Sep 18, 2016

Cory Diary : Calculating Return in Equity - Part 2

In this continuation of calculating equity return, let's simulate a scenario that on certain years we have very good returns. And we feel rich that during that periods, mentally we think we can afford to lose. This can be at portfolio level or Individual Stock that we have grown to love.

As the table above, I picked year 2009 and 2012 where Cory has strong gains and have them tweaked about 50% lower returns as we are less careful with money and that we have fallen into a tunnel vision of justifying more risk on just one or two stocks which have been been a key lifter of the entire portfolio.

This is not unrealistic. Is quite common we see at portfolio level we are doing well just because of a few of them or maybe even just one counter. And if that one is soured later on, we like to know the impact.

From the table we can see Annualised returns reduced to 4.2%. And for the above example is a $61, 000 hits on return of $100, 000 investment. Do remember return on such over 10 years compounded is quite significant even for just 1% point.

The next time you feel a particular stock has gained 100% return for you that you can afford to lose them back since at counter level you will not lose, better think again.

Have a nice day.


Sep 17, 2016

Cory Diary : Tray Collection Robot

Smart Tray Return automation piloted in a food court recently. Pretty cool huh. There is some issues here and there. The walkway is too small and the robots are a little sensitives which i think is alright due to safety. Nevertheless I find it interesting. What I do like is we probably have created a number of higher value jobs. Well is still pilot and may not take off. However this may ignite other initiatives here and elsewhere.

I still remember like "yesterday" having a vivid discussion with a respected blogger on old folks hired to help clean up the plates in food courts. His main concern is what type of values he want his children to have. Old people helping to clear his kids dishes ? I respect that. And then we also have the efficiency addition where the government want to rely less on foreign workers, and grass roots promoting self service. Well it is not going anywhere.

Curiously that time in my thought is, did anyone ask about what the old folks think ? I am more empathy that many of this old folks need to work or spending few hours of their time a day trying to earn some pocket money.

This is especially so for those who do not have enough saving. There is limited job alternatives for them. They are one of the social interaction remaining links. What more there is some value creation. There is also some interaction in their life. I think we need to appreciate their service.

But if you ask me now, i would say the tray automation system complement all our needs. The robots will likely complement their work. The workers are still needed, the children can still walk up to put their tray, the robots will lighten the labour needs and we have created higher value work supported by engineers, hr, managers etc.

I come back to Singapore few times a year. Every time i will not miss buying my Business Times copy from this old Indian Lady. A temporarily prop up store. Very friendly. And I would always like to put up a chat with her every time in the morning when I am there. She lights up my morning with her cheerfulness and ideas.

And then another older Chinese lady solo many a time on the Kopi-Tiam noodle store. Excellent food. Shes looks like 70 ! One of my favourite. Irreplaceable cooking skills. Who next's ? They all play a part in our daily life aren't they ? Do we really like to see newspaper vending machine ? Factory produced noodles self-collect at pick-up point ? Maybe some people like talking to "Wall".

Key part of the life equation is how technology enable and complement our daily experiences especially those that are the fabrics of our society. Not just dollar and cents. Maybe our future can be more exciting  in this lacklustre market.


Sep 11, 2016

Cory Diary : Calculating Return in Equity

When I look across STI Index back 10 years there are 3 major down levels. If your investment have survived this three crisis give yourself 2 STARS.

1. 2008 US - Sub Prime Financial Crisis
2. 2011 European - Greece Crisis
3. 2015 China - Stock Crisis

When we start measuring our performance matters. Anyone who invest right after 2008 bottom will most likely survive well today especially for those who invest big. If you did big please give yourself 2 STARS.

Using $100,000 Investment seed as if I am a Fund Manager, applied to my past 10 years performance. And then compared to two tweaked samples calculation on strong and mediocre performances.

The first table is Cory returns. 10 years Annualised return is 6.7%. I give myself 2 STAR.

