Posted by: donmihaihai | June 22, 2021

STI lost decade

Or 14 years.

For the last 14 years, STI has never able to break through 2007 peak.

Valuation of major Constituents 76.8% as of now, in term of P/B, saw compression from 2007 peak and every mid range peak since 2007. I just pick the highest price around the peak period. Roughly right than precisely wrong.

the drop in 2020 is not excessive in term of %, but when it come to valuation, it actually matches Mar 2009.

Ma hou pao.

I had written elsewhere and in my blog that local stocks were really cheap last year. Valuation before 2020 and current is not excessive as well. In fact very reasonable. Last year when I wrote, death of equities (local version) might be the first of the major bear bottom(STI) in the current bear market since 2007, there might another or two bear bottoms for STI going forward. Major bear bottom is not easy to come by in an investor life.

There’s an old saying that bull markets are born on pessimism, grow on skepticism, mature on optimism and die on euphoria.

Posted by: donmihaihai | May 24, 2021

I am so old tech

After ending of my news and magazine subscriptions, I live with feed news, blog and forum and I think my thinking got narrowed or at minimum, stop expanding. Not healthy at all. Look like it is about time to start some digital subscriptions. But my cheapo mindset is still having the upper hand, why pay when I can get them free. Freebies do come with a price.

I live in a googled world which unlike the world when I was a kid, where Iot of time were spent on seeking information (I seldom do), in the current world, information is abundance and getting it without effort. And in investing, information is not about speed, it is about thinking.

With the Pandemic, digital have become like the “god” word. Everyone flock to anything digital like a lemming. Not just investing, startup, news and even older generation start to do more with their smart phone than just calling. Yes, if company doesn’t have a digital strategy, it is doomed when its competitors are upgrading or future proof themselves. But does it mean that having a digital strategy will transform your company and create competitive advantage? I don’t think so. I think it just shift the bar upward, like the good old stories of installing air-con in barber shop. People flock to barber shops with aircon initially but after some time all barber shop has aircon. Well, nowadays which stupid ass will open a new barber shop with fan or which barber ship is competing with installed aircon?

The god like digital word is where the money is. The able and fakes rush to start something digital, AI or whatever. Those with capital but not able enough rush to send money to the able and fake. In my world, the biggest the crowd, the bigger the competition, the higher chances of losing money in long term. In short term, who care as long as the music is playing. For betting on some of these companies to become the next Alibaba/Amazon, good luck on picking a few from the mass orgy. More so if you are unable to think about businesses, industries and competition, etc and being feed from the news.

 In the last year of so, I see quite a few bright industries. One of company in shipbuilding wrote in their outlook on 2 results announcement, ie 6 months that say the global new shipbuilding orders decreased to from lowest since 2004 to lowest since 1996. Mean high cost shipyards were sitting idle! You can be pretty sure no one will start a digital shipyard! There will be more exit than entrant. Then, you got the sudden order book explosion, along with share price but current share price is still more dead than alive.

Another subset of shipping industry is as gloomy as you can imagine. Such as below Q&A reply.

the rapid development of the COVID-19 pandemic and the resultant plunge and volatility in oil price stemming from the sharp fall in oil demand. Our group suffered a stop work situation in 2020 which lasted three to four months during which most of our foreign workers were restricted to their dormitories. Production levels therefore fell with the reduction in available production manpower. As such, where relevant, we notified our clients of the force majeure situation. There was also a slow-down in market enquiries, tenders and potential contracts as end clients suspended or delayed projects. Contract values were also reduced. Vessel charter opportunities also fell away as exploration activities slowed and charter periods were shortened. Activities in relation to servicing and certification of offshore equipment were halted due to travel restrictions.

