A roller coaster ride for the US Stock Market? – 18 Jan 2017
With one tweet, he sent Toyota shares lower. With another tweet, he sent the shares of major pharmaceutical companies lower. With yet another tweet, Boeing shares dipped. Millions of shareholder value, wiped out just like that.
Welcome to post US President Donald Trump’s US stock markets where a single tweet from Donald’s fingers, loosely connected to a brain that alternates between hallucination and facts, invites instant kneejerk reaction, whether warranted or not. It appears that no company is spared. Perhaps negative opinions on companies or sectors where he has vested interest in, will be treated more kindly.
With no bigger brand ambassador than Donald for Twitter, Twitter has scored an unintended coup. Maybe, folks who are hesitant about using Twitter will now be more willing to try this instant messaging platform. Unfortunately, Twitter is still languishing below US$20, well below its high of US$74.73. Even with the endorsement of the most powerful president in the world, Twitter still cannot convince the market of its profitability and future growth. Twitter continues to bleed quarter after quarter.
Donald’s unpredictable tweets will be the curveball you will have to live with as you stay invested in the US stock market in 2017 and beyond. No one knows if all his grand plans of bringing jobs back to US will materialize. No one knows if his protectionist rhetoric will cause the US dollar to weaken as he thinks that a stronger US dollar has been disadvantageous to US exports.
A few things are sure for 2017 though. More corporate merger and acquisition will happen, especially in the oil & gas and pharmaceutical sector. You will strike a home-run jackpot if you have shares in to-be acquired companies. Good large cap companies like Amazon and Google will continue to grow, innovate and reward shareholders. Smaller cap profitable gems are a-plenty too. Stay invested, nimble and watch out for currency fluctuations that might lower your profits should the Singdollar strengthen against the US dollar. Take profits regularly. Money ain’t yours till it’s safe in your pocket.
Whatever you do, be decisive and don’t get Terrex(ed), meaning “Stuck”.
Have an exciting year of the Rooster!
Empower Advisory Team
The Pokemon Go revival of Nintendo – 12 July 2016
After the Mario plumbers failed to stem gamers from leaving the Nintendo platform, an unlikely hero in the form of Pokemon and its band of cutesy monsters is giving Nintendo a second wind, last experienced when it introduced Wii to the gaming community. And what a spectacular ride up the stock chart for Nintendo!
10 months ago, Nintendo had already announced a new mobile game called Pokémon Go, an augmented reality game. Basically, it’s a game that allows you to go out there to catch virtual monsters in the real world and pit your pet monster against other pet monsters. Along the way, you do tasks like search in your neighbourhood for upgrades to improve the fighting capabilities of your pet monster. All these, guided by your phone.
Knowing that its installed base of gaming console machines was limited and made it difficult to scale up its reach to new customers, Nintendo decided it was now or never to put its successful Pokémon franchise on everyone’s handphone.
If you still don’t understand any of this, just know that it’s a very, very addictive game as the upgrades and monsters are endless. Players will be able to pay real money for virtual upgrades and all kinds of enhancement to their monsters. Retailers will want to pay Nintendo money to attract gamers to their outlets to “hunt” for upgrades or fight other monsters for points.
Do you now get the idea how money will start to flow to Nintendo? The possibilities of monetising Pokemon Go are pretty mindblowing. The market recognises this and rewarded Nintendo with an astonishing 60% stock price jump in just 5 days when it was officially launched on 6th July.
Things don’t happen for no reason. And that’s how you make your millions. Because you know what’s going on and take action when the opportunity arises. Making money takes effort, but it’s not difficult.
And that’s what Empower Advisory’s investment bootcamps are for. To speed you up to profit with confidence.
Our Best
Empower Advisory Team
The amazing 164% returns of Singapore O&G – 5 Oct 2015
I was pleasantly surprised to read in the Straits Times on 5th Oct that Singapore O&G, medical practitioners in women’s healthcare – Obstetrics and Gynaecology (“O&G”) field which listed on the Catalist on 4th June has returned a whopping 164% to date, closing at 66 cents on 2 Oct 2015. This company is one of the listed healthcare related companies that the Straits Times deemed to have gone against the trend of the overall market downturn.
How did Singapore O&G pull off such a stunning performance? I decided to dig further and realized the 164% return was calculated from its IPO price of 25 cents.
Singapore O&G share price surged up upon its IPO debut and closed at 63.5 cents. So if you were to compare its first day closing price to its most recent close price of 66 cents, it’s not so spectacular after all. The increase over 4 months is less than 5%.
