Richard Russell’s Wisdom: Rich Man Poor Man

Richard Russell has been writing and publishing the Dow Theory Letters since 1958, and never has he missed an issue! It is the longest newsletter service continuously published by one person in the investment business. Richard is now 80 years old, and writes an extremely popular daily e-letter, full of commentary on the markets and whatever interests him that day. He gets up at 3 am or so and starts his daily (massive) reading and finishes the letter just after the markets close.

He was the first writer to recommend gold stocks in 1960. He called the top of the 1949-66 bull market, and called the bottom of the bear market in 1974 almost to the day, predicting a new bull market. (Think how tough it was to call for a bull market in late 1974, when things looked really miserable!) He was a bombardier in WWII, lived through the Depression, wars, and bull and bear markets. I would say that Russell is one of those true innate market geniuses that have simply forgotten more than most of us will ever know, except I am not certain he has forgotten anything. His daily letter is loaded with references and wisdom from the past and gives us a guide to the future. (You can learn more – and subscribe! – at www.dowtheoryletters.com.)


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By Richard Russell

For the average investor, you and me, we’re not geniuses so we have to have a financial plan. In view of this, I offer below a few rules and a few thoughts on investing that we must be aware of if we are serious about making money.

I. The Power of Compounding

Rule 1: Compounding. One of the most important lessons for living in the modern world is that to survive you’ve got to have money. But to live (survive) happily, you must have love, health (mental and physical), freedom, intellectual stimulation — and money. When I taught my kids about money, the first thing I taught them was the use of the “money bible.” What’s the money bible? Simple, it’s a volume of the compounding interest tables.

Compounding is the royal road to riches. Compounding is the safe road, the sure road, and fortunately anybody can do it. To compound successfully you need the following: perseverance in order to keep you firmly on the savings path. You need intelligence in order to understand what you are doing and why. You need knowledge of the mathematical tables in order to comprehend the amazing rewards that will come to you if you faithfully follow the compounding road. And, of course, you need time, time to allow the power of compounding to work for you. Remember, compounding only works through time.

But there are two catches in the compounding process. The first is obvious — compounding may involve sacrifice (you can’t spend it and still save it). Second, compounding is boring – b-o-r-i-n-g. Or I should say it’s boring until (after seven or eight years) the money starts to pour in. Then, believe me, compounding becomes very interesting. In fact, it becomes downright fascinating!

In order to emphasize the power of compounding, I am including the following extraordinary study, courtesy of Market Logic, of Ft. Lauderdale, FL 33306.

In this study we assume that investor B opens an IRA at age 19. For seven consecutive periods he puts $2,000 into his IRA at an average growth rate of 10% (7% interest plus growth). After seven years this fellow makes NO MORE contributions — he’s finished.

A second investor, A, makes no contributions until age 26 (this is the age when investor B was finished with his contributions). Then A continues faithfully to contribute $2,000 every year until he’s 65 (at the same theoretical 10% rate).

Now study the incredible results. B, who made his contributions earlier and who made only seven contributions, ends up with MORE money than A, who made 40 contributions but at a LATER TIME. The difference in the two is that B had seven more early years of compounding than A. Those seven early years were worth more than all of A’s 33 additional contributions.

This is a study that I suggest you show to your kids. It’s a study I’ve lived by, and I can tell you, “It works.” You can work your compounding with muni-bonds, with a good money market fund, with T-bills, or say with five-year T-notes.


RULE 2: Don’t Lose Money.This may sound naive, but believe me it isn’t. If you want to be wealthy, you must not lose money; or I should say, you must not lose BIG money. Absurd rule, silly rule? Maybe, but MOST PEOPLE LOSE MONEY in disastrous investments, gambling, rotten business deals, greed, poor timing. Yes, after almost five decades of investing and talking to investors, I can tell you that most people definitely DO lose money, lose big-time — in the stock market, in options and futures, in real estate, in bad loans, in mindless gambling, and in their own businesses.

