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A Money Printing Machine That Generates $69.8 Mil A Day

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In my last blog post , I talked about “The Power of Free Cash Flow” , the important of having consistent and sustainable free cash flow for companies which would allow them to pay dividend or buying back their own shares. Imagine if there is a company that could generate $68 MIL a day , do you think such company exist in world stock market ?
Yes ! It's Berkshire Hathaway (BRK ) and it was sitting on a massive cash pile at the end of 2018 and the cash continue to increase quarter by quarter in billions of dollar.  BRK is sitting with gigantic cash amount of USD 114 Billionsas of 1st Quarter 2019.
For the past 3 years , Berkshire was able to generate Free Cash Flow of USD 25.5 Bil /year(on average) and this will translate to about USD 69.8 Million / Day.

The Power Of Free Cash Flow

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Accounting Profit is Fake
Yup, you heard me correctly.
Accountant’s idea of profit is prepared according to tax adjustments and accounting standards. These were established to provide consistency and governance across how accounting is done. The problem is these ‘rules’ are very much open to interpretation — leaving room for ‘creative accounting’.
The collapse of Enron is a prime example of how investors and business owners assess a company’s financial performance is guided by all the wrong numbers.
But if you look at the Net Cash Flow position, you will see that the company was losing cash.
Sounds familiar ?

Are S-REITs Overvalued ?

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If you are having more REITsin your portfolio , the chances that you are beating STI is high as most of the REITs are having good "run" so far. Overall YTD returns for FTSE ST REIT Index is 16.5% vs STI of 7.67%. Since I have more than 42% of REITs in my portfolio , quite natural that my portfolio also outperformed STI by +6.3% with YTD returns of +13.97%.


Are REITs Overvalued Now ?






From long term trend perspective, valuation for S-REITs looks "rich " as you may see that is very close to +0.5SD trend line , a level never seen since May 2013.

You may also notice that the dividend yield for some of blue chip REITs been compressed to 4-5% like Capital Mall REIT/ Capital Commercial REIT/ FCT / Ascendas Ind REIT/ ParkWayLife REIT or even Keppel DC REIT.

Know Your Yield , Know Your Risk

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Your Portfolio Yield Determine Your Risk-Tolerance , No?
In general, your portfolio yield could be a very good indicator if you are taking too much risk or risk-averse. I plot a chart to show my portfolio yield vs other income investment instrument as below:





My yield from equity is about 6.1% , which is slightly lower than S-REITs averg of around 6.5% (base on OCBC Investment Research S-REIT Tracker-link ). Although I am just having around 42% in REITs but since my other’s holding also mostly dividend play like Telco/ Banks + 2 investment trust ( Hotung Investment and Global Investment) and some other blue chips ( Keppel Corp / ComfortDelgro) etc , which gave me a yield of almost 1.75X higher than STI ( ES3).
My Portfolio Yield (Including Bond + CPF) drops to just around5.1% if I include the Bond and CPF balance where the interest rate are lower than Equity.

You Should Be Worried When FED Starts to Cut Rates

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Market rebound strongly in last two days after FED Chairman indicating future rate cut if economy situation is getting worse due to trade war.
Fed Inches Toward Rate Cut as Trade War Frays Patience<From Bloomberge.com> “The Federal Reserve’s top policy makers aren’t yet ready to cut interest rates, but worsening trade tensions are nudging them in that direction.

When REITs Lead To Large Losses

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I would like to share this very good article from SeekingAlpha.comin regard to investing in REITs :

Summary
REITs are famous for being defensive income-producing investments. There exists, however, a lot of landmines that can lead to massive losses. We explore the most common reasons that lead to large losses in the REIT sector. Finally, we present how we seek to avoid landmines at High Yield Landlord.
Generally speaking, REITs are famous for three things:
·They pay high dividends. ·They are defensive investments. ·They tend to outperform in the long run:

2nd Qtr 2019 : Dividend & Portfolio Update

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Finally, is my turn to update the total dividend and interest income that I will be getting in 2nd Qtr 2019 , after my last company i.e Accordia Golf Trust announcing its result yesterday. I’m really excited because second quarter is normally the highest dividend amount I will get as most of the blue chips are given out their dividend in this quarter.
Total Dividend & Interest Income2nd Qtr 2019 = $59,007 vs 2nd Qtr 2018 ($60,325), decrease by -$1318.

