DBS issuing Preference Shares yielding 4.7%!

DBS Bank will be offering a new tranche of preference shares for subscription.
Up to S$500,000,000 in aggregate liquidation preference of 4.70% non-cumulative, non-convertible and non-voting preference shares callable in 2020 in the capital of DBS Bank will be offered, with an option to increase the offer to up to S$800,000,000 in aggregate liquidation preference of preference shares.
DBS preference shares at the issue price of S$100 per preference share will be offered to the public in Singapore through electronic applications made through ATMs belonging to DBS Bank (including POSB), Oversea-Chinese Banking Corporation Limited and United Overseas Bank Limited and its subsidiary, Far Eastern Bank Limited or the Internet Banking website of DBS Bank.
An application for the preference shares under the public offer is subject to a minimum of S$10,000 (or lots of 100 preference shares) and in integral multiples thereof. The public offer will open at 9.00 a.m. on 11 November 2010 and close at 12.00 noon on 18 November 2010, subject to changes as may be announced.
They are expected to be listed on the Main Board of the Singapore Exchange Securities Trading Limited from 23 November 2010, and will be traded in board lots of 100 preference shares.
The preference shares carry a dividend rate of 4.70% per annum, payable semiannually in arrear on 22 May and 22 November each year, subject to certain conditions. The preference shares are perpetual securities with no maturity date and are not redeemable at the option of the holder of the preference shares. DBS may redeem the preference shares for cash under certain circumstances.
The DBS preference shares OIS (prospectus) can be found here:

Genting Stock Chart 11/11/2010

Genting SP
So... I was right on China Paper hitting my target price (determined by charting) of $0.165. I believed it will pull back slightly and now go into consolidation or go further up in price due to good fundamentals. I have only realised recently that although fundamentals are important, technical analysis are the indicators of when to buy and sell. Such is the thing that i experience after 5 years of dabbling in the stock markets.

Nevertheless, lets take a look at the stock chart of Genting SP as at 11/11/2010. Genting has risen quite a lot ever since it posted its massive revenue increase in the Resorts world. And according to a market report by a brokerage, we discovered that Genting is raking in $10million A DAY! The fundamentals of genting is overwhelming and we believe it can really be a long-term stock that will one day go up to be like DBS that kind.

Nonetheless, as we take a look at the indicators in the chart, I discovered an Ascending triangle chart pattern and a "Hammer" candlestick is forming right at the top of the chart pattern. It then sell down in Huge Vol. around 50% more than the daily avg. vol. The following Candlestick is a "doji" signal and the MACD is also not showing any trend so i can say that people are still confused about which direction will Genting head in.

My advice? Wait for a few more days and see what happens. Sell once it breaks below the resistance line =)


How to Play the IPO Boom

On the day of listing, Yamada shot up to S$0.41 at the highest point and pared down to close at $0.37.

GLP IPO (priced at $1.96), one of Singapore's biggest ever public share floats, has attracted huge interest from small investors, with over $2.2 billion chasing the shares worth $200 million reserved for retail investors (its 11 times over-subscribed!). The red-hot response to the initial public offering (IPO) for Global Logistics Properties (GLP) also means much awaited money to be made for the counter on the Singapore Exchange (SGX) on Monday - 18/10/2010.

Next up, is the Mapletree Industrial Trust IPO (at S$0.93), which is set to raise up to S$1.19 billion in gross proceeds, assuming full overallotment is exercised. It is also planning an IPO of Mapletree Commercial Trust (MCT) early next year.

If that's not all, there are another 2 IPOs that are kinda neglected and brushed aside right now (i wonder why do they want to time their IPOs to clash with the other 2 prominent IPOs) namely - 
Anchun International and Mun Siong Engineering Limited
As you can see, IPOs are gearing up once again but the more important part is how do you play this IPO boom and make a profit for yourself? I have listed it out in a step-by-step sequence...

1) First of all, you Must subscribe for the IPO shares via ATM or Internet Banking! There is only a $2 charge for applying the IPO this way instead of the normal $25 commission you need to pay to your stock broker. You need to do this before the IPO closing date.

2) Next, Check the IPO balloting date. Keep track of the Balloting date and check your bank account balance on the day itself (usually just one day before the IPO listing date) to see whether you have been alloted the IPO shares. Don't be dismayed if you didn't get the IPO shares. More often, IPOs are catered more for other institutions out there instead of for retail investors. =)

3) All hope is not lost even if you are not balloted the stock! It could mean a potential upside on the stock price once it is listed since there is so huge demand! Therefore, wake up early in the morning and keep track of the stock exchange at 8.55am. As soon as you see the IPO stock listed in the exchange, determine whether the price is okay for you to go in and buy.
Usually, with such overwhelming demand for the stock, you can buy right at the IPO opening price and sell at a nice profit later. In case you wonder why some IPOs always start the day higher than the IPO indicative price... it is because Institutional Investors (Fund managers) have already began the buying and selling of shares to each other at higher and higher prices, thus leading to a surge in opening price compared to the IPO price you have seen.