However, if you were to chart its share price, it is not exactly the ascending pattern that you might have expected. So who actually benefited from the 164% increase?
The bulk of the beneficiaries are folks who got placement shares ahead of the public. They got 41.4 million placement shares. Who are these lucky by-invitation-only folks? They are most probably friends of the directors of Singapore O&G and special clients of brokerages. They paid a total of $10.35 m for the placement shares. As for the public, only 2.2 million shares were made available to them for balloting and the amount raised was a paltry $550,000. As for the directors/founding shareholders of the company, their issued share price was as low as 2 cents. They are the biggest winners of course.
Why set an IPO price of only 25 cents? Setting an IPO price low enough to pop in price on a company’s trading debut rewards placement shareholders who can sell the shares instantly at a fantastic profit. If the company directors/founding shareholders are not locked in with selling restrictions, they too will be able to cash out handsomely. A pop will also provide free media coverage as reporters will be scrambling to cover Singapore O&G’s stunning Catalist debut.
Are there no losers?
If you look at the price chart of Singapore O&G, you’ll see that the stock is actually pretty much trading sideway. It hasn’t been sky-rocketing like what the eye catching table might have suggested. Many folks have bought at prices beyond 66 cents (See candlesticks above the blue line) and will feel no joy. Were they overly enthralled by Singapore O&G stunning debut? Some are staring at up to 23% loss, paper or realized. This company is not consistently traded. Some days, the number of shares traded is less than 500. On 29 Sep 15, no shares changed hand.
No doubt, after people read the exciting table in today’s Straits Times, some will simple punt several thousand dollars and more on Singapore O&G to hopefully ride another 164%. Will a whooper return materialise?
The takeaway is to be discerning with what you read, beyond glossy headlines. Be savvy enough to analyse the business of the company you are investing in and its stock behaviour. I also hope you now understand some of the motivation behind the “low” pricing of IPO shares.
Our Best, Always
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Investing lessons from the Greek Crisis – 6 July 2015
The Greek government-debt crisis of Jun 2015 has its roots more than a decade ago, in an uncompetitive economy, huge borrowings and an over-generous welfare system that was stubborn to restructuring. It got worse when the Greek government admitted to under-reporting its debt level and deficits. In 2012, Greece’s government had the largest sovereign debt default in history and despite an attempt by sovereign lenders to instil discipline into its heavy spending, missed an IMF €1.6 billion loan repayment on June 30, 2015. Today, it risks being kicked out of the European Union, having amassed an estimated €330 billion in debt.
It is timely we draw lessons as share investors from the Greek crisis, using parallel ‘metaphors” to bring our point across.
1) Choosing a bad company – Greece always had a weak economy. Adding Greece into the collective long “portfolio” of EU countries, doesn’t make sense.
2) Pouring good money after bad – This is not the first time Greece has defaulted on its loan. Yet, Greece continues to get bailed out.
3) Realise that you can’t change a company. You take them as they are – Greece continued to run like Greece, on a welfare system that cannot be sustained. It is strange that its lenders think they can solve Greece’s problems. No, Greece has to solve its own problems.
4) Realise you are really investing in the quality of the company’s management – Greece is run by bad managers. Enough said.
5) If you can’t cut your losses early, you’re screwed – Now, all the lenders to Greece feel pretty screwed. Maybe they can demand some territories from Greece to offset the loan, but that will be just a political disaster.
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Our Best, Always
Empower Advisory
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2015 – The Empower Advisory 6 Golden Rules for Beginner Investors/Traders
As expected, the profit taking phenomenon at year end and start of the year has ensured that the US and SG stock markets did not enter 2015 with a firework bang.
Year to date, the Nasdaq 100 and Dow Jones index dipped 1.8% while the STI lost 1.1%. The drop is mostly true for major stock indices. One of the few bright spots is the Shanghai SE Composite index which is up 2.7%.
The continual oil price collapse has claimed quite a few victims. Once popular Singapore oil play counters like Ezion and Ezra have seen their share value drop by 37% and 30% respectively in the most recent 3 months. Of course Empower Advisory members who have learnt how to cut their losses assuming they held a long position would have escaped with minimal scratches. Some could have escaped with a healthy profit. For those more seasoned traders who took a short position, you would have made your Chinese New Year Ang Bao. But my advice again. Not to nag, but don’t be complacent. Arrogance and ignorance is the reason why unsavvy, stubborn investors/traders get wiped out of the game forever.
I have cashed out of my Facebook, Yahoo and Apple holdings. Empower advisory members should have done the same since they have been very attentive in our small class hands on investment coaching.
