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A Comprehensive Review of 2016: The Ups & Downs of the Singapore Stock Market

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Here’s what the STI looked like from 2014-2016. I’ve only put in one indicator, an exponential moving average, to show the general direction of the market. The huge move was somewhat like a freak rollercoaster ride, while the year 2016 has been a whirlwind of sideways price action.

aThe Straits Times Index, from 2014 to 2016; what a ride it has been!
Source: Chartnexus

The market isn’t exactly bullish, and it has been rather undecided in 2016. The huge fall that you see in the chart above was started by the sell-off in the Chinese market in Aug 2015:

dowNews headlines in Aug 2015 struck panic in investors worldwide.
Source: CNN Money

Ever since that crash, the STI has been struggling to find its footing over the next 16 months. It’s been interesting to look at how different people have predicted what would happen to the STI,

Tradingeconomics.com provides this image (below) as a prediction to the state of the STI. They are projected using an “autoregressive integrated moving average” (ARIMA) model, as mentioned in their website. This gives a range of values that the STI is likely to fluctuate within.

waveThe econometric model shows a bear market has started to develop.
Source: TradingEconomics.com

This is rather depressing considering that the Dow and S&P have hit new highs, with some even calling for “Dow 20,000”.

Another website forecasts a measured move fall in the STI. Referring to the diagram below, this means that the stock market will fall by the distance of the red arrow, producing two red arrows of the same length, just as it has done so for the bull run, producing two blue arrows.

redThis particular prediction for 2016 was accurate; the STI moved a lot lower than where it was in this chart.
Source: AmiBrokerAcademy.com

After falling by a measured move, the STI climbed slowly and went nowhere in 2016. The year was marked by uncertainty, binary events, political shuffles and record lows/highs on many financial instruments.

 

THE YEAR 2016 IN REVIEW: A SHAKY START IN JANUARY

January started quite poorly for the STI, falling 6.4% from Dec 31 to Jan 30, 2016. Total market capitalization was $804.9 billion, down from $856.4 billion on Dec 31, and investors were worried about the January barometer coming to pass.

3 companies were listed on the Catalist board of the Singapore Exchange, but it did little to bring the market cap higher.

Strong blue-chip companies like Prudential, DBS, and Keppel, were down -14.1%, -15.8%, and -22.9% respectively for the month of January.

In the chart below, the last candlestick is the 1st of February. That was how the charts looked at that point in time!

downThings weren’t looking that good at the start of 2016.
Source: Chartnexus

A ROUGH MID-YEAR: VOLATILITY IN APRIL

April was characterized by wide swings in either direction, and intraday volatility for all 30 STI stocks was at 36%.

Three stocks were in focus at that point in time: they had an annualized intraday volatility of 68%, compared with the average of 36%. They were Noble Group, Golden-Agri Resources, and Thai Beverage PCL. 

Subsequently, Noble went on to experience a shocking -55.8% free-fall in the next 4 months, Golden-Agri fell -15.4% before recovering back to its original price at end-April, while ThaiBev experienced a shocking +42% bull run in the next few months.

thaiThaiBev experienced a spectacular bull-run after our stock screener picked out hidden buying in April. 
Source: Chartnexus

 

JULY 14th – 5.5 HOUR TRADING HALT ON SGX

On 14th July 2016, the SGX experienced it’s longest trading disruption ever. Trading was halted just before noon stayed shut for the rest of the day. Apparently, trade confirmation messages were duplicated and posed a serious systematic risk to the SGX.

In an update to reporters, confirmed that executions were back to normal and said the market come back up by 4pm, however, it retracted its previous statement and said the market would be closed for the rest of the day, and it wasn’t clear then whether the market would open. The green arrow in the picture below shows the day that this happened.

jump
tadinghalt
The trading halt was a mere blip on the chart; the market ended +0.7% after the problem was resolved.
Source: Chartnexus, Straits Times

The markets seem unaffected, and subsequently went into a 3-month yo-yo about the trading range during that time. It was particularly difficult to trade because there wasn’t a clear trend in sight.

