SGDividends Watchlist 1 - Price per Average Free Cash Flow

Below is a list of SGX stocks which are on our watchlists. Column L (the one at the furthest right)shows the Price divided by Average Free Cash Flow per share. The lower this value, the more "value" a share is deemed to be by this valuation method. We have always maintained that this form of valuation is more conservative and better than price/earnings.See link in our step-by-step DIY investing.

Important: The objective of the articles in this blog is to set you thinking about the company before you invest your hard-earned money. Do not invest solely based on this article. Unlike House or Instituitional Analysts who have to maintain relations with corporations due to investment banking relations, generating commissions,e.t.c, SGDividends say things as it is, factually. Unlike Analyst who have to be "uptight" and "cheem", we make it simplified and cheapskate. -The Vigilante Investor, SGDividends Team

Safer than Saving Accounts and Higher Returns???

Wow...a reader just told us about this investment idea...safer than the bank deposit and earning more than the rate of return of savings interest, fixed Deposits or even money market funds! Sounds like the perfect plan...but if it sounds too good to be true..it probably is (maybe)..research at your own risk!

7% - 10% returns per annum and safer than bank deposits. Low risk, high returns ( an anomaly, we have always thought the next safest place after the saving account is our Khong Guan Biskit Tin or under our mattress...)

This is taken from their website on why its safer:

Protection of TEPs

Traded Endowments are even "safer" than S$ Bank Deposits. Singapore only has maximum Deposit Insurance up to S$20,000 per bank. Even if you have S$1 million with a bank, you only get back S$20,000 if the bank goes into trouble.

For Traded Endowment, the protection is 90% of the amount of policy cash value, not subject to a maximum amount. Below is the company stating this claims.

Pls note that SGDividends is new to this thing too and we are not here to promote anything..just for awareness sake.....steady boh!

Best Stock Trading Account? It depends..

Given so many people have asked which is the best trading account to have. SGDividends will just say, why not have them all. Seriously, dudes or dudettes.. Opening Stock Trading Accounts is free in Singapore, there is no restriction on how many accounts you can have and no monthly account maintenance fees. And they have their individual strengths and weaknesses.

For SGDividends, we have 3 trading accounts. Citibank Brokerage, DBSV (Online) and POEMS.

Why these 3? See below for the reasons.

Citibank (Dreams never sleeps....Ambition never sleeps) charges the lowest commissions at min of $22 per online trade for local SG shares. The others are min $25. Yes Yes, we know $3 bucks is not much but hey why not, since all local SG shares go to the same custodian CDP account eventually and both takes the same effort to place the trade and if you invest, dollar cost averaging a lot like ..erhem us during this crisis period, it gets quite substantial. SGDividends use this account to buy SG shares for the long term.

DBSVickers Online has no custodian fees for US shares custodised with them. So if you are buying US shares for the long term, this is a good choice, compared to Citibank's minimum $5 semi-annual custody charge and POEM's minimum $2.14 monthly charge per US counter. SGDividends use this account to buy US shares for the long term.

What we like about POEMS is it SBL (Share, Borrowing and Lending )account. SGDividends use this account as a tool for us to predict which shares will be cover shorted, so as to stand ready to scoop them up when they are going down ridiculously.

Citibank Step-Up Interest Account

SGDividends was asked by his friend to review his Citibank Step-Up Account. Here's the analysis: Basically,in short, go for POSB MySavings Account. It's better and simpler. Read more below for the reasons. (Yeah we know Citibank sounds more glam than POSB, and dont get me wrong.. i love Citibank especially their commercial..Cos Dreams never sleeps..keeps me awake at night.)

See the above chart.
Citibank: You can only get 1.2% after 12 months (Thats if you can get there..without being stepped down in any of the months!)
POSBank: You can get up to 1.5% after you opened your account and after your first $1500 is giro deposited into your account . (This rate actually depends on how much you elect to put in a month. See table rate. ) Before the high interest rate kicks in, you will be earning 0.45%.

See above chart
Citibank: Your interest will be reduced to either the base interest 0.3% or 0.75% or 0.975% (depending on which stepped up month you are) if your minimum balance, measured as the lowest balance at ANY day of the month is less than your previous month's minimum balance.