. Even as recent as April 2021, there are countries in Asia which are suffering significantly from COVID-19 and their unfortunate escalating situation impacts many companies in Singapore within the construction, marine and process sectors. Over the last year, despite the COVID-19 situation, we have suffered a reduction in manpower as a number of workers have resigned to return home to be with family and only in recent weeks, have we been able to secure approvals to bring in existing and new employees to Singapore to strengthen our workforce to enable the Group to take on more fabrication work. Although we have managed to bring in a handful of new workers in recent weeks, the new travel restriction in relation to India will now delay the remaining plans for a month or more and we will continue to suffer from a limited workforce. Although we have enlarged our sub-contractor base to reduce manpower shortages, as travel restrictions continue or escalate, manpower shortages become more of an issue. Our Malaysian employees have returned to Singapore and are occasionally returning back to Malaysia under the Periodic Commuting Arrangement.

Tell me who is going to put their money in here! Which is why I think the future is very bright here. Everyone want to leave this industry and which twenty-something is going to start some digital whatever here?  

The Q&A also touch on a very unfortunate but interesting development. Migrant workers in construction, marine and process sectors. I believe that the current situation will do what the Singapore government has been trying to do for many years but without success. Change the way you do or die off. And of course money is not flowing into these places and with their valuation, the future can be very bright. Bright future grew out of desperation and leftover players enjoy the future.

Ahhh I am so old tech.

Posted by: donmihaihai | May 18, 2021

Stupid Money

Walter Bagehot wrote those words in 1856 about an event that happened in 1720 — The South Sea Bubble. He was describing human nature’s role in turning smart money into stupid money during manias and panics:

A great deal has been written and is being written on panics and manias — a great deal more than with the most outstretched intellect we are able to follow or conceive; but one thing seems certain, that at particular times a great many stupid people have a great deal of stupid money. Many saving people have only the faculty of saving; they accumulate ably, and contemplate their accumulations with approbation, but what to do with them they do not know… Several excellent economists have plans for preventing improvident speculation…but the only real way is, not to allow any man to have a hundred pounds who cannot prove to the satisfaction of Lord Chancellor that he knows what to do with a hundred pounds. The only want of this obvious and proper precaution allows the accumulation of wealth in the hands of rectors, sweepers, grandmothers, and other persons who have no knowledge of business, and no idea except that their money now produces nothing, and ought and must be forced immediately to produce something. “I wish,” said one of this class, “for the largest immediate income, and I am therefore naturally disposed to purchase an advowson.” Every now and then, from causes which are not to the present purpose, the money of people of this class — the blind capital…of the country — happen to be particularly large and craving; it seeks for some one to devour it, and there is “plethora” — it finds some one, and there is “speculation” — it is devoured, and there is “panic.”

Stupid Money • Novel Investor

Posted by: donmihaihai | May 5, 2021

WB quiz

I am going to take the quiz and rather than handicap myself like some hero, I am going to give myself another leg. My guess is base on normal and not some crazy valuation and with my limited understanding of the businesses.

Apple – A close yes base on not many alternatives and it is big enough.

Saudi Aramco – Yes. But I would like to sit this one out.

Microsoft – No. Base on I think window/office become cheaper. ie earn less money and more competition on cloud.

Amazon – Yes. Cloud is same as Microsoft. Online platform, I don’t think it is easy for new players to catch up current players. Current players are both online and offline. International will be a dogfight.

Alphabet – Yes. Google is still search and it is global(except some countries)

Facebook- No. Hard to be the place to be gathered in the future for kids below 20 years old.

Tencent – game and wechat? I say no. More competition in China and lot of competition once they get out of the great china wall.

Tesla – No. Industry is not that big and EV and autonomous create more competition

Alibaba – online platform and alipay? I say no. same reason as Tencent

Berkshire Hathaway – No. Growth will slow. harder to make it into top 20.

Taiwan Semiconductor – No. Domination but too big and powerful for being just a manufacturer.

VISA – Yes. A global electronic payments. You need brand, trust, speed and spread. Kind of winner take all industry.

JP Morgan Chase – No. Banking is about Scale. US not big enough. Maybe China will be but it will follow US footsteps once country with high population developed.

J&J – No. I don’t see drug and consumer co. going into top 20 globally in the future.