2015 is going to be a very exciting year once again, as there will be lots of great stocks to go long and short.
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Just remember Empower Advisory 6 Golden Rules of investing/trading. Always.
Empower Rule 1) Don’t think you can control the market. You cannot. You can only control how you react to the market. Unless you’re the mastermind behind scam stocks such as Blumont, Liongold etc. Be prepared for jail though.
Empower Rule 2) Don’t have too many stocks in your portfolio. 10 is really the max for a regular investor holding a full time job. You have a life out there besides staring at daily tickers and watch your blood pressure rise too
Empower Rule 3) Don’t believe in a so-called balanced, diverse portfolio to even out your risk. Would you rather have 10 good stocks, or 5 good and 5 bad stocks?
Empwoer Rule 4) Cut losses early (whether you short or go long) and ride your winners, remembering to pull out some profits when the ride is a little too hot.
Empower Rule 5) It’s ok to cut losses aka “go-stan”. Why do you think your car has a reverse gear? You may not use your reverse gear very often but it’s there when you need it so you can live to charge successfully another day in 7th gear.
Empower Rule 6) Know how to use information in a systematic way to increase your probability of a rewarding trade
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I wish you my best and see you at our regular free investment outreach!
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My Best, Always
Douglas Chow
Founder / Empower Advisory
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Buy and hold is NOT Fail Proof. Even Warren Buffett gets burnt – 13 Oct 2014
Mr Buffett is the 4th largest shareholder in Tesco. Tesco is a multinational grocery and general merchandise retailer headquartered in UK and is the second-largest retailer in the world (measured by revenues) after Walmart.
Sounds like a no-brainer investment, right. A business in the business of providing necessities. Perhaps even recession proof, you might think.
Buffett bought into Tesco shares in 2006/2007, to amass a 5.2 per cent stake. 5 years later, when Tesco issued a profit warning in January 2012, (Its profits fell for the first time in two decades), Warren picked up some more.
Worst was to come. Tesco’s share price eventually fell to a new 11-year low on 3 October 2014, closing at 172.15 pence, down from 487 pence at its peak in 2007. By then, Buffett was looking at about US$ 750m of unrealized losses.
The competitive landscape Tesco competes in had changed dramatically since Buffett bought into Tesco. It had over-expanded, losing touch with its customers who in droves had moved over to discount rivals like Aldi and Lidl.
Finally, after holding Tesco shares for 7 years, Buffett admitted to CNBC, “I made a mistake on Tesco. That was a huge mistake by me.”
Things are going to get worse as Tesco is under UK’s financial regulator’s investigation after management admitted that it had overstated its 1H2014 profits by £250m.
Buffett’s mistake is all too common among investors who hold on to stocks of companies that have since lost their glory days and hope against hope that their battered share price will bounce up. Buffett is going to trim his losses. He too knows that this time, the leak is too severe to plug.
Buying and hold, hold, hold is not a “Fail-Proof” investment approach. You still need to adjust your position from time to time. Many promoters tell you stock picking is easy. Buy the stock of a “good” company and just hold. Don’t need to care too much. Tesco was a “good stock” when Buffet took a huge position in it. Look what happened. You have to know the correct approach to investment. Whoever tells you that investment is just buy and hold is not competent, lying or just don’t care enough about you to tell you the truth.
Our Best, Always
Empower Advisory Team
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Taking over the Singapore Flyer – Good Decision? – 30 Aug 2014
What happens when a company’s decision does not go down well with its shareholders and analysts?
Shareholders dump the shares, causing the share price to come down.
This is exactly what happened to Straco Corp’s share price when it announced on 28th Aug 2014 that it had agreed to purchase the troubled Singapore flyer for $140 million in a 90:10 joint venture, with WTS Leisure Pte. Ltd’s taking the smaller stake.
Shareholders and analysts were not optimistic that Straco Corp could turn around the flagging business of the Singapore Flyer. They think that the cash that they would have to use for the purchase could be better used elsewhere to generate better returns. They think the price paid for the Singapore Flyer is too high. They don’t like the additional debt that Straco Corp would have to take to fund this purchase.
The next day, the share price of Straco Corp plunged more than 10% to $0.725 before recovering some lost ground to close at $0.785, 4.3% below its previous day closing price of $0.82.
Nothing in charting could have prepared you for the drop in Straco Corp’s share price. Just because you’re a fan of the Singapore Flyer does not mean the market will agree with you. But now you know the reason why Straco Corp’s share price dropped. Charts don’t explain the story. Fundamentally, events, sentiments and opinions drive how the charts move. The question now is, if you’re invested in Straco Corp, do you hang on, or offload?
