Pause And Some Reflection

Hi friends,

Lets take a pause so that I can reflect on my game plan in investing.

I'll ask myself a series of questions that would help convey a good idea behind my journey towards financial independence.

As I'm starting to write this, the time is 4.38 PM. It's 30th March 2020 on Monday. Typing from the sofa of my livingroom due to this Restriction Movement Order (RMO).

What do I really want right now?
I want to come out ahead in this recession.

How do I mean by that?
I want to be part owner of a good business that gives out dividends and appreciate in price over time. Buy low, hold, collect dividends, sell high.

Why do I want it?
I want to be ahead in this recession because I see this as the best and rare opportunity for me to build my wealth. The earlier I start, the lower the share price I buy, the better the chances for me to succeed.

How do I plan to do this?
I plan to dollar cost average throughout this recession. Ideally, committing to a weekly purchase but also setting aside some reserve for lump sum capital deployment when share price hits a certain lower limit. The lower the price goes, the bigger the lump sum payment I plan to commit.

Where am I getting the capital?
30% out of my salary and dipping into savings for the small lump sum deployment.

Why do I want to be rich?
I don't want to be financially dependent on other people. I don't want to live paycheck to paycheck. I don't want to owe anyone before getting money. I want to live off of my investments' dividends. I don't want to get taxed because I prefer community donations. I want a passive income.

What will you get out of this?
I will get the peace of mind because I will be stable financially. I will expand my options in terms of careers. I will also expand the activities in life and experience.

In conclusion, this recession is also the best time for me to build a habit of committing to a framework in regards to investment.

That is all. Thanks for reading!

Opportunist

Hi friends,

I hope you all are in good health. This pandemic is really making me anxious as I think about what's going to happen to the world moving forth.

I recently watched Contagion where it tells a story about a pandemic and I have two key take aways from the film.

First, they destroyed Gwyneth Paltrow for me. I hate her character in the movie.

Secondly, I feel like the caharater Jude Law is playing in the movie is the perfect embodiment of the idea of an opportunist. Hence, the inspiration of this post for today.

Growing up, I've always believed that I can be a billionaire one day. All throughout my teen life, I would do whatever I can to work towards being a billionaire. Back then, I would save more than half of my allowances and I rarely splurge on myself. In fact, my goal was so ambitious, I didn't just want to be the richest person on Earth, I want to be so rich that it extends the denomination of trillionaire. Quadrillionaire or quinitllionaire maybe? 

However, as I grew up, I wanted to make a concrete plan on making the right step towards becoming a billionaire. As I chart my plan, first by breaking it up to making a million, then breaking the sums down to the amount it takes to garner that million within five years time, and then I break it down further into the monthly income that I need to achieve in order to meet the goal, I realized that the idea of becoming a billionaire is absurd. It's so farfetched to me and I can never be one. 

This realization hit me quite hard. My thought went paralyze as I kept dwelling into the fact that there is no way I can reach my dream that I've been chasing after ever since my teenage days. Took me some time to finally accept this fact and keep moving forward with my life, searching for something more realistic as a goal. 

As I dig deeper into the ways that I could still be rich, I slowly learned that what's important is the journey. Every simple decision in life, every routines, the frame of mind in approaching the goal, those are the most essential trait to have. Because life is not just about the destination, I would argue that the progress, the journey, the adventure would be more meaningful at times. That's what makes the destination even more special.

I understood that the process towards being wealthy starts with a shift in the frame of mind that accepts that there is no shortcut. To be wealthy, most often that not, it involves proper planning and consistency. In general, that is the key. However, on a rare occasion in a lifetime, opportunity knocks on your door and you have to act quick to get them.

The the character that Jude Law plays in the movie grabs the opportunity infront of him and milk them right to the core. Earning him plenty of wealth in the process. It is acknowledged that some of his method questions one's moral compass, but if you look further into the idea of how he thinks on the repercussions of the current cataclysmic event, it proves that you can do some preparations now in order to get ahead especially in times of economic turmoil. 

If there's any takeaways that I want to emphasize in this post is this, if you can think of the causes and effects of a certain situation, and link that train of thoughts to other sector/segments of the general economy or a broader idea, you could almost identify the opportunity slots for you to slide in and benefit from it. I think that's my current interest for now. It's about learning to invest from the viewpoint of macroeconomy where one have to combine the fundamental and technical analysis skills, understanding the cyclical/seasonal cycle, identifying the business stages, predicting behavioral finance/economics and etc. I believe that the progress towards wealth will be more meaningful to me if I can manage to connect the dots, solve the puzzle and be wealthy from it.