4) Nevertheless, you can still make a profit from it. How do you ensure that you have captured the highest margin possible? In actual fact, you cant. However there is a tactic i can share with you.
Buy in the stock right at 9am and wait for the share price to increase until the max price and then falls back before you sell the stock.
What do i mean? Lets give you an example - Yamada Green.
Yamada Green began the day at $0.365 and shot up to $0.41 before declining to $0.37 to end the day. In this case, you should buy in the stock at $0.365 (maybe a little higher), keep a close eye monitoring it and wait until it declines from the top before you sell the shares. [you see that it goes all the way to $0.41 and starts to drop... meaning the DEMAND, the engine is losing fuel! I would sell once it touches $0.40. A gain of $0.035... around 10%! Not bad for a short day's work!]

The reason for it to go up all the way to the high and selling it after it declines is because you can never know how high a stock can rise due to its overwhelming demand. Doing this allows you to capture the whole range of profits and giving up a little of it after the surge has lost steam. No one can ever predict the high for a stock price and neither can you.
Just Remember this - Do not sell a stock that still has not fallen much from the HIGH. You will tend to curse yourself as why did you sell out so fast, missing all the gains at the back!

To justify my strategy, I have locked in gains using this method before when i played with Capmallasia a few months ago. I was balloted the shares and i sold it only at the 2nd High of the day (meaning once it has fallen from the high). I sold at $2.71 several days later =D

To end this post, i believe that the global economy is on the road to recovery and more IPOs will be coming up. This is a good time to invest in stocks now and ride on the trend and get out just before the next financial crisis happens at 2017 or earlier.

-Warren Buffett, billionaire chairman of Berkshire Hathaway, said that investors
buying bonds now 'are making a mistake.-


How the Typical Retirement Plan works?

Many people have thought of retiring at the age of 65 and enjoying life after working for almost 20 years after they graduate and find their first job. But due to the high living standards of Singapore, is our dream retirement plan achievable?

I am always fascinated about finance from young and would always like to know about how the typical retirement plan works. Now that i am enrolled in SIM and have learnt to calculate some financial stuff using the calculator, i wish to present a classical example to show everyone.

Retirement Plan - Retire (stop working) at age 65 and life expectancy of 80 years old

Let's assume that you are now retired (65 yrs) and predict you will live to 80 yrs old. 
You only are living an average lifestyle with a car and house already paid for. 
And the expenses are all that you are paying for yourself w/o your spouse or sharing with him/her.
Utilities                $100
Mobile Phone      $50
Meals                  $500
Car Maintenance $800
Medication          $200
Daily Necessities $250
Others                 $200


Investing is like buying clothes?

Image via Wikipedia
Haha.. i just came across an article on the 'Invest' section of the Straits Times written by the all-famous senior correspondent - Lorna Tan where she compare Investing to buying clothes. I think this article will be quite interesting for girls in particular.

Now, let's check it out and see what it is all about...

When we buy clothes, they focus on buying clothes and accessories that match our lifestyle, age group and activities they engage in. 

An investment portfolio is not much different. We rely on lifestyle (risk appetite), age group (our time horizon) and activities they engage in (financial goals)

The rationale or idea behind this concept is that everyone should always take a look at what they are comfortable with given their current situation and future goals. 

Let's look at an scenario. It probably isn't wise to ask an elderly to dump all his cash into stocks and hope for the best. It has breached all the 3 principles of *buying clothes!

1) Lifestyle - an elderly risk appetite is the least minimal. Pardon me for saying... but they have only couple of years lifespan left and should take on as less risks as possible. Therefore, they should look for low-risk stuff such as bonds and term deposits.

2) Age group - An elderly has to invest things which reward them with the shortest time horizon as well for obvious reasons. Equities are risker assets but they generally give a positive returns if held long enough. However, this is not a good decision for the elderly. A good alternative may be short-term deposits or even forex trading! 

***(you may say forex trading is risky, but i feel that elderly can minimize the risks as they usually have more time and $$ (than working adults) to learn forex techniques from many workshop and read about the global news that affect the currencies. Thus,  in a way, they can take advantage of their free time and earn extra income from short-term trading or forex!

3) Activities - An elderly financial goals normally is not about capital gains or long-term appreciation of stocks because they might not live to see the day it happens. A more practical approach is the income approach. I have advised my father to load up on REITs during the U.S. housing crisis and it has paid off pretty well now. His dividend yield amounts up to 20% because he has bought the stocks at historic lows. If he can, so can any elderly!

Last but not least,
One can look at your personal age as a rule to allocation of your investments. Use 100 minus your age and invest the 'remainder' to equities.

E.g. if you are 45, invest 55% in equities or forex trading (it's my style =D) and the balance 45% in less risky investments like cash, bonds or income trusts!

When you have a well-planned investment portfolio, you can sleep soundly through any economic cycle. Well... that's all folks! Happy investing!


