Year 2023 would be ending soon. Year to date so far nothing drastic has happened to global stock markets and probably the next 3 weeks would be the same. However, year 2023 spells a significant milestone for me in stock market. This year marks the 30th year that I have been invested in Singapore stock market. While the past 3 decades wasn't a very eventful periods but did encounter the ups and downs of the stock market. Of course not to mention the mistakes that were made and the precious lessons that were learnt throughout.
The Early Year (1993)
Singapore stock market in 1993 was a total difference as of now. There wasn't online trading, every transaction has to call up broker or remisier to place the order. Commission then was 1% per transaction, contra period was 7 days and only aged 21 and above was allowed to open CDP account to trade or invest in stock. Payment of share has to be settled in either bank cheque or ATM transfer as there wasn't any online banking then. IPO adopted a dual system in which apart from the normal application, investors were allowed to bid for it at the same time.
After opening a CDP account in 1993 and with limited capital since still an undergraduate then, the only mean to get into stock market was applied for IPO. After numerous unsuccessful attempts, SingTel IPO was the first successful and needless to say SingTel was my first stock holding. Due to popular demand, every normal application of SingTel share were allocated a small portion of it. I also managed to successfully bid for the IPO. The bidding price if remembered correctly was $2.10 compared to IPO price of $1.90. Then IPO was like a sure bet as price highly likely surged on the first day of trading. Managed to sell the bid portion and got myself a decent profit for it. The normal application portion decided to hold for long term to collect dividend annually. After SingTel, again met with several failed IPO applications and finally managed to get the second one through bidding. The stock was Pan United and the bidding price was $1.80. Every good thing must come to an end, of course the bull run then eventually stop and very unfortunately, was caught at the wrong end with the Pan United IPO. As a novice then, probably didn't know of risk management so just held onto Pan United share to collect annual dividend despite the paper loss.
The Passive Year (1994 - 2006)
With the bull run came to an end, decided to take a back seat and refocus back to my varsity education. For the 1997 Asian Financial Crisis, I was lucky enough to not taking big hit from the stock market as was in the early part of the working life so focus was more on career than any other things. The only stocks I have then were SingTel and Pan United. Paper loss was there (which stocks not in paper loss from 1997 AFC ?) but with annual dividend to collect so just practically shelved them aside to concentrate on my career. That was the same for the stock market crash in 2003 due to SARS. Well, the cons was missed the golden opportunity to buy some cheap blue chips. So, that the first mistake and lesson learned from stock market.
For that period onwards till 2006, I would consider myself a passive investor by just holding onto those 2 stocks and collect annual dividend. Somewhere down the road, probably Lady Luck shone on me as firstly, managed to get some discounted SingTel share in my CPF account (not the CPFIS account, some special scheme which can't remember the exact name though) and some Pan Marine share from Pan United when it span of that unit. Of course years later Pan Marine was privatized and delisted from Singapore Stock Exchange.
The Aggressive Year (2006 - 2014)
2006 was the year decided to return to stock market or rather came out of hibernation. This was mainly other aspect of life has pretty much stabilize and refocus to gaining some financial for future retirement. Then stock market was in a bull run so the attractiveness was there. With a little more knowledge on stock market and the introduction of online trading (very much lower commission than in 1993 and not to mention DIY), I started actively doing stock trading (contra to be exact) on top of investing. Since it was a bull run, chances of gaining from stock trading was very highly and every Technical Analysis you've learned and applied to it all seem so accurate. Apart from that also decided to build a portfolio of stocks for long term investing.
Firstly, talked about building up portfolio for long term investing. Pan United was sold at a loss (dividend collected so far and profit from Pan Marine wasn't enough to offset), that the first realized loss in my stock investing after holding for 13 years. Robinson, Genting, MMI, ChinaESave, Cambridge Industrial Trust and First Reit were bought between 2006 to 2007. SingTel was sold off in 2007 after holding for 14 years (both the CDP and CPF holding) netting myself the first realized profit in investing. Along the way, Robinson and MMI were both privatized and delisted so getting myself another investing profit. Genting was bought before being announced winner of Singapore 2nd IR (just confident they will win). Both Cambridge Industrial Trust and First Reit were bought purely on Reit play, collect high dividend yield annually and hoping somewhere down the road the amount of dividend collected is able to recover the whole of capital being put in. ChinaESave was purely a bet on the future about reading about those sexy stories painted by analysts. When the US sub-prime crisis kicked-in in 2007 leading to global financial crisis, this time really took hit. ChinaESave was cut loss while Genting, Cambridge Industrial Trust and First Reit continued to hold on. ChinaESave was my 2nd realized loss in investing. That the 2nd mistake and lesson learned, never ever trust analysts and till today, this notion remain the same. However, lesson learned from 1997 and 2003 market crash has taught me to grab the opportunity to bargain hunt in the 2007 Global Finance Crisis. To continue to build up my 2nd Investing Portfolio, I began to buy SingPost (2008), CapitaMall Trust (2009), SIA (2009), Kep Corp (2010), Sem Marine (2010), MapletreeInd Trust (2010), CapMallsAsia Bond (2012) and Kep DC Reit (2014). Together with Kep Reit which was given as an entitlement from Kep Corp in 2013, that form the 2nd Investing Portfolio.