A very simple example from the movie is snatching the healthcare and food&beverage stocks before a pandemic is declared.

I'm currently in love with this idea.

Anyway, that is all for today. Stay safe, my friends. Don't forget to take care of your hygiene and practice social distancing.

Thank you.

Sapura Energy Analysis

Hi friends,

Today, I would like to discuss about one of the stocks that I've already put my limit order on. I want to write the thought process as to how I've arrived to the decision of putting an order on this stock.

The first stock that I put a limit order on is Sapura Energy Berhad (SAPNRG).

I have to admit, I don't usually set my eyes on companies that gives out low dividends. I've came across this company several times in the past and looking at how low its dividend yields are, I quickly shrugged of any further effort of looking into it.

However, ever since the dramatic drop in the stock market lately, almost all of the companies I'm looking at right now have their dividend yields blew up. As a person who values dividends more than growth, this has certainly got me excited. Although, I am aware that at depressing times like this where the future economic prospects are looking bleak, the possibilities of dividends being cut or cancelled are very high. Based on this awareness, I will always tell myself that the next year or so, I should not be expecting any dividends. Instead, what matters to me now is to grab wonderful companies at wonderful prices. 

Lets look at some of the ratios relating to the performance of this company. Ratios like what I'm about to write here gives a good idea in terms of a company's intrinsic value and its financial strength.

There are 8 things that I look into a company before I make my decision to buy them. Here are the data that I gathered based on when the price is RM0.08 per share:

1. Graham Number ratio: 0.09

2. Price to book ratio: 0.11

3. Dividends yield: 6.66%

4. Price to earnings ratio: N/A

5. Current ratio: 1.34

6. Piotroski score: 2

7. Market capitalization: RM1.67 billion

8. Payout ratio: (Couldn't find it online)

Looking at this data, right of the bat the strongest reason for buying this company is that it is very cheap. For a company to have a book ratio and Graham Number ratio that low means that the company is extremely undervalued by the market. A good idea to portray this cheapness is to imagine yourself buying an item for 11 cents but having a potential of selling it back for RM1. Another strength of this company is because of its high dividends yield. Being a conservative investor, a dividend of 5% is enough to make me content on my investments. Anything higher than that would be a great bonus.

Unfortunately, that is as far as the strong qualities of the company goes. In other aspects of it, I would say that Sapura Energy is performing poorly below par. The two most obvious ones are its PE ratio and Piotroski score. Since the company hasn't made any profit as of late, we are unable to identify its PE ratio. Thus, this would've been a deal breaker for any investors because no sane man would ever buy an asset that doesn't earn anything. Another area where this company performs rather poorly is on its Piotroski score. This score represents the financial strength of the company and from this score, it could give us a good idea on whether its financial is positively generating or negatively generating income. Having a score of 2 out of 9 means that the company has a rather poor financial strength. 

Now that we've briefly touched on the strong and weak points of the company, all that's left is the quality of the company that falls on the neutral side of the spectrum where it neither performed spectacularly nor it is a deal breaker. Sapura has a current ratio of 1.34. So this means that its current asset is about 30% higher than its current liabilities. So the reason why I'm looking at this ratio is because on a worse-case-scenario, even if the company goes bankrupt, it could still sell all its current assets to cover its current liabilities while having some extra buffer for its investors. This is how I'm trying to mitigate the risk if a company is in its insolvency. Other than that, a market capitalization of one billion ringgit or more gives a good idea of how big the company is. A company with billions on its evaluation tends to have serious people at its corporate level that would do their best in avoiding any bankruptcy. Essentially, being in a situation where they are too big to fail. The last ratio, which is the payout ratio, was unfortunately unable to be determined. I couldn't find the ratios anywhere online so there's no comment on that.

So where am I going at here? What's my conclusion? Well, I have to admit, Sapura is the only company on my list where I lean more towards my "gut" feeling rather than what the analysis tells me. There's a part of me that keeps on thinking on the upside should thing bounces back after this depressingly low evaluations. Being the only stocks on my list that trades in a single digit cents, I have decided that I want to jump on this bandwagon, hoping for the value to increase when the global issue that we are experiencing now is done and dusted. 