Our Best, Always
Empower Advisory Team
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Get READY! SGX to cut lot size from 19 Jan – 26 Aug 2014
You no longer have to find yourself priced out of more expensive blue chip stocks like Keppel Corp, DBS and UOB.
No need to shell out $11,000 just to own a piece of Keppel Corp. You will soon be able to have a tiny-weeny piece of this marine, property and infrastructure company at $1,100.
From 19 Jan 15, the trading volume of blue chips will shoot up many, many folds, shaking the sleepiness from some of these blue chip stiocks. With more trading activity, the greater the opportunity of profiteering, but only if you know how. What would you do now?
If you’re not well-versed in stock investment yet, get up to speed and equip yourself with REAL investment kung fu. Empower Advisory’s bi-monthly intensive stock investment course specifically prepares you for it. Just 2 more dates for Sep and Nov 14.
No nonsense, no games, no time wasting, no rah-rah. Because at Empower Advisory we teach, not trick.
To check out SPECIAL pricing for our September course (7th intake), scroll all the way to the bottom at this link.
Our Best, Always
Empower Advisory Team
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Cheap can get cheaper (Case Study) – 5 Aug 2014
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I was driving today when I heard on the radio that Xpress Holdings Pte Ltd (“Xpress”) is in talks with UOB to avert a winding up application.
UOB is not the only one pressing Xpress for late payments. HSBC Institutional TrustServices (Singapore) and ASEAN Finance Corporation Ltd (AFC) are also in the fray. The sum owed is not a lot, just $2.4 million. That Xpress, a listed company on SGX Mainboard cannot pay up shows how weak the company is.
Isn’t it ironic that Xpress, a company that prints time-sensitive & quick turn around. publications such as stock market research reports , annual reports, IPO prospectuses, shareholder circulars and fund management reports cannot print its own report of stellar results?
An acquaintance called up. Let’s call him Cheapo since he has a clandestine affair with cheap penny stocks, despite having got burnt several times.
The conversation went something like this.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
“Douglas, you saved me some serious money.”
“I know. So when you buying me lunch?”
“How did you know it will get that bad? The charts don’t show it?
“The signs were there but the charts can’t tell you. You don’t bother going through the financial numbers and thinking about the business model.”
“Aiyah, I too busy, ah.”
“Busy with work or busy with losing money?”
“Don’t rub it in, leh.”
“The charts can only tell so much. You like to buy cheap stocks. But cheap can become cheaper until one day you don’t even have a currency to represent your stock price. How much was it when you yakked about Xpress last year?”
“About 3 cents.”
“Today?”
“1.6 cents.”
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
The Takeway. Combine fundamentals with technical analysis in stock investment. That’s what we do at Empower Advisory. It will save you lots of tears. And it’s not rocket science. You can pick it up, just like all our course participants with or without financial background. Think about it. You can be either busy losing money and making excuses or busy making good investment decisions.
Douglas
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How New SGX Regulations Will Affect You – 4 Aug 2014
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We have distilled the latest SGX Regulations announced on 1 Aug 14 and highlight the salient ones that will affect you, the retail investor
Upcoming Changes in Singapore Stock Market Regulations that will affect you.
A minimum trading price of S$0.20 as a continuing listing requirement for company shares listed on the SGX Mainboard – While this tries to address risks of low-priced securities being susceptible to speculation and manipulation, it doesn’t mean that you can assume it will no longer happen. Most affected companies are likely to consolidate their shares so that their share price is well and above S$0.20 unless they can boost their share price organically through good financial performance. Expected date of implementation: Mar 2015. Companies will have up to 4 years from Mar 2015 to comply. Companies that don’t comply may be forced to delist.
1) Minimum price as a continuing listing requirement for company shares listed ONLY on the SGX Mainboard
2) More cash outlay required
Securities intermediaries like your brokerages houses will have to collect at least 5% of collateral from you for trading of listed company shares. Exempted from this rule are institutional investors (Big boys, not you and us), trades settled through delivery-versus-payment mode, and funds from the Central Provident Fund and Supplementary Retirement Schemes.
For those affected, you will have to keep cash collateral in trust accounts with licensed banks in Singapore at all times, except for cash collateral collected in relation to trades on overseas securities exchanges such as NASDAQ.
Expected date of implementation: Mid 2016
3) Expensive stocks become “cheaper” to buy
SGX will reduce the board lot size for securities listed on SGX from the existing 1,000 shares to 100 shares.
Expected date of implementation: Jan 2015. More details will be provided by end August 2014.
Our Best, Always!
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