. For now, I will collect the dividends. Sold Oracle shares at a slight loss to raise cash levels as well as hesitated adding stakes in IRobot when it got cheaper. Accidentally, current portfolio constitutes a 50/50 allocation in SG and US markets.

Now the main topic, I will be running through the fast growers in short summaries.
Young and fast companies usually have the largest growth potentials and also the highest chances of falling apart due to lack of their establishments. In other words, they have high risks-rewards and are possible multi-baggers or the ones that can easily wipe out our money.

Lippert Components Industries

Berkshire Hathaway's acquisition of Forest River and Clayton Homes indirectly made Lippert Components one of its business partner. I actually found Lippert Components after looking up on Thor Industries, which is one of their main customers. The reason of not picking Thor Industries was mainly due to their less attractive dividend yield.

The Recreational Vehicle (RV) industry was surprisingly still a growing trend in the camping world.
RVs, as seen in movies and Breaking Bad, are usually used on family trips and tend to look like old news. Yet, the millennial will be the ones driving to grow this segment further. PEG ratio (5 year expected) also looks very good at 0.62.

Slides from Lippert Components 
LCII’s shares have been punished recently due to fears of expected steel and aluminum tariffs and gradual inventory buildup. At a closer look, inventory buildup over revenue rise is safe at less than 5%. This explains that sales are growing faster than rise in inventory.


Earnings, earnings, earnings.
Earnings are ultimately what it all comes down to in investments we made.
I feel that IRobot's annual growth rates do not lie.
As the robot vacuum market has been far from fully penetrated, IRobot’s growth is foreseen with a rate of CAGR of 20%.

However, the public has been fearing that high competition will take up IRobot’s market share -especially after Amazon reported to be interested in the smart home robots business. The worries may be overblown as IRobot has hundreds of patents protecting their intellectual products. As an example, they were recently in settlement with Black and Decker of their existing patents.

In order to protect their dominant market share of 60% , serious investments in heavy research and development are already in the works.

Slides from IRobot
IRobot will be introducing new products as well in the later half of this year with smart home as a focus (similar as Valuetronics) along with plans of using cloud to aid their products' functioning. Despite the prospects, IRobot shares do not come cheap with a high current P/E multiple.

Valuetronics (Sold)

Valuetronics is an electronic play on Internet of Things (Iot) light bulbs and in-car connectivity. Iot lighting itself are expected to grow at a rate of 21% till 2023. The current worry looms on the slowdown in electronics exports, and a healthy correction is common after a long up-run in share prices.

Aptiv, a fast growing self-driving cars manufacturer, is also one of Valuetronics' major customers. Looking at Aptiv's annual earnings and up-trending stock prices, it is pretty obvious how good business is going. Furthermore, Valuetronics possess stable net earnings and attractive yield of around 4.5%. Based in Hong Kong, it serves as some form of regional diversification.

Valuetronics’ chart has started to look ugly recently, making a mini U-turn curve and looking to correct severely downwards. This is what happens when you are not buying near the bottom, you tend to feel less secure “floating” above. I am not trying to speculate by selling but avoiding the pain of holding a loss for months ahead. Valuetronics will be under watch and may be added back if the price gets reasonable to me. For now, I have switched to Bumitama Agri which has similar upside potential and less downside risks. Bumitama Agri is not a true Grower and thus been excluded from this post.

03 June, 2018

How to Invest our time wisely

There is a saying “The person you’ll be in five years from now, depends on the information you feed your mind today”.

After a long day from work, it is understandable to come up with excuses to remain productive. We are all tired. For those who have their own houses or families, this may mean less time after clearing of chores and taking care of kids. Yet, hardly do we find excuses to resist the indulgence of leisure such as gaming or TV shows? It is poor usage of time if our entire spare time are spent on entertainment.

I came across a post on Investorsthink's Instagram as shown below, on how we could less waste our time. Most of the points are pretty obvious yet largely unnoticed or taken lightly.
It will be nice to share and add on my own suggestions.
They say good things must share.

1. Replace TV shows with educational videos
There are many different lessons to be learnt from the Web even on Youtube. The topics range from housing, cooking, finance, travel, fitness and many more. Choosing a suitable topic will be highly dependent on what interests us that will bring value to our lives.

One example of useful sites under investing will be BuffetsBooks.com, with educational videos lined up to teach new investors how to work their money.

2. Read more
As mentioned above, we should at least read 30 minutes daily. These must come in useful information such as blogs, news, articles and books.
Reading manga and comics are not included.

3. Replace music with Podcasts
This is the most useful point among the 4 to myself. We can actually learn during our commute to school or work.
Instead of listening to music and looking up on social media, should it be more productive to listen to global news or podcasts?

My personal favorite business podcasts are Staking Benjamins and Radical Personal Finance.
The Staking Benjamins show is highly recommended given their relaxed and light-hearted tone.
Here is a good list from The College Investor on other investing podcasts that may interest you:

  • The College Investor Audio Show
  • So Money
  • Stacking Benjamins
  • Bigger Pockets Podcast
  • Radical Personal Finance
    (more on their site)

  • I am using the free application Business Podcast 2.0 to listen to these podcasts and it is pretty decent.

    4. Plan your day the night before (Time Management)
    What this is supposed to mean is, plan your events ahead to optimize our time being productive.
    With planning, we avoid taking wasteful breaks that were too long that later leaves us with insufficient time.
    It is the same when we travel overseas, we tend to waste more time and money with last minute plans. When time are lost, we may then need to pay a higher price to get back on track (such as taking expensive express transport).