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Richard Woon Tian Jun

Seeking to grow and share my own knowledge about the financial industry with the community

Richard Woon Tian Jun

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Seeking to grow and share my own knowledge about the financial industry with the community

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Richard Woon Tian Jun

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General

Richard Woon Tian Jun
Richard Woon Tian Jun
Level 7. Grand Master
Updated on 07 Jun 2019
Below 1 TIE Ratio for consecutive years is a definite red flag for me. This means they can't even produce enough earnings to cover the interest payments owed by them to their creditors. If their assets aren't able to pay off their debtors, equity holders will get absolutely nothing (hyflux). A big big lesson to learn there is that we need to be extremely clear that private companies aren't going to be bailed out by the government because of poor management, and unrated bonds must have even higher scrutiny involved regarding financial statements to see that they can meet their obligations.

Investments

Richard Woon Tian Jun
Richard Woon Tian Jun
Level 7. Grand Master
Updated on 07 Jun 2019
Hi Billy, to my knowledge, the analyst reports which are open to the public are the sell-side versions, where they earn via the brokerage businesses and IB/ commercial banking relationships with these firms, and the buy-side versions are the ones which are internally circulated within asset/investment management firms and their investor clients. And to be perfectly honest, both are quite inaccurate given that most predictions are derived from historical information, and each have their own vested interest that skews results to their favor, making this accuracy even worse. So to answer your question: 1) & 3) I was looking up such information recently and well, I couldn't exactly find the recent numbers, but analyst target price prediction has quite a large disparity, according to BCA Research. The dark blue bars being analyst earnings growth, and the rest of the bars being actual realized growth sorted into year duration. Although I would take this research with a pinch of salt given that the information source is from about 1990s to early 2000s, and may not be properly indicative of today, it still gives you an idea of the incentives to "over-sell" a stock for these firms, both for the analyst's sakes and the overall firm's sake. For the analyst, giving sell recommendations that deviate from the crowd that turns out to be wrong is infitismally painful than if they followed the average and turned out to be wrong - we don't really like to stray off the beaten path when our livelihood and reputation is at stake. A good buy recommendation = more sales, more business with the client, perhaps promotion is not too far away as well. It is the contradictory nature of the research analyst who is trusted to give accurate, impartial information but yet serve the purpose of the firm whose sole purpose is to make a profit that is the huge dilemma here. I think all analyst have to face at some point in their career. The website I took the info from is here: https://ftalphaville.ft.com/2018/11/13/1542091438000/How-accurate-are-sell-side-analysts-/ ! 2) Though regulations have been tightening up after the whole Enron and internet bubble burst regarding appropriate analyst predictions, an analysis done by Bespoke Investment Group ( https://www.ft.com/content/0609b1b4-ec51-11e6-ba01-119a44939bb6 ) still found that of 12,122 ratings of the S&P 500 in 2015, only 6.67% carried a sell. I think we can all agree that this ties in back to 1) and 3), due to the whole idea of contradicting goals, serving the retail investor, or the firms? I believe that there is a penalty for foul play, meaning false misleading of investors, using of fake information, but I think generally such analysis reports do use justifiable, real information and do state that it is just an opinion of that analyst, and is not responsible for the loss of the individual (though they may exaggerate the effect of this information). There are laws that protect professionals from unlimited liability. Could you imagine posting a research paper that made a loss, and ultimately had to pay for every single person that raised their hand and said they followed your advice and lost money? no one would do the job! So all in all: take the analyst reports with a pinch of salt. I like to compare them, and look at how they derive their information and growth numbers from. But it is not unlikely their predictions are quite off. I think if you go to a Bloomberg Terminal and go to Top Glove's Earnings Estimate (Shortcut EE), you will see a myriad of buy, sell and hold recommendations for the same stock. Just goes to show information is intrepreted differently by different people, and we all don't possess the power of foresight. Even the Oracle of Omaha makes mistakes (coughKraft heinz cough).
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Investments

