Friday, August 29, 2008

End-August 2008 Portfolio Summary and Review

If I had thought the first half of August 2008 was quiet, at least it was punctuated by the results releases from the companies I own. The second half of August 2008, without any earnings release, would thus qualify as probably the quietest half-month since I started preparing my half-monthly portfolio summaries. There was not a whisper of news from the companies I own except small snippets which I will be updating on the respective companies’ summaries.

With the Olympic Games in Beijing coming to a close, the Chinese markets and the rest of the world can seem to safely continue their downtrend, which is what I had observed over the last few weeks. By now, most speculators and traders are feeling the despair of a market which cannot seem to go anywhere but down, even though DJIA may be performing “well”. The de-coupling theorists seem to have gone all quiet for some reason. And as usual, there are the talking heads coming out to predict how long the bear market will last and when the index will “turn up” or “be in an uptrend”. Suffice to say such “research” amuses me to no end because these people are essentially being paid to do fortune-telling ! No one is able to know or predict when bear markets will end, but nevertheless, people try their best to predict and forecast.

Below is the summary of my investments and related news as at August 29, 2008 (STI at 2,739.95 points).:-

1) Ezra (Vested since October 6, 2005) - Buy Price $0.645 (bonus adjusted), Market Price $1.81, Gain 180.6%, YTD Loss 45.5%. There was no news for Ezra for the half-month ended August 29, 2008.

2) Boustead (Vested since September 13, 2006; averaged down November 13, 2006) - Buy Price $0.6475 (split-adjusted), Market Price $1.07, Gain 65.3%, YTD Loss 11.2%. There was no news from Boustead for the half-month ended August 29, 2008. The dividend of 7 cents per share (5 cents final, 2 cents special pre-split) was received on August 20, 2008.

3) Swiber (Vested since February 14, 2007) - Buy Price $1.01, Market Price $1.45, Gain 43.6%, YTD Loss 57.7%. Swiber announced on August 20, 2008 that they had signed an MOU with Rawabi, a Saudi Arabic firm, to pursue business opportunities in the Middle East. I had detailed this joint venture in a previous post. Other than this, there was no other news from Swiber.

4) Suntec REIT (Vested since December 9, 2004) - Buy Price $1.11, Market Price $1.46, Gain 31.5%, YTD Loss 14.6%. There was no news for Suntec REIT for the period ending August 29, 2008.

5) Pacific Andes (Vested since March 29, 2006; Rights Issue July 11, 2007 at S$0.52 per share; averaged down August 17, 2007 and July 3, 2008) - Buy Price $0.5475, Market Price $0.365, Loss 33.3%, YTD Loss 42.1%. There was no news from PAH for the half-month ended August 29, 2008. The scrip shares will be issued at 44 cents a piece, and with the current share price trading at 36.5 cents, it makes more sense to reject the scrip and receive the dividend in cash so as to buy more shares from the open market.

6) China Fishery Group (Vested since November 20, 2007) - Buy Price $1.50 (average), Market Price $1.20, Loss 20%, YTD Loss 35.1%. On August 19, 2008, China Fishery announced the acquisition of an additional purse seine vessel from a Peruvian Company for US$4.3 million. This vessel has a fish hold capacity of 204 square metres and will add to CFG’s total capacity, boosting it to 10,149 square metres. Management have reiterated their belief that positioning themselves in the South Pacific will be beneficial for the Company once Peru changes to the ITQ system, and the ITQ system is also believed to be able to boost EBITDA margins significantly.

7) First Ship Lease Trust (Vested since January 14, 2008) - Buy Price (Averaged Down) $1.105, Market Price $1.13, Gain 2.3%. There was no news from FSL Trust for the half-month ended August 29, 2008. The dividend of 2.8 US cents per share (converted at a rate of 1.4136) was received on August 26, 2008.

Overall Portfolio

The gain on my current portfolio is 12.8% from a cost of S$89.2K as at August 29, 2008. The market value of my portfolio is S$100.6K. Realized gains amount to S$8.6K as a result of the dividend from FSL Trust, Boustead, Suntec REIT (inclusive of the dividend from Pacific Andes which I will choose to accept in cash instead of scrip). Including realized gains, the total gain as a % of my cost is 22.4%.

Comparison against STI

Using my benchmarking technique:-

The FTSE STI had declined by 21.3% since the start of 2008. My portfolio (without FSL Trust and the new PAH purchase) has to date declined 39.3%. Therefore, I have under-performed the STI by a (whopping) 18 percentage points !

FSL Trust has gained 2.3% thus far from my date of purchase while the benchmark STI has fallen 14.9% (from my date of purchase Jan 14, 2008 when STI was 3,218.14); I am happy to report that FSL Trust has managed to out-perform the index for FY 2008 thus far.

The new Pacific Andes tranche which was purchased at 44 cents per share on July 3, 2008 will be analyzed separately from the rest of the portfolio. STI as at July 3 was 2,880.45 and STI today is 2,797.50, thus this represents a 4.88% loss. Current share price of Pacific Andes is 36.5 cents, representing a loss of 17%. Hence, my purchase of Pacific Andes has under-performed the index (I have excluded the dividend in my computation).

My next portfolio review will be on Monday, September 15, 2008 after market close.


Anonymous said...


Thanks for the insightful analysis of your holdings. I enjoyed reading them. Looking at your portfolio, I noticed that most of the stocks were concentrated in the commodities & resources sectors. Not sure you wish to consider diversifying into some blue chips for stability & collect regular dividends eg SPH, ST Eng, banks, CMT etc, and reinvesting them.


Anonymous said...

Sooner or later you will realize that almost 99% of so called "value investors" in Singapore will lose money. YOu had such a good profit and due to your stubbornness and refusal to take it, you have let your portfolio DROPPED SO DAMN MUCH.

I feel sorry for you.

Brendan Lee said...

I always respect your stock ideas and recommendation, but portfolio return is 20% alpha and 80% beta.

Since you have underperformed the market, means you had also lost the alpha as well.

I had written an article on this:

Anonymous said...

The STI is not really a good benchmark for value investors. They are largely blue chips while value investors by nature shun big bluechips for less-researched counters (to benefit from information asymmetry). As a blunt tool to reassure myself that I'm better off than indexing, I still use the STI. But as a value investor, I should really be looking at value creation, perhaps the absolute ROE, ROIC of my companies.


musicwhiz said...


Actually, I didn't really have a mind on a particular sector when I assess companies. As long as it shows potential for growth and good prospects, and I can buy at margin of safety, that's the most important criteria for me.

Blue chips are definitely more stable but the prospects for growth are smaller due to their large size and already established position. For dividends, I have FSL Trust.

Thanks for the suggestions !


musicwhiz said...

Hi Anonymous,

Where did you get the info that "99% of value investors will lose money" ? Is that with a short or long-term horizon ? Perhaps you can define your basis for saying that and provide some support ? 99% is a large number, and it implies that this method of investing is (almost) totally ineffective.

I buy companies based on their ability to grow revenue, earnings and maintain high ROE. Technically speaking, using market prices as a way of measuring performance should NOT be the case for value investors, but I have provided this info as a benchmark against the index. Also, as my view is long-term, I don't see a problem with holding my companies as their businesses are still sound.

I think it's OK for you to make a comment but needless remarks like "I feel sorry for you" without some form of explanation or justification implies that you made the comment out of emotion rather than logic.


musicwhiz said...

Hi Brenden Lee,

Thanks, will go read up on the link you provided. I am (as this point in time) not too sure about alpha and beta !


musicwhiz said...

Hi Troy,

Thanks good suggestion ! In future, I may revamp my portfolio review to encompass the ROE and ROIC as you mentioned, rather than focus solely on using market prices. As long as my companies are growing, I can be considered to have succeeded in my investment as I have followed my criteria.