The 2nd Table has return tweaked with smaller losses in year 2008 from -52.5% to -25%. And in year 2011 from -13.1% to -8%. This 2 years are periods where market is bad. 10 Years annualised returns boosted to 9.5%. Give yourself 3 STARS if you hit this level of performance.

The 3rd Table has return tweaked to have lower return in other years only. 10 years Annualised returns come down to 2.3%. This is in the upper range of fixed deposits. Still better than cash. 1 STAR.

What I understand from the tables are reducing large looses are important. Consistent performance is even more critical.

How many STARS you have ?


Sep 4, 2016

Cory Diary : Taiwan Housing and Pension System

In an ironical twist, Taiwan DPP (Green Party) recent elected president policies direction is moving towards what Singapore has been doing despite the blue camp is more "Pro" Singapore. Of the 5 Major reforms, two of them is deep in Singaporean heart.

Constructing 200,000 units of social housing for lease to low-income citizens

Taiwan problem isn't just about wealth gap. The main issue is the low average salary. Wealth gap is only meaningful when the average ( or median) pay is high. Even if they have succeeded in distributing the wealth evenly, it only means everyone is poor. The average salary in Taiwan is about S$2,100.

In the survey, 1111 Job Bank, one of Taiwan's leading human resources agencies, said that employers offered NT$26,493 (US$855) in starting salary on average to new college graduates. That's about S$1,100.

Cost of living in Taipei for equivalent level of standards, is not far from Singapore. Housing in Taipei is not cheap either and not far from our Condo prices (depending on location) considering they do not have wide social housing development policies previously. A pain to many because limited subsidised housing currently is build for a small pool of Civil Service personnel who can sell it as a cash rich scheme on the expense of the public. Why do they have such policy is beyond logic as not everyone in the service can get it either. 

Initiating nationwide discussions on establishing a permanent pension fund

Taiwan pension system appears to depend on future generation to pay for current retirees.

In an era of lower birth rate and low income, the Civil Service Pension will go bankrupt within 2 to 3 years.  The Civil Service Pension is quite generous. People in the government will prefer to retire whenever possible rather than work. And many did retire young and subsequently out of economic contribution to the country at a time when they are at their peak of experience. This is beyond .. beyond... logical sense. A self inflict wound !

And the financial burden go to the young who not only has a lower salary environment than their parents but also higher living cost. Another blow to themselves.

Many of such policies are short term to appease to get votes since the Civil Service constitutes as large voter base. Compared to Singapore, CPF money is how much we saved and government service it at a reasonable interest rates. We pay our way to retirement and not our children.


President Tsai clearly got her financial logic right. The next is will she be able to execute what she says ? Taiwan will do well if she does, and if so, stay long after to clean up the political mess of President Lee(Blue and Pro Jap), President Chen (Green but corrupt), President Ma (Blue and powerless). And Vice President Lien ( Blue and Pro China). By the way, "Pro" is an understand statement for both. I would say Extreme.

Base on the past few month records, President Tsai did right by removing key positions from both blue and green camps of top level corrupt politicians from key government and legislation posts. I bet she will succeed.  I see lights at the end of the tunnel for Taiwan now.


Taiwan Notes:

There are currently 135,224 retired civil servants, the United Evening News reported. Each civil servant receives an average of NT$56,383 in monthly pension payments and preferential interest deposits.

According to MOCS statistics, spending on civil servants' pensions has accounted for about 8 percent of the government's annual budget over the past few years. The proportion is likely to rise if no reform is adopted, creating further burdens on government finances and squeezing spending on other segments.

According to the MOCS' report, only 2,719 civil servants retired in 1996, compared to a staggering 11,803 in 2015, while the average retirement age was 61.14 in 1996 compared to 55.72 in 2015

One of the major goals of Tsai's pension reform is to achieve equality, which addresses social tensions arising from the huge differences between government and private sector pensions.

But how deep should the cut be? This is indeed the most difficult part of the reform, which will affect vested interests of all active civil servants, (currently almost 350,000,) and all retirees, (currently more than 135,000).