Rule 3: Rich Man, Poor Man.In the investment world the wealthy investor has one major advantage over the little guy, the stock market amateur, and the neophyte trader. The advantage that the wealthy investor enjoys is that HE DOESN’T NEED THE MARKETS. I can’t begin to tell you what a difference that makes, both in one’s mental attitude and in the way one actually handles one’s money.

The wealthy investor doesn’t need the markets, because he already has all the income he needs. He has money coming in via bonds, T-bills, money-market funds, stocks, and real estate. In other words, the wealthy investor never feels pressured to “make money” in the market.

The wealthy investor tends to be an expert on values. When bonds are cheap and bond yields are irresistibly high, he buys bonds. When stocks are on the bargain table and stock yields are attractive, he buys stocks. When real estate is a great value, he buys real estate. When great art or fine jewelry or gold is on the “giveaway” table, he buys art or diamonds or gold. In other words, the wealthy investor puts his money where the great values are.

And if no outstanding values are available, the wealthy investors waits. He can afford to wait. He has money coming in daily, weekly, monthly. The wealthy investor knows what he is looking for, and he doesn’t mind waiting months or even years for his next investment (they call that patience).

But what about the little guy? This fellow always feels pressured to “make money.” And in return he’s always pressuring the market to “do something” for him. But sadly, the market isn’t interested. When the little guy isn’t buying stocks offering 1% or 2% yields, he’s off to Las Vegas or Atlantic City trying to beat the house at roulette. Or he’s spending 20 bucks a week on lottery tickets, or he’s “investing” in some crackpot scheme that his neighbor told him about (in strictest confidence, of course).

And because the little guy is trying to force the market to do something for him, he’s a guaranteed loser. The little guy doesn’t understand values, so he constantly overpays. He doesn’t comprehend the power of compounding, and he doesn’t understand money. He’s never heard the adage, “He who understands interest, earns it. He who doesn’t understand interest, pays it.” The little guy is the typical American, and he’s deeply in debt.

The little guy is in hock up to his ears. As a result, he’s always sweating — sweating to make payments on his house, his refrigerator, his car, or his lawn mower. He’s impatient, and he feels perpetually put upon. He tells himself that he has to make money — fast. And he dreams of those “big, juicy mega-bucks.” In the end, the little guy wastes his money in the market, or he loses his money gambling, or he dribbles it away on senseless schemes. In short, this “money-nerd” spends his life dashing up the financial down escalator.

But here’s the ironic part of it. If, from the beginning, the little guy had adopted a strict policy of never spending more than he made, if he had taken his extra savings and compounded it in intelligent, income-producing securities, then in due time he’d have money coming in daily, weekly, monthly, just like the rich man. The little guy would have become a financial winner, instead of a pathetic loser.

Rule 4: Values. The only time the average investor should stray outside the basic compounding system is when a given market offers outstanding value. I judge an investment to be a great value when it offers (a) safety, (b) an attractive return, and (c) a good chance of appreciating in price. At all other times, the compounding route is safer and probably a lot more profitable, at least in the long run.

II. Time

TIME: Here’s something they won’t tell you at your local brokerage office or in the “How to Beat the Market” books. All investing and speculation is basically an exercise in attempting to beat time.

“Russell, what are you talking about?”

Just what I said — when you try to pick the winning stock or when you try to sell out near the top of a bull market or when you try in-and-out trading, you may not realize it but what you’re doing is trying to beat time.

Time is the single most valuable asset you can ever have in your investment arsenal. The problem is that none of us has enough of it.

But let’s indulge in a bit of fantasy. Let’s say you have 200 years to live, 200 years in which to invest. Here’s what you could do. You could buy $20,000 worth of municipal bonds yielding, say, 5.5%.

At 5.5% money doubles in 13 years. So here’s your plan: each time your money doubles you add another $10,000. So at the end of 13 years you have $40,000 plus the $10,000 you’ve added, meaning that at the end of 13 years you have $50,000.

