FTSE ST Mid Cap and FTSE Small Cap

I suggest to choose stocks from FTSE ST Mid Cap Index or FTSE ST Small Cap Index components for beginners. Not FTSE STI index.

Q1: What is FTSE STI?
A1: FTSE, Singapore Press Holdings (SPH) and Singapore Exchange (SGX) jointly calculate the Singapore stock market's main benchmark, the Straits Times Index (STI), and to create a comprehensive series of stock indices for the Singapore market.

Q2: What is FTSE ST Mid Cap Index?
A2: The next 50 companies by full market capitalization of the SGX Mainboard universe, that are not large enough to be constituents of the STI, and that pass the relevant investability screens.

Q3: What is FTSE ST Small Cap Index?
A3: Companies within the top 98% by full market capitalization of the SGX Mainboard, that are not large enough to be constituents of the STI and FTSE ST Mid Cap Index, and that pass the relevant investability screens.

Q4: Why not STI index shares? 
A4: Invest in STI index shares mostly need huge capital investment and they are big companies and no much room for growth. Nevertheless, this may be a good place to diverse your portfolio when your capital grow to, let say S$100k.

Q5: Why mid cap or small cap?
A5: Mid cap and small cap are relatively established and still have room to grow. They are more actively traded so that you can buy or sell freely. Mid cap's market capital (share price x no. of shares) is between $730m to $6,000m with share price of $0.106 to $7.18. Small cap's market capital is between $70million to $1,200million with share price of $0.026 to $2.07.
Personally I prefer mid cap than small cap because mid cap has more companies that I am more familiar like M1, SingPost, FCT etc. Don't anyhow buy any Kucing Kurap just because they are cheap. Yes, the share price can double from $0.010 to $0.020 but it is relatively less stable.

I am using sharesinv.com and shareinvestor.com as my analysis platform. You can register for free to join but only limited information is available. You can pay subscription for more functions and information. Sharesinv is S$7 per month or $70 per year. Shareinvestor is S$126 per year. You can access the component of FTSE ST Small Cap or FTSE ST Mid Cap as shown below.

shareinvestor.com

sharesinv.com

Ok, you have your 154 shopping list. 50 from Mid Cap and 104 from Small Cap. No, don't start clicking company 1 by 1. I will share how to filter non-profitable companies in next post.

Do not hold stock during financial result announcement period

One important and painful experience I learned from stock market is "Never hold stock during financial result announcement period". If the financial result disappointed or even just miss the target, investors may act pessimistically and drive the share price crazy. Never assume the company is "stable" and may never fall.

You may not even have the chance to "cut-loss"...cry also no tear...

Stock tips

Go around various blogs and ask around stock tips never fail to annoy me. For me, whoever asking this is a "gambler". They don't know what they invest on, lazy to do homework, but want to take short-cut to make money. So, will you claim from the blogger if you lose $?

Ok, let's cool down and i analysed why we shouldn't hunt for stock tips:

(1) Smart bloggers / Guru always have "disclaimer" to protect themselves so they can say whatever they like, without holding responsibilities.

(2) There is always a lot of assumptions/conditions that they may not tell you. I can say you can make money when you buy Singtel share at S$1.80. But i may not tell you, this is the time when STI is 1600.

100 people has 100 different portfolios, different capital, different strategy at different time. They may have the time to hold but you may not.

(3) Asymmetric information. There are many investment companies with many stock analyser, while OCBC researcher may think Singtel worth $3.5, CIMB may think Singtel worth $2.80. There are so many ways to "calculate" the "true value" of a company. Think about it, if those "fortune teller" is so accurate, why they still need to work so hard for the company?

So, please wake up, there is no shortcut in live, so does investment. It is rather silly to just follow what people said. You are the one responsible for your hard earn money. Nevertheless, the only person that i willing to share my tips faithfully is my wife. Just because, her money is also my money..haha..