Anyhow, I would rather base my performance on 5-8 year horizon. My current 2-3 year horizon is a little too short-term for my liking.


la papillion said...

Hi mw,

Interesting comments you have here :)

I find that the way of presenting the portfolio not adequate enough. Alas, I must find some time to research some ways to do up a good portfolio analysis. Was thinking of putting it as a single price, something like unit trust.

Technically not sure of how to do it, but fundamentally, i think it'll be a better way to analyse it as it will also take into account new investments. By taking 2 dates, we can also calculate the returns and do a suitable comparison to STI, if one wishes.

What do you think?

Brendan Lee said...

Hi MW,

I prefer that you keep your presentation this way so we can see the individual stock performance. But if you want to know how does the unit trust calculation work, you can ask me, as I use to work as a fund accountant in the early part of my career.

I see that you received a lot of knocks from your readers. And I want to give you compliment for that, this means you have a lot of readers for your website, and you have the guts to present your portfolio.

95% of investors who bought stocks this year must be losing money now, they could be the same people who are critising you.

There are a lot of websites that write about stock ideas and news, but there are very few that show their own positions.

I show my positions in my websites too, so I know how you feel.

My websites:


Corporate Man said...

Aiyo, not another Warren Buffet wanabe again...

Not that I want to disparage your fundamental analysis or what, but before you get all high and mighty and start getting "amused" by the "talking heads" trying to predict markets, I suggest you look into the mirror and see who's doing a lot of ahem, fortune telling here.

Basically besides parroting what management says in their financial statments or doing some cut & paste google job, ask yourself how much do you really know about each of those businesses you went on and on about?

When you keep going on about how these businesses of yours are great, what did you really base those conclusions on? The above mentioned managment parroting? Or maybe it's some google research?

Allow me to put forward that your only basis for claiming these companies are great is because you look at history and they have been doing well. Nothing new here, lots of companies have registered growth in the past 5 years.

The only real way you can gain an advantage in value investment is to specialise in certain business to allow you a special perspective and insight on the companies and its industry that most layperson fail to see. This is how Warren Buffet made his fortune.

Just regurgitating everything that is announced in SGX will get you nowhere.

musicwhiz said...

Hi LP,

Yes, I agree it's not the best way to measure returns, but it's the way that I have been following and it's worked thus far. I find the "fund" concept a little hard to grasp, thus I shall reserve that for perhaps later.

Thanks for your suggestion !


musicwhiz said...

Hi Brendan,

Thanks for your encouraging words. It's not easy displaying my portfolio for all to review every half-month, but my objective is to show my commitment to value investing as a viable investment technique, and hopefully my results will show that I was right. Of course, I may very well turn out to be "wrong" and that all my companies may turn out to be duds, but at least readers can find out what went wrong so that they may avoid the mistakes I made. The aim is to educate and hopefully let people learn something, and my blog helps me to crystallize my thoughts on investing and remain focused as well. It may not be the best performing under the current circumstances (I am new to value investing), but at least I am glad for a decent return.

I will visit your blogs and websites too ! Take care !


musicwhiz said...

Hi Corporate Man,

While I can appreciate constructive criticism on the methods I use, I think your comment qualifies as "disparaging" without really adding value. Why do I say this ? Several reason:-

1) You say "Warren Buffett Wannabe" - but it was never my intention to obtain the man's returns, I am only asking for a realistic and decent return on investment (not exceeding 10% per annum, mind you). Using the word "wannabe" is presumptuous as it presumes that I am trying to get returns similar to Mr. Buffett himself (21% compounded for 30 years).

2) You mention "parroting" Management and that financial statements cannot be relied on. So pray tell what basis does an investor have to determine if a company is suitable for investment, if not through Annual Reports and/or press releases ? I need to remind that even Mr. Buffett himself reads up tons of annual reports to get ideas for investing; and most of his info from early days was obtained through publicly available sources of information, and not to get "special perspective".

3) I never said the businesses I own are "great". In fact, I think they are merely businesses which are growing over the years, steadily and slowly. I have emphasized that the businesses I own are far from great because they are unlike See's Candy owned by Berkshire, where only a small amount of capital is needed to generate high return on equity. What I do as a value investor is to closely track the businesses I own, and not just through press releases. I also talk to the Management and read up on other sources of information on the companies and its competitors (scuttlebutt) though of course this aspect can be improved. I think using the word "parroting" is being very extreme and seems to suggest that an investor has no independent mind of his own to analyze a company as a potential investment.

4) The assumption that the companies I own are "good" by "looking at history" is also baseless. When I purchased companies like Ezra, Swiber and Boustead, there was not much +ve history to tell that they had been doing splendidly and that they were good businesses to own. Investing is about foresight (not hindsight) and you seem to suggest that I am using a rear-view mirror to invest. Unless you can substantiate this point, I am afraid I have to strongly disagree.

5) If you are indeed suggesting having "special insight", then one must either be intimately involved in the industry, or else he must know some information which is not known to the general public. May I remind that it is NOT always a good idea to invest in industries which you are familiar with, as work experience may have little to do with the investment attractiveness of a particular company in a particluar sector. Also, if information obtained is not known to the general public, I would deem it as "insider information", which is inadmissible for use as basis for an investment decision as it would bring about an unfair advantage to oneself. If I recall, Warren Buffett made his fortune by understanding the insurance industry intimately through GEICO, and he used this to churn cash which he used to buy up great businesses. So you are saying that the for the subsequent great businesses he bought after GEICO, he had special expertise or knowledge which would have given him the "upper hand" ? I find that a little hard to accept.

Finally, your point on "regurgitating" seems to imply that information is swallowed wholesale and then vomitted out intact, without processing or analysis. Either you assume that a normal human being does NOT go through a thought process when he sees news, or you presume that all investors are idiots. Either way, your final statement does not seem to make sense.

Thanks for your comment, but unless you can suggest something more useful for me to improve my analysis and value investing techniques, instead of going around lambasting "Warren Buffett wannabes", then I will take your argument apart point by point if I have to.


PanzerGrenadier said...

Hi Musicwhiz

Just disregard some of the trolls that exist in cyberspace. They add no value by critising without offering their own ideas and opinions that help people learn more about value investing.

I for one think you are quite open and have the courage to lay your portfolio and performance for all to see. It takes one a degree of honesty as well as competence to be able to analyse your own stock picks and benchmarking against standards.

This bearish market is doing bad things to virtually everyone who is vested in the market unless they are trading. I for one also am seeing -ve performance of my equity portfolio. The only saving grace is dividends but I have to hold out for the next upturn for my portfolio to get back into the black!

Be well and prosper!

Anonymous said...

Hello MW,

It's me again. It has been sometime since I posted on your blog after we started Huatopedia.

You might want to consider picking up some basic TA skills to understand Y your stocks are moving the way they are, just to compliment your superb FA skills.

Oil and gas/marine sectors are being sold down by funds. The run up last year was spectacular... but the fall might be equally so if the funds leave.

I am NOT a chartist. I am a FA/TA person, I think you might know by now.

Going thro' the pain-ful bubble bear market has wisen me up to the fact that stocks run ahead of annual reports....

I used to be a pure FA person but I found doing just pure FA does not answer the following questions:
1. Y do stocks run up (actually due to market trend)
2. Y do stocks tank (again due to market trends and sector rotation)
3. When do mkt trends top and bottom and how do I protect my profits and minimize my losses?

Of course, you are free to disregard what I say cos' this is your first true bear market...

We all have to learn our own lessons.

