Ding Ding Ding! Closing Bell To 2017. Results Are In!

Bye Bye 2017.

As I turn my back on 2017, I can’t help but think that its really been a bittersweet year.

Dunno if I should be happy or disappointed.

My benchmark has always been STI ETF. The rationale is that if over the long term, I can’t beat a passive, idiot proof way of investing, then why bother? Yet, STI ETF has been a tough competitor. I suspect most people trading their way around actually fail to beat STI ETF. Most don’t even bother to keep track, so they wouldn’t even recognize their fallibility.

Anyhow, this is what STI ETF has done in 2017:

21.29% IRR.

That’s really a monster year. I give STI ETF the benefit of not including the effects of any transaction fees, nor does the passive index have the holding costs of cash. So the odds are piled against me.

But still, I was hoping to beat the index year in, year out. (Bill Miller style)

It was a pretty close fight up to Q3:

FY17Q3: STI, TTI Is Hot On Your Heels!

I was hoping for a final kick in Q4, much like UCC:

Alas. Life is not like the movies. No fairytale ending here.

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TTI’s portfolio performance in 2017 generated an IRR of 19.12%.

Total assets grew substantially from $943,815.80 at the end of 2016, to $1,295,279.61

Of this $1,295,279.61, approximately $372,240 is in the form of US stock options, Japanese equities and currencies USD and SGD.

(Based on the exchange rate of USD-SGD 1.3375)

The rest are in the form of SG equities:

Now in any given year, I’d pop the champagne with a 19.12% IRR. In fact, I’d gladly take a 19.12% return every year for the rest of eternity if I’m given the choice right now.

For 2017 though…. I just can’t feel happy with a performance that’s lost out to passivity. I can’t wrap my brain around the fact that a complete investing idiot who decided to throw his weight behind STI ETF at the start of 2017, would’ve beaten me after 1 year.

Ouch.

That’s the bitter part.

The sweet part is that AUM really swelled this year, jumping to $1,295,279.61 in SGD terms. And I didn’t even put much capital into my investing portfolio this year, choosing instead to channel into my property fund.

In an earlier post (TTI Is Banking On The Eighth Wonder Of The World), I put up a projection that shows what a 20% compounding rate over a 35 period would do for you, assuming you start with a $1mil capital:

Yr	Beginning Capital		Capital at Yr End
1	$1,000,000	1.2	$1,200,000
2	$1,200,000	1.2	$1,440,000
3	$1,440,000	1.2	$1,728,000
4	$1,728,000	1.2	$2,073,600
5	$2,073,600	1.2	$2,488,320
6	$2,488,320	1.2	$2,985,984
7	$2,985,984	1.2	$3,583,181
8	$3,583,181	1.2	$4,299,817
9	$4,299,817	1.2	$5,159,780
10	$5,159,780	1.2	$6,191,736
11	$6,191,736	1.2	$7,430,084
12	$7,430,084	1.2	$8,916,100
13	$8,916,100	1.2	$10,699,321
14	$10,699,321	1.2	$12,839,185
15	$12,839,185	1.2	$15,407,022
16	$15,407,022	1.2	$18,488,426
17	$18,488,426	1.2	$22,186,111
18	$22,186,111	1.2	$26,623,333
19	$26,623,333	1.2	$31,948,000
20	$31,948,000	1.2	$38,337,600
21	$38,337,600	1.2	$46,005,120
22	$46,005,120	1.2	$55,206,144
23	$55,206,144	1.2	$66,247,373
24	$66,247,373	1.2	$79,496,847
25	$79,496,847	1.2	$95,396,217
26	$95,396,217	1.2	$114,475,460
27	$114,475,460	1.2	$137,370,552
28	$137,370,552	1.2	$164,844,662
29	$164,844,662	1.2	$197,813,595
30	$197,813,595	1.2	$237,376,314
31	$237,376,314	1.2	$284,851,577
32	$284,851,577	1.2	$341,821,892
33	$341,821,892	1.2	$410,186,270
34	$410,186,270	1.2	$492,223,524
35	$492,223,524	1.2	$590,668,229

OK, so if everything goes to plan it means TTI would be worth $590mil when I’m 70 years old.

LOL!

It also means when I’m 69 years old, it’d be the most exciting cos I’d grow my assets by almost $100mil that year alone.

Anyway, 2017’s results means I’ve very comfortably, “cleared” the 1st year’s year end capital requirements of $1.2mil. In fact, it’s actually quite close to the 2nd year’s requirement. I probably can top that with a simple cash infusion right now.

Also, aside from investing, on the business front, 2017 has been a really really good year. My personal investment holding company, which holds private equity stakes in healthcare companies mostly, and some minority stakes in other related businesses, reported record revenues in 2017.

And by record revenue, I mean it’s at an all time high in the past decade, since incorporation in 2007.

I mean, everything’s literally BOOMING right now. BOOM TIMES are here!

This is a complete surprise to me. I remember distinctly, feeling that 2017 will be a very tough year for business. I remember brainstorming ideas at the start of 2017, and things look bleak. The news was constantly blasting about how SG’s economy is sick, and will likely under perform relative to our peers in the region.