At the end of the next 13 years you have $100,000, you add $10,000, and then you have $110,000. You reinvest it all in 5.5% munis, and at the end of the next 13 years you have $220,000 and you add $10,000, making it $230,000.

At the end of the next 13 years you have $460,000 and you add $10,000, making it $470,000.

In 200 years there are 15.3 doubles. You do the math. By the end of the 200th year you wouldn’t know what to do with all your money. It would be coming out of your ears. And all with minimum risk.

So with enough time, you would be rich — guaranteed. You wouldn’t have to waste any time picking the right stock or the right group or the right mutual fund. You would just compound your way to riches, using your greatest asset: time.

There’s only one problem: in the real world you’re not going to live 200 years. But if you start young enough or if you start your kids early, you or they might have anywhere from 30 to 60 years of time ahead of you.

Because most people have run out of time, they spend endless hours and nervous energy trying to beat time, which, by the way, is really what investing is all about. Pick a stock that advances from 3 to 100, and if you’ve put enough money in that stock you’ll have beaten time. Or join a company that gives you a million options, and your option moves up from 3 to 25 and again you’ve beaten time.

How about this real example of beating time. John Walter joined AT&T, but after nine short months he was out of a job. The complaint was that Walter “lacked intellectual leadership.” Walter got $26 million for that little stint in a severance package. That’s what you call really beating time. Of course, a few of us might have another word for it — and for AT&T.

III. Hope

HOPE: It’s human nature to be optimistic. It’s human nature to hope. Furthermore, hope is a component of a healthy state of mind. Hope is the opposite of negativity. Negativity in life can lead to anger, disappointment, and depression. After all, if the world is a negative place, what’s the point of living in it? To be negative is to be anti-life.

Ironically, it doesn’t work that way in the stock market. In the stock market hope is a hindrence, not a help. Once you take a position in a stock, you obviously want that stock to advance. But if the stock you bought is a real value, and you bought it right, you should be content to sit with that stock in the knowledge that over time its value will out without your help, without your hoping.

So in the case of this stock, you have value on your side — and all you need is patience. In the end, your patience will pay off with a higher price for your stock. Hope shouldn’t play any part in this process. You don’t need hope, because you bought the stock when it was a great value, and you bought it at the right time.

Any time you find yourself hoping in this business, the odds are that you are on the wrong path — or that you did something stupid that should be corrected.

Unfortunately, hope is a money-loser in the investment business. This is counterintuitive but true. Hope will keep you riding a stock that is headed down. Hope will keep you from taking a small loss and, instead, allow that small loss to develop into a large loss.

In the stock market hope gets in the way of reality, hope gets in the way of common sense. One of the first rules in investing is “don’t take the big loss.” In order to do that, you’ve got to be willing to take a small loss.

If the stock market turns bearish, and you’re staying put with your whole position, and you’re HOPING that what you see is not really happening — then welcome to poverty city. In this situation, all your hoping isn’t going to save you or make you a penny. In fact, in this situation hope is the devil that bids you to sit — while your portfolio of stocks goes down the drain.

In the investing business my suggestion is that you avoid hope. Forget the siren, hope; instead, embrace cold, clear reality.

IV. Acting

ACTING: A few days ago a young subscriber asked me, “Russell, you’ve been dealing with the markets since the late 1940s. This is a strange question, but what is the most important lesson you’ve learned in all that time?”

I didn’t have to think too long. I told him, “The most important lesson I’ve learned comes from something Freud said. He said, ‘Thinking is rehearsing.’ What Freud meant was that thinking is no substitute for acting. In this world, in investing, in any field, there is no substitute for taking action.”

This brings up another story which illustrates the same theme. J.P. Morgan was “Master of the Universe” back in the 1920s. One day a young man came up to Morgan and said, “Mr. Morgan, I’m sorry to bother you, but I own some stocks that have been acting poorly, and I’m very anxious about these stocks. In fact worrying about those stocks is starting to ruin my health. Yet, I still like the stocks. It’s a terrible dilemma. What do you think I should do, sir?”

