Year 2017 Portfolio Performance and Dividend Income

With the closing of the stock market for the year, it is time to compute the required statistics to measure my performance for the year. In this piece, I will review how I have fared as well as the strategy to employ for the new year.

Similar to what I have done previously, I will go through my dividend income first. For my SGD-denominated counters, the trend in dividends received pales in comparison to 2016. This could be attributed to the following reasons: (a) profit-taking on some of my counters in the earlier half of the year, (b) poor economic conditions leading to some counters delivering lower dividends, (c) delisting of yet another income counter (Croesus Retail Trust), and (d) delays in the declaration of distributions (RHT Health Trust). In 2018, I expect dividends to drop further.

In contrast, the dividend payout from my USD-denominated counters increased. This is primarily due to capital injections into such counters. Percentage-wise, it looks like huge gains. However, I would like to point readers to the y-axis. In dollar terms, it is insignificant. I intend to build-up this portion of my portfolio slowly. Partly to get my feet wet and ease myself into the US stock market and partly to minimize the damage in case of a market correction. Whenever the US market allows, I will continue to nibble at counters in my watch list.

Purchases

In Q4 2017, I could not resist the temptation and bought quite a number of counters, albeit in small quantities. 

I purchased small quantities of Yeo Hiap Seng for their investment properties. Technically, it is not an asset play (stock price < cash + real estate + securities), but I am treating it as such. Yes, this is a new position.

I initiated a new small-ish position in SATS in October when the price fell. Using technical indicators, the counter was at its 52-week low and is on a downtrend. However, its historical PE trend indicated otherwise. Being cautious, I intend to gradually increase the size of accumulation in proportion to the extent of price depression. However, the price rebounded shortly after my purchase. Anyway, I am holding this counter for its income-generating ability.

I added to my Singtel position in November when the price fell.

I initiated a new small-ish position in HongKong Land in mid-November when the price fell. Similar to SATS, I intend to gradually increase the size of accumulation in proportion to the extent of price depression. Based on historical trends, HongKong Land usually trades at a ~50 percent discount to book value. If, however, you value it using current yield, HongKong Land still has more room for its price to drop (7% yield at its best during the GFC, see here). 

I added to my position/averaged-up in Welltower REIT just last week after monitoring its performance for the past one year (I first initiated a position in the REIT in December 2016). My position is still small. 

I initiated a new small-ish position in Thai Beverage just a few days back. I have been mulling over Thai Beverage for quite some time. "Valuation looks good, but what if the market corrects and I could get a better deal?" "Oops, I think I missed the boat." "Let's wait for that entry price again." "Doesn't seems like it will ever hit that particular price again unless there's a market crash." Similar to SATS and HongKong Land above, I intend to gradually increase the size of accumulation in proportion to the extent of price depression.

I have also added some more (physical) gold to my portfolio.

Performance

Using the XIRR function in Excel, my portfolio returns is as follow:

For my SGD-denominated portfolio:

Returns for Year 2017: 19.00%

Annualized returns since portfolio inception (March 2015): 11.60%

For my USD-denominated portfolio:

Returns for Year 2017: 20.09%

Annualized returns since portfolio inception (March 2016): 19.61%

My USD-denominated portfolio includes SGX counters that are traded in USD. Specifically, Dairy Farm, Mandarin Oriental, and HongKong Land. 

There's no typo error in the portfolio inception date. The first counter which I purchased that is traded in USD was Dairy Farm in March 2016. The very first counter which started my investment journey was Nikko AM STI ETF in March 2015.

Oh wow! The returns from my USD-denominated portfolio comes as a real surprise. I vaguely recall all of my US consumer staples stocks bleeding very badly just last month. They have rebounded quite well. The high returns probably come from my holding of Dairy Farm since March 2016 as well as my complete divestment of Mandarin Oriental in Q2 2017 after the company tried to place the Excelsior on the market (see here). 

Meanwhile, the returns for my SGD-denominated portfolio is boosted by the high-quality REITs (MIT, PLife, First REIT, FCT, CMT) as well as other yield stocks (ST Engineering, SGX, FCL) which I have collected cheaply and have been holding on tightly ever since. In Q2 2017, I have taken profit/cut loss on a number of counters, which could have contributed to the returns (see here).