Swing traders (those who hold a trade to ride a trend) were particularly hit by this period. Their trades would have been stopped out easily, and new entries were psychologically difficult to take. The confusion kept these traders aside, and intra-day traders prospered during this period.

NOVEMBER 2016: BREAKOUT AND A NEW BULL RUN?

2016The STI broke out of a classic wedge pattern, and is currently testing the prior highs in July.
Source: Chartnexus (Chart correct as at 15 Dec 2016)

After a couple of months of going nowhere, the STI looks like it has made a resolution to go higher, but it has paused near the prior resistance level. It could find support at the EMA, but we’ll have to look for more price action to make a high-probability trade.

The STI is still positive for the year, and those who bought the STI had to sit out a rather uneventful 2016. The big wins came from stock speculators getting involved in superstar stocks like CityNeon (up >500% for the year), China Aviation (up >100% for the year).

2016 IN SUMMARY: A SIDEWAYS MARKET WITH MANY SURPRISES

In January 2016, a senior investment strategist at OCBC stated that the market volatility “will cause your stomach to churn, but it may not be enough to cause you to lose your job or wipe out your investment. (China) will cause volatility, but not enough to create mayhem”. The market at the start of the year was still reeling from the spectacular crash of the Shanghai stock market. This time, amidst a post-Brexit world, populist political climate, and a recent U.S Federal Reserve rate hike, it makes sense to think the year wouldn’t start with a bang.

There is a saying that “the market tends to be 6 months ahead of the economy”. If this were true, we should see economic indicators picking up, as it already had in the U.S with better employment figures. Let’s see how 2017 will begin!

Cheers! 😀

REFERENCES & RESEARCH SOURCES:

http://www.tradingeconomics.com/singapore/stock-market/forecast
http://www.straitstimes.com/business/companies-markets/good-chance-of-sti-rebound-in-2016-ocbc
amibrokeracademy.com/amibroker/straits-times-index-prediction-for-2016/
http://www.channelnewsasia.com/news/singapore/sgx-halts-trading-in/2956382.html
http://www.straitstimes.com/business/companies-markets/sgx-says-securities-market-to-open-per-normal-on-friday
http://www.straitstimes.com/business/companies-markets/sgxs-longest-trading-halt-raises-concern
http://www.straitstimes.com/business/companies-markets/value-of-singapore-stocks-down-64-in-jan
http://sbr.com.sg/stocks/news/here-are-three-most-volatile-sti-stocks-in-april

Personal Checklist: The Top 5 Habits of Singaporean Self-Made Millionaires

Just last week, I came across this interesting article, talking about some of the prominent millionaires in Singapore, and how they created their wealth.

vulcan-postSource: Vulcan Post

As I read it through, I couldn’t help but think about what they did to make, keep, and grow their wealth. Sure, some of them inherited their wealth, but it takes a different kind of education in order to preserve and grow the inherited wealth.

It is definitely not chance that these people have achieved phenomenal success. There were, in fact, common patterns of behaviour that keep them successful.

The difference lies in just 5 actions they take consistently:

1. THEY CREATE MULTIPLE INCOME STREAMS

The average person lives from paycheck to paycheck, while the average wealthy person receives cash from various sources, so that even if one source were to be temporarily cut off, they can still enjoy the same standard of living they currently have. Here are just some of the commonly known income streams that they have:

Earned Income: working for money

Interest Earned: earning money by lending it

Dividend Income: earning money by share ownership

Profit: Selling something you make or own

Capital Gains: Selling something higher than what you bought it for

Rental Incomes: Money gotten from owning real estate

Royalty Incomes: Money from selling intellectual property or franchise systems

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Having multiple streams of income is like having many waterfalls flowing into the same ocean. The more streams you have, the more reliable the flow.

Which do you currently have? The average person struggles to survive because he only has one stream. Personally, I like trading and portfolio management. The great thing about portfolio management is that you can enjoy interest earned, dividend income, and capital gains.