Investment books

Good books to share:

(A) Technical analysis技術分析(for choosing what price to buy)
抓住飆股輕鬆賺 : 看圖選股 找出最佳買賣點
作　者：朱家泓
出版項：臺北市, 2011
集叢名： 創富
ISBN：9868734606
my rating: 5/5

抓住線圖股民變股神
作者：朱家泓
出版社：原富傳媒
出版日期：2012年03月24日
ISBN：9789868734616
my rating: 5/5

(B) Fundamental anlysis (for choosing what stock to buy)
一次就懂：怪老子帶你看懂財報選好股 (basic)
Website:http://www.masterhsiao.com.tw/
作者：蕭世斌
出版社：Smart智富
出版日期：2012年10月27日
ISBN：9789867283412
my rating: 4/5

財報狗教你挖好股穩賺20% (basic)
作者：財報狗
出版社：Smart智富
出版日期：2013年04月27日
ISBN：9789867283443
my rating: 4.5/5

財務自由的講堂：財務報表是投資的偉大航道
作者：黃國華
出版社：先覺
出版日期：2012/10
ISBN : 9789861341996
my rating: 3/5

財務自由的世界：財務分析就是一場投資的戰
作者：黃國華
出版社：先覺
出版日期：2012/10
ISBN : 9789861341989
my rating: 3/5

(C) Books about economic (quite difficult but useful, for study long term trend)
Title: 經濟指標告訴你＆沒告訴你的事
Website: http://www.wretch.cc/blog/izaax
作者：愛榭克
出版社：Smart智富
出版日期：2012年04月27日
ISBN：9789867283375
my rating: 4/5

POEMS stock trading charges

To trade SGX Market (Traded Currency in SGD) stock using  Phillip Securities (POEMS). The commission charge is 0.28%(online), Minimum charge $25
Plus Clearing Fees of 0.04% (max. of $600)* & SGX Access Fee of 0.0075% on the contract value and GST on brokerage, Clearing Fees & SGX Access Fee.

Excel formula:
=(1+7%)*(MAX(C5*0.28%,25)+C5*(0.04%+0.0075%))

Assuming C5 is Purchase Price * no of Lot.
E.g.: purchase Singtel of 5000 lots @ $3 =(1+7%)*(MAX(5000*3*0.28%,25)+5000*3*(0.04%+0.0075%))
=$52.56

You can download my version of stock calculator here:
https://www.dropbox.com/s/grk0lfuwz6d9gny/StockCalculator_v3.xls

How to calculate annualized return

Annualized Return

Compare 2 investments tools of compound interest, or Fixed Deposit for easier understanding:
(A) 3 years return 30%
(B) 10 years return 120%

Which one is more profitable?

If you think 30%/3 = 10% and 120%/10 = 12% so, (B) is better. Then you are wrong. This is because time value of money. The return of every year is different, so, you cannot "average" it by year. You need "Annualized" them.

2 formulas can be used:
(1) (1+return%)^(1/no of years)-1
(2) (ending value / start value)^(1/no of years)-1

Back to the case above, (1+30%)^(1/3)-1=9.14%, (1+120%)^(1/10)=8.2%.
Conclusion: (A) is more profitable.

So, if anybody ask you invest 100k and can get 180k (80% return) in 20 years, you can ask he back, "are you happy with 2.98% return every year?"

You can read more here.

Best Investment tip

There are a lot of investment tools, but the highest return investment tool for age under 35 is investment on yourself. Many just want to become Warrent Buffett no 2 or take short cut become millionaire. Yes, you can find a lot of story about successful people but I bet those lost big money is more than that. No loser will publish book how they lost big money.

Take your time, learn hard, get as many certification, knowledge, skill, experience as you can. Those things will follow you forever. Nobody can assure he/she always win in investment but you will lose nothing on investment yourself.

Do you like to read the stories of how other people success and plan to copy or combine the recipe? The answer is don't just believe and follow. It is rather silly to just listen whatever people said. There are many factors that people succussed and successful people may not have time or obligation to tell you everything. You may read more here.

Which do you believe: certification and your salary or luck and your "sure win tips?"