There has been absolutely zero indication that this year would’ve been a bumper, record year.

Yet, we started 2017 with a bang, and I was expecting a slowdown, which never really came. In fact, Dec 2017 is very likely to be a record month for us. I’m still awaiting final figures from the accounts, but it’s highly likely to be the highest monthly revenue reported in the past decade.

Totally unexpected.

This leads me to think that this current rally, IS supported by growth in earnings. Everyone’s really doing well. It’s not some sham price rises based on interest rates, or share buybacks or other financial shenanigans.

This also shows how hard it really is to forecast and make such economic predictions.

And now, here I am, at the start of 2018, and I’m feeling it’s just as pessimistic as the start of 2017. It’s always after a bumper, record performance, where the next year becomes harder.

Just look at Leicester after they won the EPL.

I’m not sure where we’re gonna find the revenue in 2018, to match that of 2017. I look back at the monthly figures for 2017, and I’m really wondering how 2018 will match those numbers.

I’d be glad to be proven wrong in the end of 2018.

On the property front, as indicated in some earlier posts (somewhere way earlier, I’m lazy to go back to find it), I’ve said I’m looking out for another bigger place for personal use. The plan is to shift nearer to the kids future school, while renting out my current place. I’d also have to sell my current investment property, as I’d be hit with much higher taxes for the 3rd property.

For the uninitiated, a couple can own 2 properties (1 under each person’s name), without getting hit by the higher taxes for “investment properties” (ABSD and property taxes). I don’t know the specifics right now, I remember sorting it out some time ago and the conclusion is to just not have more than 2.

So I was literally willing the property market to crash, and for a long while, the odds seemed to be in my favour.

Hey, I thought we are in the midst of a long term secular property market decline?!

That’s what the experts said.

Suddenly we have record en bloc sales, and the market is BOOMING. All these guys lucky enough to sell en bloc, will now be flush with cash, looking for another place.

There goes my chance.

There are literally no good deals or firesales in the D9,10,11 region right now.

So much for the downturn. It’s so minute, and so transient, that I hardly felt ANYTHING.

Argh. I do not have luck in the property market. Like really. Zilch. It never goes my way.

I bet if I give in and buy right now, the market will crash the next day after I’ve signed.

Anyway, in view of the booming market, instead of buying in 2018, I’d likely sell my investment property sometime after August when the tenancy is up. The best case scenario is that the property booms like what the experts say, and after august, hmmm or make it November (give a couple of months to conclude the sale), and the market absolutely crashes.

I need something to precipitate a crash.

Come on bitcoin! Help me out a bit. Crash and burn at end 2018 k. Please?

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I thought of going through and reviewing each of my SG equity holding here, but… kinda lazy to do that now. Anyway, I think I’ve just recently reviewed.

The only changes I guess are the addition of 100,000 shares of Alliance minerals at $0.365, and 40,000 shares of Q&M Dental at an average of $0.6075.

I don’t think I can say anything much about Alliance Minerals that hasn’t already been said. It’s in the news so much. I’m just awaiting it’s value to be recognized, once it starts producing, and that’s gonna come real soon, in Q1 of 2018. Lithium plays are likely to be in a long term secular uptrend. These things don’t fade that quickly. Unless electric vehicles and smart phones become obsolete.

I won’t talk much about Q&M Dental, except to say that its not a typical value play. Even though the PE has come down a lot from its heydays of what PE 50? 60?… to the current PE 17 or so, it’s still not exactly cheap.

But the company has been doing share buy backs, and the CEO NCS himself has been buying shares through Quan Min Holdings.

I have my own rationale from my understanding of the business and the industry, and I’m betting on a special event that’d occur within 2018. Perhaps even a general offer and a buyout of sorts. Don’t think I should write too much about it here right now.

In any case, I think the downside is protected with the share buybacks by the various parties. Aside from the visible guys like the company and the CEO buying back shares, I know there are other deep pocketed, related drs, who are accumulating quietly.

So let’s see how it all plays out.

On top of that, my recent foray into Japanese steel makers have so far turned out exactly how I expected them to.

TTI’s New Core Position: Shinsho Corporation & Kobe Steel

I currently own 2,000 shares of Kobe Steel, and 2,500 shares of Shinsho Corporation, a position worth a total of approximately SG $125,000.

As mentioned in my investing thesis, I’ve thrown my lot mostly behind Shinsho Corporation, with a tiny stake in Kobe Steel itself.

The rationale is that Shinsho Corporation was unfairly knocked down by its association with Kobe Steel. Shinsho derives approximately 30% of its revenue from Kobe Steel, yet with the Kobe Steel scandal, it’s share price dove hard and fast, despite not being directly responsible and hence, not liable, to any fallout from the scandal.

In the past month or so, Shinsho Corporation’s share price has recovered strongly, as the markets realized it has been unfairly knocked down, whereas Kobe Steel’s recovery has been more tepid, as more negative news of lawsuits and further suspensions start coming through.

I’m continuing to hold my stakes in both companies.