Richard Woon Tian Jun
Richard Woon Tian Jun
Level 7. Grand Master
Updated on 07 Jun 2019
I think apart from the usual 3 financial statements that most investors would immediately flip to to analyze the current financial health and growth/reduction in the position of the company, some extra hidden gold that are within these reports are their expected business direction and management's explanation of their investor Q&A, if you're not one to attend their investor presentation/call conference. Their business direction can tell you alot about their expected positions in the near future. For example, back in 2013 when Asahi India Glass was suffering from incredibly high interest payments consuming any profit margins they had, their course of action within the annual report was to issue out rights to pay down this outstanding debt they had, and to continue to cut costs in order to increase profits to be able to make interest payments. I think that really tells you that a company is on the right course to ensuring that their business structure is corrected, and can hint a potential turn in the stock direction , which did happen for them, where their stock steadily rose from a low of about 50 INR back to over 200 INR today. Management's way of explanation to investor's Q&A is something more subtle actually, since it tells you management's analysis and any possible overoptimism on their part. For me, if their Q&A / investor conference involves alot of uncertain answers, I'm not really inclined to invest in them, even with strong growth prospects. To me, an incredible business model may be worth nothing in the end in the hands of weak leaders.

Equities

Securities

Stocks

Investments

Richard Woon Tian Jun
Richard Woon Tian Jun
Level 7. Grand Master
Updated on 07 Jun 2019
Younger people should invest in more risky stocks because they have lesser dependents/ reliance on this amount of money to survive in a sense. For eg. You, at the age of 20, healthy, could most likely work and live off that paycheck instead of the investment returns you make, compared to when you are 80 years old, retired, and have to rely purely on savings to live off of, and investment returns may be your only source of income. So if you are a person at the age of 40 with no dependents, and having alot of financial freedom, you could have a greater investement tolerance for riskier stocks than a man in his early 20s who has to support a family! So, essentially everything depends on your own investment risk tolerance and goals. If you are relatively debt and dependent free, you could be looking towards more volatile growth stocks if you are looking for riskier forms of capital accumulation.

Investments

Richard Woon Tian Jun
Richard Woon Tian Jun
Level 7. Grand Master
Updated on 07 Jun 2019
For me I started with a ETF as well - in fact it was the Nikko AM Singapore STI ETF. Was just buying it to try out the whole investing system of Standard Chartered Brokerage at the time, but have been holding and accumulating my position for about a few years now. I think for beginners, it is best to start out with something that is easy to understand and can allow you to generate moderate returns - essentially your broad market index trackers like the STI etf. I would say to try US S&P etfs also, but this is after you feel alittle more confident. You will be exposing yourself to currency exchange rate risk, so you'll have to factor in possible depreciations of the USD against the Sing dollar that might lower your returns! however, if the USD appreciates against the Sing dollar, you could potentially see even higher returns since USD are worth more now! Slowly take steps to take into account more and more risk factors - you'll be a veteran filled with various experiences of ups and downs in no time if you are serious about investing!

Investments

Stocks

Richard Woon Tian Jun
Richard Woon Tian Jun
Level 7. Grand Master
Updated on 07 Jun 2019
One of the main thing you should know about is the volatility of the stock price -aka riskiness of the stock. When you invest into a stock it is not a sure win game (unless you are doing arbitrage, but thats a different story) , so you are essentially taking on a risk when you decide to do so as prices of the stock and go both ways - up or down. The extent of this movement up or down is the "riskiness" of the stock which you will be exposed to. So, understanding this riskiness in the form of standard deviation of the stock price is important as you can then gauge it against your own risk profile - are you a risk taker? are you willing to make big losses for a chance to make big gains? if you are, then you are more inclined to invest in riskier stocks, and vice versa. Understanding your tolerance will help guide you in creating your investment portfolio, and having a portfolio tailored to this tolerance will definitely help you sleep better at night as you will be comfortable with the level of risk you are taking!