Return On Investment vs Return On Luck

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When buying TOTO , everyone thinks ( or at least hopes ) that they will be the “lucky” one to become the next “millionaire” and we all knew that winning 4D or TOTO is just a pure luck, but how about investing ?
My friend ( Chirs ) from (Growing Your Tree of Prosperity )have blogged about it herewhich caught my attention to write about my case and “luck factors “ which have much impact on my of investing.

(What is your Return on Luck (ROL) ?)<link>

How Many “Lemons” Do You Have In Your Portfolio ?

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The Market for Lemons
From Wikipedia,
Akerlof's paper uses the market for used cars as an example of the problem of quality uncertainty. It concludes that owners of high-quality used cars will not place their cars on the used car market. A car buyer should only be able to buy low-quality used cars, and will pay accordingly. The market for good used cars does not exist. "The Market for Lemons: Quality Uncertainty and the Market Mechanism" is a well-known[1] 1970 paper by economist George Akerlof which examines how the quality of goods traded in a market can degrade in the presence of information asymmetrybetween buyers and sellers, leaving only "lemons" behind. In American slang, a lemon is a car that is found to be defective only after it has been bought.

Building Your Own ATM Machine !

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Sometimes my friends or even relative just wonder how I could survive without working or having “active income” for the past 4 years. I told them that I have my own “ATM Machine “that will generate a consistent cash flow , quarter by quarter , or course sometime I can withdraw more money from this ATM and sometimes less. It has consistently giving me the cash without fail even during GFC ( Global Financial Crisis), it just a matter of given out more or less.
Yes, it is dividend pay- out from my shareholding which I’m depending on since 2016 to pay for my monthly expenses and holidays. Of course I’m not saying is easy to build this ATM Machine, it take long time ( very long ,almost 20 years for me ) with hard work and saving , investing and reinvesting on the dividend received…taking advantage of the power of compounding effect“ as well as spend within your mean ( try to avoid “Lifestyle Inflation“ ).

Saving on Transaction Cost : 1st Qtr 2019 vs 1st Qtr 2018

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I have done less transaction in 1st Qtr 2019 vs 1st Qtr 2018 although market has gone up much from the low recorded in end of last year  In line other with world stocks market , STI also performed well in 1st Qtr ,up by +8.02% to 3315 as of writing and my portfolio managed to outperformed market by few % points with ROI of +12% YTD, mainly due to better performance from REITs.

Five Best-Performing S-REITs Average 20% Total Return in YTD<from SGX.com>

OMG !! The Yield Curve Just Inverted ! Sell or Not Sell ?

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This is probably one of the hottest topics where you can see and read from all over the business news headlines in last two weeks.
What is “ Inverted Yield Curve “ and why is it so important that draw so much attention from financial strategist / economist/ investors / fund managers all over the world. Discussing, pondering and arguing about the impact and direction of economy due to this so called “ Inverted Yield Curve” , relentlessly.

Share Buy-Back By REITs : Does It Make Sense ?

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If you may notice , I think K-Reit is the only REIT that is actively buying back its own share among all REITs listed on SGX.

I fully understand the benefit of “share buy-back “ as it has been carried out by many companies who see the value of their share when the price might be temporary plummeted due to market condition or caused by certain bad news.


What is a Share Repurchase/ Buy-Back( From Investopedia.com)

1st Qtr 2019 : Dividend and Portfolio Update

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Time flies , 1st quarter 2019 just passed in the blink of an eye , I am sure most of us have good return on your investment as STI has achieved +4.9% returns YTD.
My portfolio managed to outperform STI with returns of 9.7% YTD , thanks to most of the REITs and some other counters like Global Investment and Comfort DelGro.

