Happy New Year!
January 3rd, 2008 NW Teong
Hi, I would like to wish every one a very happy new year and that all of you would have a new year filled with joy, plenty of wealth and lots of health.
I am sorry to say that I have not blogged for quite sometimes due to my heavy commitment in my private equity career. This is not an excuse, more importantly I feel that there is nothing much to talk about the markets in the last few weeks. To put it simply, there are no new factors to talk about on the markets. Markets are basically still spooked by the depth of the sub-prime loan debacle and its severe impact on leading financial institutions.
Due to the sub-prime problem and its impact on the financial institutions as well as on the macro picture, markets would be volatile with the tendency to trend downwards in the next few weeks. In short, investors should all be wary when macro picture is turning down, i.e. GDP growth rate is coming off. Under such scenario, we should not invest in the equity markets if we can afford to. What shall we do then? Well, we should continue to monitor the markets and wait for good opportunity to go in or at least when macro picture started to turn up again. We may not know how long the economic slow down will be, nevertheless we should be patient to wait for a turnaround. However, if we have to invest at this moment, we have to really look for value-stocks and prepare ourselves to hold for a longer term. My own view is that if we can we shall put most of our money in safer instruments such as government bonds and some money in in-expensive value stocks which we prepared to hold longer term. These stocks preferably also give out 4-5% dividend per year. Be cautious and conservative. The Santa Claus rally, if any was really muted last year and I do not think there will be any Capricorn effect this month. On the contrary, markets would be extremely volatile.
Cheers!
Master “The Essence of Stock Investment” and ride towards the journey of your financial freedom to be the “Master of Your Own Destiny”!Disclaimer: Investors are investing at your own risk. Please read full disclaimer at the end of the blog or from the main page of the website.
7 Comments Add your own
1. JEW | January 3rd, 2008 at 3:27 pm
Hi Mr Teong,
Good to see you are back! Happy New Year to you too!
From your writing, it sound to me that you have turned bearish on the equity markets. If that is so, would you be able to comment on some alternative investments that is right for current investment climate?
2. NW Teong | January 3rd, 2008 at 4:01 pm
Hi Jew, thanks for your comment. I am not entirely turning bearish, not yet! I am more cautious and conservative in view of more volatility to come. On that count, you can say that I am bearish at least in the short term. However, I am not asking investors to sell out good value-stocks which have good valuation. Some alternative investments that one can consider are: 1) mid-low end property in Singapore. As in any investment, you need to do your homework in order to find a good value buy. For instance, a unit at Eastvale (an EC) costs about S$650,000 or S$590 per square feet. It has superd location which is about 10 minutes to MRT, it is 10 years old comes 2009 i.e. you can sell it to foreigner from 2009 onwards. With its current rental of S$3,000 per month, this works out to about 5.5% in gross rental yield. At current price, it is definitely cheaper that the pricest HDB sold at Marine Parade. To think that it also has seaview (for some selected units) with full condo facilities. FYI, I do own one unit there. To me, Eastvale is an uncovered gem and is highly undervalue (in comparative terms). I will hold on to my unit till at least 2010. 2)Short-term money markets that give you abour 2.5% per year, 3) Government bonds and others. Other instuments may not be accessible to retail investors. Please note that you are investing at your own risk and the last two options are basically a short term measure depending on your view on the equity markets. Cheers!
3. JEW | January 4th, 2008 at 11:00 am
Hi Mr Teong,
Thank you for your enightenment, I find your comment very clear to me…please continue to post your thots for the benefit of everbody…
JEW
4. LA | January 8th, 2008 at 8:32 pm
Hi Mr Teong,
Happy to see you post your blog again… I have some query regarding the plantation stock (palm oil)… is it the time to invest on it?? Juz read the newspaper today saying that the successful result biodiesel using by car… Is it the good time to invest on palm oil since the petrol price keep hike… Will palm oil replace the petrol in future?? any comment & advise for the Yr of 2008??
Thank you.. Happy new year..
5. NW Teong | January 10th, 2008 at 9:44 am
Hi LA,
One advise is that do not rely on others to give you advise on investment decisions. Learn to do it on your own. To look at palm oil, you need to know the uses of palm both as vegetable oils and bio-fuel. Not only that, palm oil can be used to produce a host of other products such as soap, candle, oleochemical (cosmectic industry), CBS (cocco butter substitutes), …etc. Only after knowing all its uses, then you can know the supply and demand for all these. I had said at least two years ago, that palm oil is the king of all vegetable oils. I am still saying this today and perhaps for a long long time. Why? reason is very simple. You just need to compare palm oil with any other vegetable oils, you will realise that palm oil has much higher yield as compared to other crops. In addition, you plant one time and can harvest for the next twenty years after the trees mature. The best part is that you can probably harvest the fruits three times every two months. Please note that every other major crops can be harvested at most twice per year! Having said that, being commodity, its price is closely link to other major crops as well as its other subsitutes, crude oil included. All this boils down to supply and demand.
From my opinion, palm oil can never replace petrol, not now nor in the distant future. Reason is obvious, palm oil is still predominantly a vegetable oil, with the rising trend of the CPO (crude palm oil), it is in fact costly to turn palm oil into bio-fuel. In addition, it is not really environmental friendly to cultivate palm just to produce bio-fuel. If you look at the very macro level, human beings are really short-sighted to clear the rain-forest for the sake of having cheaper fuel. Instead of running out of fuel, we might run out of Oxygen one day!
We shall take good care of the earth and everthing on and in it.
6. LA | January 14th, 2008 at 4:46 pm
Dear Mr Teong,
Thank you for the advise, elaboration & analysis which you given. I will keep in mind… Thanks once again… hope you will organise some investment seminar soon…
Happy New Year..
7. samarth | April 9th, 2008 at 6:49 pm
Your blog is very informative, I have learned so much from it. It is like daily newspaper :). Added to fav
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