Moving forward, I expect my returns to fall.

Bleeding ones
It would not be fair if I do not point out the duds in my portfolio.

When I do not include dividends, the following counters are in the red: Nera Tel, Starhill, Vicom, Singtel, Kingsmen, QAF, RMG, Yeo Hiap Seng, and Thai Beverage.

After taking into account the dividends received, the following counters are still in the red: Nera Tel, Singtel, Kingsmen, QAF, RMG, Yeo Hiap Seng, and Thai Beverage.

I am not too worried. The potential damage that some of the more-worrisome counters could do to my portfolio is contained through position sizing while I am keen to build a bigger position for some of the other bleeding counters.

Flops

So much for trying to time the market and anticipating a market crash. I exited T Rowe Price, iFAST, and Hong Leong Finance thinking that these counters would be hit the hardest in a market crash. Apparently, the market hasn't crashed yet and I look like a complete fool. In fact, I exited T Rowe Price and iFAST at a loss. As of today, T Rowe Price continues to hit higher highs.

Strangely, I am at peace with my decision to divest those counters. I guess it must be my inclination to rather protect my capital from potential losses in a market crash rather than reveling in unrealized gains. 

The only counter which I really have to kick myself is United Industrial Corporation. I chickened out and locked in my profits as I am uncertain how the market would react to asset plays during a crash. Oh well.

Along similar lines, I have also divested my STI ETF in Q2 2017. So much for market timing a market crash. -.-

If there is a market crash, I will be reinstating my POSB Invest Saver account to automate the collection of STI ETF on the cheap.

Dilemma

My investing strategy entails focusing on income from multiple sources. There should not be any sort of over-reliance on any one or few counters. As a result, I diversify/diworsify (depending on how you see it) a lot. 

What I currently have are small positions across many counters. At one time, my largest counter has a market value of $9000. On average, the market value of each of my counters stands at around $1500. Even though I am sitting on plenty of unrealized gains, it makes absolutely no sense for me to lock in profits for some of my smaller positions. I am unable to sell half of my holdings since commission charges would wipe out the returns (good % returns; poor $ returns). Conversely, selling all means killing the golden goose permanently.

Come hell or high water, I would have to be comfortable with seeing my unrealized gains evaporate in a market crash.

Net worth breakdown

Compared to my Q3 2017 update, there does not seem to be much change in my net worth breakdown. Phew! With all the buying in Q4 2017, I am quite surprised that the pie chart did not change much.

As per before, quoting my Q3 2017 update, "The pie chart depicts the breakdown in my net worth across the various asset classes in percentage (pie chart neither includes my CPF nor my emergency fund). To be conservative, I computed my precious metals allocation at spot price even though I am holding everything in physicals."

Strategy moving forward

I'll continue to build up my cash reserves. As and when the market allows, I will continue adding small positions or small amounts to my existing positions.

With plenty of consumer staples (Dairy Farm, Sheng Siong, Thai Beverage, Yeo Hiap Seng, QAF, Kimberly Clark, J.M. Smucker, Hormel Foods, General Mills) and healthcare (PLife, First REIT, RHT Health Trust, RMG, ISEC, Welltower REIT, Abbott Laboratories) stocks, a relatively high precious metals and cash levels, I hope to ride out the market crash.

Thanks for reading!

What will I do after achieving Financial Freedom (part 2)

This is a continuation of my previous post (see here). After some thinking, I think it is not wise to blab about my interests as well as the potential areas of interests that I am keen to develop. Else, I will really overdo it with the number of "parts" there are to this post.

To make it more relatable, I think it would be better to show how I could potentially fill up my schedule with various activities over a 1-week time-span. For this hypothetical scenario, let's assume that I wake up at 8am each day and head back to bed at 10pm.

Why 10pm? I am a morning person who rise early and rest early.

To make scheduling "easier", I'll divide the time into 2-hour blocks. Hence, there are 7 such blocks in each day (8am - 10am; 10am - 12pm; 12pm - 2pm; 2pm - 4pm; 4pm - 6pm; 6pm - 8pm; 8pm - 10pm). This is just to make the blog post less-complicated; I am not going to really restrict myself in this way.