Without hesitating Morgan said, “Young man, sell to the sleeping point.”

The lesson is the same. There’s no substitute for acting. In the business of investing or the business of life, thinking is not going to do it for you. Thinking is just rehearsing. You must learn to act.

That’s the single most important lesson that I’ve learned in this business.

Again, and I’ve written about this episode before, a very wealthy and successful investor once said to me, “Russell, do you know why stockbrokers never become rich in this business?”

I confessed that I didn’t know. He explained, “They don’t get rich because they never believe their own bullshit.”

Again, it’s the same lesson. If you want to make money (or get rich) in a bull market, thinking and talking isn’t going to do it. You’ve got to buy stocks. Brokers never do that. Do you know one broker who has?

A painful lesson: Back in 1991 when we had a perfect opportunity, we could have ended Saddam Hussein’s career, and we could have done it with ease. But those in command, for political reasons, didn’t want to face the adverse publicity of taking additional US casualties. So we stopped short, and Saddam was home free. We were afraid to act. And now we’re dealing with that failure to act with another and messier war.

In my own life many of the mistakes I’ve made have come because I forgot or ignored the “acting lesson.” Thinking is rehearsing, and I was rehearsing instead of acting. Bad marriages, bad investments, lost opportunities, bad business decisions — all made worse because we fail for any number of reasons to act.

The reasons to act are almost always better than the reasons you can think up not to act. If you, my dear readers, can understand the meaning of what is expressed in this one sentence, then believe me, you’ve learned a most valuable lesson. It’s a lesson that has saved my life many times. And I mean literally, it’s a lesson that has saved my life.

Why REITs and Business Trust are not always good investments

valuebuddies.com is probably the place you want to be if you are into fundamental analysis. And the most interesting discussion that I was informed taking place is a discussion on REITs valuation.

One respected forumer d.o.g. made some great comments and I just find that I need to highlight them to investors that never had to experience what happen in the credit crunch in the 2007-2008 bear market.

Back then, a lot of REITs did rights issue because the cost of getting debts refinancing is so high that it doesn’t make sense for REITs.

It soft of highlights a lot of negatives of REITs. But the general idea d.o.g. is driving across is that REITs can be good or bad, depending on how an investor evaluates fundamentals and valuation. The general consensus is that REITs exist to benefit the sponsers to cash out on it to get money and lessen risks rather than benefit the owners.

Generally, no business trust will pay down its debts, because it is not in the interest of the trust manager to do so. The trust manager is paid as a percentage of assets, not equity. Therefore, the incentive is to borrow as much money as possible to raise the assets under management, thus raising fees, and never pay down the debt except under duress from banks.

An investor in a business trust has to understand that the trust structure is basically a packaging gimmick. It is given tax incentives by the authorities to encourage a more “sophisticated” capital market. Essentially, the original owner of the assets can enjoy tax savings if he owns the assets through a trust instead of within a normal corporate structure. With an IPO his ownership decreases, but he then enjoys the management fees. As a result he gains several advantages:

1. The management fees are economically an inflation-indexed annuity;
2. Partial asset divestment through the IPO raises cash for other higher-return projects;
3. Reduced ownership reduces the amount needed to fund a future rights issue; and
4. Trust distributions are taxed at a reduced rate (normally 10%)

Net-net, the overall income decreases slightly as the reduced share of trust income is partly offset by the management fees, but the potential liability decreases greatly. It is a huge risk-reward improvement.

Investors should not harbour any delusions that REITs are created primarily for their benefit. REITs are created first and foremost to help owners dispose of unwanted assets.

As a general rule, the best assets do not get sold into a REIT, they are held forever by the original owner. From a purely rational perspective, REITs are simply a convenient dumping ground to offload undesirable assets to a gullible public. An outright sale would be difficult since the buyer would likely do due diligence and negotiate a discount for lousy assets. But the public can be convinced to buy anything in a bull market. In fact very little convincing is needed – the public is happy to convince itself, especially in today’s low-interest rate environment.

