2011 was a bad year for investments. Stock market is trading sideways for most of the year, let’s see how we did.
Total returns for KLCI is at 82%, similiar to last year while my returns have dropped from last year’s 67% to this year’s 53%. Depressing.
Stock allocation did not change much at 69% Blue Chip, 10% REITS and 21% Small Cap/Speculative.
Public Bank is maintaining it’s stock price while returning an additional 6% dividends for the year. YTL was sold because of it’s poor dividends and AJI was added for it’s growth potential into India. AJI also returns a respectable 4% dividends for the year.
AL AQAR returned 7% Dividend for the year on top of a few percent of capital gains. It may not be an AXIS but still better than everything else in this environment.
HAIO, ANALABS and CENBOND was sold to realise their gains.
MEGB suffered a severe hammering due to lower student intake from a government policy change regarding student loans. However dividends remain strong at 6.8%. I still believe there’s a good future for MEGB as demand for nurses should go up as the world ages. I will keep a close eye on this stock as there are too many factors driving the stock downwards, including the CEO’s health.
XDL suffered through the year as continuous string of bad news came out of China. First there was the reverse take over scandal of Chinese companies on US stock exchange, and then rumours of economic hard landing eminent in China. Dividends are quite disappointing at 3%. Yes I know, better than FD but poor compared to REITS. Only piece of good news came only in 2012 when it was announced that another company is contemplating buying XDL. This stock is speculative all the way.
NOTION was added again for the rumours of interest from KKR private equity firm. The deal however fell through, perhaps due to management’s belief that it is worth more than the money offered. After the earthquake in Japan, it announced that Nikon wants to outsource their processes to NOTION, which is a positive development. However, late in the year it was hit by floods in Thailand and the stock again fell. Given the circumstances, it is still worth keeping the stock and see 2012’s results before deciding whether to keep it or not.
One of the themes of 2011 is the amount of mergers and acquisitions happening, like MAMEE, PLUS. Some of the mutual funds are doing really well because of it, and it rather makes my portfolio look embarassing, despite the overall KLCI barely moving. This M&A theme is moving well into 2012 with PROTON and KFC. However, I might not play on this theme as market insiders will outplay any retail investors.
REITS however look promising and the limited capital gains is keeping investors on the sidelines despite the good dividends. If the situation in Europe persists, it might be worth investing in more REITS as I wait it out. If the situation changes only I will change to cash and start buying more beaten down stocks.
I have written this a year ago to a friend and since I’m planning to write something for 2011, thought I’ll dig up this one and post it. Unfortunately the excel values have been blanked out to protect myself. I am however posting the percentages for everyone’s perusal:
I have attached here my portfolio, share my rationale for my purchases and perhaps thoughts for the immediate future.
Public Bank has been doing well as the back bone of my portfolio, forms about 50% of total equities and is returning ~65%. Not even rumours of Teh Hong Peow’s health can drag this stock down.
Hai-o is doing well as a growth stock for the moment, returning 78% although the growth seems to have stagnated for a year.
YTL is a blue chip that is holding its own, but the dividends are not growing as much as I like.
CENBOND and ANALABS are small caps that according to the Stock Market Performance Guide quite reliable dividends generators. Growth is moderate.
Al Aqar Reits was purchased towards mid of last year as I felt the Malaysian stocks are getting expansive in their evaluation. It is also defensive in nature due to their dividends policy. My hope is that it will have capital gains like Axis Reits.
XDL is a china stock which has an ok dividends but the market is shunning it like crazy. Still too early to judge whether there will be capital growth, it is one of my more speculative investments.
MEGB is a play on Education stock, but it is still speculative in nature when compared to SEGI or HELP.
The Intelligent Investor: by Benjamin Graham
The central Idea that I got from this book is that an Index Stock Fund outperforms other equity funds on a historical basis. And sometimes it outperforms active investing too. And from my wife’s portfolio of 5 years, it seems to be true.
The other Idea is the emotional Mr. Market. The stock market as a speculative investment is a zero-sum game, and Mr. Market plays the role of the crazy trader who trades stocks at a different price everyday. Of course, the book encourages investing for the long term where the stock value grows along with the economy. But for active investors, it is recommended that they study Mr. Market’s price variations and invest in their preferred stock at their lowest price.
Investment here is also specifically mentioned to be different from trading or speculating. Some may call it ‘Fundamental’ investing and what it means is just that one must study the company’s fundamentals (financials/management) before selecting it for investment. Normally the investment would be long term and the only time to sell is if the company’s direction or management does not fit with investor’s requirements anymore.
Lastly, the book introduces the concept of Margin of Safety. Of course, the writer puts this concept in context of the Great Depression of the 1930s. The idea is that even if a stock looks cheap on paper, you still can get screwed by the irrational Mr. Market who prices it lower and lower. So a stock that looks borderline cheap is not good enough. Ben Graham recommends to have a bigger Margin of Safety and buy it really cheap. It will help with the sleeping soundly at night too. It is the result of living through the Great Depression and it is a lowering of one’s risk to the point where the returns will be quite limited too.
For a basic course in investing, one cannot go wrong with this book, BUT for normal readers, the writing style might be a bit archaic. It IS written quite a long time ago. For those who have read this book, they will have the basics to invest but in order to get a better return, they must next read Common Stocks and Uncommon Profits.
Been doing some financial planning lately. Found this lovely website which I would recommend to everyone:
http://www.ykconsultancy.com/
I find the articles and financial calculators pretty comprehensive for beginners like me. So bookmark it and start planning your future!