It was also these periods that I started investing with CPFIS and SRS. For CPFIS, there was STI ETF (2008) and First Reit (2009). In SRS was mostly short term investing.
During these periods also started to gain more knowledge by reading up on Value/Fundamental Investing and started an Incubator Portfolio. As the name incubator suggested, it is looking at those mostly neglected stock with good fundamental and invest during cheap for the future. The first stock in that portfolio was Nordic (2014).
Next, talked about trading. Before 2007 market crash, stock trading was like out of 10 times, 9 times you would gain. Even the one time you cut loss, the next trading gain will recover back that loss. As the saying good thing never last, stock trading was taken a badly hit when stock market crashed in 2007 and practically unable to make any gain in 2008. However, when global stock markets hit the bottom in March 2009 and recovered, stock trading was back with a vengeance. I took this opportunity and actively traded from 2009 till 2014 to not only fully recover whatever was loss during the 2007 - 2008 period but also build up capital to inject into the Investing Portfolio. During these periods, contra trading to me was like daily ATM money withdrawal, everyday can profit from it. Record like more than 20 consecutive contra without a single loss and contra for whole month without loss were achieved.
Basically for these Aggressive Years, was playing a dual role of both a stock trader and a value/fundamental investor. Wouldn't termed it as hybrid investor as whatever stocks being traded in were not in the investing frame and vice versa.
The Transitional Year (2015 - 2019)
2015 started the transitional years that lasted till 2019. Trading conditions have started to deteriorate from 2013 due to adopting smaller bid size (risk reward no long attracting) and stock market undergone periods of uncertainty from global events (US Fed QE, Euro crisis dragging on, China bubble burst, Oil crisis, US-China trade war, etc). There were some changes in the Investing Portfolio. Sem Mar was divested in 2015, Cambridge Industrial Trust was divested in 2015, STI ETF from CPFIS in 2015 and CapMallsAsia Bond was redeemed in 2017. The divestment of Sem Mar or rather cutting loss (but overall still net profit with inclusion of dividend collected) has triggered a reaction to think out of the box in investing for me. Putting aside the traditional of using Technical Analysis and Fundamental, I started to try out using Sun Tzu Art of War in investing. Well, we probably heard of success stories of people using Sun Tzu Art of War in politics and business but never heard of using in stock investing. Then I do not think it was impossible, just need to understand the underlying and essence of Sun Tzu Art of War and how to translate to stock investing. It was never a straight forward thing for sure as for every principles (13 of them) I have to figure out how it could be translated to stock investing. At the same time, I have to experiment those translated concepts with real investing to determine the feasibility. It took me a few years to realize some basic essence of Sun Tzu Art of War, the 13 principles form a system for stock investing. Said system is able to self defense and attack at the same time. Coupled with Warren Buffett's advice of not losing investing capital, this translated to defense in protecting capital and attack as in capital gain (凡战者，以正合，以奇胜). This was when I started using CPFIS and SRS account to experiment with the concept. That was further extended to CDP holding later. The principle is simple, I would accumulate stocks with either very little or no capital injected. Exactly how that was done afraid is confidential. As such, should anything happen like market crash, fundamental of the company worsen and etc, I won't suffer heavy capital loss. The initial experiment was using Reits. This is because Reits unlike other stocks do not suffer from great volatility frequently and the high dividend yield is an additional gain on top of capital gain. FrasersCom Trust was experimented with both CPFIS and SRS. After few months, the feasibility of the the concept was positive and this led to further extended to CDP holding with Cambridge Industrial Trust (reinvested), Kep Reit (shifted from Investing Portfolio), FrasersCom Trust, MapletreeCom Trust, Mapletreelog Trust and CapitaR China Trust. Feeling too much holding, Cambridge Industrial Trust was fully divested in 2016. Since it was of little or no capital being injected, Cambridge Industrial Trust didn't suffer any capital loss.
While focusing on experimenting the Sun Tzu Art of War system, I still manage to keep a lookout of bargain hunting opportunity for the Investing Portfolio. The 2016 market crash due to China economic growth concern helped me to pick up Frasers Cpt Trust. The Incubator Portfolio wasn't neglect too, Valuetronics was added to it in 2017 at $0 cost and Creative Technology in 2018. There was also some changes made to Nordic. A partial divestment was carried out in 2017 when the prices rose to a point that gain of the partial divestment was able to offset the whole of the capital being injected in 2014. As such, Nordic has reached the objective of being mathematically impossible to lose money in just 3 years of investing. There was also a significant milestone being achieved for First Reit. In 2017 after 10 years of investing, the amount of dividend collected was 100% of the capital being injected. Thus, it has also became mathematically impossible to lose money.