How Warren Buffett survives on a $1,923.09 a Week?

Warren Buffett speaking to a group of students...Image via Wikipedia
Everyone who is involved in investing may have heard of Warren Buffett, the self-made investor Billionaire and the third richest man in the world. However, what you may not know is that counting only his take-home pay, Warren Buffett (the Oracle of Omaha) is a pauper compared to his peers.

With a yearly salary of just $100K from Berkshire-Hathaway, the grandfatherly Buffett just barely finds himself among the top 30% of earners - a mere pittance for one of the world's richest individuals.

But as we all know, there is more to this story than meets the eye. After all, Warren is not exactly wondering where his next meal is coming from...
The difference, in this case, is in the dividends.

Dividend Stock Strategies

You see, aside from the paycheck he received from his "day job," Warren earned an estimated $42,583,971 in income last year from the dividends spun off from his own personal holdings.
Those dividend money machines accounted for 99.76% of his estimated 2009 income, keeping him flush with cheeseburgers and business jets.
And with the yields on the benchmark 10-year Treasury note hovering in the 3.8% range and the market struggling to rebound, Buffett's dividend portfolio will likely outperform in 2010, adding to his massive fortune.

True to form, he buys them, holds them, and watches them grow. Simple - but effective.
But that is not the only advantage to be had by building a portfolio like Warren's. The other benefits of a divided-based portfolio include:
  • Safety - If preserving your money is as important to you as it is to Buffett, dividend investments are preferable because of their low risk.
  • Diversification - If the balance of your portfolio tilts towards growth, dividend investments can help you diversify acting as buffer against unpredictable market swings.
  • Access - Dividend-paying stocks offer investors ready access to their income streams, unlike similar investments in 401(k)s and IRAs, which are retirement based and carry penalties for early withdraws.

Even in bear markets, dividend-paying stocks typically do well, especially if those companies have a strong history of increasing the dividend payout.
That's because investors win two ways when a company increases its dividend. First, the yield on your initial investment goes up with the dividend; second, and even better, the dividend increase often propels the share price higher.
That's an unbeatable combination in today's tough markets. And it's the reason that investors are so eager right now to gobble up companies with solid dividend yields.

Warren Buffett's Personal Portfolio
The latest filings from his personal portfolio showed that he had multi-million-dollar stakes in 10 companies as of the end of last year.
Per the SEC, they included investments in:

  • Wells Fargo (NYSE: WFC).............................. 14, 812,857 shares

  • Johnson & Johnson (NYSE: JNJ)......................4,973,200 shares

  • Procter & Gamble (NYSE: PG)..........................4,375,000 shares

  • Kraft Foods (NYSE: KFT)..................................8,000,000 shares

  • Wal-Mart (NYSE: WMT)....................................4,200,000 shares

  • US Bancorp (NYSE: USB)...................................8,365,000 shares

  • General Electric (NYSE: GE)..............................7,777,900 shares

  • United Parcel Service (NYSE: UPS).....................1,429,200 shares

  • Ingersoll-Rand (NYSE: IR) .....................................636,000 shares

  • Exxon Mobil (NYSE: XOM)...................................421,800 shares
Among them, they pay an average dividend yield of 2.3%, with Buffett concentrating 77% of his investments in the top five stocks. That plan allows Buffett to "get by" on the $1,923.08 found in his weekly paycheck.

Buffett is not concentrating entirely on dividend yields to make his investment as well. 
Firstly, He seeks for value - he scoops up companies shares when they are undervalued during bear markets.
Secondly, He makes sure these companies are there to stay and grow with their competitive strengths - companies like P&G and Kraft Foods are no-brainers.
Lastly, due to first and second steps by Warren Buffett, the companies which are doing good will keep compounding the dividend yield, churning out steadily increasing income periodically even as Warren Buffett is performing his favourite adage - 'buy n hold'.


The Time to go against the Crowd

I read an article in the business times over the weekend and i tot i will share it with you.

An interview with Longtime stock market champion Jeremy Siegel has revived my value investing approach again. He is the author of a book "Stocks for the Long Run, 4th Edition", which talks about a study in the US mkt going all the way back to 1802, using data from several sources.

Over that period, he found that the stock mkt outperformed every other asset class except for one. It was found that in stretches as long as 20 years, long-term govt bonds have sometimes outperformed stocks. But as holding periods lengthened, the stock mkt has almost always pulled ahead.

If you are more industrious, you can even boost your returns by focusing on dividend-paying value stocks and investing globally (looking at the emerging countries of that era).

To top it up even more, positive returns become more probable (higher % of +ve returns) in subsequent years when stocks are bought cheaper than average measured by PE ratio.

That is very encouraging for times like that - where the earnings of companies have been rising but stock prices remain at attractive PE ratios with all the bad news (euro debt crisis, persistent high unemployment in U.S. & the possibility that China will fall).

As Professor Stiegel says: "It's exactly times like this, when bearish sentiment has brought down valuations, that your chance of strong returns in the following years is greatest."