I expect Shinsho corporation’s share price to continue climbing upwards, such that it’s PE become a more normalized 9-10 or so.

Kobe Steel will take longer to recover, as the fall out and negativity from the scandal drags on, but I’m expecting record earnings to act as a catalyst.

Both though, are well supported by a booming steel industry in Japan right now. With the infrastructure boost from the upcoming Olympics, all the steelmakers are functioning at maximum capacity. That has helped to buffer Kobe Steel as its competitors cannot fulfill further orders from clients which may be considering jumping ship from Kobe Steel.

My investing thesis has played out thus far, and I’m waiting for bumper Q3 and Q4 results to be a catalyst (They have March year ends).

Alright, that’s it for this last post of 2017.

BYE BYE 2017.

Bring it on, 2018!

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Options Records In Oct & Nov 2017

It’s been a very very busy period for me, and I’m juggling many balls at once. So I shall take the easy way out and just cut and paste my options transactions in the past 2 months.

Anyway, I am also genuinely interested to know what’s the cashflow like for the past 2 months. I track each transaction, but haven’t been tabulating on a monthly basis and comparing to prior months, like what I have done previously:

A Unique Arbitrage Situation + Results From Options Strategy (3rd Month)

Geo Vs GEAR! + Options Update

As mentioned previously, I’ve also been more cautious, preferring to skip some premiums that I deem risky, while increasing my cash buffer. I haven’t tabulated the monthly cashflow even as I’m typing this, but my gut feel is that it’d be a substantial drop from the previous USD $16k or so every month.

Also, just to clarify, I’m talking about cashflows. It’s not exactly profit. Not yet anyway. This is because some of the contracts would still be existing, even though I have collected the premiums. In other words, it’s kinda like a “liability” in my balance sheet, until it expires.

On top of that, this doesn’t include capital changes. So there could be a situation whereby I collect premiums and I’m including it in my cashflow records, but the capital changes in the underlying security is greater than the premium collected. (So technically, it’s a loss for that period of time actually)

The longer term plan though, is that if the cashflow records is constantly acceptable on a monthly basis, it’d far exceed any negative capital changes.

OK, so here goes (I’m calculating it now as I create this post. Oooo so exciting.)

OCTOBER 2017

Premiums collected in October 2017: USD 9,434.26

Wow. What a drop, comparing to the $16k or so previously.

But I was expecting this.

NOVEMBER 2017

Premiums collected in November 2017: USD 14,403.98

Hmmm, so different from October.

Anyway, nothing much to comment here, I’d be happy with a 5 digit USD cashflow every month.

With approximately 9 months or so of data and experimenting and tinkering and implementation, I now feel confident enough that I’ve increased my allocation of funds into my options strategy.

I started out sometime at the start of the year, with an initial token USD 100k to test out my strategies, it went swimmingly well, then I got greedy, screwed up a bit, and now I’m back on track. So now, I’ve increased my allocation and my options strategy has approximately USD 280k to mess around with.

If things go the way they are currently, I’d likely increase my allocation further in 2018, to perhaps… up to 50% of my portfolio. That’d be approximately $500k USD or so. Let’s see.

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Part of the fun of Decembers is to make travel plans for the next year.

Years ago, before having the 2 little rascals, it was a much simpler affair. TTI could just go anywhere the heart desires (if the wallet is willing).

Now, each trip becomes a big military operation. The planning! oh my. The logistics is crazy, esp if my parents and the in-laws put their hands up and want to tag alone.

Paying for your parents is perfectly ok. They deserve it. I’m more than happy to in fact. If they wanna go, money is never a consideration. The kids need to spend as much time as possible with their grandparents.

In-laws though… hmmmmm…… heh. That’s another story.

Anyway, in a recent earlier post:

TTI’s New Core Position: Shinsho Corporation & Kobe Steel

The picture is that of Meteora, in Greece

Highly recommended by one of my lunch buddies and colleague.

But alas, looking at the schedule, autumn 2018 is already packed, and it’s not really that fun for the kids, so I’d have to postpone that to spring of 2019, and instead switch to this:

No shit! Look at that!

It looks like a scene from Game Of Thrones! Just need a couple of dragons flying in the background.

This is a real place on Earth. Built in a time and era way before me. Yep. Make a guess where that is. Not that easy huh?!

In fact, we’re planning to stay there for the night. It’d probably be extremely costly for my poor finances, but well, take a look at how it looks like at dusk:

How much is such an experience worth?

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I generally like off the beaten track, yet fascinating places.

Like this:

It’s just a library in Stuttgart, but oh my, I’m fascinated by its architecture. So much so that I detoured and made a pit stop in Stuttgart specially to see it. The local Germans must think that this guy is an idiot, taking pictures of their library like it’s a tourist attraction. (It’s not)

Before I die, my travel pics catalog over the years will map out all the most fascinating places on Earth. And perhaps, even out of Earth… if Elon Musk works fast enough.

 

Well, if you can’t figure out where the earlier pic is, here’s a mega hint. It’s the same country where you find this:

Everybody knows this.