Good luck and keep learning ;)


Simon said...

hi MusicWhiz,

I think you should keep up the good work on your analysis. If you feel value investing is something you are most comfortable with, you should stick with it.
But i would like to let you know about my opinions. Please don't take offense in any of my comments.
i feel that for our own singapore market, cyclical investing is the best way to make money rather than value investing, which probably is more appropriate for more mature markets like the US market, or markets more dominated by the non-discretionary consumer sectors.
From experience and analysis, i realise buying a singapore stock and selling it after 8-9 years at a good price will make u the same money as holding the same stock for 2-3 years.
It's just the nature of our singapore market. This is where MM has a point. Funds will exit, valuations will go down.
No doubt your Ezra and Swiber will go up to double digit PEs again in the future, but I feel it's a wasted opportunity when i could have exit when valuations were still high and not have to wait for years again until it reaches it's high valuations again. Moroever, after taking your profits, you have 'bullets' to ride on the next up-cycle.
Now, the most obvious question is, how can i predict the beginning and end of a cycle? My answer is it's impossible. We can only come out with a educated guess. And that's where MM, being a seasoned investor, hit the spot with the 3 points he made in his post. Knowing about fund flows, TA, market timing etc, will help you in ways that FA will not allow you to.
So the next question is, will making an educated guess by buying near the bottom and selling near the top of a cycle make you more money than holding the stock 'forever'? my answer to that, especially in the singapore market, is yes!
anyway, i think you made a lot of the purchases at good prices. Keep up the good work! I am an ardent follower of your blog and wish you the best of luck. This bear market will definitely expose some good stocks at cheap prices, so keep us posted on your purchases!

Anonymous said...

Hi MusicWhiz,

Please ignore these unfounded allegations. I will always support your works.

I am a novice investor and started investing in shares in 2007. My objective is to buy/hold and grow my investment.

My investment decision were based entirely on friend's recommendation. One of the lagging counter I bought was Creative at $10.50 where my friend claimed that the company had received hundreds of millions in legal compensation and would cheong up like the rest of the top performing counters. Later I realised that the company had been making losses every quarter.

When I came across your blog on Ezra and Swiber, my first impression was that you were employed by them to promote their companies. Who would want to waste his time analysing the companies and publish their results for free?

But your consistent work including attending AGM (not just for the sake of food)and questioning managment led me to believe that you were genuinely looking after your investment. In fact, you even pointed out that Ezra had recently borrowed at higher interest rate than Swiber for their vessels.

Therefore, I began to mirror your investments. However, my entry prices were all high until you taught me the concept of margin of safety.

To date, I had invested more than $300,000 and had lost more than half the value. I even leveraged on Ezra for fear the market would price the counter beyond my reach until you advised against it.

I am glad that you did not exit from Ezra and Swiber when their prices were sky high. If not, who would be the watchdog and provide independent analysis for the benefit of the existing shareholders?

Please continue your good work. I am still learning from you.



musicwhiz said...

Hello Panzer,

Thanks for your comment and for being so candid. Yes bear markets make everyone cranky. I do know a lot of friends who don't even wish to talk about the market anymore, as it has become increasingly depressing as each day passes.

I am also still learning about value investing and am continually applying stricter criteria to my screening process, as well as using more brain juice to think through and analyze issues before committing capital. It's not an easy process and I will probably still be learning when I hit 60 ! But such is the lifelong journey for an investor, and I enjoy every moment of it.

I would like to comment that traders may not be making money in such markets either, though most people will assume that since they are able to short (investors usually only go long), this means they can consistently make profits. It still takes discipline and some amount of luck/research in TA for traders to make money consistently, and I for one will not say it's easy at all. The problem is that no traders I've known (from numerous blogs on the net) have been totally frank about their portfolios and buy/sell decisions as well as profit/losses (after brokerage mind you). Thus, there are no reliable numbers on whether traders can indeed make money consistently over a long period of time.


musicwhiz said...

Hi MM,

Thanks for your suggestion. I've been thinking about what you said as well, and decided that since my style is strongly fundamental and I've been reading up extensively on value investing, I don't see how TA and trend analysis will value add. In terms of "timing" one's entry, I am not concerned about buying and seeing the price further, as I base my purchase decision on valuation. I frankly do not think TA is 100% accurate in catching "bottoms" as well, but please correct me if I am wrong.

Also, the thought of selling out at the high point and buying back at lower prices is very appealing, but in real life is one able to rinse and repeat this method ? Not that thus far, I have 4 counters which are still above my purchase price years back (of course, Mr. Market may sell them down further), but my point is that one's purchase price, if made with margin of safety, may not come again for quite some time. To sell out hoping to buy back at the same price or lower is akin to speculation (of course, some investors call this cycle timing).

I understand your method is called CANSLIM and makes use of FA/TA. While I respect your application of this method to make consistent profits, I also hope you can appreciate that I would not like to deviate from value investing (at the present moment, at least) as I believe it is a method which can work given 5-10 years. Currently, my track record for investing is simply too short to judge whether it is effective.

Also, it would be nice if the other forumers on Huatopedia could detail their portfolios and whether they have been consistently making profits using their various methods. Thus far only LP and myself have been open about our investing process and portfolios, and it would be nice to see if other methods as espoused by other forumers actually work as well. It could be a good learning ground, assuming one wishes to.


musicwhiz said...

Hi Simon,

Thank you for your frank comments and your suggestions, I will not be offended don't worry - as long as there is no intended malice I will be fine with reading any comment and responding to them.

I am comfortable with value investing and so far it has allowed me to grow my wealth at a reasonable rate. With regards to your comments on cycle timing, I feel that even though Singapore market may not be mature, it still has the potential to produce long-lasting multi-baggers over the years. Some glaring examples would be Keppel Corp and Bukit Sembawang which has returned shareholders' money many times (even at current bear market valuations).

Thus, I feel that it is the process of identifying the right companies and buying them at margin of safety which will enable a shareholder to enjoy future wealth increase. Companies do stumble and some do fall, but the value investor should try his best to discern the strong from the not-so-strong. Naturally, he will make mistakes periodically as no one is perfect, but he should strive to correct these and not repeat them. Cycle timing is a very attractive proposition (I know a few who practice it, though no detailed records have been kept over the years of their performance), but I feel it does not suit my temperament or investing style.

And thanks, yes I will keep readers posted of any purchases AFTER I have made them. I will also provide accompanying analysis on facts and figures to support any purchase decision.


musicwhiz said...


Nice of you to drop by and share your thoughts.

Yes Creative was a former blue chip which saw its fortunes (and share price) plummet when it began losing out in the tech war to Apple, especially when it came to portable music player iPod (its Zen cannot beat the iPod in terms of branding, sleekness and sadly, sales revenues). The fact that costs are creeping up also means margins are eroded and the company has reported losses in its recent financial report.

Haha, it seems amusing to me that you thought I was employed by Ezra and Swiber to promote their companies ! Well, as a value investor, I conduct independent research on companies and would also talk to the Management for insights on the industry, as well as doing my own reading up of course. This includes looking at positive as well as negative aspects of a company. For example, I highlighted that Swiber seems to be slow in announcing details for their ED, which is not a good sign, and that many press releases are a little too glossy for my liking. Hype is not liked by myself.

My suggestion to you is not to mirror investments, but to independently research companies on your own. Also, try to avoid leverage if possible as it will result in margin calls in such a bear market environment.

Thanks for your support. :)


Ryan said...

Hi MW,

Great work on your blog...

You could improve on your selling strategy so as to lock in to your profits. I believe, at one point in 2007, the p/e of Ezra and Swiber is as high as 30-40. On hind-sight, one could have sold them at such an attractive price. Good businesses is one thing , but I think you have fallen in love with your companies , by the way that you promote the companies you bought at cna, wallstraits forums.

PS: Warren Buffett don't practice buy and hold forever strategy.

musicwhiz said...

Hi Ryan,

Actually I find your comment rather interesting. You mentioned at one point in 2007, the PER of Ezra and Swiber was "as high as 30-40 times". But may I know if you are using forward PER or historical PER ? Also, if one can forecast the profit growth of the company to 5 years into the future, based on present circumstances I think PER will not be as "inflated" as you claim. Remember that in bear markets, valuations of companies can go as low as 3-4x based on HISTORICAL PER (not using forward even !), so I think the way a company is valued can radically change one's perception of its purported "value".

