Buying on Value

The past 5 days, we saw the banking stocks worldwide making strong movements with huge expectations of a interest rate hike. While most of the other stocks recovered some losses, they were pretty weak to cover back (such as SGX and SingTel). Weakness is opportunity. Thus, I have uploaded some City Development at $8.40, finding its current valuation cheap and with the potential in growth. Despite the drops after getting hold of the shares, I felt that it is already a good bargain and that much negativity has already been priced in. This might not be a long-term investment due to its low dividends yield of around 1.88%.

Nevertheless, the dividend from City Development at 1.88% is still higher than the interest rates of 1.75% that I get from OCBC 360 (Salary + Paying of 3 bills + Base interest). I did not participate to get the interest rates rewarded for the minimum spending of OCBC credit card due to two reasons:
1) My spending will hardly hit $500, 2) If you force yourself to spend $500 to earn the interest rates; you are in turn saving less money each month.

On Saturday morning, I paid a visit to DBS Equity Center for their complimentary talk: Basics of Investing. As I am neither a new investor nor a professional, I gave it a try. There are about 20-30 attendances who made it, ranging from army men to old folks. Some left very early as they may find that it is not their kind of thing or that they already understood the concepts being shared. The rest stayed through the whole event.

The talk starts very early at 9 am and they hold different talks from time to time. You can check it out if you are looking to start investing. Only real interest will make you last the whole event. The talk is not very in depth due to its time constraint. From what I can remember, the talk explained on the following topics and was broken down into 2 sessions:

Session One:
1.     Stocks
2.     Bonds
3.     Warrants
4.     Mitigating Risks

Session Two:
1.     Technical Analysis
2.     Fundamental Analysis

Basically, the concepts taught can all be self learnt if you have the discipline and heart. If you would still like to try listening to such talks, I will recommend you to tag along an investor friend to fully grasp the lesson as you may be lost.  There is also a mini buffet treat during the break before the 2nd Session starts. As the slides were not be given to the audience, do ensure you have a good smart phone camera to take photos of the slides.

From the talk, I learnt some points previously not studied or perhaps less noticed. Usually as a long-term trader, we do not look at technical analysis such as trading volume as we enter because we are buying based on value or fundamental analysis. Today, I learnt that such indicator can actually help us further by allowing us to better “foresee” price movements before we make our bids.

One technical analysis discussed on price surges. They should usually be supported with the same upward trading volume. If the prices are surging yet the trading volume is dropping, it is an indication that the price surge is only created by a small population of the investors and probably followed by a plunge in price. With such “foresight”, we can wait and make later, better and cheaper entries. Another indicator taught was Relative Strength Index (RSI). A RSI of 30 may mean an oversold situation while a RSI of 70 may mean an overbought situation. You can read more on this at Investopedia.

Last but not least, you will get a free DBS Vickers fold-able umbrella if you submit a survey form!