Though by buying the company would totally go against my principle of investing, I have set a very strict rule for myself on the price that I am allowed to buy. I have set my limit order to be at RM0.02. Yes, I will only buy this company if the price per share drops from 8 cents to 2 cents. Seems highly unlikely, right? Well that's the strict rule I have imposed on myself on when I can buy Sapura. Even if it doesn't hit the 2 cents price per share, I would be totally okay if I didn't buy it. The reason being? Because the prospect of an energy company that solely depends on oil is not something that I see being beneficial in the next decades to come. If it hits 2 cents and my limit order goes through, I'm happy because I'll get it at a bargained price. If the trend reverses and goes up higher, I would still be okay because there are still a couple more stocks that I have on my watchlist to purchase.

That's my thought on Sapura Energy. Hope to post more about other stocks on my list. 

Thank you for reading, friends. Have a good day staying indoor!

Focusing On Affordability Due To Limited Funds

Hello friends,

I have some quick updates regarding my investing plan in this time of market distress.

Before I proceed, I just want to express a disclaimer that I am very thankful for being in my current financial position right now. In essence, I have some money that I managed to squeeze out of one of my emergency fund and channel it into the market. I'm saying this because I do acknowledge the position of luxury that I am in right now due to various fortunate reasons such as I have no dependencies, I still live with my parents, my frugal nature and a recently stable job. Having these thoughts at the back of my head, I will always tread cautiously as to not to take my blessings for granted. So without further ado, lets proceed with my investing updates.

So I've been making some calculations today and I realized that my funds isn't as huge as I thought that I could've muster. This has direct result in terms of my selections on the business that I want to own. The question that I'm facing right now is not just about the best business to buy, but also which business that I can afford while being cheap?

So allow me to explain a very simple concept that I used to have some confusion about. Cheap and affordable are the two words that are often misunderstood and may used interchangeably by mistake.

A cheap business refers to how high in value that a company is able to give you relative to its price. On the other hand, an affordable business is one that you could afford as of your current available liquidity. So for example, a company trading at RM10 but with a PE ratio of 5 is considered to be very cheap. But in order to purchase that company, you need to purchase at least 100 units which equals to RM1000. From this example, the company is cheap but not affordable. Similarly, if a company is trading for RM1 but its PE ratio is 20, then by a simple glance it would seem that the company is expensive. However, since 100 unit of the company is only RM100, it is very affordable. So in general, a good company is gauged to be the cheapest one that you can find as it represents greater value for your money. But a cheap company may not necessarily be affordable.

So this is the problem that I'm having right now, with my limited fund, my constraints in choosing a high value business is more restricted because I need to prioritize affordability first before its cheapness. As a result, some of the wonderful companies are slightly out of my reach. 

The easiest way to combat this would to go after the cheapest company regardless of its affordability. Though the rationale would still justify the actions, I would severely compromise the diversification aspect of investing. And that is definitely something that I wouldn't risk. 

As of right now, there is only one company that I found that perfectly meet the balance between cheapness and affordability. I'm happy to say that I've already put my limit order somewhat below the market value just to squeeze a tad bit more of value in the purchase. 

This action may seem as I'm timing the market to which at some degree, I do agree with that. However, in the depressing state of the market right now, my margin of safety is relatively high and even the market rebounds before it hits my limit order, I already have another fair value of the stock that I have in mind at which I am more than happy to accept it. I have also put in place a limit order for several other stocks and thus, the waiting game begins. 

As I'm going through this bear market, I'm also writing out my thought process here so that I could get a birds eye view of my frame of mind as I try to figure out the best way to approach this event to be successful on the other side. 

My goal as to writing all these down are such that I want to instill a behavior within me that tries to decide on the best set of choices that leads to a good outcome. In essence, aiming to make a good decision. I believe that making a good decision is always the best step to take even if it doesn't lead to a good outcome. 

That's all what I want to say for now. Stay safe and wash your hands.

Corona Crash 2020

Hello friends,

I have very mixed feelings as I'm writing this post. A lot of things has happened this past few weeks and they are nothing short of extraordinary. Three major thing happened and they all have some convoluted effects as a result. Corona virus, stock market crash and I got a new job.

March of 2020 will forever be known as the end of the 11 year bull market as many has acknowledged that we are all in the bear market now. This happened because of the black swan, Corona virus (Covid-19), event and the depressing downward surge of the world oil prices. As I'm writing this post, my head is twirling with questions about the uncertainty of the future. My hands are trembling as I think about the things that I should/could do in order to protect myself. My inner peace are constantly thinking about how to turn this whole event into a beneficial one. So I'll try to breakdown things slowly based on what goes through my head right now. At times like this, I don't even have time to think about doing some preparation on writing this post. Eventhough I've been preaching about the quality of preparedness as being an almighty trait above everything else.

