Some updates on the investments made over the last month

I have blogged about my taking positions in China ETF, Noble Group Limited as well as Weiye Holdings. Since my investments, Noble Group and Weiye have dropped in value further, but having determined to take a long term approach, I decided not to check the prices regularly to prevent any impacts on my psychology (also because of a busy schedule). I decided to do a check today and am pleasantly surprised that both stocks prices have risen above my entry point, with Weiye having risen about 10%. Of course, this is against the backdrop of a general rebound in Asian equities, and I did not have the foresight that they are going to be in the green anytime soon; however, I have invested in them from a value perspective and I believe that with time, their prices will revert to their means to reflect their true values.

3rd investment: First Reit

I have decided to invest a small amount of my savings into First REIT at S$1.01 after a sharp drop in its price. Net asset value per unit is S$0.895, so I have overpaid somewhat, but I am comfortable with the yield which is currently at about 7%. My understanding is that this is mainly a healthcare real estate trust, and so should be quite resilient to market developments. In total, I have invested almost half of my savings into stocks so far: China ETF, Noble Group and First REIT.

Noble Group

Noble Group Limited stock price dropped a further 5% after my purchase to reach below 80 cents. Of course, it is not a great feeling to see immediate losses after taking a position in this stock, but then hindsight is 20/20, and I can never tell for certainty when will be the lowest point. I decided to invest in this stock based on my understanding and analysis of the company, and at that point in time I decided to take up a partial ownership of this business. I have reminded myself that I am going for the long-term and price fluctuations, sometimes disconnected from business fundamentals, are decided by market forces which I can never understand.

P.S. There is a small rebound today to 83.5 cents at the time of writing,

Planned obsolescence

I was talking with my brother the other night and he introduced me to the term planned obsolescence, with which I immediately made a mental connection with wage slavery. It is to deliberately introduce elements into the design and engineering of products so that they will go out of function or fashion after a while, and consumers will be forced, either out of necessity or societal pressure, to purchase new products. Think about smartphone, and how it has come to be a necessary tool for some of us. In addition, think about the upgrades and new features that appear every few months. I am using a perfectly functional Nokia Symbian phone, but it now looks so out of place in the midst of highly powered touch phones. Planned obsolescence is a huge obstacle that prevents some of us from ever achieving any degree of financial freedom.

Looking into Weiye Holdings

I was reading news on the Reuters website when I came across the announcement that China is going to spend $277 billion to tackle air pollution problems. Previously, I would have just glanced through the content but now I am beginning to make connections between this piece of news and investment opportunities; I quickly searched through companies listed on the Singapore Exchange with the key words "air pollution control" and arrived at an interesting counter called Weiye Holdings.

The main business of the company is property development in Henan and Hainan provinces of China, but at the same time a sizable portion of its revenue came from clean room equipment and air diffusion products. In addition, the P/E ratio is 2.71 and P/B is 0.2373! The market obviously has grave doubts about the future successes of this company to give it such low evaluations, and indeed the stock price dropped a lot to below 10 Singapore cents in recent years. Since I am still very new towards analyzing the value of companies, and given the volatility of the company's stock price, I choose to take a more prudent approach and not invest into the company. However, given China's huge investments into air pollution control, I am just wondering at the back of my mind if this is indeed a value investment opportunity.

2nd investment: Noble Group

I have highlighted in an earlier post my interest in Noble Group Limited listed on the Singapore Exchange. Noble Group is a global chain manager of agricultural and energy products,  as well metals and minerals. The group seeks to hold assets in resource producing countries and supply to high growth economies. I am cautiously optimistic that commodity and agriculture will perform well in the mid to long term future. At an estimated 2013 P/E ratio of 10.8, P/B ratio of 0.87 and dividend rate of 2.59%, I have decided to take up position in this counter with 15% of my investment fund. This company is considered a blue-chip stock, being a constituent of the Straits Times Index in Singapore. At the same time, I worry that there is a chance that with its poor performance presently, the Group might be taken off the index. If the ETFs divest from this stock as a result, further decrease in price may be possible.

Wage slavery and redeeming my freedom

Wage slavery refers to the condition that my dependence on monthly handouts from my company is "total and immediate." Frankly, sometimes I feel drained by the involuntary manner that I have to carry out my duties and the monotony of work; the modern society and civilization appears to afford personal freedom unmatched by any other period of human history yet I feel burdened and walks with heavy footsteps on my way home after each work day. I begin to accept that I am still a slave, just like those from any other periods in human history, albeit a finely clothed one who is able to afford smartphones, laptops etc but at the end of the day, cannot even enjoy a single prolonged period of time without work. Increasingly, I feel that the modern conveniences are actually trappings to put me in my place and deny me of any possibility to escape from the rat race.

Ever since starting my investment journey weeks ago, I have pondered if, through a combination of savings and steady investments during times when value opportunities present themselves, I am able to redeem my freedom, like the way a slave can redeem himself. Looking at the current dividend rate of 2.56% of my first investment, the iShares China ETF, I calculated that I might perhaps need US$1 million dollars to provide enough dividend income for my present annual expenditure, thereby reducing my "total and immediate" dependence on wages. Of course, if I am able to invest in higher dividend yield stocks, perhaps at 5% dividend rate, then I probably only require half a million dollars of invested capital.

On the other hand, I aim to continue with my simple lifestyle, and reduce unnecessary purchases and personal belongings. Some degree of freedom is achieved when my expenditure almost equals my income from stock dividends, and I can accomplish this by either reducing expenditure or increase invested capital. In any case, I feel pretty excited about the journey ahead and will try to update my experiences in this blog regularly. And finally, I would like to end off this post with a quote from Epictetus, who was born a slave and lived a life of great simplicity:

Wealth consists not in having great possessions, but in having few wants.