Hindsight is always 20-20 isn't it ? I've mentioned this many times and if one had a crystal ball, then I would always sell at the highest point (or close to it) and buy back at prices which seem ridiculous. The problem is how many of us can truly claim the benefit of foresight, rather than hindsight ? Not me, for one as I am still learning.

I would like to highlight the difference between posting FACTS, and PROMOTING companies. Note that in forums on Wallstraits and CNA, I mostly comment on the company's prospects, plans, current news (including newsflow) and my impressions of its potential growth. That is very different from "promoting" a company, which is to encourage people to buy because I think it's the best company to own, or I induce people to buy based on the facts which I post. It has always been "post the facts, and let others decide" for me, and this is part of my strategy for keeping a close watch on the companies I own. How that translates into "falling in love with my companies", I can't really imagine. You mean other value investors don't keep a close watch on companies they own as well ? If you are a shareholder of a private business (not listed), I think you would be very concerned about how its operations are, and its prospects as well. By passing a flippant remarks such as "promoting" and "falling in love" without elaborating is not being very responsible, I feel. If you take a casual look at CNA and Wallstraits postings, there are many other people "promoting" in a more blatant fashion rather than just my posting newsbits and updates on my companies, so please be a little more discerning and don't jump the gun on using such words. I thank you sincerely for this.

And P.S - I know Buffett does not buy and hold forever. He sold out of Petrochina some time back because it was over-valued. The chinese market ran way ahead of itself at 6,000+, and that was obvious (again on hindsight). Buffett of course has the foresight to sell out if he knows over-valuation. Perhaps I can't read over-valuation as well as he can, but it's something I am learning.

Thanks and Regards,

Ryan said...

Hi Musicwhiz,

Please blog more about the qualitative aspects of your company next time, eg risks and management.

1. At Nov 2007, Erza bought its own shares at its highest point of $3.7!

2. It even tried to buy its share at $5.60 in May 2007! Wow...

3. Directors kept changing in this 2 years.


Anonymous said...


I think I can answer point (1) of Ryan for you.

I questioned Mr Tay, Finance Director on the timing of their shares purchases during the 2007 AGM. He told me that Ezra was given that window period in Nov 2007 (after the bonus shares issue) to buy their treasury shares.

Because of this, I believe Ezra caused their share price to go up against the falling market trend. This led me to foolishly believe that Ezra was resilent to price drop. As a result, I bought 25 lots of Ezra at $3.36 during this period for fear that it may appreciate further.

Next time, I had better check the reason for the price surge before rushing to purchase the shares.



Anonymous said...

Your attempt at value investment is admirable.

However, I can tell you that in five years, after you have gone through the journey, you will see that just looking at fundamentals in isolation without regard to broader implications of market trend and global economic climate is insufficient to make consistent returns in the market.

Hopefully, you will be able to see light at the end of the tunnel and see the flaws of your approach.

From an insider of the markets

musicwhiz said...

Hi Ryan,

With respect to qn 3, the directors who changed are as follows:-

a) Teo Peng Huat resigned as ID on July 4, 2008 - due to increased work commitments on his China business;

b) Soon Hong Teck was appointed as ID on May 16, 2008 - He is the senior director of Finance and Group FC of Chartered Semicon Limited. I believe he is to replace Ms. Goh Gaik Choo (mother of Lionel Lee and wife of Lee Kian Soo) as she is retiring (old liao).

c) Ngo Get Ping was appointed as ID on July 18, 2007 - 20 years of experience in finance and stockbroking industry.

d) Tan Eng Liang resigned from the Board on July 6, 2007 - I met him personally before at the AGM and he was a nice guy, but didn't seem to be able to tell me much about the company. My impression of him was brief.

Other than these 4 major announcements, I do NOT note that "directors keep changing" during the last 2 years. The term "keeps changing" seems to imply a very frequent change which I take to be like maybe once every 3 months ? One can clearly see the examples highlighted above that there have been 4 director changes in the last 24 months, and one of them was for retirement. Hence, it is an average of a change once every 8 months. I won't call that frequent by any definition.

For questions 1 and 2, I think it's a matter of how a company perceives it own value. Ezra's growth was probably going to be steady over the years (from 2007) and the directors had no way of knowing the price was going to tank all the way to S$1.30+ in the current bear market. It is only on hindsight that $3.70 and $2.80 seemed expensive. If the bear market had not come about, the shares may be trading in or around that range, or even higher. So who is to say that the company made a wise move or not ? I am just glad they did not try to time the market.

If you read most of my posts, I do blog a lot about qualitative aspects. Perhaps you can go over all the posts on the companies I own (since you claim I "promote" them) and you can understand that I look at more than the numbers.


musicwhiz said...


Thanks for explaining Ryan's Point 1. A company will buy back shares for various reasons, of which the one you stated is one of them. As mentioned, I am just glad the company is not trying to "time" the market, but is focusing on its core business instead.


musicwhiz said...

To Anonymous @ Sep 9,

It surprises me (actually, flabbergasted is more accurate) that a simple portfolio review can generate a total of 15 comments, since I have been posting my half-monthly portfolio review without fail for the past 1 year+.

Your comment seems to imply that my attempt is admirable, but is doomed to failure. I quote "your attempt at value investing is admirable" - which seems to imply "hey good try ! But you just aren't making it".

Well everyone is entitled to their opinion surely, but you pile on the mystery when you mention that it is insufficient to just look at fundamentals without looking at 1) market trend and 2) global economic climate. So I would like to engage you on these 2 points.

1) Market trend is basically TA, or to observe prices to look for a suitable entry and exit point. Correct me if I am wrong on this. The essence of value investing relies on margin of safety, which in turn depends on intrinsic value of a business, not the business' share price. What you are suggesting seems to be a combination of market timing and investing, which I believe is what CANSLIM practitioners practice. Value investing is somewhat different in that we do not look at market trends, but emphasize margin of safety for capital preservation;

2) When you say global economic trends, I assume you refer to events such as rise and fall of certain industries (e.g. tech boom and bust), inflation, sub-prime issues and economic growth of countries + currency strength. When I analyze my companies, all these of course have to taken into account ! I won't invest in a company which is domiciled in a country with high political uncertainty or has a poor economy, for instance. Neither will I ignore the industry trend for say, oil and gas, for which my companies are involved in. I read up extensively on these facts and keep up with news and developments. Inflation is something which affects all companies and commodities boom (oil prices) has resulted in higher COGS for all companies. This is why I choose companies with market power so that they can raise prices without affecting market share (e.g. CFG). So I think it is not totally correct to assume value investing IGNORES global economic climate. In fact, it is crucial to consider all these in evaluation of a company for long-term investment.

So, the light at the end of the tunnel is very bright ? If it's blinding I think I wanna wear shades ! Since you can pinpoint supposed "flaws" in my approach, why not be the good samaritan and educate all readers (including myself) on the "right" way to value invest ? That would indeed be very helpful and would enhance our knowledge a great deal.

And don't worry about being a market "insider", I've seen my share of "insiders" as I am involved in the investment industry, and quite a few of them have no idea what they are doing either. Please do not presume I do not know or understand how the insiders work their "magic" by periodically manipulating stock prices; this is part and parcel of investing in the stock market where participants such as hedge funds and mutual funds use a variety of tactics to "outdo" one another and emerge the "winner" so as to attract more funds.

So if you care to, please enlighten us further. We are all here to learn.


Ryan said...

Hi Musicwhiz,

Thanks for your detailed reply.

Why I don't invest in Ezra or Swiber.