So here's what's constantly on my mind. I am in my mid twenties. I want to achieve financial independence. Thus, I have a relatively long investing horizon. One of the tried and true way is through investing in the stock market. According to the greatest investor in the world, Warren Buffett, the best time to be greedy in investment is when others are fearful. Conversely, a smart investor should be fearful when others are greedy. As I reflect on his points, I made a simple conclusion that this Corona crash would be the best time for me to be greedy as I've read many times that millionaires are made in time of stock market distress. However, what's really bugging me is that I don't have any cash sitting on the sidelines to participate in this depressive market evaluation. It disturbs my conscious as I feel like I'm missing out on this huge "sale" in the market. As I try to reason with myself to not be in a stressful state of mind, I made some quick plan in order to still be able to participate in this sale. Historically, bear markets average out within 14 months in duration. The shortest bear market was about three months and the longest bear market was a little over two years. Though there's no telling of how long this 2020 crash will be, the least that I can do is to prepare to dollar cost averaging down in the market for the duration of at least 14 months. Hence, here's my plan.

1. I will allow myself to only buy 5 equities in this period. This is to conform to Warren Buffett's idea of choosing only the best company that adhere to the concept of value investing. By limiting my purchases, I won't be going around thinking that I have to buy everything just because they have low PE ratios. Instead, all of my purchases would be backed by deliberate thought process and valid reasoning.
2. In terms of monetary deployment, not only I will only deploy when the equities meet my strict requirements, I will also start the deployment in very small amount and gradually increase my purchases when the market dips deeper. I already have a few stocks on my watchlist and I'm planning to start with as little as one lot (100 units).
3. In terms of purchasing frequency, I'm planning to be fairly lenient on this because I'm willing to spend a little bit more on the transaction cost if the dips came more frequently than expected. This month alone, we have seen the market hit the circuit breaker 3 times. This occurrence is unprecedented knowing that the previous financial crisis only hit the circuit breaker once in a given month. I will start with monthly purchases but if opportunity presents itself, I might grab the lows as frequent as once a week, provided that my fund allows me to do so.

In essence, these are the guidelines that I'm telling myself. They are somewhat vague in some areas but I hope to convey a good idea whereby I stick to purchasing businesses below its fair value and not to go on a relentless spending spree without a proper conviction and justification.

The second thing that's lingering on my mind right now is in regards to the pandemic we all are facing, the Corona virus. I have to admit, I was adamant at first to the idea of going out of my way to breaking the chain of viral. My selfishness kept creeping in my head, telling me that my youth is enough to justify that I need not to worry. However, I knew things are getting serious when news about a few people in my city has succumb to the virus as well. News like these are making me paranoid especially when I see my close relatives are starting to show its symptoms like flu and coughs. Things start to get really worrisome when there are shortages of deterrent items such as hand sanitizers, disinfectants and face masks. Knowing that we are not equipped enough with the proper deterrent, it has increase some level of discomfort as I'm feeling a little too exposed and helpless. Nevertheless, I am also aware that there are plenty of ways that we all could do to combat this spread even without the proper deterrent because at the end of the day, your hygiene is the most important. So simple things like washing your hands, taking frequent showers and not touching your face are still the precautionary steps that we all could do. 

After reading through many sites and clickbaits, I'm guessing that these precautionary steps are the best ways for us to instill in our daily habit at least for another year. I often hear that vaccines could take awhile to concoct. As of right now, all that we can do is to practice proper hygiene. 

The third and final thing that's always on my mind is about my new job. Thankfully, I just managed to secure a job as a project engineer. The job scope entails me to work on building management systems (BMS). So that includes the whole spectrum of BMS systems ranging from the design, implementation & construction, and maintenance of the project. However, it's a very interesting dynamic right now because with the recent 'restriction of movement' being declared by the government, I'm currently working from home. There are definitely many challenges to working from home mainly due to distractions of entertainment and fairly easy access to bed, but it's a fun experience and I'm truly learning on how to have a better control of myself. So far, everything is very good. Friendly colleagues, good supervisor and good pay. I really hope that things progress towards the better but I always tell myself to always prepare for the worst. 

That is all my rant for you today. Hope that you are in good health physically and financially in this tough times. Just remember that dark days will pass and there's always light at the end of the tunnel. 

Stay safe!

Job Hunting Progress 2

Hi friends,

I'm here to update you about some good news on my job hunting progress. As it stands, I've had 7 interviews and I've already gotten accepted by 2 of them. This is very exciting news to me because I've been feeling a little down lately mainly due to no income stress. But thankfully things are starting to progress towards the better.