Samsung Electronics – No. Would be a surprise if there are more brand in this segment earning lot of money in the future where the basic rule is lower and lower price for same product.

Kweichow moutai – No. Not seeing it as a global brand

Walmart – No. Unless it can repeat what it done in US in another country.

Mastercard – Yes. Same reason as VISA

United Healthcare – No. Same reason as Walmart but in healthcare.

LVMH MOET – No. Brand conglomerate? Very hard and too small.

So my picks will be Apple, Saudi Aramco , Amazon , Alphabet , VISA and Mastercard.

5 US companies and 1 country.

I don’t want to bet against a country and it is so huge now. If the last spot is 4T. I would bet that it will take that spot from current 1.92T. Oil will not be going away yet and 30 year is a long time to adapt.

I am not into the current US vs China shithole and I seriously hope that there won’t be any war. I believe to be in top 20 30 years later, companies must be strong in their home country and also the globe. The bigger the home country the better it is provided they have tamed the competition. That is my preceded landscape 30 years from now.

Pick Apple, Alphabet, VISA and Mastercard because I view them as global companies. While I think Amazon is more US than global, it is huge. I see Tencent and Alibaba as more China than global. While China has a bigger population and will be bigger in the future, there is also a lot more competition. I believe the 5 US companies face lesser competition in home country. At global stage, these companies have advantage they are the first mover and some of them have already “won” in many countries which mean it is hard to kick them off their spots. China companies face a harder time in global arena and while I bet there would be many successful companies from China in the future, I just don’t think it will be the current 3.

Posted by: donmihaihai | April 6, 2021

I like

I like companies that have competitive advantages.

I like companies that is doing well. Doing well not just in good times but in bad times as well. Doing well in term of better than competitors. For example, during down-turn, the company averaging of say 5% ROE where many competitors are swimming in reds. That is doing well. I like to spot good companies during bad times.

I like companies where the management is fair and I want my money to bet on management who is fair. To be fair, I don’t know whether the company is fair to customer/supplier.  While I do know the remuneration of directors/management and non-management and unless the amount of remuneration is so huge that became the elephant of the room, it is hard to know if the remuneration is fair. But over time I thinks are companies is fair when the amount of remuneration jumps along with yearly profit. This fluctuation has to be about the same across the board or management has to take more pain than non-management during down turn if they receive higher upside during good time. Companies where management get big increase in remuneration at the moment of green shoot leaving the non-management behind are those that I don’t like.

I like companies that is not constantly in the news.

I like Biden like not Trump like companies. “You guys are great and I have make XYZ greater like never before”

Posted by: donmihaihai | February 16, 2021

Some knowledge some commonsense

No, I am not writing about AI, nothing of that sort.

Chanced upon writings by someone on where does the money in the stock market come from. Not the kind of big idea stuff that I would spend much time thinking about. But well, somehow I think it fit well into what I have been writing recently.

With a little knowledge and some commonsense, I have always reject the saying that the stock market is a zero sum game. Never was and not going to be. Neither is casino. In a zero sum game, the pot of money remain the same, it just change hand. Even in casino, the house has advantage and that is where the money flow to and of course there are lucky people but when you have advantage, luck will not play a big part in long run. If stock market is a zero sum game, then the whole market is make up of saving of investors/capital providers and market will only grow when the saving goes up. Well, it doesn’t say money on whose hand. That is not what I have seem.

What I have seem in stock market is investor provide capital. Forget about loan, etc. just say capital = equity. With capital, company operate and generate income. Wealth of the investor depend very much on the income generated now and in the future. Pretty much a private market or company or call it unlisted co. When the co. is listed, or in stock market, what happened as a private co. still remain true but investors can easily sell their share or buy more. Buying and selling is where the valuation come in. Actually the same things apply to private co. as well. So in short, money from stock market come from capital from investor, money generate from company and lastly valuation.