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2. THEY TREASURE EVERY SECOND OF THEIR TIME

Let’s be honest with ourselves; how many hours a day do you do things that do not contribute to your financial success? Most people would rather procrastinate or spend time on enjoyment rather than on what really matters.

I found this really interesting image of how most people spend their time in a year:

4Source: The Visual Communication Guy

It’s amazing; out of 365 days a year, 183.7 days are spent on media! If we were honest with ourselves, perhaps what we need is to rethink the way we live. Perhaps if we all take some time away from Media and reallocate it to self-improvement, learning, investing, and growing as a person, we could be living a very different life indeed.

How would your life look if you re-arranged your priorities?

Robert Kiyosaki once made a quip about what he noticed of rich and poor dads; he said that poor dad would sit on the couch and watch TV every night, while rich dad would review his investments and upgrade his skills every night. Poor dad would spend the weekends wasting time, while rich dad would build a business during the weekends.

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Many of you would know that I read more than 200 books before I embarked on my trading journey. Even now, I make it a point to read at least 3 books a week, because I feel that it is important to never stop learning and upgrading oneself. Here are some key pointers:

  • Don’t waste time. Find out what you need to do, and do it.
  • Re-prioritize. Find out which areas of your life you can do away with, and cut them out quickly.
  • Learn. Just because you have graduated doesn’t mean you should stop learning. Successful people get where they are because they have an attitude of lifelong-learning.


3. HAVING A MENTOR MAKES A BIG DIFFERENCE

Mentors are looking for people who are humble, hungry, and hard-pressed for success. No matter where you are in your career or life, it helps to have successful people to reach out to and learn from. They’ll be able to quickly point you in the right direction if you are going off-track.

When I started my trading career at a professional fund, I had wonderful, experienced mentors to guide me in the right direction. I quickly picked up on what worked and what did not. I learnt their habits, their lifestyle, and the difficulties that they went through to get where they were.

Where can you look for mentors if you have no one at the moment? This is what many people ask me from time to time.

  • Build connections: Networks are not built overnight. As you expand your social circle to include successful people, you will start to find people who could potentially guide you to where you want to go.
  • Be inquisitive: People will only want to mentor someone who has the attitude for success. While at the beginning you might lack aptitude, the right mentality and motivation would attract the right people to you.
  • Keep learning: As you learn more, you discover you will have the vocabulary to connect with people. With greater proficiency, you would be able to speak at the same level as industry practitioners, asking smart questions, being able to understand jargon, and make an impression.


4. THEY VISUALIZE THEIR DREAMS IN DETAIL

Goals without dreams are dead; they become mere tasks rather than the exciting outcome that you hope for. It helps to have an idea of what you want; most people want to be wealthy but don’t know what it would look like.

What does a wealthy life look like for you? For YOU personally?

For some, it could mean having to work only 2-3 days a week. Financial goals differ from person to person, and it’s not just the monetary goal, but also the lifestyle goal. For me, I knew I wanted to have the luxury of making passive income even when I am travelling. This may not be everyone’s goal.

“How much money do you want to make exactly, and what would that lifestyle look like exactly?”

Many people want to lose weight. Losing weight isn’t a definite enough goal; Losing 12 kg by the end of 6 months is a definite goal. Many people fail to achieve their goals because they don’t even define their goals!

It’s also important to visualize yourself doing what you hope to be doing. Having a lot of money is pointless if all you are going to do is sit aroud with the cash; it is accomplishing the goals you have, those bucket lists, that make life worthwhile.

So what is it for you?

Grab a piece of paper and start getting your hands dirty. It doesn’t matter if you are old or young, experienced or inadequate; what matters is a willing heart and dilligent hands, and of course, a big enough dream that will knock you off your sofa and get you started.

