20 July 2013

Portfolio Review July 2013: Margin of Safety - Bull Ends soon?

Since my last portfolio review in May 2013, there was a busy trading season. After realizing some of my speculated counters, such as MISC, COMCORP, FACBIND, and LBS, I invested more of my capital in safer counters. Please note that speculated counters were still appreciated. Did I make a bad decision again? Hmmm... I think no. This is because I am incapable of predicting the future. As long as my decision is based on my valuation and strategy (instead of EQ), then the only thing I can do is keep sharpening my valuation skills and investment strategy.


New counters

New counters of AWC, LTKM, Jaycorp, PIE, PIC, Tongher and Mercury were bought with no bad prices. I must admit that I really could not find a counter that got enough margin of safety for me to allocate 10% of my capital.

Top five counters

My current top five counters are Symlife, AWC, LTKM, Huayang, and Hevea. However, most of the time, my top five counters may not contribute large percentage of return individual! Why? I do not know. Maybe these counters are more safe in nature and suit for me to allocate more capital in the long run. Or maybe I really need to re-calibrate my investment strategy.

Which one is the best

Again, please do not ask me which is better. I really do not know. All of them have their strength and weakness. For example, LTKM business can be considered indispensable (Do you eat egg or egg related products?), but the risk is the price of feed (or cost) is uncontrollable and this uncontrollable cost cannot be transferred to consumers instantly (price of egg is ceiling price). Besides, I am an outsider who judges these company by their 'book' (financial reports and annual reports). I am incapable of monitoring other people action and thought. Therefore, what I can do is to make some arrangement to achieve my investment objective with proper portfolio management.


The safety of margin

Since the safety of margin is gradually lower, it is getting more risk to reduce the amount of my cash. Many targets were run away without notice. But I am quite used to this kind of phenomenal in stock market investment. I am keeping around 23% cash for any bargain hunting despite that the possibility is quite low. Nonetheless, surprise always happens in stock market. Let's wait and see. 

Bull or Bear?

Well, Bull ends soon? Who knows. Nobody knows. But for an value investor, I invest when I can find a gap between price and value, that is, when the price is lower than its intrinsic value, and vice versa. Margin of safety is much lower after an average of 20% appreciation. In other words, my safety of margin has been reduced around 20%!! We were in the bear market in last few months. Bear market means the good time to buy shares. 
Am I going to tell you "we were in the bull market" next time?? Who knows. Ha Ha. Happy investment and all the best.
That's all for today. More fascinating articles and sharing will be updated from time to time in Xaivier Blog. So, you are welcome to subscribe our feed, look at our sitemap or simply visit our Homepage for latest sharing.

Written by: Xaivier Chia

Note: The purchasing price has been adjusted after ex-date, and the percentage is based on the cost I spent. In other words, there may be a huge deviation if the profits (or loses) are realised in the future.

P/S: The above sharing is solely based on personal insight and information that believed to be reliable. Your valuable feedback are very welcome.


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