Keep Calm and Collect Photos (Dividends)

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STE  and Mrs like to take photos during our morning/evening walk , of course other than catching Pokemon ..hahaha  :D
Photography allows you to create images of events, times, and places, it also record what happened and allow you to share them with friends and family, either in digital format or more permanently with prints or photo books. By being able to capture a special moment in time, you carry the memory of that event forward with you, allowing you to share it and remember it with those that were there.

HYFLUX Scheme Of Arrangement (SOA) : Yes or No ?

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**Disclaimer : I am vested with $127,000 in Hyflux 6% CPS, my views and opinions expressed here might be biased to some extent , please do your own due diligence when acting or using the info as presented below.


Bitter pill to swallow despite Olivia Lum's sweetener to small investors(18 Feb 2019)
Hyflux reorganisation plan will see heavy losses for small investors(17 Feb 2019)
Hyflux's replies to Sias raise more questions ( 16 Feb 2019) SIAS's Hyflux rap: A wake-up call for corporate Singapore(13 Feb 2019)SIAS queries Hyflux chief Olivia Lum and board on remuneration, operations(11 Feb 2019)
Finally, Hyflux unveiled the so called Scheme of Arrangement under the court protection restructuring plan on 16 Feb which affecting more than 34,000 (mostly retail investors) registered holders.

Saving Too Much For Retirement ?

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Was having casual conversation over the dinner with friends last week and some knew that I am not working since 2015, asking if my investment income will be able to cover my expenses. I told them that I am still able to save $60-80 K a year after deducting all my yearly expenses including holidays and staycations.
“Then you are saving too much for your retirement !” ,one of them said that .. I was stunned like : huh ?? saving too much ?? …Uhhh !

Open Electricity Market (OEM) : I Switch You Switch , Save ! Save! Save!

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Everyone seems happy recently (including STE ) as our pocket willhave some extra money from saving of our electricity bill by switching to some other’s retailers , other than SP Power. STE just signed up with Keppel Electric on their FIXD24 plan at $0.168/kWh vs current tariff of $0.2413/kWh (before GST ) which is around 30% discount from current tariff + $20 NTUC voucher.
😄

CapitaLand 3.0 – Asia Largest ( Rights or No Rights ?)

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Guess this is the hottest business news headlines since the announcement made last week : CapitaLand buying Temasek unit Ascendas-Singbridge in $11b deal
While everyone seems excited about how it will transform CapitaLand -> CapitaLand 3.0 to be one of the Asia largest real estate group and world No.9 in term of AUM , with 8 listed REITs entity on SGX.

2018 : CPF-IS and Interest Income Update

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Right after 31st Dec 2018 , I guess everyone was busy logging in to their CPF account to check what is the latest balance they have in their CPF account. Yes , CPF interest will be credited on that day and one will be able to see how much he/she got on interest income for the year of 2018.
STE doesn’t have the opportunity to feel the joy of getting year- end bonus since 2014 but instead, receiving the interest income from CPF on first week of each year make me happy same as getting the bonus. ( Not from employer but from “Ah Gong” ). We normally work hard to get bonus but in this case, we let our money work hard to generate the interest income. :D
Total $29,348.70 been credited to our CPF accounts ( for both STE and Mrs. ).

2018 Portfolio Review and Reflection

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As we leave 2018 behind and roll into 2019, first and foremost allow me to wish all A Very Happy & Prosperous 2019.
I am sure 2018 was a tough year for all investors as compared to 2017 where most of us may end up having negative return on our investment portfolio.This is a big contrast to 2017 where we have achieved double digits growth in our portfolio. If you are still enjoying double digit +ve return this year, congratulation !! you must be an exceptional and extraordinary good one in picking wining stocks.
STI closed at 3068 in 2018 with -9.9% return since early 2018. For me, my portfolio ended up worse than STI with -13.2% (including writing-off of $117K of Hyflux 6%CPS ) vs return of +24% last year.  This year will be the second year where my portfolio under-performed STI by 3.3% and another year was in 2013 where REITs was badly hit.
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