Other key assumptions have to be made before I begin. I assume that I will be single all the way and have no major financial commitments.

Here is what my schedule could look like after achieving financial freedom.

Okay, definitions, and their corresponding elaborations, are up next.

Exercise: Includes "low-intensity" exercises such as brisk walking to more "moderate intensity" stuff such as swimming, badminton, etc. Technically, I am not supposed to do any exercise as per the doctor's instruction owing to my medical condition. Hence, I expect to spend most of my "exercise time" on brisk walking through the various park connectors. When I was a student, I have brisk walked across park connectors countless of times. It is therapeutic, helps me to work up a sweat, and I could gamify the sub-routes to take. Beautiful scenery too, if you know which paths to take. :)

I have contemplated on more "exotic" physical activities such as swordplay and jousting before. On second thought, it may or may not materialize anyway.....and I don't think it is good for my health.

Spinning stuff is also a decent form of exercise once you achieve some form of competency in it. As there are multiple divisions which require different skill sets, it could be both a challenging, rewarding, and definitely time-consuming hobby to pursue.

Since we are on the subject of skilltoys such as yoyos here, it reminds me that I have other skilltoys such as glowsticks (see here for a visual demonstration), astrojax, and devil sticks collecting dust somewhere at home. The thing is that some motions cut across skilltoys and practising one of them could very well have a synergistic effect on my growth in the others.

Read: I am being very broad here and am playing around with semantics. This could include just plain reading of books, both fiction and non-fiction. It also includes Massive Open Online Courses (MOOCs) such as Coursera, EdX, and other similar online education providers. It also includes any formal or professional education that I may take up just for interest's sake or to try to get an insider's view of another field just to broaden my horizons (in a way I'm doing the latter now....).

With less constraints, I foresee myself spending more time in the library devouring books. The end goal (if it is even appropriate to call it a goal!) is to develop myself to become a well-rounded individual with exposure to various schools of thought.

Gaming: This includes both computer games and console games. As it is, I have a "backlog" of computer games to play. If arcades still exist in the future, I would occasionally visit them for their music/rhythm games. This ties in with the above point on exercise as well. Once you reach some form of competency in music/rhythm games, they could qualify as exercise.

Besides the more traditional conceptions of "gaming" above, I used to engage in tabletop wargaming. What you do is you purchase miniatures, assemble them, and hand-paint them. Besides admiring your accomplished work, you also take these miniatures to the field. You deploy them on a table with various terrain against other players and fight it out. Christopher Ng of Growing your tree of prosperity does this too. Something like the below picture.....

Back in Upper Primary/Lower Secondary, I used to host my own free-form text-based roleplaying website. You create characters and stories purely with words and get others to do the same, weaving their characters and yours together in a journey of epic proportions. I probably will attempt to revive my website after I attained financial freedom.

Reflection: Some may get this while others may not. I need time alone to reflect. It could be on anything. It could also be just soaking in the moment, being present in the here and now. 

I need to reflect on the stuff I learn/experience, to internalize it and make it personal. To progress from a shallow understanding to a less-shallow understanding. I need to have ample room to bounce ideas in my head, to think absurd thoughts. A cognitive playground for me to play in, so to speak.

I need to be a detached observer, like a scientist who curiously observes his or her target specimen.

Visiting museums and reflecting on the exhibits.

I could do this by staring at the ceiling (like what SMOL would do), observe how my pets (specifically, crayfishes and shrimps) behave (like what AK and Cory would do), or observe fellow human beings in their natural habitat. You can learn a lot through observation and it makes you think.

Job: As I have shared in my previous post, I like what I am doing. If there are interesting, meaningful, and challenging problems to solve at work, and since I get paid for doing it, why not continue working? One issue that I observe with this mentality of mine is that my health could suffer as a result.

Ideally, a scaled-down version of work would provide me with a good mix of "job" and "me-time." But you never know. Such arrangements may not materialize.

Hence, I have also thought of doing part-time jobs to keep myself mentally and socially alert. Preferably holding a part-time job in the area of my spiritual community. Firstly, to be part of a spiritual community and second, using the spiritual community's connection to the wider society as a platform to reach out to disadvantaged people in society. Of course, I am already "somewhat" doing this as a social science researcher since my work deals with the disadvantaged people in society. 

