20160122 Ordinary Singaporean investors can easily outperform Temasek

Arumugam: Bro, today I want to tell you some good news. We all can outperform Temasek in investing because share markets have collapsed and there will companies with very good value. Serious.

Kow: You crazy or what? They 40 years make 16% annual returns like money drop from the sky. You think you can perform magic meh?

Aru: Don’t be like 70% Singaporeans anyhow believe every bit of propaganda la. If can make this type of returns means $10,000 investment in 1974 today become $3.8 million (caculator). A 3-room flat become a bungalow. If Temasek really can make these returns, how come PAP building more 2- and 3-room flats instead? Money see no touch of course can claim anything they want.

Ahmad: Kow, you shut up listen to Aru our bro why he want to lie to us?

Aru: OK, I teach you all a bit about what is happening to the stock market every Tom, Dick and Harry (except with surname Lee) can understand. Some things use common sense but people like to make it so cheem to make them sound clever. Market already collapsed in every country and will get worse ….

Kow: Quite scary leh. You learn investment from textbook not same as experience, can pock kai OK.

Aru: No. I learn from my uncle because he really trade and teach me. Market collapse creates a lot of fear but should also see this as an opportunity. Everything is subject to cycles so what comes down will go up. But there are some rules like don’t anyhow tikam tikam and buy companies that will go bust.

Temasek’s (and GIC) simplistic investment model – buy when market up or down. Look at this chart. Ask yourself how did Temasek make 16% 40-year returns? And 70% of sotongs really don’t want to find out. Singaporeans are a joke.

Aru: Actually Temasek is worse than that – net buy is the highest when the market is also at the highest and net sell is highest when market near bottom. This type of “buy high,sell low” model they say can make a lot of money has fooled not only 70% of us but the whole world. Even foreign media so stupid and believe PAP propaganda without verifying facts.

Kow: Wa lau eh, that means Singaporeans lost a lot of money leow.

Aru: So you can see who can be a worse investor than Temasek? Anyway, I want to tell you get ready to buy because our market today break support and if 2500 level give way, all hell will break loose.
But no need to rush and buy because shares will have lelong sale until you scared to buy. Ha ha.

Aru: Many good shares already dropped 40% or more from the high but of course don’t go in yet. You can see, when the market rally for one day, every investor waiting to offload and next day down. (see STI chart below) Wait a while and you can invest at extended Great Singapore Sale prices.

Kow: Thamby, that mean the big trader with MBA so stupid meh? U think you clever ah?

Aru: No. We just got the advantage because we can wait for the right time to buy but the big funds cannot hold on to cash for long time. When they sell low, it’s because they have no choice, need to raise cash and even good investments they will let go. Some big players will win, some will lose. Last financial crisis there were some shares so cheap until people scared to buy, for eg, SuntecReit, fund managers sell until incredible price of about $0.50, down from more than $2.10. At this price, dividend was almost 20%.

Image: Marketwatch.com

Of course you cannot buy at bottom but even at $1, the dividend about 10%. Better than CPF 2.5% right? However, uncle says just be prepared for rights issues OK leow. Reits got super prime properties and if the value of their properties collapse, our HDB same price as Malaysian real estate.

Ahmad: Then what other shares can buy, bro?

Aru: If you kiasu like my uncle, look for stocks which are monopoly but the company is not run by scholars, like SGX. SGX is like your neighbourhood market or supermarket. Recession also need to eat right? SGX will be around even after we are gone and its business is pow chiak business. Just make more money or less. The yield is low but you can sleep at night. $5 to $6 should be within reach again but make sure got some cash when it goes below this level. Just buy and keep, collect dividends for few years then, sell during next rally. Maybe can make 100% capital gains, if your price is low.

SGX – $6 and below within reach soon?

Ahmad: What about SMRT?

Aru: We know PAP will come in to support Temasek’s baby but at what price? Those buy at $1.80 maybe cut loss when market dropped to $1.10. Then suddenly go up back to $1.60. We don’t really know what price to go in but any big drop 30% or 40% should be safe. SMRT so badly managed that it would have become a penny stock in early 2014 if PAP did not provide support.

SMRT

Aru: Another safe bet is M1 which if drop to below $2 is a must buy. Even if they cut dividends, the yield is likely to be more than 5% in a worst case scenario. People can cut down on luxury like eating at restaurants but not the use of mobile phones. Anyway, today I don’t have much time to explain too much but here are a few links which you can share with kakis.

Summary of Reits (dividend, yield, gearing, NAV, etc) @ reitdata.com
Historical dividends of all SGX stocks @ sgxdata
Long-term chart @ marketwatch.com

Read up a bit and discuss which are businesses which are value for money. This is a golden opportunity not to be missed. Read real news @ Bloomberg and not propaganda to get a picture of what’s really happening.

As you can see, Temasek doesn’t care if asset prices are inflated they just go shopping for taxpayers, shop till we drop. Rain or shine, high or low, anytime is good time to buy. So if we only buy at low, don’t you think we can make better returns than Temasek? Ok, time to go. Don’t forget to buy me Starbucks, not Ya Koon, coffee when you make some money. Good luck.

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