Return On Investment vs Return On Luck


image credit to mymoneyblog.com


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 pure luck, but how about investing?

My friend ( Chirs ) from (Growing Your Tree of Prosperity ) have blogged about it here which caught my attention to write about my case and “luck factors “ which have much impact on my of investing.





I have also written a blog about “ (How Much Luck in Investing Success? My Experience in 2008/09)on how the “luck factor” really played out during my early years of investing.






As I repeatedly mentioned in my previous blogs, I am not very good in figures and analysing the company’s P&L and Balance Sheet… till now, I am still not really clear why there is huge “ off-balance-sheet” figures sitting on most of the bank’s Balance Sheet. Try to figure out….

Off-Balance Sheet (OBS) < Investopedia.com>



I’m So Dumb but Damn Lucky!


I try to put things into perspective by plotting the chart for my ROI vs STI from 2008 – 2018, in a way that hopefully, it will be easier to compare by using all the trade data and dividends figure I have.







While waiting for the approval of our citizenship application, we sold all our shares/ house in Malaysia in 2007 and putting it into various tranches of FD. The different expiry date of my FD allow me to transfer the fund slowly back to Singapore, bit by bit. Eventually, I only bought 3 stocks in 2008 ( i.e Suntec Reit / MapleTree Log and ESR (Cambridge) ) with a total value of $147K, my subsequent fund transferred mostly in 2009 with total of $562K, with that, I purchased more Suntec/ K-Reit / MapleTree and added Starhill Global.


That’s turned out to be a “perfect timing” and show how lucky I am, it gave me return of +87.5% vs STI ( 73.4% ) in total 2010 & 2012.


I’m Damn Lucky That Hit The Jackpot Twice

You may still remember that in 2011 US Government Debts rating being downgraded and STI started to plunge from July 2011 onward and closed at 2646 with -17.1% by Dec 2011.

From May 2011 – Oct 2011, I have net sold of +$759,447 (cash inflow ) and subsequently bought back -$777,858 (cash outflow ) from Nov 2011 to Aug 2012. With profit-taking in 2011 + dividends, I managed to have positive returns in 2011 ( +12%) and the market rebounded strongly in 2012 which gave me an extraordinary return of +39.6% vs STI of +19.7%.

I am not so sure what you call it if is not “ LUCK “….

But again, I don’t think I will have such a good return again as I am more conservative now and depending on dividend income to survive.  Also, the difference was that in 2011 my wife and I were still working and our risk tolerance was totally different at that time.


Case in 2016 ….Emerging Market & China Crisis


We have another smaller “crisis” in 2016 where the market corrected by more than -28.5% from peak registered in Apr 2015 due to Chinese stock market turbulence” -link. Obviously, I didn’t take drastic action like the one in 2011 as I have to be more conservative since I am not working anymore and depending on dividend income to cover my expenses.

I have blogged about how I staged my war-chest in early 2016 on AK’s Blog ( you may find the link here ).

STI closed flat in 2016 but around +4% returns inclusive of dividend. ( link here from Dollar and Sense.com)

With a bit more aggressive approach in deploying my war-chest in 2016, I managed to outperform STI by around +6% points. For the first Quarter of 2016, I deployed $140,339 (net cash out-flow) of my war-chest to buy few blue chips ( OCBC/Keppel Corp) and some REITs. Is a really good bargain to buy stocks during the crisis, my average price for OCBC was $7.79 and DBS = $14.47, I hope to buy more in next crisis  :D

Again, ‘Luck “ was on my side in 2016…..it just that I am a bit “ Kia-si” this time around.   :D


This is another good article on “Luck Factor” in investing which I would like to share:

Posted May 28, 2015, by Ben Carlson



STE vs STI ( Cumulative ) From 2008 -2018






STE ( Cumulative Return ) since 2008: 140.9%

STI (Cumulative Return ) since 2008: 27.04%
STI ( Cumulative Return / Inclusive of Dividend) since 2008 : 64.40%


STI ETF (ES3) ( Dividend Yield ) (link from www.dividend.sg)  


My Lady Luck” has gone in 2018 as my portfolio downed by -17.7% vs STI (-9.8%). The poor performance in 2018 was also partly due to “written off” of $127K Hyflux 6% CPS which I think the chance of getting back the money is slim, even with the latest saga of two new potentials “white knight” appearing to save the company from going into liquidation.