Social: Meeting with friends and family. Spending time together and creating memories. Nothing much to elaborate on for this.

Spiritual: This ties in with what I have briefly mentioned in the "Job" section. To be a mere participant/learner in a spiritual community and the possibility of working as a part-time staff in an organization aligned to my spiritual community. I get "spiritual nourishment" and I get some form of interaction with others who subscribe to the "same" spirituality.

Most likely, I will be topping up credits and upgrading my postgraduate cert to a complete postgraduate qualification to go into academic religion research in a niche area which I am interested in.

Of course must keep it hush hush. Last thing I want is a leadership position and meeting the expectations of others. @_@

Personal Projects: PP stands for Personal Projects. I have mentioned some of them in my previous post. To reiterate, I want to learn how to grow my own food and automate the process of growing them through the use of Arduinos and the like. I want to improve on my programming skills. I want to improve on my miniature painting skill and branch out to other areas of painting. I want to re-pickup a certain musical instrument and learn totally new ones. I want to re-pick up a certain language and learn totally new ones. I want to sharpen my investing skills. I want to learn gardening and help out as a volunteer at gardens. I want to keep more/different marine pets. I want to develop my own game. I want to learn how to design my own character sprites to be used in the games I create. Bla bla bla, yada yada yada.

Could I do all these things while I am still working? Nope. I have to be selective.

Will I be satisfied with merely dabbling in each of these activities? Sure, why not? I could spend my non-working hours on some of them. 

Are you reeeaaaaallllyyy sure with that? If have, have. If don't have, don't have. I am contented as it is. :)

What will I do after achieving Financial Freedom (part 1)

This post is a response to La Papillion's most recent post (see here). Now I am starting to think twice whether is it a bad idea to respond to his post. I have plenty of thoughts concerning this topic and I think it would be quite difficult to form it into a coherent whole.

I think the most important thing is to know why you want what you want. Not many people are able to sufficiently distill their raison d'être and clearly articulate it to others. Personally, I struggle with expressing my worldview to others. It always end up not coming out the way I want it to sound.

People generally encounter obstacles in the first phase. They live their life without careful reflection, unconscious to the fact that there is another realm of existence that they have not considered before. The closest illustration that I can whip up on the spot now is to invoke Edwin A. Abbott's novel Flatland. In Flatland, there are various creatures that live on different dimensions. One fine day, Sphere, a 3-dimensional creature, visited the 2-dimensional world. A Square, a 2-dimensional creature, failed to grasp the realities of Sphere and the 3-dimensional world in which Sphere belonged to. When A Square had the chance to visit Pointland, the 1-dimensional world, he experienced the same frustration of trying to communicate his reality to another being who is unable to shift its reference point to that of another. (Actually, Plato's Allegory of the Cave could also be used here).

Why does this happen? A fundamental shift in cognition is jarring. It forces the individual to confront the most basic of questions: What is the meaning of life, what am I here for, and what do I want out of it/how do I lead my life. Fortunately, many do not need to ask themselves these questions. Life is somewhat structured in a manner that they could engage in various activities without thinking through why they do what they do. Often, it is society and the people around us that shape us to live this way. This is not wrong. In life, we are inundated with all sorts of pressing deadlines, urgent concerns, and just plain noise that distract us from contemplative introspection. We need to sit down and craft out a coherent worldview that accommodates the potential scenarios that life could throw at us, and our prioritization of what do we want to make out of life. Not doing so is like being a driftwood out at sea, bobbing wherever the waves take you.

Being a driftwood is dangerous. From what I have observed, there are some who mistake financial freedom as the be-all and end-all. Financial freedom is not a panacea. It does not generate meaning. Meaning has to be self-generated, else the person could just be an empty husk post-financial freedom. A hollow being that seeks substitutes after substitutes to patch what they deemed to be lacking in their lives. SMOL and Wall Street Playboys have emphasized this fact multiple times in their writings. A downward spiral could occur for those unprepared to manage this. Wall Street Playboys highlighted some vices that people who have "made it" gravitate to. In SMOL's comment to STE, he highlighted male seniors who go around as auditors of mystical garden assets.

