Simple Joys of Life


This year was a landmark year for me, in terms of the life lessons gleaned. A friend whom I considered one of my closest in university had a difficult battle with a brain virus and is now bedridden at home. Doctors say he is unlikely to recover and chances are he will remain mentally incapacitated for life. This affected me greatly as I witnessed firsthand how fragile life really is. This incident has inscribed in me the importance of contentment. Every second here on earth is a gift that we should never take for granted. Being a very impatient and ambitious person, I am starting to learn how to live in the present and to enjoy every moment in my life, instead of living life always planning for the future.

A culmination of factors also led me to a period of mild depression, where I found no purpose in my life. All along, I had obediently followed the standard pathway of a Singaporean son, completing my high school, followed by national service, and then university; only to realise at the end of it, that I still had not found what I wanted to do with my life. Peers were landing jobs, rushing to build their careers, and starting to build families, while I was living off my savings and part-time work to payback my university loan. I constantly looked to others and compared myself to them, only to find myself even more upset. It took me a few months, but I finally realised and understood that comparing ourselves to others is futile. Everyone has their own paths to take in life; one path can never be the same as the other, and we should not use money or social status to judge the progress one has made in their own lives. Being contented with what one has and being a good steward of our resources is more important.

My birthday this year was perhaps, the simplest one I ever had. In fact, I never even noticed it coming, until I was wished by friends. A simple meal of soya chicken rice alone for lunch and a family dinner was more than enough for me to give thanks for. I enjoyed the company of my close friends, of which at this stage in life, could be counted with one hand. Nevertheless, I can hardly remember any other birthdays in which I was any happier.

Earning a meagre wage, facing an unstable situation, and a lack of social interaction was a triple whammy, but being grateful for life itself gave me a new perspective, and an undeniable inner joy. “Take your time, don’t live too fast”, for we might end up like the poem below:

“First I was dying to finish high school and start college.
And then I was dying to finish college and start working.
And then I was dying to marry and have children.
And then I was dying for my children to grow old enough for school so I could return to work.
And then I was dying to retire.
And now I am dying…

And suddenly I realise I forgot to live.”

~ Anonymous

Truly, it’s the not the end, but the journey that matters. I used to rush everything I was doing, but now I’m trying to enjoy the process. A simple example would be my past focus on getting to my next task on my to-do list, rather than embracing the actual task at hand. Let’s learn to take life one step at a time, and to treasure each moment that it brings. Wishing everyone a blessed Christmas and a great year to come! 🙂


Margin of Safety

If I was to sum up one key investing lesson I learnt this year, it would be the Margin of Safety concept. Investing without a margin of safety gives little room for error, and puts one in a dangerous position. Below are some of the lessons learnt with regards to having a Margin of Safety in investing:

1. Money not invested is not lost – Many of us rue our chances and regret not taking the plunge before the prices of the stocks in our watchlist shoot up, but I believe it is important to remember that money not invested is not lost. There will always be opportunities to find good deals if we are patient and observant.

2. Do not overpay for growth – Overpaying for growth is another dangerous thing to do, as the stock might suffer a double whammy in a re-rating of its PE and a drop in profits; leading to a sharp drop in stock prices. This can easily destroy one’s portfolio.

Currently, I prefer growth stocks which pay sustainable dividends which makes the wait for the growth story to play out more palatable. Financial theory tells us that a firm can only grow at sustainable growth rate which is derived from the product of its retention ratio (1 – dividend payout) and its ROE. Thus, it is usual to see growth companies paying little dividends so that it can use the retained earnings to grow the business. Thus, I believe the only way to get a good dividend yield, yet not needing a high payout ratio is to buy the stock at a low PE. However, it is rare to see growth companies trading at such valuations, but when the time comes, it might be very rewarding.

Warren Buffet quotes, “I don’t look to jump over 7-foot bars: I look around for 1-foot bars that I can step over.” It might be easier if we keep investing simple by focusing on stocks which are easy to understand and practising a margin of safety before going in.



A Glimpse into The Australian Stock Market


Today, I was studying more about the Australian stock market and sieving through stock filters to find interesting companies that warranted a second look based on my investing criteria.

Interestingly, many companies that filtered past were commodity, property and engineering companies, which I thought were cyclical in nature and tended to be heavily leveraged. The others consisted of mainly finance and asset management companies, with a few retail and technology stocks in the list. Australia is a huge land of massive resources, and it is expected that there will be a large number of commodity and property related companies listed on the stock exchange.

Upon further studying, the dividend yields of many blue chips in Australia seem to be pretty high, ie. more than 5%. However, it is important to note that one would have to pay a tax of 30% on the dividends gained. The term used here is “franked”, which basically means that the company pays the tax on the unfranked dividends for the investor before distributing it to them. After “full franking”, some of the blue chips like Telstra Corp and ASX are giving out yields of approximately 5% which are still attractive to the income investor. Another thing I learnt is that many companies in Australia tended to have operations both locally and in New Zealand, which is rather close to Australia.

I have visited Australia on a number of occasions when I was younger, but have not had the chance to scuttlebutt around yet. Australia remains one of the favourite countries for Singaporeans to invest in, especially in property, due to its developed market, transparent laws, vibrant cities and the attraction of many foreign students into its universities. With regards to the stock market, there are a few interesting companies that I have noted down to pay more attention to in the future, but it is likely that I will not be investing in this market soon as I feel I have not developed a circle of competence for it yet. Nevertheless, it is a good learning exposure to a new market, and the opportunities that it provides.