Monday, May 22, 2017

The Everything Bubble?

Honestly, I like Mike Maloney a lot. Quite a number of people think he's a shill and just goes on about tin foil hat precious metals stuff so that people will buy his book. I don't think that's true. He has time after time given away his book away at heavily discounts, or even for free. And to be fair, he book is 4.6 stars on Amazon and considered as the only proper book for precious metals investing in the modern world.

Anyway, just watch the video, but of course don't take everything at face value and keep asking yourself - "does this info really prove that it is in a bubble?".

Do I also think that we are experiencing an everything bubble? I don't find all his statistics particularly useful when taken in isolation, but with the context of combining all of them together, it is quite convincing to me.

Mmm, US stocks are overvalued on plenty of metrics...

Bonds require no special chart at all. Short term rates are basically dictated by governments.

Real estate in plenty of places all over the world, particularly Canada and Australia, look very giddy.

Personally, I buy into the tin-foil theory and I refuse to give in to the this time it is different camp. I'm not afraid of missing the boat, I know that there will ALWAYS be another boat.

My portfolio is mostly cash, cash alternatives, low-risk bonds, precious metals, precious metals miners and some stock here and there. I'm starting to look at silly places again... Brazil is back on my radar. I'm still holding onto Russia with 30% unrealized gains. I bought precious metals 2 weeks ago when gold was at USD 1225 and silver was at USD 16.20. I'm pretty happy with my precious metals buy.

Anyway, no rush. I find it really hard to find attractive asset classes or investment ideas to put my money to work. Since inflation has picked up a bit, that's not too good. But on the bright side, at least I'm getting about 2% nominal just sitting around and waiting.

Friday, May 19, 2017

[SGX Portfolio] Bye bye LMIRT

I bought Lippo Malls as one of my very first investments back in June of 2014. Wowza... that's almost 3 years! My thesis wasn't very complicated. Retail REITs are a nice class of REITs, Indonesia has the demographics to give a nice "growth" story, gearing was really low (just 26%) and most of all, because it was an overseas Asian REIT, it was just shunned by most investors, giving it a nice P/NAV discount of 10%.

Just a few months later in Dec 2014, price dropped a whopping 25%, from $0.405 when I bought it, to $0.305 when I was talking about it. If I had sold, I could have booked in a beautiful annualized loss of 50%, hahaha. Instead, I rolled up my sleeves and plunged myself arms deep into the anus of this beast (very graphic imagery, I know).

Fast forward to where we are today, the past month has seen LMIRT poking above $0.40. With prices slapping at my anchored entry price, it piqued my interest and got me looking at my LMIRT investments which have been a steady, steady dividend payer all this while.

Looking at the financial statements, LMIRT has a NAV of $0.3735 (1Q17 statement). I decided to sell all of my shares of LMIRT at $0.42, which represents a premium over NAV of 12.5%.

Does LMIRT really deserve a premium of 12.5%? Sure, Indonesia does have higher property yields compared to many countries, so a high premium does not necessarily mean a low distribution. However, one of my biggest guiding principles when it comes to REITs is the P/NAV premium and discount.

The "natural" premium of malls / strip properties is probably about 4% (just guesstimating from Green Street's data and approximating to the mall conditions of Indo). Throw in the default 5% deviation and BAM, you see that we're on the upper ends of what is plausible. Of course, this sort of thinking isn't that good since who knows what is an appropriate premium for Indonesia retail REITs and what its actual SD is.

Of course if you use dividend yields as your main metric, you'd likely get a different answer and that LMIRT is just fine for giving out about 8.5% dividends. To each their own I suppose.

My average price of my shares were $0.353 and I sold at $0.42, giving me capital gains of 19%.
I've collected quite a bit of dividends here and there, but since I've owned different amount of shares at different times, the dividends work out to be about 21%.

19% capital gains with 21% returns from dividends is a nice 40% gains. Over the past 3 years, that works out to be about 12% annualized returns, not too bad I guess.

Honestly, I like LMIRT. If the premium comes back to something more realistic or attractive, you can be sure that I'd be willing to go back in.

Buy low, sell high. That's the name of the game, ladies and gents

Wednesday, May 17, 2017

Who Even Takes Taxi Anymore?!?!

I stumbled on this Yahoo Fin article which had the original Value Penguin post about this.

Take note that the values above are supposedly BEFORE PROMOTIONS. That means coupled with promo codes + credit card tie-ups, you could be getting even bigger savings with Uber / Grab.