I've listed some key information about the interviews I've had and compiled them in a simple table that you can understand. (Click on image to enlarge)

From the table above, you can see that the industry of choice for my interviews were mainly in the electrical engineering sector and financial related sector. I feel very happy about this list because it shows that I'm not limiting my career opportunities based on my educational background. I've decided to open up myself to the financial related industry because that's my passion. Other than figuring out ways to optimize engineering related problems, I also like to optimize/benefit from any knowledge in the finance sector to increase my wealth.

I noticed that the thing that gives me utmost satisfaction in life is when I work towards optimizing my tasks to the maximum.

My educational background is in the sustainable energy sector and I love the idea of optimizing energy production because by doing so, I get to save money on my everyday energy utilization. Hence, helping me towards increasing my net-worth.

I also love the idea of optimizing my finance because that's the most direct way for me to progress towards financial freedom. If I learn on how to optimize taxes, optimize big ticket item loans or optimizing every aspect of financial planning, I believe that it help towards achieving financial freedom as well.

Anyway, I digress. Back to the table above, there are still a few results from the interview that I'm still waiting for their answer. The ones I'm still waiting for their response would be under the "Results" column where I wrote "Pending". As you can also see from the table, there's one result came in as a "Failure". This is because during the call screening, I couldn't answer their questions regarding coding languages and integrated circuits. So I admitted my shortcomings in that area and they've decided not to proceed with me as their candidate.

As for the two "Success" I've received, I'm happy to say that I decided to proceed with the building management engineer because that's what I'm more passionate in. The job scope, according to what I've been briefed, was to essentially design an energy efficient building. The process starts from designing and all the way to construction and maintenance. I could definitely see myself getting excited about integrating renewable energy concepts in a building. The other "Success" I had was for an insurance adjusters position. In theory, the job scope is very interesting because I need to learn about the business nature of many industries before being able to assess any insurance claim related to their business. From that perspective, I could also see myself getting excited because I love learning how every industry makes money and maintain their cash flows. However, the only reason why I declined that offer is because the salary package is slightly lower than the engineering job.

Well, I'm grateful for this results I'm getting. I think I'll be perfectly content if I get rejected from the other companies. Any success I'm getting from here on would be a great bonus and I'll be forever more thankful if I ever got them.

Something interesting that I want to comment about throughout this job hunting journey is that I no longer find interviews as being something really scary. I don't know why but I feel very comfortable during all of the interviews I've had so far. I no longer feel nervous and restless like I usually do back when I went for scholarship interviews. This is very interesting to me because I always hear people getting nervous before an interview. I truly hope that this version of me stays because getting nervous for an interview is tiring.

I also acknowledge that part of the reason why I'm not nervous is because the companies that interviewed me were all small and medium enterprise. Maybe that could be the reason but I'm not going to dwell in this too much.

Anyway, that is all for today. Thank you friends, for reading. Hope you're having a great day.

Investments In People

Hi friends,

Just want to write a quick update about something I recently learned.

For the first time ever, I think that investments that you make in people give more return than investing in monetary form.

I've been observing the good deeds that a close acquaintance of mine have been performing and indeed the goodness does comes back around. Although the returns may not be in monetary form, it does present itself in other valuable form that is arguably better than getting money.

I'm thinking of incorporating investments in people too in my portfolio in preparation for the feeling of goodness one can get from giving and that unexpected gifts one may received.

That's all for now. Thanks for reading!

Running Progress - February 2020

Hello friends,

Here's an update on my running progress.

As you can see, there is little to almost no progress at all in January. I'm a little bit ashamed of myself for such terrible progress but life happens. My pathetic excuse this time would be due to me succumbing to dengue fever. And because of that, I was in no form to run and so I decided to just rest.

However, I'm proud to say that I've bounced back in February. I feel relieved that I've hit that 100 km mark again after so long of not hitting it. There's this little part of me wouldn't quit screaming because it feels like I've redeemed myself. Though it took awhile, but I managed to fall back to my regular routine.

March is already here and so far I'm getting a decent start. Everything is progressing according to schedule and I just know that this month I would nail it. The months that I'm quite nervous about however is April and May. Knowing how the month of Ramadhan has severely impacted my progress last year, I'm still feeling a bit hesitant if I could overcome the challenges of being in those months. I haven't really prepare a detailed plan on going through Ramadhan but I do have an idea or two in terms of clocking the kilometers. The plan would either to run some kilometers just a few hours before iftar or to run at night after iftar. Still deciding on which approach would be the best.

I guess that's all the updates I have on my running. Here's a progress snapshot from the Adidas app. Cheers!