I shall try to attempt to articulate what I want out of life; how I can convert what I enjoy doing now to what I could potentially do when I am financially free. Of course this is susceptible to change. Whenever we reach some sort of milestone, we readily redefine who we are as a person and look for avenues in which we could further develop as a person. This is growth.

Family and Friends
I am highly introverted, hence low amounts of social stimulation would suffice for me. I aim for quality, not quantity. At this present moment, I am blessed enough to recognize that I have abundance in this area.

In terms of family, I am very close to my mum. With or without financial freedom, I am spending quite a lot of time with her. To some extent, this will mitigate any deathbed regrets of "what if", "if only", etc.

I have a few good friends who watch my back. We mutually support one another. They are not perfect, and neither am I.

When I studied a module on Developmental Psychology in my undergraduate days, the Socioemotional Selectivity Theory really gelled with me. As people age, they gravitate towards people in their inner circle. They know who matter most to them and prioritize these individuals over everybody else.

Do I know who I value the most? Do I know who belongs to my inner circle? As my inner circle, do I accord to them a higher priority than frenemies, fair-weather friends, and acquaintances?

Would how I treat my inner circle significantly differ from pre-financial freedom to post-financial freedom? Generally, it is okay, but it could be better.

To throw a spanner in the works, what if all my family and friends died in a catastrophe? Theoretically, my spiritual core will mitigate this to some extent. In fact, I might challenge myself and use the amount of time taken to bounce back from the adverse event as an indicator of my spirituality. Second, to borrow concepts from personal finance/investing, I should practise some sort of socioemotional diversification and socioemotional energy allocation. I am open to the possibility of developing greater friendships with others who are currently not part of my inner circle but have the potential to be part of my inner circle and have reached out to them (I think this is one example of INTJ personality type trying to "optimize friendship.")

Interests, hobbies, and the like
Ho, ho, ho. I think I can write a lot here. But for the sake of my reader's sanity, I shall attempt to keep it brief. Unlike LP, I classify spirituality with meaningful work together, as they intertwine together in my life. As meaningful work is something that I am genuinely interested in to do, I classify it under the overarching category of interests and hobbies.

In one of my recent post, I shared that I enjoy my vocation as a noob-level researcher. Hence, work, to me, is something that I find interesting and actively engage in. Well, that is not 100% true. There will be politics at work, workplace stressors, and certain pointless stuff that I need to do because that is "how work is structured" (As a Social Science Researcher, why should I waste time commuting to work, access journal databases that could also be accessed at home, write stuff, and waste even more time to commute back home? A better alternative is to permanently work from home, unless there's a need to head back to the office) that mildly annoys me from time to time.

After achieving financial freedom, I would still prefer to work. I would like to keep myself cognitively active, soak up ideas from brighter minds (there's plenty, especially in research), bounce off random ideas I have with these individuals (maybe I should do a separate post on the random research topics I have in mind?), and experience a sense of achievement from doing well in what I am interested in.

My research interest is in <censored> psychology (censored because with all the information in this post, it will reveal my true identity). I have moderate interest in the Cognitive Neuroscience branch of Psychology and Quantitative Psychology. I have taken a module on the former in my undergraduate life and I enjoyed it. As for the latter, I am occasionally reading up on it in my spare time to challenge and entertain myself.

Outside of social science research, another vocational path which I am interested in is data science. For this reason, I have taken up R programming. Regular readers would know that I have written multiple R scripts on my older blog posts to help me with some routine investing tasks  (e.g. stock correlation computations, dividend yield trend calculation). Depending on how you see it ("fun" or "boliao"), I have done some sentiment analysis on my WhatsApp chat with financial blogger friend, Rolf.

If I were retired, I could also consider working on some side programming projects that I am interested in but lack the time and expertise to do so. For example, developing an actual investment app that I can use. Quite shiok what! I will know what metrics I want and how I exactly calculate those metrics. In the process of developing the app, I would learn plenty of nifty stuff from back-end databases to front-end user interfaces, etc. Learning more about text mining would be good too. That way, I can parse selected data from financial reports automatically. For fun's sake, I have also thought of some sort of "wisdom harvester" to summarize the wisdom of Uncle CW, Uncle Temperament, and SMOL from their respective blogs. :D (have yet to think of the actual mechanism though; I only possess a rudimentary grasp of text mining).