  • Be specific about your goals. General goals generally don’t work. Specific goals help you to move toward exactly what you want.
  • Keep track of your progress. You never know if you are on the right path if you don’t take stock regularly. Even better, get a mentor to help you evaluate where you are.
  • Focus on the dream with its details. Keep reminding yourself of where you eventually want to be. Otherwise, you’ll just lose steam and burn out, bum around, and end up not getting where you were heading toward.


5. THEY DO NOT GIVE UP OR QUIT

If you’ve got your foot into the investing arena, you would be familiar with financial losses. It is at this point where your mettle is truly tested; is this what you want? Are you willing to sit through heartache and tough lessons to get where you want? Is the life you left behind really worth going back to? Do you still believe in the dream you have?

When that business fails, would you stand up again and start all over? When you family doubts you and the pressure to provide hits you, will you continue to stand by your dream? People want the glory without the trials and training. Just take a look at the infographic below that I found:

33Source: Anna Vital (Founders & Founders)

I also came across this interesting quote, which I thought was very useful in clarifying what we really value. Millionaires invest their money and make investing a priority, while poor people spend their money first and make spending a priority.

5Source: Gecko and Fly

Always, always seek to make investing your primary objective. Invest your time, invest your money, invest in your team if you are running a business. Invest, invest and invest.

Is investing your primary objective, or is spending your primary objective? Would you be willing to delay gratification, in order to enjoy a lot more in the future, far more than you can ever imagine?

  • Do not quit. Ensure that you have made a commitment. Tell your friends, and engage people to keep you on this path.
  • Invest your money, your time, and in your team. Investing is what multiplies your returns in the long-run. Keep at it!
  • Prioritize learning, rather than earning. It pays to be more proficient at what you want to do. When you are starting out, make learning a priority, and the profits will come eventually.

Don’t give up on your dreams!

555

Feel free to share this with people you know who are working hard toward their dreams, and striving to build their first pot of Gold. And with these 5 actionable steps, you’ll be one step closer to your first million! 😀

Bonus: Download free ebook: The 7 Best-Kept Secrets of Professional Traders

RESEARCH SOURCES & REFERENCES

vulcanpost.com/593788/in-forbes-2016-asias-richest-families-list-we-see-some-prominent-singaporean-names
businessinsider.sg/habits-of-self-made-millionaires-2016-3/#rJDS8hCPPhHm5qpK.97
fastcompany.com/3052770/how-to-be-a-success-at-everything/7-habits-of-self-made-millionaires
allbusiness.com/slideshow/9-smart-habits-of-real-millionaire-entrepreneurs-16769866-1.html
huffingtonpost.com/timothy-sykes/top-30-millionaire-habits_b_8260134.html

Monthly Portfolio Update for October 2016 – Acquired New REIT ETF

In time of uncertainty, it pays to be like the tortoise – Slow but Steady. Especially if you are serious about building passive income for the long run instead of short-term gains.

For October, the biggest change in my portfolio was the purchase of this new REIT ETF:
http://synapsetrading.com/2016/10/singapores-first-reit-etf-should-i-add-some-to-my-portfolio/

I also removed the real estate component of my portfolio, as I felt that a residential property (of which the owner resides) is technically not a cash-generating asset, and it distorts the portfolio. You will notice that the portfolio looks a lot neater now.

Baby Hermann's Tortoise (Testudo hermanni), 18 months old

I was overseas much of October, travelling to Iceland, Ireland, and UK for a 2.5 week holiday, while letting my money work hard instead. You can check out my travelling photos here: https://www.instagram.com/iamrecneps/

monthly-portfolio-updates-october-2016-1

For my current allocation, my cash, my trading accounts and my fixed income investments remain the bulk of my portfolio, at 25%, 22% and 25% respectively. This is in line with my defensive strategy, since I only have 11% in Stocks and REITs, which allows me more room to increase the holdings when the market has a significant correction.

For October, we had pretty decent trading gains for stocks and for forex, which we withdrew and added to our warchest of cash reserves. This is in line with our strategy to keep a fixed trading capital base, since we only need a fixed capital base to consistently generate monthly returns.