1. I don't understand the business at all. Circle of competence

2. High capex; Ship is a very high capital goods. In a boom times, everyone rush to build ships to meet demand. However, once the ship is built, it will fight with its own family of ships or external competitors' ships for businesses.

3. Operate in a cyclical shipping industry as mentioned below. Cycle timing is extremely important. High growth for 10 yrs is highly impossible in that sector.

4. Sexy sector, oil and gas exploration. Darling of analysts

5. Discount the words of management. They tend to paint a bright picture of their management

I realize that your portfolio mostly involves ships. Highly risky as I will illustrate below;
Let expand more on capex. Not all capex is created equal. There are two parts to capex – maintenance and growth capex. In a downtime, there will be no need for growth capex. But it is the maintenance capex that will kill the company; the more ships you have, the more you have to spend to maintain the ship. It’s why airline, semiconductor and shipping companies are generally a big “No” for me.

To digress a bit, I realize from your reply that Soon Hong Teck was appointed as ID on May 16, 2008 - He is the senior director of Finance and Group FC of Chartered Semicon Limited. Haha, I think you know the story and share price of Chartered Semicon

It’s just my some of my comments and thoughts. We are all here to learn.


musicwhiz said...

Hi Ryan,

Thanks for your detailed reply too. Very good of you to share your thoughts on Ezra and Swiber which few readers do in such detail.

Regarding your comments:-

1) Fair enough, I will also not invest in a company in which I did not fully understand the business. Circle of competence is important.

2) For this point, I think you have to see what the vessel is used for. Assuming O&G exploration continues into the next 50 years, with oil majors drilling more wells, the pie will get larger for all players and supply will be met by adequate demand.

3) I disagree with this. Ezra and Swiber are not bona fide "shipping" companies at all, unlike Cosco, NOL or YZJ. They are more exposed to the oil and gas E&P industry and their vessels are utilized for such purposes. You mentioned "high growth", but as an investor I am merely expecting reasonable growth, no need for explosive growth.

4) Analysts have been writing many reports on oil and gas, I concede. But I do see the potential there as many websites and news articles also write about oil and gas. Probably what you are referring to is that you prefer "unsexy" sectors which are neglected by analysts, so that you can find better buys. I don't disagree with this.

5) Of course I understand this too. Management will always have a high opinion of themselves. Basically, results will speak for themselves eh ? The financials, numbers and execution plans (whether they go well or go awry) will determine if Management is indeed as "competent" as they claim to be. I don't take them at face value, I wait for results.

I need to correct you on capex part. You mention growth and maintenance "capex". However, maintenance charges are usually classified as an expense in the P&L, not capitalized under Balance Sheet, hence it cannot be strictly called "capex". You are referring to operating expenses for ships I think. Think of the situation this way (I've given this a lot of thought over the years as well):- ships do incur high operating costs (including bunker charges and crew), and this has to be supported by firm charter contracts by oil majors so that it can more than adequately cover the cost of running the ship. With the increase in oil and gas E&P, rates are likely to remain sustainably high, as oil hovers around the US$100 per barrel level. Witness the huge profits made by Shell and ExxonMobil - they will continue to invest in rigs (semi-sub and jackup) to do their E&P, gradually moving into deeper waters. This has been the general trend for oil and gas over the last 3-4 years, and in case you are in doubt, it has been highlighted in a recent deepwater drilling forum organized by Swiber at their office (the presentation slides can be downloaded at the company's website). Thus, I forsee a consistent demand for the companies' vessels which will ensure that revenues exceed the costs of maintenance, thereby giving both companies a decent GP margin. It's not really fair to directly compare to semi-con (as semi-con is commoditized) as their vessels are specialized and even customized (as in the case of ED for Swiber) so it can have a competitive edge (Ezra has a much younger fleet too, important in this day and age). Airline companies are held hostage by Government regulations, unions and oil prices; whereas companies like Ezra and Swiber actually benefit from high oil prices and they are also granted tax exemptions from operating in international waters.

On a side note, the ID is from Chartered, but it does not imply that he cannot sit on Ezra's board to give pertinent advice. Both are very different businesses, as I mentioned above.

Hope this clarifies, and I welcome further comments from you. Let's all learn together.


Ryan said...

Hi Musicwhiz,

I don't wish to agree or disagree with your Pt 1-5. Generally, I feel that you know what you're doing.

About the capex part, i don't take P/L account as face-value. Accounting principles does not reflect accurately "investor" value as you should know by now.

One important thing that I look when I invest in the prospects of the industry in 10-20 yrs time.

Mental framework as Charlie Munger called it.

You assume that O&G exploration continues into the next 50 years

1. What is the break-even oil price for O&G exploration? $100 or $200?

BUFFETT: Well, the biggest variable in whether it's a good investment is the price of oil. Now, it's important to know how much they can get out and what their costs are going to be and what the capital costs--all of that is important and that fits into it. But you still have to figure out what your own feeling is about what oil's going to be selling for three years from now or five years from now. Because you could be the world's greatest mining engineer, but if you were wrong about the price of oil in a big way it would negate all that knowledge. So it--I can tell you that if 100--if you had $120 oil from now till, you know, 50 years from now, that the tar sands would be--would work out very well. But I don't know the answer to that. And I may form an opinion at some point, and I've got it--I'm prepared to form that opinion now.

With that mind, the break-even oil price for O&G is $120. If the exploration costs for out-shore drilling exceeds $120 per barrels, it make no sense at all. O&G drilling is, itself, capital and energy intensive industry. With the increases in energy price (oil price), the break-even costs for O&G will be even higher (a vicious cycle as we can see)

2. What are the competitors to oil?

Solar, wind, nuclear energy… We can list all the renewable energy; what are their break-even price based on oil? Less than $100 per barrels?

From what I know, EU and USA are slowly transforming into a renewable hydrogen-based economy when transportations will be run by hydrogen or electric fuel cars. Transportation sectors use the highest proportion of oil.

I could not predict how high the oil price will rise in 10-20 yrs. But I can safely say that Ezra or Swiber are facing much more invisible competition outside their own industry! With so much unknowns and uncertains… how can one invest safety?

Lastly, I hope to see more such lateral thinking “qualitative” in your blog.


Simon said...

well, it looks like everybody is against buying ezra and swiber. maybe this is the best time to pick up some. =)

musicwhiz, what do you think?
i think ppl's perception of these 2 stocks have deteriorated quite a lot. What data points are you looking for before you add more position to swiber and ezra?

Corporate Man said...

Ok musicwhiz,

Looking back, I agree that my comments esp. the “Warren Buffet wanabe” have been inappropriate and harsh and for that I apologise, but I stand firm on my fundamental POV, i.e. you don’t know what you are doing. Seeing that I seem the only person around here who’s not into value investing, I’m probably gonna get flamed by all your supporters for saying that though.

Maybe let me qualify a bit why I haven’t been able to offer you constructive criticism on how you can improve your fundamental analysis – that’s because I have no idea how to do it and based on what you blog, it is my belief that you don’t either.

I used to think I was a good fundamental analyst just like you in the past – way earlier than you in fact. Got so “on” about the whole thing that a lot of like minded people like me got together to form some sort of unofficial investor club. We were no technical traders, we were the true disciplined disciples of Graham and Buffet who will eventually prevail and even if we don’t match his 22% p.a. return, we’ll still beat the market by 3%-5% over a long term.

Or so we thought. Every fortnight for more than a year we got together at some member’s home and spent a weekend afternoon discussing investment concepts, business analysis and other news that crop up. It’s not really that different from what you doing in your blog now, just that last time internet not so prevalent and blog wasn’t invented yet.

Besides this particular group, I also spend a lot of time mingling with other like-minded people, attend AGMs and what have you. After more than 7 years, based on my observations and quite a decent sample size (20+ FA practitioners I know quite well), I was faced with the following reality:

1) Some incur loses and quit
2) Most make some return, but not enough to justify all that effort and time put in
3) A few can beat STI a little
4) NONE has demonstrated that they can beat the market convincingly and make all the whole effort worthwhile.