But Hey! Is ok, we have to accept that not every year you will have “luck” to beat the market, under-performing in some years is common and natural for all investors.

My current portfolio’s dividend yield is about 6.3% vs STI ETF (ES3.) TTM of around 3.6%, which is about 2.7% higher than STI. In the long run, I'm sure these “higher than STI dividend yield” may contribute significantly to my portfolio’s overall return.

The overall dividend received has attributed to more than 65% of my total returns, this is The Power of Dividend “ which I have blogged about it (here Link ).








When you realize how much luck goes into investing, you might change your methods < from MarketWatch.com>


I am still waiting for my last stock ( i.e Accordia Golf Trust) to announce its result and dividend on 28th May 2019. By then, I should be able to tell how much I will be getting in total for my dividend in 2nd Qtr 2019.


Cheers !!




Quote Of The Day:


“Whatever success I’ve achieved, I think I’ve achieved it because I’ve been very lucky.” Leon Cooperman, CEO of Omega Advisors

Comments

  1. How to be lucky in the stock market?

    ReplyDelete
    Replies
    1. Yah..The only way is to wait for "Lady Luck" to find you ,not the other way round... hahaha :D
      Cheers!

      Delete
  2. Hi STE

    Could you write something about personal finances especially on how to manage kids expenses?

    ReplyDelete
    Replies
    1. Hi STE fan,
      Thanks being my "fan" :D
      I am a very simple person same for my kids , I try not to "indulge" them with "fanzy" gadgets or branded clothes... occasionally a simple restaurant for "family dinner" will make them happy, or even like a movie cum ice-cream as a treat. For education , yes, for those subjects where me and my wife can't teach by our self , we would have to spend money on tuition.
      Kids' expenses are quite "personal " as you said, some would spend thousands on kid's "enrichment programs " ... guess this is very personal and no right or wrong...
      That's why I don't really like to write about "personal expenses " as it's very "personal" indeed .... e.g some like to spend "big " on holidays (like STE & Mrs)... some may think otherwise and spending big on "cars" and other luxury items.

      Hope this clarify ..
      Cheers !! :D

      Delete
    2. Thanks STE

      I was wondering if we should forget about sending kids for overseas tertiary education once we are on fire. That makes sense right?just do it locally and of course we never know how much fees will be in future

      Delete
    3. Hi STE fan,
      For me , I personally think SGP universities are among the best in Asia , if kids are smart enough, he/she may get scholarship to enroll into good uni in the world , else , it may just be the same for local or oversea uni. I have seen many parents sending kids to oversea uni , but came back just so-so ... if parents are very rich , I think is ok to send kids to oversea u , some are for pride and prestige but I am more on "practical" side. :D
      Again, education for kids is personal as well, some "die-die" must send ...as the glass is always greener on the other side..

      Cheers !! :D

      Delete
  3. Haha, i am a practical person like STE and doesnt want to risk a fire plan. Better i stick to local education for less stress on family expenses.

    P.S I am also like Ste, previously malaysian and now a sporean. I can relate to your story because we start from humble beginning. I found your story at ak blog. Nothing beat hearing frm the real person. if u do meet your fan for coffee .please keep me inform of such meetup, i would be glad to join. Thanks. (this paragraph can be edit off).
    Cheers

    ReplyDelete
    Replies
    1. Hi STE fan,
      Again,thanks for the comments and glad to know that my story is useful ...sure can catch up if we have chance. For time being , i don't organize event like "AK's meeting up with friends" :D , if I do, sure have chance to meet...
      Cheers !!

      PS: So sorry that i couldn't or edit or partially delete the comments , hv to publish as it is,,..

      Delete

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