Sponsored trusts are created to help owners divest unwanted assets. The management fees are just a bonus.

Non-sponsored trusts are created primarily for the management fees.

Growth:
Since a trust seeks to grow by buying the type of assets it already owns, its own assets and unit price are likely to be marked down at the same time that bargains are available in the market. Therefore it can’t buy these assets since its currency (its units) is also marked down. In a bull market its units are priced higher, but so are the targets, so we are back to square one.

This is true regardless of whether or not there is a sponsor. Where the sponsor can help is to market/hype the trust to get its units overvalued against the physical market e.g. if the cap rate in the market is 5% and the trust yields 4% then yield-accretive acquisitions can be done.

A sponsored trust can rely on the bigger marketing budget of its parent to help hype the units. A non-sponsored trust has only the limited resources of its trust manager. So all things being equal, the sponsored trust has a better chance of becoming overvalued and thus able to grow.

Ideally one would buy a sponsored trust at a low valuation. Then, while waiting for the hype/revaluation, one can still enjoy the higher dividend yield. The sponsor wants to unload their assets to the trust, so they have an interest in getting the trust units overvalued.

Of course, the sponsor’s hype machine doesn’t always work – see Hyflux Water Trust. The trust never traded at a sufficiently low yield to be able to overpay for projects from Hyflux. Eventually Hyflux decided to kill it and find a Japanese buyer for its projects instead. But due credit to Hyflux management for their intelligent attempt to (ab)use the capital markets.

This is precisely why non-sponsored trusts exist – because people want to own a REIT manager. It is no accident that while there are plenty of listed REITs, there are very few listed REIT managers.

The fact that REITs and business trusts are created to benefit either asset owners who wish to divest, or managers who wish to create an income stream, is neither good nor bad. It just is.

Investors simply have to understand this when doing their due diligence and not invest based on the yield alone. Management behaviour (rights issues, debt refinancing, acquisitions etc) can and will drastically change the future yields.
Just because the structure of REITs encourages value-destroying behaviour (debt-funded acquisitions in bull markets) doesn’t mean that all managers behave this way. The sensible ones keep gearing low. At the right price, such REITs can be fantastic investments.

In the 2008/2009 stock market crash/recovery, some of the biggest capital gains were recorded by REITs. IIRC one of the big winners was CDL H-REIT. In the bear market, one could have safely bought all the REITs with strong balance sheets, and obtained both high income and good potential for capital gains. As a group, they were low-risk, high return investments. Note the past tense!
Conversely, some of the worst losses were also recorded by REITs. Essentially, everyone who did a rights issue destroyed shareholder value e.g. CMT, CCT, MLT, K-REIT (twice), Starhill, Fortune etc. With the exceptions of Starhill and Fortune, all of them had horrible balance sheets that were train wrecks waiting to happen.

Starhill was unusual in that the management actively chose to destroy value – despite low gearing and their debt not being due for over a year, they raised cash at the bottom of the market, then let it sit around until they bought the Malaysian properties much later. Ditto with Fortune – the purchase of the Cheung Kong properties was a massively DPU-negative transaction.

As for normal companies, the division between ownership and management also encourages value-destroying behaviour, since managers are paid salaries and bonuses before shareholders get dividends. Therefore the temptation is to take maximum risk, since if it works there is a big bonus waiting, and if it doesn’t work the shareholders cough up for the rights issue.

Does this also mean that one should not invest in stocks at all? Of course not. But it behooves the investor to inform himself of the risk/reward equations faced by the key managers so that he can understand how the managers are likely to behave.

Again, not all managers behave badly. Normally the owner-managers are better behaved, since they are the biggest shareholders and must cough up money in a rights issue if they screw up. Notice that the family-run UOB and CDL did not have any rights issues during the crisis, in contrast to the professionally-managed DBS, Capitaland and NOL.

There are of course bad owner-managers and good professional managers. But my experience has led me to favour owner-managed companies.