I belong to #2, made money but underperform STI slightly and all in all, I figured I could have made so much more in those 7 years if I had taken up some advisory projects using my professional expertise with the same time spent on investing homework.

That’s why I made a decision in 2003 to switch into a regime of buying solid blue chips every half a year ignoring both fundamental and technical analysis while relying on diversification and portfolio balancing instead – haven’t looked back since. Been grabbing various ETFs since they were introduced as well. Over the years, they have generated a decent return no different from my investor club days, but I get a lot more free time to do so much more.

You mentioned the following key points:

[[“So pray tell what basis does an investor have to determine if a company is suitable for investment, if not through Annual Reports and/or press releases?".

“ What I do as a value investor is to closely track the businesses I own, and not just through press releases. I also talk to the Management and read up on other sources of information on the companies and its competitors (scuttlebutt) …”

“If you are indeed suggesting having "special insight", then one must either be intimately involved in the industry, or else he must know some information which is not known to the general public.”]]

All I can say is that you aren’t the first and won’t be the last to rationalise in that way, been there done that for me. I don’t know, maybe you’ll be the first guy I know who can outperform the market with a profitable margin to boot. From what we can see now, your returns of $19k over the 2004 – 2008 period ain’t that spectacular, but you’ll no doubt argue that you go long term. Be that as it may, just sharing some life experience with anyone who’s interested anyway.

Actually directed to your site by a colleague and unlike you who started earlier, he wasn’t so lucky. He’s a FA guy and started stock investing in late 2006, demonstrates the same pluck and confidence in FA like I and my peers did more than 10 years ago, and he’s sitting on massive loses now.

Looks like I have rambled on and on, should end now, got too engrossed with life story.

Simon said...

corporate man, 7 years is a long time! haha. luckily i found out after 4 yrs...not much better, but at least i realise there is a need to inject some 'realism' into the idealistic notions of value investing...

ANYWAY...just to remind everyone im not taking sides, but corporate man, your way of investing is not much of a strategy la!...u just buy blue chips every half a yr..u can't get much alpha returns from that..there's not much active asset allocation involved at all.

and u bought from 2003!!, that was the start of the boom mkt and when SARS was just subsiding, i think anybody in this world who bought in 2003 would have made money and much more too, unless u r damn noob. and yr friend who invested in late 2006, im not surprised if he lost money. u can't make the same comparison like that...

musicwhiz said...

Dear Ryan,

About the capex part, if you don't use operating lease expenses as shown in the P&L, as well as capital commitments note as shown in the Annual Report, then pray tell what exactly can you rely on for "investor value" ? You sound as if you doubt all forms of financial statements because of the possibility of "financial engineering", but in turn this undermines the entire investing process doesn't it ?

Mental framework by Charlie Munger, yes I had read about that. He advises using a multi-disciplinary model, which I have tried to do on most occasions. As I am much younger than the man, forgive me if I do seem to lack more knowledge in this area, but I promise to catch up on my reading.

What Buffett said is that he cannot tell what price oil will be in 3-5 years time, and I dare say no one can. But do note that oil is a finite resource (like coal), and as we dig up more of it, there's naturally going to be less of it. I doubt you would disagree with this statement. Thus, over the long-term, prices will tend to trend upwards as supply diminishes; while world population continues to grow. Increasingly, the "easy" oil in shallow waters is being used up, and oil majors have to go deeper. This capex will mean that oil and gas support companies will continue to be in demand. As for charter rates, I would forsee them to remain stable until at least 2011-2012 when the new batch of AHTS for deepwater come into play.

You mentioned alternatives to oil, and I concur - yes there are many ! But which one of them can be mass produced on a large-scale as oil refineries are doing now ? Thus far palm oil, solar and wind energy (and some say nuclear) have been touted as the "next big thing". Perhaps someday one of these will take over; but that day is not at hand. Also, I dare say most of our machinery and vehicles are made to run on gasoline, so the use of oil will still be very prevalent for the forseeable future. You say that Ezra + Swiber are facing "invisible" competition - other companies producing other products also face such competition (threat of substitutes) so it's really nothing new in terms of evaluation of a company. Every company must be constantly vigilant in case a substitute appears to render their products/services obsolete.

I don't understand lateral thinking "qualitative", please kindly explain. The above points which you raised have already been thought about by myself some time back when I invested in both companies, I just have not blogged about it thus far. So thanks for giving me the chance to put my thoughts down.


musicwhiz said...

Hi Simon,

Yes, in a bear market suddenly a lot of people are also following Mr. Market's moods and are affected by them. I always say it's a sign of the times (a Petula Clark song frmo the 60's). When markets are in "bull" mode, no one questions valuations and prospects; but when the tide turns, suddenly every industry is subject to a slowdown, amid the threat of a global economic recession, the likes of which no one has ever seen (emphasis intended) !

So I take comfort in knowing that the companies I own are well-run and profitable. I have no data points to look out for; I am focusing my attention on other opportunities in such "troubled" times.


musicwhiz said...

Yo Corporate Man,

Thanks for your very long post detailing your history of investing and also justifying your disillusionment with value investing. You are free to have whatever opinion you wish to have of me - that I do not know what I am doing. I can't very well claim I know a lot as I have been investing for just 3 years, but I would like to add that "not knowing what I'm doing" does tend to sound a little extreme. It reminds me of trying to squeeze toothpaste back into the tube - a valiant effort but utterly futile.

Your apology is accepted and no, you will NOT get flamed by my "loyal subjects" because not everyone who reads my blog is a value investor or believes in value investing.

Just a quick note - if you say you do not know how to improve on fundamental analysis and value investing, then how did you figure out that I don't either ? It's puzzling because if I hadn't seen an elephant before, I would not be able to tell that a person HAD seen one, would I ?

You keep mentioning "fundamental analyst", but I think value investing is not just about analyzing financials, getting together with buddies to talk about economic news, and going to AGM. It's a mindset which involves attitudes, behavioural finance (this is integral), mental attunement and an understanding of the intangibles which make up a business. In short, value investors are business analysts la. I always feel that whether or not value investing works depends as much on the practitioner as well as the methodology. You say that of your friends, some managed to get a decent return while some lost money and "quit" (assume they gave up value investing and turned to some other form of investing). The practitioner is the one who internalizes knowledge and uses it to adapt to the situation at hand. Investing is fluid and needs to be flexible in order to survive through the times.

On the same point, I wonder why you keep referring to "beating the index" as a good benchmark that "you've made it". If you aim is not to emulate Buffett's returns (who can, anyway ??), then you should simply be satisfied with a decent return on investment ! Ask yourself a basic question - what is the purpose of investing ? It's to receive an adequate return on your investment over time, higher than inflation hopefully. I feel it is pointless to compare your effots to the index because in that case, buying an index fund will suffice.

In fact, I think you are a success (not a failure) because you managed a consistent return over 7 years without losing money ! Capital preservation is the key to investing and you have already achieved that, so why deny yourself the feeling that you've achieved something which not many are able to achieve ?

For me, I emphasize getting a decent return on investment over time, hopefully just 4-6% per annum is enough (inflation is usually at 2-3% except for the recent temporary spike). Thus, the result I am getting, though not spectacular, is satisfactory to me. Do note that I have also considered ETFs like you have done, but for now I prefer to research individual companies rather than just buying the index.

So to conclude, I am NOT trying to beat the market. The reason why I chose the path of value investing is to preserve my capital (I had been losing money through directionless investing from 2004-2006) and to get a decent return. So far my objectives are being met, and my time horizon is 10-20 years (I personally think 7 years is not long enough - maybe you wanna wait another 13 ?).