In How could SPH lost so much? The swing in valuation for SCM and SPH, SCM valuation was about 1/10 of Dec 2012 as at Aug 2020 and SPH valuation was about 1/6 of Dec 2012 as at Aug 2020. Ignoring dividend/ return of capital if any over the years, your investment is left with 10% and 16.67% of original amount after 8 years base on valuation alone(doesn’t mean it is your actual loss). So this is how you are going to lose money, over paid for an investment(buy) and sell at wrong time or shall I say sell at depressed valuation?

Charts say it better

Who want to do that? Nobody. But it happen to almost every investor, just how regularly and whether the amount impact your employed capital. Everyone like to do the following. Just not many are able to do it regularly or with amount impacting their capital.

Who doesn’t love to invest in AEM or Powdermatic at their low? I have not invested in both co. at their lows. Most investors won’t even want to look at them at their lows. But now they love them. Maybe not so much love for Powdermatic but certainly AEM.

Ifast and Tesla are even better

The recent surge in Ifast and Tesla were wow. AEM was almost the same. Valuation, I don’t even want to talk about it.

There is one thing good about being in the market for many years. Why talk about valuation with investor who are long AEM, ifast or Tesla?

I wish I have the longer chart for SCM or SPH but Microsoft and Sarine should be good.

Just like my title, end it with some knowledge, some commonsense. With the capital from shareholders, company operates and generate profit hopefully and valuation swing….. Yup, don’t be at the wrong side of the swing.

Posted by: donmihaihai | February 5, 2021


Talk about companies that I have invested and unlikely to invest more in the near future because of the valuation.

Micro Mechanics

My first 10 baggers and still holding on to a smaller holding after recent further selling.

The company future is certainly bright especially the consumable tools. While it is good to know that the company believe semiconductor industry may be entering a supercycle of multi-year growth, it is even better to know that the company goal is to become a leading next generation supplier within a handful of suppliers. In short, it means Micro Mechanics intend to beat all competitors during the supercycle going forward. Isn’t that exciting?

How high can the ROE go from close to 30%? I don’t know but I don’t think it will double as this is a manufacturing company and it is constraint by pricing and capacity. So, the current share price isn’t cheap and I am not of the view that just because of the future is so bright, rich valuation is justifiable and share price will keep going higher. But then, I will likely hold on to the last few shares as it is hard to totally sell out on a good company.

My initial purchase was sometime after IPO with my CPF monies and my last was during GFC. So over 17 or 18 years, Micro Mechanics alone funded more than half of my FRS.


Initial purchase in 2007 and bought more during GFC. Managed to sell most in 2014 for multi baggers gain after Sarine price jumped. Then Sarine, dominate the equipment side of the processing segment of diamonds supply chain and was trying to enter retail segment. The sale was mainly on valuation ground.

On hindsight, my timing was almost prefect as Sarine share price staged a multi-years drop there- after and I started to repurchase about 6 years later, ie in 2020 and bought more as it head lower. My current average cost is even lower than 2008 and waiting for a second ride, hopefully.  

Diamond industry that Sarine operate in has certainly changed somehow in the past 14 years or so, it seen to be less attractive now compare to before, but I am not so certain because I can come out with views that it is even more attractive now for company like Sarine. And Sarine continue to dominate the equipment side of the processing segment and working (looking good) to combine processing and retail segment and dominate both.

Out of the blue, Sarine share price jumped again recently, reaches close to 3X NBV from below book. While the current valuation is certainly not the elephant in the room on whether it is cheap or rich, I would want to continue riding it base on the Sarine domination.

Penguin International Limited

Building one of the leading brands in vessel for crew and security boats, Flex, locally and managed to be decently profitable as well. While I believe their lead is by no mean secure, the management is pretty good and I like the way they are communicating with shareholders.

Now the management make an offer to take the company private at $0.65. $0.65 is really a good premium from my cost price and what a short holding period but my fate depends on other shareholders.

No complaint on whatever the outcome will be. It is not because of my gain but rather it is part of investing. Why complain?

Penguin International Limited certainly worth more than $0.65.

