Winston's Investment Ideas 01 (Nov 08 - Apr 10)

[winston]

Industry Risk

Industry Risk is something that I have not been looking at in detail, inside my portfolio.

Suddently, I have a big exposure to Residential & Commercial Properties inside my portfolio although the exposure is spread throughout the region eg. China, Singapore, Malaysia, Australia, New Zealand & Japan.

I will need to keep in mind this risk in case interest rate spikes up, the economic situation worsens, rental declines, lending facilities freezes etc.

[financecaptain]

On interest rate risk, in Singapore, mortgage borrowers now are more vulnerable to interest rate changes than before. There has been a structural change in how banks price their consumer loans, which I assume is due to severe competitions and internal risk managment purpose.
In the past, almost all mortgaged loans are pegged to a bank's published mortgage rate, which is similar to a bank's prime rate for corporate lending. These rates are not sensitive to interbank rate changes as they are reset very infrequently.
Now, almost all mortgaged loans are pegged to SIBOR. This means if interest rate increases, the impact is felt almost immediately. Currently SIBOR is only about 1% p.a.. assuming if it goes to 2% p.a., it is a 100% jump and your monthly mortgage repayment increment may be quite substantial if your o/s loan is big.
I can definitely assume most mortage loans are large these days or else how would you expect long queues and large take up rates for houses priced above S$2m ? Leverage is one key factor pushing up prices of houses. You mean Singaporeans' salaries on a whole has risen so much in the last few years (faster than GDP) ?
If interest rates go to 3%, it is a 200% increase ! If say we go to rates of 4-5% that we have experienced before, then the increase is 300-400% !
Think about this risk ....

[helios]

FinanceCap is back in action!

Welcome back. (*pom pom ball)

Where have you been?

[kennynah]

On interest rate risk, in Singapore, mortgage borrowers now are more vulnerable to interest rate changes than before. There has been a structural change in how banks price their consumer loans, which I assume is due to severe competitions and internal risk managment purpose.
In the past, almost all mortgaged loans are pegged to a bank's published mortgage rate, which is similar to a bank's prime rate for corporate lending. These rates are not sensitive to interbank rate changes as they are reset very infrequently.
Now, almost all mortgaged loans are pegged to SIBOR. This means if interest rates increases, the impact are felt almost immediately. Currently SIBOR is onlay about 1% p.a.. assuming if it goes to 2% p.a., it is a 100% jump and your monthly mortgage repayment increment may be quite substantial if your o/s loan is big.
I can definitely assume most mortage laons are large these days or else how would you expect long queues and large take up rates for houses priced above S$2m ? Leverage is one key factor pushing up prices of houses. You mean Sinagaporeans' salaries on a whole has risen so much in the last few years (faster than GDP) ?
If interest rates go to 3%, it is a 200% increase ! If say we go to rates of 4-5% that we have experienced before, then the increase is 300-400% !
Think about this risk ....

head no so big...dont wear so big a hat.... later vision impaired by hat and can cause accidents.... leveraging to invest for returns is a very risky business...since no investment can guarantee healthy returns but interests on loans is guaranteed..

so for those whose earning power cannot match up to the instalment payments of any property bought with huge loan, should think about their family members welfare...don't speculate on property value growth and cause pain and suffering to the spouse and young children... always invest money you can afford to lose...

[financecaptain]

FinanceCap is back in action!

Welcome back. (*pom pom ball)

Where have you been?

Thanks San San.
Sorry, have been travelling.

[iam802]

Think about this risk ....

I think FinanceCaptain highlighted a very important point here.

[kennynah]

i fully agree.... and like 802, who is very familiar with what risks is all about....it is to be contended with foremost before embarking on any investment ideas...

[winston]

TOL as of December 13, 2009:-


Staying On The Sidelines

I'm still waiting for things to unfold and am still sitting on the sidelines. In the past, this has always been the time that I get into trouble. Somehow, my hands are itchy when I'm sitting on some Cash. I tend to "impulse buy" or I buy too early..

1) Gold - Gold supposedly can drop to US$850 and still be in a bull market

2) Oil - Is US$64 the next stop? Inventories are still high

3) Other Commodities - Expecting other Commodities to correct as well

4) Shanghai Equities - Resistance still at 3400

5) HK Equities - Position in Zhongwang and AMVIG

6) HK IPO - Stagged Kaisa & Longyuan. Applied for Mobi, Sunac and China Corn

7) Spore Equities - Still no Conviction Buy ideas

8) US Equities - Still expecting it to be range-bound. Still have my Inverse ETF

9) Japan Equities - Stronger than expected. But I'm expecting a stronger Yen

10) Properties (HK,Spore & China) - Would you be buying at this price ?

11) Swine Flu - 300 deaths in China and 10,000 in the US

12) Emerging Markets - Would you be buying at this price ?

13) Iran - What are the consequences of the sanction ?

14) Hedge Funds - Next deadline for redemption is Feb 15, 2010 for Apr 1, 2010

15) Mutual Funds - Year End Window Dressing activities ?

16) US Interest Rates - Expecting it to rise sooner than expected

17) USD - The USD moved up slightly. Are the shorts starting to cover ?

18) Signature - I've changed my signature to remind me of the current situation

19) Title - Today's title is to remind myself to be patient

20) Corporate Debts - Dubai, Greece and Spain have changed things. And now Ireland and Portugal is in on the radar. This could be a strong catalyst for a correction.

I'm reminding myself to keep the big picture in mind. Things have run up a lot already. However, it may still be possible to have one or two more puff, as long as one have a tight stop in place. But is the Reward worth the Risk now ?

I have already reduced my Equities exposure to 12% and may need to reduce it further, if things continue to detiorate. When a crash comes, the 12% exposure would still be painful.

Inverse ETF is currently only 1% of the portfolio. I may increase my Puts and Inverse ETF exposure after the Year End Window Dressing activities. This could be around
the first to second week of January 2010, taking into account any January effects as well.

My exposure to gold ( excluding watches and jewelleries ) is still around 4%.

I have also reviewed my portfolio for any Currency Risk, Country Risk and Industry Risk.

It's timely to also remind myself of one of my previous signatures - "Greed. Fear, Arrogance and Ignorance".

The above is to help me crystallize my thinking. It's not a recommendation to Buy or Sell. Use the above at your own risk. Please do also feel free to provide me with your kind thoughts and comments...

[kennynah]

W :

boss... u not nice lah...

request that you participate in the "interview with members" thread... you kept brushing it off...how can like that? must lead by example mah...

so...see yours next ok ?

[millionairemind]

W :

boss... u not nice lah...

request that you participate in the "interview with members" thread... you kept brushing it off...how can like that? must lead by example mah...

so...see yours next ok ?

Ya lor, Ya lor

We want to read about W's interview