As for your colleague sitting on massive losses, did he buy with margin of safety ? I think you should separate FA from value investing because as mentioned above, value investing is really so much more than FA.

I think it's OK to ramble. Heck, you've made me ramble on too ! Haha. You have a good week ahead and take care.


musicwhiz said...

Hi Simon,

Thanks for your comment with regards to Corporate Man's second comment.

I do think value investing should incorporate realism because we are looking at actual businesses and how they survive out in the dog-eat-dog world. Although I have never run my own business, I do enjoy analyzing them as a hobby.

I guess I will enjoy investing even if I retire, as it keeps my brain juices flowing and also allows me to engage others as well. Quite fulfilling, I must say !


Ryan said...

Hi Musicwhiz,

Not that I doubt all forms of financial statements, it is just that ships itself cost a lot to build and also cost a lot to maintain. In the worst case scenario if the O&G industry collapses i.e when oil prices fall below $70 or even less, not one will pay to maintain all the support vessels except the company itself.

I believe in peak oil theory but not in peak oil prices. Human innovation and ingenious will get us out of crude oil addiction and into a more sustainable economy. I also believe in invest for abundance not in scarcity. Scarcity for resources create bubbles, likewise I think O&G exploration may be the next bubble to be explode.

I also do not expect the various alternative energy to save our economy now, but maybe from year 2015 onwards. That is also when the next bull market will start.

Sidetrack to gasoline part, you may refer to that article (Making gasoline from Bacteria) It may be the next Google. It's just one unknown risk that will kill O&G.

All well be prosperous,

Anonymous said...


I follow you to buy pac andes cos' I learn about your blog from WS and was following your investments. Now Pac Andres dropped almost 40% from my buy in price.

Do you know what is the reason? I am getting very worried.

Will you buy more? Can you share more info with a small kan cheong investor like me?

Kan Cheong

musicwhiz said...

Hi Ryan,

I see that you strongly believe in alternative fuels eventually replacing gasoline. While I concede that this may happen some time in the future, it is unlikely that in the near-term (next 5-8 years), something can displace gasoline and crude oil as the dominant provider of energy in our world. In my opinion, oil will not form a "bubble" like the one you envisage, because there is always scarcity and scarcity will act as a natural driver of prices (along with inflation). Hence, oil exploration will still continue for quite some time and provide Semb Marine and Keppel Corp with business for at least the next 8-10 years (forseeable future).

Why the year 2015 ? Do you forsee that some new technology will appear to completely replace crude oil or at least act as a commercially viable substitute ? It's possible and as an investor in this industry, I have to be alert for any such developments. If the news is big enough (i.e. significant enough) to cause an impact to our daily lives (and not just cause a stir in some distant laboratory), then I am sure many newspapers will publish it. Investors can then mull over the news to decide if there are far-reaching consequences.

Investing is not an exact science and it's impossible to see so far into the future (which you have tried to do by stating 2015). Being nimble and reacting to news is but one of the traits of the dilligent investor.

Your article (URL) is interesting, but at this stage it is still very preliminary and experimental; thus I will not dwell too much on such "discoveries", as there are probably a thousand such discoveries made every month all over the world. Let's not try to second-guess which will be the next "big" thing.


musicwhiz said...

Hi Kan Cheong (that's not really your nick eh ?),

I would strongly suggest you do your own research on the companies you wish to own in future and not just follow the companies I buy. It is good to understand the company yourself first and to feel comfortable as a shareholder.

If you invest in a company for its business, you should not worry too much about price movements. Pac Andes is more than 50% down from my purchase price, but so what ? As long as I see evidence of its business growing, I am not worried.

As to whether I will average down more, I cannot tell at this point as I am saving my funds for other significant investments too.

Sleep tight and stop worrying ! The sky ain't going to fall down...hehe


Ryan said...

Hi Musicwhiz,

Why 2015? It's just my rough estimate. Because I read in my childhood about a story that in old Egypt, there was seven yrs of great crop abundance and followed by seven yrs of drought. Year 1982 to 2000 is the biggest bull-market run in human history. For the next bull market to start, the excesses will have to be let off first, first by p/e contraction followed by corporate earning downgrade. This vicious cycles will go for a few rounds and all these will take roughly the same time to run its full course.

To Kan Cheong,
I have also recently get into a small position in Pacific Andes.

1. Strong management and "what they say they will do" attitude as seen from annual reports 2001 to 2008
2. China consumer and resources play; complementary to my whole portfolio
3. 50% margin of safely

Top Risk:
1. High gearing ratio; it's why i only take a small position

Singapore market is highly volatile due to its small size (i.e. very easy to manipulate by BBs) so, you must do its homework to determine your intrinsic value of the company. Then have some margin of safely.


8percentpa said...


45 posts! That's a record for a value investing blog, hehe. Well done MW!

Would like to share just a few thoughts here.

90% of all professional fund managers cannot beat their benchmark ie indices like STI, S&P500 etc. Any it is said that 95% of all retail investors lose money in the stock market, we are not talking about beating indices. It is not surprising that most people don't make money.

Even if you do beat the index, it takes 17 yrs to differentiate whether it is due to luck or skill. Like someone pointing out, those who started in 2003 will make money, those who started to 2006 will lose money.

For a lot of people, winning or losing in the stock market is about luck.

So MW, just by following truly to your investment philosophy is a great feat. Do it for 17 yrs with the zeal you have and I am sure you will be rewarded.

For those bashers here, you are the loser here for faulting someone pursuing what he truly believes and what's more, the verdict is not out in 14 yrs.

If you can't wait that long, go buy indices, ETFs. It is the best way to invest for the lazy people. Actually I would put a substantial portion of my money in ETFs, and much lesser in stock picking.

If you think trading is a better way to make money than value investing, I suggest you read up. To be a good trader is as difficult as anything else, a good artist, writer, surgeon, lawyer, value investor etc. If you traded and made money. Again, it is all about luck! You are just lucky.


musicwhiz said...

Thanks Ryan,

Now I know where you got your estimate of 2015 from. But may I remind too that market cycles may not repeat themselves in the same way or have the same duration in future; as economic conditions change and the financial situation changes as well. The world is dynamic and few things are constant, so as you say the excesses need to be flushed out first. How long this takes is anyone's guess.

Your observation of Pacific Andes is sharp, and glad that you have your margin of safety of 50%. I am trying to average down my cost in time to achieve higher margin of safety, as this is one of the companies I own where I feel I have insufficient margin of safety.

Thanks again for the comments, and take care.


musicwhiz said...

Hi 8percentpa,

Nice of you to drop by and leave a comment ! Your blog is a very good read and your posts are also very entertaining (I like your casual style of explaining value investing to the layman). Yes, 45 comments are a lot but note that 50% are my replies ! So it's actually only about 22 la.....

It's quite amazing that 95% of retail investors LOSE money in the stock market. If you think of it, markets basically only go up or down, so by right it should be 50-50 right ? haha. But I can see why if people constantly churn their portfolio and try to catch the next hot tip. Contra and margin can also kill many people and it probably has in this current bear market. This is why I strive for capital preservation rather than attaining huge profits. Many of the "bashers" only concentrate on the profits I missed out, without realising that it is capital preservation and a decent return on investment which I am seeking, not lottery-style "winnings". For goodness sake, investing is not a competition or a race, though everyone seems to treat it as such. Witness how many people say "win or lose" money, it's pervasive and it's totally wrong to embrace such a concept of the stock market.

Just curious though, how did you come by 17 years as an appropriate measure of an investor's true returns ? How do you actually differentiate whether it is luck or skill, since I know randomness can also play a big part in ensuring one profits every year, regardless of actual skill. Hope you can elaborate ?

Thanks a lot for the encouragement. I do believe in what I practise and I believe in the getting rich slow method. Hopefully, I can be consistent and steadfast over the years in order to attain my goal of a decent, consistent return on investment.