REVEALED: FULL PORTFOLIO HOLDINGS!

Here are my current holdings as at the end of October 2016:
(Click on any of these buttons below to unlock; for mobile device users, please click twice)

For more insights into my portfolio construction, and how you can create your own customized portfolio, I will be touching more on it during my “Trading Foundation Workshop”, where I will cover all the essentials to kickstart your trading & investing journey. Check availability: http://synapsetrading.com/trading-foundation-workshop/

Good luck! 😀

Singapore’s First REIT ETF – Should I Add Some to My Portfolio?

Philip capital has announced the public listing of its first REIT ETF on 20 October. It claims to “provide investors transparent and low cost access to the diverse basket of quality Asia Pacific REITs which offer stable dividend income”.

The REIT has a heavy Australian weightage (59%), and a heavy retail weightage (47%).

Phillip SGX APAC Dividend Leaders REIT ETF Breakdown

reit-components

compoenent

Source: Philip Capital – REIT Prospectus

 

Is it Worth Adding to My Portfolio?

Here are some considerations:

  • There is a relatively high management fee of about 0.5% annually, which might go down as the AUM of the ETF increases.
  • There is a 15% withholding tax on Australian assets, which will lower the overall yield.
  • There is a 17% corporate tax which further lowers the yield, but there is a possibility they might do away with that, and if that happens, could act as a positive catalyst for the ETF price.
  • Overall, the net yield is about 4.5%, which is pretty decent, and if prices continue to slide, we might be able to average a higher yield on subsequent purchases.
  • This provides good diversification without the hassle of having to manage and monitor multiple counters, which is in line with my hands-off portfolio strategy.

After much consideration, I have decided to add some to my portfolio, and it will be reflected in my next monthly portfolio update for the month of October. As with all purchases, the quantity and timing is of utmost importance.

 

Useful links

General information – http://www.phillipfunds.com/home/banner_link4
Prospectus – http://phillipfunds.com/uploads/funds_file/Phillip_SGX_APAC_Dividend_Leaders_REIT_ETF_Prospectus.pdf
Product Highlight Sheet – http://phillipfunds.com/uploads/funds_file/Phillip_SGX_APAC_Dividend_Leaders_REIT_ETF_Product_Highlight_Sheet.pdf
Product Summary – http://www.phillipfunds.com/uploads/funds_file/Phillip_SGX_APAC_Dividend_Leaders_REIT_ETF_Product_Sheet_Oct_10.pdf

Monthly Portfolio Update for Septmeber 2016 – Holding Steady & Waiting

This month, there wasn’t much change in the markets, hence the allocation hasn’t changed much, but going forward the Deutsche Bank fiasco might have far-reaching effects which could trigger a market correct in the upcoming months. Hopefully this is not the start of the chain of dominoes.

deutsche-bank

I will be travelling overseas much of October, and I will be keeping an eye on the news as well, just in case there is any opportunity to deploy some of the capital in my bloated warchest. 😀

monthly-portfolio-updates-september-2016-1

For my current allocation, cash and real estate (allocation budget) still remains the bulk of my portfolio, at 24% and 38% respectively. Fixed income consists of 11%, which is very close to the target allocation of 15%. Our Gold holdings also remain constant at 3% of our portfolio.

For September, we had pretty decent trading gains for stocks and for forex, which we withdrew and added to our warchest of cash reserves. This is in line with our strategy to keep a fixed trading capital base, since we only need a fixed capital base to consistently generate monthly returns.

REVEALED: FULL PORTFOLIO HOLDINGS!

Here are my current holdings as at the end of September 2016:
(Click on any of these buttons below to unlock; for mobile device users, please click twice)

For more insights into my portfolio construction, and how you can create your own customized portfolio, I will be touching more on it during my “Trading Foundation Workshop”, where I will cover all the essentials to kickstart your trading & investing journey. Check availability: http://synapsetrading.com/trading-foundation-workshop/

Good luck! 😀