Jardine Matheson

A decent conglomerate with lot of businesses and mainly in Asia. Most of the businesses range from average to good. Even if some lines are not in top condition, they are not in worrying state. The ROE is reflective of it as well. Management remain consistent but recent years acquisitions is somehow on the expensive side, especially those in China.

Why don’t you wait on your ass? Perhaps the down cycle of some businesses push the management to jump the gun. I don’t know. Really hope JMH is as discipline in acquisition as in share buyback.

I believe JMH have conducted the biggest share buyback for all locally listed co.(primary and secondary listing) since COVID-19 and I believe at this point, buyback already crossed over USD1B. I was hoping that the share price keep depressed longer at USD40 to USD45 but well, share price jumped and JMH is still buying back at around USD55 to USD57. At a price where I still support.

My thoughts on their share buyback is a reflective on what I should do.

Posted by: donmihaihai | January 7, 2021


Nasdaq last 10 years annualised return (1/1/2011 to 1/1/2021) was 17% annualised and about 11.6% for S&P 500. Outstanding returns. If the same rate of return continue, Nasdaq and S&P 500 will be at 49,789 and 7,507 on 1 Jan 2031 & at 191,302 & 14,972 by 1 Jan 2041.

Annualised return of 17% and 11.6% for 10 years happens but it is not a norm especially the 17%. Over 20 or 30 years? I don’t even want to bet a single cent on it even when I don’t know the exact historical annualised return of Dow, S&P 500 or Nasdaq at this point, it should be below 10%.

Nasdaq 20 years annualised return (1/1/2001 to 1/1/2021) was 8.6% and S&P 500 at 5.4%. Now this tells another story. Nasdaq return was still very decent and S&P 500 is at 5%. But most of the return came from the 2nd 10 years with the first 10 years being 0.8% and -0.5% for Nasdaq and S&P 500 respectively.

I didn’t choose the period, If I do and measure the return from peak of 2000 Tech bubble to 1/1/2021, Annualised return for Nasdaq and S&P 500 will be 4.56% and 4.36% respectively. 0.2% differences and Nasdaq cut by half! Let not forget, at this point while we are not at the Tech bubble level kind of insanity (I believe so), we might be close.

Will high rate returns continue? Some say yes. Some say there will be a crash, but then expect the market to go right back up.

Some say this time it is different. We are in new digital ages that lead to singularity soon. Stock market will reflect it.


High exponential growth rate never last long. Everything is constrained by something. At 17 annualised rate, Nasdaq double at just about every 4 years!

If Alibaba revenue exponential growth is 30%, Alibaba revenue will reach 1.8trillion from the current 80billion in another 12 years!

WB BH growth was from started from a small base and last long enough for it to grow 20%pa for about 55 years. But going forward, BH equity will grow to 3.7trillion in 12 years at 20% growth rate from $425 billion!

If there is no constraint, even elephant can populate the whole earth with its slow birth rate.

Posted by: donmihaihai | December 17, 2020

2020, what a year!

2020 is almost all about COVID 19, but if one is talking about investing, there are a lot more to it. Seldom would I say what a year, but I think 2020 is going to one of those years.

When China finally admitted to the seriousness of COVID 19 at the beginning of the year, my initial reaction was to check the stock markets and see if a crash is coming. Lot of thunders but hardly any rain. It was only in March that Markets started to drop seriously and followed by a sharp crash when COVID 19 finally hit US. As if the market is telling everyone of us that, US still matter, or in fact the only market that matter in terms of influences and we keep seeing it being playout throughout this year.

Almost instantly, I knew that SGX is flooded with bargains, STI or banks was at reasonable valuations at the start of the year and the border market was actually way cheaper. I have increased buying in 2019 after years of little activities and of course, upped my gear during CB period.  But the panic period was short and all markets went up. Extraordinary times doesn’t last and what a short window.