The Sun Tzu Art of War system of stock investing is not just about self defense and attack at the same time, it is also about ability to analyze the future and make preparation for it. This is the part where Technical Analysis comes in. Looking at all the TA tools, the one that found suitable was none other than Elliott Wave Analysis. It has a steep learning curve but once got the concept right, it is pretty deadly accurate especially looking at long term. To assist me in Elliott Wave analysis, I even developed an app for it and the STI Analysis which I have started in 2016 (still continue as of now) was using Elliott Wave to analyze.
From the Elliott Wave analysis, in 2019 sensing STI would be going into big correction next, decided to divest all of the experiment stocks from CPFIS, SRS and CDP holding. That divestment netted me a profit return of +105.70% for CPFIS, +106.48% for SRS and +639.12% for CDP (27.34% with respect to total capital for the Investing Portfolio, refer here) for just purely investing in a 4 years duration. These outcome more or less concluded the feasibility of the Sun Tzu Art of War system.
The Sun Tzu Art of War experiment has taught me another precious lesson though not a single mistake was made. If sensing something wasn't right and didn't think out of the box to make changes, just like the political party who always pride themselves in white only know one direction, sooner or later will fall off the cliff. The Sun Tzu Art of War experiment that I carried out with CPFIS suggested to me that the present CPF retirement scheme which many believe is one of the best in the world can be better if you willing to put hard work for it. The Sun Tzu Art of War system which used on CPF monies will overperform over purely letting the money sitting there to collect the higher than bank interest.
During the transitional year, I see myself transforming from a traditional trader and traditional investor into a strategic investor.
The New Phase (2020 -- )
2020 was the year in human history that nobody can forget, the Covid-19 pandemic which many infectious specialists all gotten their analysis of the virus wrong in the early phase. Remembered the "Health No Wear Mask" advice ? Like SARS in 2003, global stock markets were not spared from Covid-19 when the whole world went into lock-down mode. Well, my 2019 Elliott Wave analysis that stock market will undergo a big correction next didn't prove wrong. Not that I have a crystal ball to see Covid-19 coming, just that when it is about to have a big stock market correction, somehow something will trigger it. Thus, the full divestment of the Sun Tzu Art of War part was a shrewd move. Whenever there is crisis, there will be opportunity. I took the opportunity of market crash to restart the Sun Tzu Art of War part (which I termed it as Strategic section in the Investing Portfolio) for CPFIS, SRS and CDP holding and this time wasn't an experiment. CapitaR China Trust, Lendlease Reit and STI ETF was added to the CDP holding in 2020. Except for STI ETF which small amount of capital was injected, the other 2 were at $0 cost. For CPFIS, MapletreeCom Trust was added and Mapletreelog Trust was for SRS. In 2021 adjustment was made to swap all of CapitaR China Trust to Lendlease Reit and added both InnoTek and Fu Yu to the CDP holding all at $0 cost.
At the same time, First Reit was fully divested when its fundamental has gone from bad to worse. While the selling price was below holding price, didn't make any net loss as the dividend collected already way way exceeded the total capital being put in. SingPost was next to be fully divested in 2021 and again the dividend collected managed to offset the capital loss to conclude a net positive return. These 2 divestment taught me another precious lesson. Though the dividend of the 2 divestment managed to offset capital loss to give a net profit, this method of investing cannot sustain. Sooner or later, will be hit with dividend collected unable to offset capital loss. This was when I started to think of rebuild and restructure the 3rd Investing Portfolio. For the whole of year 2022 divestment of stocks that didn't fit into my 3rd Investing Portfolio was carried out. SIA, Kep Corp and Genting were divested. Except for Genting, both SIA and Kep Corp suffered capital loss but the dividend managed to offset to give a net profit gain.
What I have in mind for the 3rd Investing Portfolio is to build on the Sun Tzu Art of War system.
- An Income section to house all the Reits to collect dividend, the dividend is the self defense part (正兵) of the Sun Tzu Art of War system. As such, Lendlease Reit was shifted from the Strategic part to the Income section. In actual fact, CapitaMall Trust and MapletreeInd Trust have achieved the mathematically impossible to lose money status in 2020 as dividend collected all those years exceeded the capital injected. As of now, CapitaMall Trust (CICT), MapletreeInd Trust, Kep DC Reit, Frasers Cpt Trust and Lendlease Reit compromise the Income section.
- A Strategic section (STI ETF, InnoTek and Fu Yu) is the attack part of the system whereby little or no capital is being put in, the so-called 奇兵.
- Also added Cryptocurrency in the Blockchain section. Frankly speaking, sooner or later cryptocurrency will be forming an essential part of any investing portfolio in the future. However, the risk is still relatively high at the moment mainly due regulatory. As such a $0 cost policy was adopted. This is another part of the 奇兵 in the Sun Tzu Art of War system
Not only in investing moving into new phase, stock trading too. Stock trading nowadays is more of strategic oriented rather than the old aggressive style. While might not be making more profit than in the past, still able to create a little side income and keep myself active in the stock market.
关羽过五关斩六将寻刘备，吾三十载历五阶段.
That practically sum up my 30 years in stock market so far, made 2 investing realized loss, not afraid to admit mistakes instead of giving excuses for it and most important of all not just learn the lessons but put that in action.