POSBank: Your interest will be reduced to the lowest of 0.45% for that month ( If you withdraw any amount, even $10)

See above chart
Citibank: You have to maintain at least $20,000 to earn 1.2% thereafter,having stepped up for 12 months. OR instead of having to maintain $20,000, you have to have a consistent minimum balance more than your previous month.

POSBank: You will continue to earn 1.5% as long as $1500 of savings is giroed into your account for that month. ( or any other interest rate depending on how much you elect to giro)

The Bomb: You have to maintain $2,000 in your Citibank account or else you will be charged $10 service fee monthly.(This is if you stop your auto salary credit. If you do not stop, this monthly service fee does not apply). POSBMySavings , you need a minimum of $500 or else charged $2 service fee monthly. $2,000 minimum vs $500 minimum.... Your Guess is as Good as Mine which to go for!

Furthermore, we hate it when things are complicated. K.I.S.S (keep it simple stupid) unless you have something to hide.

Where You Should Put Your Money - Depends On Your Risk Profile

SGDividends have been asked where people should put their money now. It depends.Why? Are you risk adverse or a risk taker?

For the more risk adverse, putting your money in POSB MySavings account is a good choice as you will be able to get an interest of up to 1.5% per annum ( depending on how much you save a month), payable monthly. What SGDividends love about this is that it does not have any Lock-In like Fixed Deposit, so once the dust has settled, you can take the cash out and invest in the stock market. ( See interest table on the below.) The only hassle is that you have to go down to the branch to withdraw your money..but hey, their branches are everywhere!

For the more risk taker investor ( like us), see our artical on sectoral investing.

High Risk High Returns, Low Risk Low Returns, thats life my friend, which makes life so exciting..doesn't it!

Make Money While Staying Invested

If you are a long term investor, do you know that you can make extra money by lending your shares to others while they cover short the market. SGdividends recommend our readers to lend your shares. Why? It's because you can earn a (nearly) risk free interest rate on lending your shares, instead of letting it sit idle in your CDP account. From our experience, having people borrow from us, the interest is roughly 2.5% - 4% per annum.

For long term investors, there is another good reason why you should lend. It is because it gives you first hand news on which stock is going to get shorted (As people borrow your shares) and you could wait at the sidelines to invest when the shares dip.

And guess what? From our Commodities man! Mr Jim Rogers! He has been cover shorting stocks too during this period, commodities, that it. The asset which he was so full of praise about early this year and last year! See the sentence: "..I bought them. I covered shorts yesterday..". Oh yes, Mr Rogers, you depressed prices and then bought them back. Lovely..

Sectoral Investing

Sector Investing philosophy is that different sectors are stronger at different points in the economic cycle. The Market Cycle preceeds the Economic Cycle.
(What this means is that, the local Singapore Property Market is going to slump next. The local stock market is the precursor)

Based on the current economic climate, SGDividends see we are 1/2 - 3/4 way towards the bottom (trough) of the market cycle (Red). Utilities counters should fair the best now.

Investing Idea:
Based on this philosophy, the following should be the way one invests in this climate:

Now - Mar 09 - Buy Utilities/Infrastructure counters. Eg, CitySpring, Macquarie IIF, SP Ausnet, Singtel,SMRT, Reits

Feb 09 - June 09 - Buy Financial Stocks. Eg, DBS, OCBC, UOB, SGX

June 09 - Sep 09 - Buy Cyclical Stocks . Eg, like SIA, NOL

Sep 09 - Dec 09 - Technology Stocks . Eg, Venture

Dec 09 - Feb 10 - Industrials Stocks . Eg Keppel Corp, Semb Corp, Tat Hong

Feb 10 - June 10 - Basic Industry Stocks. Eg Golden Agri, Wilmar, Indo Agri, Straits Asia

Mar 10 - July 10 - Energy Stock . Eg KS Energy, Keppel Corp, Semb Corp

July 10 - and Beyond - Staples. Eg Sing Food, Raffles Medical

And the cycle goes on again. The dates are based on pure GUT feeling and i have no empirical data to support it. Stocks given are not recommendations but mentioned as they fall within the Sector category. Please take note though that this is an unprecedented crisis and not just a pure play recession and therefore the above might not work. Research smart and hard before investing!