Equities

Securities

Investments

Stocks

Richard Woon Tian Jun
Richard Woon Tian Jun
Level 7. Grand Master
Updated on 07 Jun 2019
Hi Zetong, usually what I do if I want to get a really detailed fundamental analysis on a company is to head over to their company website and download their past few year annual reports. Usually I take about 3-5 years, so I can get a good idea of how their 3 financial statements have been changing: 1)Cash flow statement (see their expenditure, how much have they been using to buy assets, how much is paid out to debtors eg.) 2)Balance Sheet (their Asset, Liabilities and Equity to give you overview of the holdings and capital structure of company) 3) Income Statement (how much Net income, EBIT, taxes are they generating/paying, their costs eg.) These 3 are the backbone of any financial analysis. you can derive your relative valuation ratios (your P/E, PEG, EV/EBITDA or any other ratio you like) all from these 3 FSs. You can do your DCF modelling using these numbers, if you are really into doing your own evaluation of the intrinsic value of the stock! Usually apart from ther 3FS, I read up alot of their financial news and their going ons on their company website, and financial news platforms as well to get a general idea of how have they been performing. If you don't really have the time, you could head over to sginvestors.io to get professonal analyst reports on different stocks on the SG exchange, such as from OCBC investments, Phillip Capital etc. that do analyst reports for their clients and recommend buy/hold/sell. However, I take these with a pinch of salt - they are sell-side, meaning they benefit with more people buying into the stock, so they tend not to recommend sell unless the company is on the verge of collapse. Make sure to read through their assumptions, and formulate your own opinions! don't blindly follow their recommendations. I think thats the general gist of it, good luck, and I hope I've given you some tips to help you along your journey!

Trading

Stocks

Investments

Richard Woon Tian Jun
Richard Woon Tian Jun
Level 7. Grand Master
Updated on 07 Jun 2019
Wow, that's really a pickle, let me just take out my biz law textbook to help you out here blows dust okay, so according to Singapore's Securities and Futures Act (which prohibits insider trading) under section 219, people who are not connected to the corporation who recieve price -sensitive information will fall under this act, which means you . Even if you pass this information to another friend, who tells a stranger at a bar, who then buys that stock, that stranger will still be liable for violating the Securities and Futures Act for insider trading. So your dad, you and of course your dad's friend will all be liable for insider trading if found out. I highly suggest to politely decline participating in this and talking your dad out of it - you are looking at possible criminal liability - you will be charged in court and if convicted, be deemed a convict. Under section 221 you will be looking at a max fine of $250 000 or imprisonment of up to 7 years. If you're lucky to get off with a lighter civil liability, you are still looking at a penalty of 3 times the profits gained, or $50 000, whichever is greater. I got this all off "introduction to business law in Singapore" by ravi chandran 4th edition. If you don't believe me, buy the book, check page 278 -280. It's cheaper than getting fined 50k and going to jail for 7 years.

DBS Vickers Securities

ETF

Investments

STI ETF

Richard Woon Tian Jun
Richard Woon Tian Jun
Level 7. Grand Master
Updated on 07 Jun 2019
If you are buying into Funds on the DBS page, you aren't purchasing stocks yourself - fund managers are doing it for you. You essentially are transferring your investment capital to be managed by a professional, and you will incur management costs. You technically don't "own" the stock, since the fund manager and his fund is the one that owns it, but essentially you will earn the dividends and returns from his investments for you, minus costs of course. There is also a large variety of funds you can choose from that fits your investment horizon or risk appetite. Buying STI ETF from brokerage accounts like DBS Vickers or SAXO capital markets, on the other hand, is different. ETFs trade like stocks, but traditional mutual funds don't. ETFs basically track a certain index performance, can be the broad market index like S&P, can be very narrow like only EV companies in US. But hardly do ETFs do individual stock picks, because their role is to track performance of a index, not outdo it. Since ETF trades like stocks, you can speculate in it, but it is very difficult to do so for funds, which may have exit costs and entrance loads.
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