Another thing to note is that their calculations is based on the airport surcharge being $5, which is only true for Fri - Sun from 5pm to 12mn. For all other times, the surcharge is only $3. Ideally, you'd want to knock off $2 from their Taxi figures to make it more apples to apples, I would imagine.

That said, even with a $2 reduction across the board for taxis, taxis are still on average about 30% more expensive than Uber / Grab. Throw in promo codes and credit card promos and you could be looking at huge savings.

Why take taxis when they are more expensive and the quality variance of the drivers are so huge? With driver's rating directly affecting the driver's income (eligibility and tier for bonuses), I can say that my rides with taxi-atlernatives have almost always been very good. What are taxis ONLY advantage? Kerbside pick-up. That's it. And honestly, it's not a very big advantage, especially if I can tap a few times on my phone and save 30% of my transportation costs.

The sooner taxi companies realize that they are being raped - and for very valid, clear, obvious, transparent, economic reasons - the sooner they might just clean up their act and actually come up with a proper business model and solution which people would actually use.

As of now, only the tech unsavvy and tourists take taxis.

Tuesday, May 16, 2017

GMGH Insurance Review 2017

I did an insurance review just last year in Oct 2016, but I recently made some changes so I thought I'd just share that with anyone who is interested.

Change 1: Addition of standalone Early CI / CI plan

In November, I was pondering about early CI coverage. My main concern is how that my only current coverage is a rider of a group insurance policy. After weighing the pros and cons, I decided to supplement my early CI coverage by taking this standalone plan. It has slightly more coverage and relaxed claiming terms, but the independent nature of the plan is what won me over.

I went through DIY insurance and I have already received my commission rebate. It was a very fuss-free experience. I highly recommend it to people that are independent and know what they want. 

Change 2: Changing IP Shield and upgrading rider

I'd say this is probably the biggest changed I've made to my personal finance situation this year. I made a very long blog post about it in March after thinking about it for a long time, and that really helped me sort out my thinking. 

After getting a letter from NTUC telling me that my premiums was increasing and I get very "meh" extra bonuses, I decided that it's time I shop around for another shield plan.

In the end, I decided to go with AXA because of several reasons. Firstly, I had a very good experience with AXA when I was buying my DIRECT DPI insurance in Jun 16. AXA does have good duration of pre and post coverage (180 and 365 days respectively). Finally, AXA is the only insurer to offer a no-pay rider option without the bells and whistles.

I contacted AXA through their website and I got assigned an agent. She helped me answer all my questions and we met up for 15 minutes to go through the documentation. Less than a month later, my application was approved and I have already received my policy documents.

Of course, with the additional early CI policy and also an "upgrade" from a co-pay rider to a no-pay rider, my premiums have gone up.

All-in, my annual insurance burden is $2413.50 a year, or approximately $200 a month. Cash outlay is lower at $2016.50 a year, or $168 a month. My premiums would stay the same until I'm 30, so I've a few more years before some of my premiums adjust upwards.The difference in premiums at this stage of life should be very minor.

Compared to anyone else paying about $200 per month (most people forget to count DPS and their Shield plans), I think I have pretty good coverage levels - excessive levels, in fact.

Let's be frank. There's no reason anyone like me should have a $1,150,000 death coverage. I have no dependents. This runs counter to my insurance philosophy. However, given that it is so unbelievably cheap, it's almost criminal not to max out my MHA policy.

I think this is going to be the last time I make any major changes to my insurance policies. With what I have now, I think it is sufficient for me unless circumstances in my life change quite drastically.

If anyone has any questions, or want to discuss about finer details, please feel free to comment and maybe we can have some good conversations there.

Friday, May 12, 2017

China's Yield Curve Inversion

What is a yield curve inversion? When shorter tenure bonds have higher yield than long tenure bonds.

Why is this a problem? Banks won't lend out money because they wouldn't borrow short term money (typically cheaper, but now more expensive) to lend for the long term (typically higher, to pay back the borrowers + profit for the bank). It's not a difficult concept to grasp.

What happened in the past when a yield curve inversion happened? In China, it has never happened before (at least for the 10Y - 5Y). In the US, all 7 out of the 7 times that is has occurred has led to an economic recession.

Conclusion: Unless China has some magic bullet up their sleeve, this signals low inflation and low long-term growth. Economic recession looks imminent, especially with their WMPs looking more like WMDs. A crash in China assets and a devaluation of the RMB? Who knows!