My Investment Record (5) - 01 November 2013

Market Overview

The general market in last 2 month was dominated by two events, one is worry about US Fed may start tapering their quantitative easing program, another is on the congress debt ceiling deadlock that forced the US government to be shut down for 16 days. However, when both event duely passed, KLCI first recovered back to 1800 level after domestic fund buying activities cushioned off the effect of capital outflow, then hovered around at 1770 level, before breaking through 1800 level after US passed its debt ceiling problems. 

Last few months, there are several published articles warned that Malaysia economy may have entered into a bubble. See here , here and here. However, through a glimpse of graph i believe the trend produce make economic sense. It would be natural that, as malaysia real GDP is growing at 5% (nominal GDP = 7%) for last decade, coupled with more advance financial system, we would have higher house price, higher aggregate money (M3) and higher KLCI level. In fact, this article from Economic Malaysia  explains why the bubble isn't that big. 

The conclusion, i believe the property market and stock market is slighly overheating. However, the bubble is not big enough that warrant action by Bank Negara to pop it soon, or that the collapse of the bubble has catastrophic effect cascade down to the markets.

Current Return and performance

The holding period return for KLCI in the past period ( 1st September - 1st November 2013)

is 5.37% (with dividend included). Holding Period return for my portfolio, is 6.99%. Total holding period return since the start of investing is 5.58%, annualized to be 4.77%, this beat the Fixed Deposit rate of 3.2-3.8%, but still far below KLCI return of 14.62% (annualized, 12.41%)

In theory, my performance should track KLCI return although i currently hold non of the KLCI composite stock. In practice, my performance would lag behind KLCI return by 0.5% - 1.0% due to 

1) Trading cost (currently average 0.3%-0.5% per trade)

2) Portion of cash that earn only risk free rate. 

The objective of this investment program remain the same. I will try if i can track the market overcome trading cost and requirement to have cash position, if i can beat the market, that shows i can survive in the investment management business. 

Highlight

MNRB(6459) and YOCB(5159) performed particularly well during last period. 

Position in Cheetah (7209) , UMS-NEIKEN (7227) and XDL(5156) are sold due to uncertain company future. Cheetah is discontinuing stable dividend policy, XDL is splitting stock (to increase paid up capital) again, UMS has high CAPEX this year.  Unfortunately, all three stocks were sold before the end of fiscal cliff in US to preserve cash for any potential opportunity when market overeact and oversold. The opportunity didnt realized, and the selling decision cost around RM 3,000 in lost profit opportunity. 

  

New member add, TWR REIT (5111). Real Estate Investment Trusts(REIT) have high and stable dividend payout. TWR REIT has dividend rate higher than other REIT.