Showing posts from June, 2019

The Power Of Free Cash Flow

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 ?

<Image> If you are having more REITs in 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 o utperformed STI by +6.3% with YTD returns of +13.97%. Are REITs Overvalued Now? From a 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 the 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

Y our 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 average of around 6.5% (base on OCBC Investment Research S-REIT Tracker- link ). Although I am just having around 42% in REITs 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 around 5.1% if I include the Bond and CPF  balance where the interest rate is lower than Equity.

You Should Be Worried When FED Starts to Cut Rates

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

When REITs Lead To Large Losses

I would like to share this very good article from in 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:
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