The perils of the stock market (Part 1)

Recently a fellow blogger wrote an article on the topic: Do you have what it takes to withstand the bear market?

I would like to add that beside the threat of the bear, there are certainly many more dangers in the stock "forest".  People should not rush headlong into the stock market without understanding the perils involved. There are many ways that we could lose money.

1. Daylight Robbery - CLOB shares

To recap - In the old days, we could purchase Malaysian shares in Singapore through over-the-counter trade, the so-called Central Limit Order Book, or CLOB, as the market was known.
 
Malaysia unexpectedly introduced capital controls on Sept 1, 1998 (Asian Financial Crisis) and declared the trading of Malaysian shares on Singapore's Clob International to be illegal.  All CLOB shares investors were burnt badly.

I lost 100% of my investment. Lucky that my invested amount was small as I got on the CLOB train at the eleventh hour. Or perhaps unlucky as I would miss the CLOB train by being just half a month late.

2. Once a blue chip, not always a blue chip - Chartered Semiconductor

ST Engineering, SingTel, SPH, etc are blue chips, then Chartered Semiconductor was once a heavy weight blue chip.

Chartered Semiconductor was created in 1987 and Singapore Technologies Engineering Ltd was part of the venture. It was once the world's third largest semiconductor foundry. In 2000, ST Engineering wholly acquired Chartered Semiconductor. 

In the heydays of Chartered Semiconductor, the share price was well above $10. But after the Iraq War and later the SARS, the share price crashed to a low $0.73.

After that the share price stayed at $1 - $2 region until being fully acquired by an Abu Dhabi company at $2.68 in 2009.  Imagined that you brought the shares at above $10 and got back $2.68 at the end...

Even branded name like "ST" does not guarantee anything.


Next one. You are cash rich. You think you can take whatever the stock market throw at you.  In a bear market, you have holding power and you think you can hold on until your shares recover.  But you are wrong... You lose...

(See part 2)

Fixed Deposit Rates Update - 1.368% P.A.at Singapura Finance

First some clarifications: Fixed Deposit is not for real investment.  My review on Singapore's FD is limited to S$50,ooo and below; and tenure term not exceeding 12 months.  Fixed Deposit is for parking the emergency fund and allowing immediate access to the fund when needed.  These are also based on the following considerations:

1. Singapore's Deposit Insurance Scheme maximum coverage up to S$50,ooo only.

2. Long tenure term will potentially affect your cash-out value for your emergency fund, as you may suffer a penalty fee for early withdrawal.

Back to the update:    

With all the talks about higher interest rates, the FD interest rates in Singapore do move slowly higher since my last update in February (highest was 1.18% back then).  The highest interest rate in the market now is 1.368% p.a., offered by Singapura Finance:

Singapura Finance 

The promotional interest rate is 1.368% p.a. for 12 months tenure, for a placement sum >$50,000 and <$100,000.  So you could enjoy 1.368% if you place deposit for $50,001.

This promotion (ending 31st Dec) is not found on their website, but there is a leaflet displayed on their branch door.

There are few branches of Singapura Finance in Singapore:
1. City HQ (150 Cecil Street #01-00),
2. Ang Mo Kio branch (Blk 711, Ang Mo Kio Avenue 8),
3. Bedok branch (Blk 202, Bedok North St. 1),
4. Woodlands branch (Blk 302, Woodlands Street 31),
5. East Coast branch (212 East Coast Road),
6. Serangoon branch (Blk 101, Towner Road),
7. Jurong West branch (Blk 501, Jurong West Street 51).


Please let me know if there is better offer in the market.

Finally Spring comes to CitySpring

Heard that CitySpring is in talk with Keppel Infrastructure Trust for a possible merger. 

I hold CitySpring since its IPO day. It was $0.89 when CitySpring launched its IPO in 2007.  My average price for CitySpring is a high $0.65 that CitySpring is enveloped in deep winter in my portfolio for many years.  At one time, it lost >50% its initial amount.

I did not get rid of CitySpring because of the regular quarterly dividends which generated about 7-8% yield and also the fact that it comprises just a small percentage of my holdings.  Despite the high yield, I did not average down because of the huge debt CitySpring is carrying.

After many quarterly $0.0082 dividends, finally I managed to breakeven on CitySpring in early 2014. 

CitySpring owns City Gas, which is the sole producer and retailer of residential gas in Singapore.  It also owns SingSpring, which runs a large-scale seawater desalination plant in Singapore.  An overseas asset Basslink operates high-voltage electricity grids in Australia.

This possible merger would combine CitySpring with Keppel Infrastructure Trust, which generates power from city waste and supplies reclaimed water to industrial users.  This possibly could provide investors with long-term, regular and predictable distributions and have potential for long-term capital growth.

So, finally Spring comes for CitySpring investors.

itySpring Infrastructure Trust, a Singapore piped-gas supplier backed by Temasek - See more at: http://www.straitstimes.com/news/business/more-business-stories/story/temasek-backed-cityspring-said-weigh-merger-keppel-unit-20#sthash.d4NnUoF3.dpuf

CitySpring Infrastructure Trust, a Singapore piped-gas supplier backed by Temasek Holdings, is exploring a merger with Keppel Infrastructure Trust - See more at: http://www.straitstimes.com/news/business/more-business-stories/story/temasek-backed-cityspring-said-weigh-merger-keppel-unit-20#sthash.d4NnUoF3.dpuf

CitySpring Infrastructure Trust, a Singapore piped-gas supplier backed by Temasek Holdings, is exploring a merger with Keppel Infrastructure Trust - See more at: http://www.straitstimes.com/news/business/more-business-stories/story/temasek-backed-cityspring-said-weigh-merger-keppel-unit-20#sthash.d4NnUoF3.dpuf

My Stock Portfolio @ end Oct 2014

No.	Stock Name	Lots	Portfolio%	Avg Cost$	Breakeven$	Market$
1	SGX	4	18.71	4.95	3.79	7.00
2	Starhub	6	16.56	3.36	2.90	4.13
3	SPH	5	14.30	3.99	3.39	4.28
4	SingTel	2.2	5.53	3.37	3.10	3.78
5	CapitaMall Trust	4	5.27	1.76	1.32	1.97
6	AIMS AMPI Reit	5	4.98	1.47	1.39	1.49
7	Suntec Reit	4	4.77	1.58	1.26	1.785
8	Starhill Global	8	4.36	0.74	0.60	0.815
9	CapitaLand	2	4.24	3.91	3.61	3.17
10	SATS	2	4.14	3.06	3.02	3.10
11	CDL HTrust	3	3.46	1.66	1.06	1.725
12	SIA Engg	1	3.18	4.86	4.74	4.76
13	Frasers CT	2	2.60	1.81	1.75	1.945
14	SPH Reit	3	2.11	0.97	0.97	1.055
15	HPH Trust	3	1.68	0.90	0.81	0.675
16	Sing Post	1	1.32	0.875	0.63	1.97
17	Boustead	1	1.23	1.44	1.38	1.84
18	CitySpring	3	1.02	0.65	0.45	0.51
19	FE HTrust	1	0.55	0.93	0.86	0.83

Movement in my portfolio in Oct:-
Sold:- Nil.
Bought:- Starhill Global Reit.

Dividends collected in Oct: $640.00
2014 avg dividends/month: $485.24


Boring process of building up my passive income portfolio brick-by-brick (bit-by-bit). 

Next Month:

November is my winter dividend harvesting month - another month that exceed $1K in dividend incomes.  Hopefully this will be the norm rather than rare occasions in the future.