8percentpa said...

I don't really have a source per se for the 17 yrs. I read in somewhere some time ago. More accurately, I think it's like it takes 17 yrs of track record in order to be statistically significant, t > 2 or something (if you still remember your stats!). ie H0 hypothesis: test for excess return over benchmark > 0 or not. Logically, it sounds about right bcos 1 cycle (peak-to-peak) lasts 7 years on average right? So if you are right 2.5 cycles, probably you got some skill lah....

Then again, we shouldnt really be bothered by the benchmark. In the end, as you said, it is about capital preservation and capital growth (if poss!).

8percentpa said...

Oh I forgot about the confidence interval thingy. Maybe it's 17 yrs for 90% confidence that this guy got skill.

And 95% confidence would be 20+ years and 99% confidence interval would be 30+ yrs etc.

Btw in stats, you can never get 100% bcos it will take forever. Normal distribution, that sort of thing.

Stats revision for me and maybe a lot of pple here huh? :)

Anonymous said...


While your frevor for value investing is noted, you might want to get down from that intellectual high horse of yours.

So what if people don't agree with your brand of value investing? Branding others with differing view points as "losers" and "bashers" does nothing but exposes your immaturity in both the markets and in life.

And btw, there are many reasons why people buy mutual funds and ETFs. Some do it for diversification, others use it as a a natural hedging instrument. You might want to read up and interact more before spouting nonsense like ETFs is for lazy people.

I see you also engage in "bashing" traders. Going by your definition, traders who make money are just lucky and value investors who make money are not a result of luck but skill!? Oh yeah, I get that logic, rite...

Out of no where you come up with this theory about 17 years is a cut off point to determine between luck and skill. Since you are unable to cite your source, also hard for bloggers to comment. But what I can say is it seems unlikely an academic study would conclude the way you put it across to us. The statistics might be true, but I suspect you are taking quite some liberty in interpreting.

8percentpa said...

Haha, very emotional post here. Ok just let me clarify a few things here.

Some times I use offensive words like losers etc more for effect than anything else. When it comes to the markets, everyone is a loser at some point in time. Buffett was a major loser in the bubble.

I have never said that practicing value investing will ensure a better result than trading. Pls read carefully. Both are difficult in different ways. It takes a lot of effort no matter which style you pursue.

It is easier to put pple into "for" and "against" and then fight. I may belong to the value investing style but I respect traders a whole lot. I read up books on trading/TA/candlesticks and salute legends like Baruch and Livermore and I believe the respect should be vice versa.

The posters here on the trading side don't really give that impression though. Esp those under Anonymous.

On the 17 yrs, I think my explanation is quite clear. Backed by a statistical method and a logical thinking behind it. Again pls read slowly and carefully.

On ETFs is for lazy people, it was meant to be a compliment. The next line reads I myself would put substantial amt into ETFs. It is interesting how emotions cloud the reading ability.

And finally, I always believe nobody has a monopoly on knowledge. I have never rode any horses and I don't drive a car. We are all here to learn and help one another.

This shall be my last post on this thread as to ensure I do not engage in meaningless comment battles.

Anonymous said...


Wow… just wow. Not only have you showed us what an arrogant snob you are in your earlier posts, you have also subsequently demonstrated that you don’t even have the balls to stand by what you wrote. Your attempts at back paddling are disingenuous and an insult to anyone who has been following the exchange.

You tried to deflect criticism right at the start by saying “I use offensive words like losers etc more for effect than anything else”. This statement is so tautological that it’s completely meaningless. Of course offensive words are used for “effect than anything else”, they are meant to taunt, insult and ridicule for effect. That’s just stating the obvious.

Allow me to quote what you previously declared “For those bashers here, you are the loser here for faulting someone pursuing what he truly believes and what’s more, the verdict is not out in 14 yrs”.

The message was clear and simple, you were labelling people who “faulted” (whatever that means) musicwhiz as losers and bashers. Instead of simply admitting that you were rude and condescending, you chose to do a clintonisque spin by claiming “everyone is a loser at some point… Buffet was a major loser in the bubble” to justify your language. Going by that ridiculous rationale, we should go around calling each other losers since all of us would have lost money at some time. Go down to SGX and try this stunt of yours, don’t forget to report back - if you make it out in one piece.

You then went on “I have never said that practicing value investing will ensure a better result than trading.” Don’t think anyone claimed you said that, whatever was that for?

A belated patronising attempt appears in the form of “I may belong to the value investing style but I respect traders a whole lot.” All this after claiming that “If you traded and made money. Again, it is all about luck! You are just lucky.” What did you say you respected traders for again? For being lucky?

You said “On the 17 yrs, I think my explanation is quite clear. Backed by a statistical method and a logical thinking behind it.” Not at all, what you presented wasn’t backed by any verifiable statistical method, you couldn’t even cite us a respectable source for Christ sake. All you did was regurgitated some basic statistical concepts like confidence interval, standard deviation etc. That’s just basic Secondary school knowledge, come back when you find the actual study.

I will repeat my original stand on your 17 year claim. Not withstanding you being able to cite a proper peer reviewed study, I am extremely sceptical that any study can conclude that 17 years is a cut off point to determine between skill and luck.

Most bizarrely, you then remarked “ ETFs is for lazy people, it was meant to be a compliment”. Next you will be telling us that black is white and the sun rises from the west.

“This shall be my last post on this thread as to ensure I do not engage in meaningless comment battles.” Nice try. In short, you started of haughtily by ridiculing anyone who disagrees with musicwhiz and by extension to yourself. When taken to task, all you could muster were those pathetic lingual gymnastics to argue why calling people all sorts of names is OK While such skills are in need during a legal hearing, it’s pathetic and goes against common sense when you are trying to interact in a blog with common people.

musicwhiz said...

Hi 8percentpa,

In response to your initial 2 posts @ Sep 15, 2008:-

I was never really good at statistics, haha. But I do know about confidence interval and sample size and all that. However, I think as long as we preserve capital and get a decent return, I will be satisfied. I am not out there to directly compare with anyone else, be they trader or investor. Everyone has different financial circumstances.


musicwhiz said...

Re: Anonymous and 8percentpa verbal sparring,

I hope all who contribute to this comments section can remain civil and be tolerant of each other's different viewpoints. Using sarcasm and "flaming" is certainly not a pleasant experience for anyone and I hope that this will not continue.

Let's all learn to respect each other, be they traders or investors. Value investing is NOT the only way to make money consistently, it is merely MY way; and I won't say it's the RIGHT way cos everyone is different and everyone should have the right to choose a method which suits their temperament and financial goals.

This blog is merely an account of my investing journey using the principles of value investing. There is no guarantee I can actually consistently get a decent return, but I certainly hope to be able to demonstrate this over time. If readers out there are still around after 5-8 years, hopefully this blog will be too, documenting my exact decisions and supporting them with facts and figures.


P.S. - Do note that future postings of an inflammatory nature will be deleted by me.

Anonymous said...

Anon @ Sep 15 2008

You called 8%pa a snob, got no balls, rude and condescending based on he using the word "loser" which wasn't even directed to you. So who is rude and condescending?

The word can just mean loser in an argument or debate. Not necessarily the incompetent, incapable, failure in life, that you are thinking. It may not be used to ridicule.

It is not implied that traders are bad, traders lose in the markets. Traders and value investors lose in the markets. Traders and value investors can both be lucky as well. It is ok to respect both as they are. Your criticism here is flawed.

And on statistics, not sure if you actually studied. Hypothesis testing IS a valid method. Finally on lingual gymnastics, seems to me more like you are the one using it to divert attention.

Mick Ong

musicwhiz said...

Hi Mick Ong,

Please let the matter rest. I don't wish to see any more "spats" relating to name-calling or difference in views.