07 August 2015

Giraffe's Cafe - An Expose on LizardoRealm

GiraffeValue recently published on his blog a collection of 55 SG Financial Blogs. Seems my blog made it onto his list.

He subsequently got in touch to further conduct a virtual interview. "Lim kopi" as one might say. Here it is, republished.

[Republished, with permission]

Lizardo - Giraffe's Coffee

My guest for today is Lizardo from http://lizardorealm.blogspot.sg, he has been blogging for about 5 years on topic such as ETF, Unit Trust and stocks. I like the most is where he looks at them in a portfolio perspective rather than an individual investment.
Let’s see what he has for us.
Hey Lizardo maybe you can start by giving us a brief introduction about yourself? I.e your major, profession, age and other things you would like to add.
I am a working professional with a few graduate and postgraduate degrees(Computer Science). I’ve been working for 24 years and nearing the big “50”. I started investing with some seriousness only 10 years ago, and started buying individual stocks in the midst of the Global Financial Crisis. Lucky timing!
I’ve been running some what-if analysis and certain models would suggest I could choose to semi-retire next year. But we’ll see. As a single income family, there are many risks to consider.
I see that you have a World Cup Team(stock portfolio) consist of SG dividend stocks and overseas stocks, and you have also invested in ETF, and unit trust. Could you tell us what is your portfolio consist of, and the breakdown of its asset allocation?
My Singapore and US teams of stocks are indicative of what I’m invested into. Broadly, my asset allocation is a spread of:
[a] 45% Singapore stocks
[b] 11.5% in US stocks
[c] 11.5% each in European, Asia-Pacific (ex-Japan) and Global Emerging Markets using ETFs/UnitTrust
[d] 4% in Japan ETF/UnitTrust and [e] the balance in cash, preference shares and bonds.
I have a high risk appetite as I view my CPF as the bond component of my portfolio. The Unit Trusts are primarily invested using SRS and CPF-OA funds.
I maintain a few separate portfolios for my two kids’ education funds, and for my wife. Collectively, the total valuation for my family has exceeded $1 million. The gradual accumulation over the years has given me a lot of confidence that investing is definitely the way to go to build a retirement fund.
Keeping cash in the bank and fixed deposits is definitely not the way to go.
let say that there is a reader who is out there who only has 6hrs per week to spare for stock investing. He wants to build a portfolio that can generate dividend for him, holding period 3-5 years. What are the 10 stocks that you would introduce to him right now, and how would you build the portfolio i.e no. of stock, stocks criteria, DCA or lump sum purchase and etc?
With a holding period of 3-5 years, I suspect it will require more attention and time. I’m a long term investor myself and I tend towards holding stocks ‘forever’. For this, 6 hrs a week sounds about right for me, possibly less. A lot more time would be spent reading up and gaining appreciation about investing initially.
I would recommend that the investor consider his/her risk appetite and purpose for such an investment. It is only with that understanding that he/she can make the right choices that he/she can sleep peacefully come rain or shine. Instead of jumping into individual stocks, I would recommend someone who is just starting out to try a diversified portfolio across market regions using either Unit Trust or ETF for a start. And then to go into buying individual stocks when the portfolio has reached some critical size – perhaps when more than $100K.
For a suggestion on the 10 stocks, he/she could consider my team of 11 players for some ideas. As a value investor, I recommend however to keep those on watch and buy only when the price is right – esp. a reasonable margin of safety. Buying when the P/E is above 20 is unlikely to be ever a good idea.
Perhaps the top few that would be most interesting to me now would be OCBC, Keppel, M1, Boustead, Kingsmen, VICOM, HourGlass and GKGoh. Many of these have some interesting challenges that would suggest room for caution and doubt today. But it is precisely in circumstances like this that the best opportunities are created. It is the future that we seek, the past is only a history. In any case, every one of them is a dividend paying stock and hence provide some ‘insurance’ while we wait for their growth.
I see that you also blog quite a fair bit on your experience in unit trust. As you know, in our personal finance and investing blogosphere many have encouraged the use of ETF over unit trust, because of its lower cost and etc… What are some of the things that many have missed out, or things that you see and others don’t.
I think the advice on ETF over Unit Trust is the right one. However, unlike Unit Trust where one can buy and sell anytime, it is less so in the case of ETF. For many ETF (the exceptions are the STI ETFs), I have found it difficult to buy, and would suspect the problem would be even worse when trying to sell, especially if there is a market situation developing. Also, given the charges, it makes sense to go ETF only if buying in larger quantity. Hence, for an early investor (as I was when I started almost 10 years ago), it was more convenient to go with Unit Trust.
The ETF markets in the US is a lot more liquid. But it comes with the penalty of the 30% withholding tax (especially on the dividends paid out), and there is potential issue over inheritance that I do not yet confess to fully comprehend due to US laws. Unnecessary complexities.
[Although there are theoretically market makers for the ETFs, I find that the bid-ask spread can be very wide. I don't get a sense that the liquidity is really there for me to buy/sell easily for the less popular ETFs.]
What are the most common mistakes you often see people make on investment?
I think the mistakes are:
[a] not knowing what one is trying to invest for (what’s the time horizon?)
[b] attempting to make quick bucks by trading actively, jumping in and out
[d] attributing luck to skill,
[e] listening to others (noise) without doing an analysis
[f] looking for excitement from investing!
GV: Alright, now come to the last question. What are the tools or webs you use for investing and any financial web you frequently visit to source for information?
– Key websites that I read are on my home page. Especially: NextInsight, ValueBuddies, Finance.sg, Business Times, Motley Fool Singapore.
– Key newspapers/magazines: The Edge, Business Times Weekend, Fortune.
– Key online resource/tool: POEMS, Fundsupermart, and my own Excel spreadsheets.

Something that I have never considered of when looking at Unit Trust,  on the response from Lizardo liquidity is one big issue.  Of course one can still go for US ETFs which are more liquid but the withholding tax makes it unattractive and not to mention about the legal complexity.
Of course for withholding tax issue say on S&P500 one can go for VUSD which does not have a withholding tax on dividend(as it will be taxed at 15% before the divided is paid out) as compared to the US version of S&P which has a hefty 30% withholding tax on dividend.


SMK said...

good interview. like your balanced view.

lucky man too.

Lizardo said...


Thanks for your comments. Luck, something we all need more of.