If my readers have noticed, the specialist diplomas I have taken do not relate at all to my work. I signed up for them out of interest. I could argue that it links back to my work, but such an argument is, at best, tenuous.

In my second specialist diploma, I played around with microcontrollers such as Arduino. I have also thought of growing my own food at home. It's not to "save money" or what not. It is just something that I want to try. Then one day, it struck me that I could combine electrical/electronic engineering (Arduino) with growing my own food at home. Automating the watering of crops, temperature measurement, soil quality measurement, etc. Learning about these two fields and integrating them together could occupy a huge chunk of my time already.

In my current specialist diploma, I learned how to better optimize the presentation of myself online. I'm a hobbyist blogger, but if I ever want to commercialize my brand, I could do so (Nah!). Most entertaining is to understand why certain optimizations work and their underlying mechanics. A whole new world, really.

Oh! Right, I almost forgot about personal finance/investing. So far, I am enjoying all the readings. My analyses are still pretty superficial and it could be developed further. Let's just say that I screw up my investing journey totally. Like, I get a 0.01% annualized return over the next 30 years. Would I engage in counterfactual thinking where I convince myself that I should have spent my time on more productive outlets? Not quite. I still managed to learn valuable skills such as how business owners think by reading between the lines, hone my bullshit-detector, etc.

As much as I try, I still fail to summarize what I want to do post-financial freedom in one blog post. Stay tuned for part 2 (most likely there might be a part 3, 4, 5, etc). Do note that I have yet to get started on other non-bookish hobbies yet.

tldr: Unintelligent Nerd has plenty of interests he could pursue if he has achieved financial freedom. He can do a successful job of Ownself Entertain Ownself. He will list some more interests in his next few postings.

A Quick Analysis of Société Bic

A couple of months back, I was looking through the consumer staples sector and I came across Société Bic that is listed on the Euronext Paris (EPA). For those unaware, EPA is the French stock exchange.

Société Bic is a company that sells stationery, lighters, and razors. I personally have come across the ballpoint pens that the company sells. I don't think I have come across the other two product categories which they carry. What I liked is that the company is not dependent on any one category of product; their revenue sources are quite diversified (see screenshot below) and demand for their products are generally stable.

Fortunately for non-French speaking individuals like me, their investor relations page and other documents are in English.

According to their 2016 annual report, the reported revenue and net income is €2025M and €249M, respectively. Compared to their 2015 financial performance (revenue: 2242; net income: 325), this is a drop of ~10 and ~23 percent, respectively.

Is this concerning? At a superficial level (because I have yet to dig deeper into this company!), it does not appear to be the case. From my screen capture below, revenue and net income seems to hover around the same range.

With the exception of 2015, earnings per share remains within the 5 euros range. Dividend-wise, the company increased the amount of dividends distributed in 2016 even though EPS declined in 2016 (see screenshot below). Correspondingly, the payout ratio increased.

I've taken a quick look at the trend in numbers of shares outstanding for financial years 2014 to 2016. The change is minimal.

I like their balance sheet as the company has no debt.

Cash flow from operations is healthy. Their main business of selling stationery, lighters, and razors generate cash flow for them. After taking into account capital expenditures, the company has shown positive free cash flow over the years.

According to Morningstar's website, the PE trend is starting to become more attractive.

As I am yield-focused, Morningstar shows that Société Bic is currently trading at 3.6% yield. Using my R script (see here), the chart shows that Société Bic could yield up to ~5.75% (based on what happened during the Great Financial Crisis).

Not vested as my inclination towards small positions, coupled with custodian fees, transaction charges, and taxes would put me in the red (even after considering dividends received). -.-"

Free course for Temasek Poly Alumni

Just a quick post. Don't say Unintelligent Nerd bojio when there's free lobangs.

Apparently, Temasek Poly Alumni are entitled to redeem one free SkillsFuture Series course (see here for details). The course has to commence within the period of January to December 2018.