Fast forward a few months, STI, made up of mainly “old techs” underperformed big time so much so that the multi-years underperformance against US market and many more and many investors started to notice it. I used investors because this underperformance hurt buy and hold investors way more than traders. And surely, the SG version of death of equity start screening real life. With the exception of some REITs, Singapore stocks were being thrown out and Foreign Tech stocks became the favourite new holdings. Hardly any surprises that this was the time where local bank valuations were in the cheapest portion for months for a period of more than 25 years. In fact, if I remember correctly, other than short windows during AFC or GFC, local banks are cheapest for a big part of the year and if you are in wrong sectors, the valuation is even more rock bottom. Basically except for some REITs, the shows ended, crowds left. For a cheapo like myself, all I did is keep picking up these “old and unless tech”. So happy when investors pour cold water on local stocks like SPH, SCI, SCM, Singtel, Jardine, etc. whether I am buying or not.

 Excitement move prices but the market weights in the long run. Out of the blue, just when many were thinking that STI is a goner, it staged one of the best gains in a month for many years in Nov and IPO market start to look interesting after years of boredom. And the markets look like it is to be going insane for a much longer period. All these happened in a COVID year!

It is easy to has views on the direction of the markets but looking back, how many got it right? I wrote this sentence because as always, when I say I don’t know where the market is heading, they will surely tell me what their crystal balls tell them. It is hard to tell peoples I focus on thing that I know and in control, and what will happen next to the market is something I don’t know and I don’t bet it with my money.

And I know, at this point, a big portion of local stocks are still cheap. Local banks are cheap when they are trading at PB of 1X or less with ROE at a little north of 10%. And that is just the banks, there are many more “dead stocks” in forgotten industries.

The future is great.

Posted by: donmihaihai | August 10, 2020

How could SPH lost so much?

Yeah. I got the title from a local blog. A blog that mainly write about investing in stocks. In fact he wrote about how much the fell in a number of well known stocks from 2012 to 2020.

I don’t know that particular well on these few stocks despite them being well known but I do know that over the same period, only a few of the current STI component stocks are trading at above their end 2012 price. Hard not to be as STI is down by more than 20% from their peak. But then there are always more when stocks are down by more than 50%.

An investment into stock is about being shareholder of a company and if the company is private, my return will be the money that thrown off by company. And if the company’s shares is quoted, then my return will include the differences between my buying and selling prices.

How much the company is able to thrown out on a long run depend on their long run ROE. Let not talk about exceptional businesses, an average business like our three local banks can generate good long term return. A long run ROE of 10% is very decent.

Because we are talking about quoted stocks, another key is buy and sell price. Take a look at the top 2, SCM and SPH written on the blog.


31/12/12 share price – 4.60, NAV- 1.20, P/NAV – 3.9X

Current share price – 0.38, NAV – 1.04, P/NAV – 0.37X


31/12/12 share price – 4.03, NAV – 1.39, P/NAV – 2.9X

Current share price – 1.07, NAV – 2.16, P/NAV – 0.5X

The above pretty much explain the drop. P/NAV, dropped by just over 90% from 3.9X to 0.37X for SCM. Almost the same as the drop in share price and the remaining is actually because SCM managed to reduce their NAV over the period. SPH increased their NAV over the period which is why the drop in share price(73%) is not as great as the drop in P/NAV (83%).

These 2 are extremes but even a drop of P/NAV of 2X to 1X mean lost of 50%. These representing the buy and sell prices. Something we as an investor has control and can control. If you do exactly as in buying at 2012 valuation and sell in current valuation, good luck.

What we can’t control is how well the company will do in the future. We can make reasonable assessment of the company future. It can be learned but it is not going to be easy. Everyone make mistake. I made mistakes and going to make more mistakes. When situation changed, decision changed. Just like WB with airlines.

This is what make investing interesting.

Looking at the local stocks or especially STI stocks, What will their businesses like in 2028? In 2028, we are unlikely to be still facing COVID 19 but that doesn’t mean their won’t be other challenges. But I can’t make the assessment of the businesses for you.

Are the current valuations attractive for the potential return? Neither can I do it for you but the writer of the blog wrote about P/B of selected stocks which are mainly STI components here

You can conclude yourself. Doing that is part of the reason why investing is so interesting.

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