分享锦集：盯紧盈利莫放松冷眼

股票投资，其实有许多准则可以遵循的。问题是，准则太多了，要付诸于行动，难之又难。

就以选股来说，每个人都知道本益比、周息率、每股资产价值等准则，但真正将这些准则应用在投资上的，恐怕不多。

准则越简单越好
不要说对股票投资略识之无的股友，即使像我这样在股市中征战数十年的沙场老将，在应用这些准则时，也未必能做到得心应手，故股票投资之道，知之匪艰，行之维艰呵！

研究股票数十年，在股市中实践数十载，到了古稀之年，我有一种越来越强烈的感觉：选择股票，准则越简单越好，组合管理，则动作动少越妙。

投资者所犯的最大错误，是他相信自己可以应用各种既艰深，又复杂的方法去战胜股市，从而赚取暴利。

实际上，这一类投资者，成功致富的少之又少，真正成功的反而是那些根据很简单的准则进行投资，而动作又很少的投资者。

抓最重要最实用
我们与其去采用一大堆华而不实，知而不能行的准则，倒不如去芜存菁，抓住最重要，最实用，而又最易实行的一点，身体力行，更能产生实效，达到创造财富的目的。

如果你阅读别人的股票分析，听取别人的主张的话，你反而会无所适从。

所以，与其去到处询问别人的意见，倒不如依循一两个简单的准则，脚踏实地的走自己的道路。

当你听到一只股票是否值得投资，众说纷纭，莫衷一是的时候，你只要回答一个最简单的问题，就马上可以作出决定：“这家公司赚钱吗？”

如果答案是“不”的话，就不必再去考虑买进，因为主张买进的人，是根据似是而非的“意见”，并不是根据事实作出推荐。

股票价值建在盈利基础
你的投资概念，必须是建立在一个基础上，那就是股票的价格趋势。

长期来说，必然是跟股票的价值成正比。而股票的价值，主要是建立在盈利的基础上。

简言之，只有盈利，才能创造价值，只有价值，才能确保股价的长期上升趋势。

一家公司的股票，如果没有盈利的支撑的话，其股价不可能长期向上。

一家盈利长期向上的公司，短期其股价容或随股市大势而有起落，但长期的趋势必然是向上的。

星狮、玻璃市种植、吉隆甲洞、联合种植、大众银行、健力士等公司的股价，短期是有起落，但长期来说是向上的，因而为投资者创造了财富。

投资者把资金投入一家企业，需冒丧失资本的风险，还要花精神，竭心智去经营，盈利是他应得的酬劳。

正如雇员把时间、精力卖给雇主，他应该得到薪金一样，是天公地道的事。

盈利是投资保障
有了盈利，员工职业才有保障。

有了盈利，才有股息。

有了盈利，公司资产才会增加。

有了盈利，公司才有能力增加投资，扩展生意。

盈利，是企业的生命。

盈利，是你的投资的最佳保障。

低买长期收稳赚
既然如此，投资者要作出投资决定，易如反掌，那就是只买有盈利公司的股票，没有盈利公司，无论“消息”多么好，一概不买。

盈利长期稳健上升的公司，是最好的公司，低价买进长期收藏，稳赚。

所谓“有盈利”的公司，是以全年，而不是以一季为标准。

一家公司的业务，受到意想不到因素的冲击，在一两季中蒙受亏损，是很平常的事，只要不伤及元气，逆境过后就重振旗鼓，重获盈利，就应归入“有盈利”的公司。

在经济大风暴中，企业蒙受亏蚀，情有可原，只要长期盈利纪录标青，将来赚钱的能力完整无损，就仍有资格列入“有盈利”公司。

实际上，好公司短期受挫，导致股价暴跌，正是买进的良机，这正是反向思维者用武之好时机。

举例说明：亿维雅
亿维雅（Hevea Board）的主要业务是在森美兰的马口设厂制造碎木板（Chipboard）和傢具，由2005至2008盈利日走下坡，但金融海啸后盈利猛力回弹，去年每股净利23仙，以目前64仙的股价计算，本益比仅2.77倍，为上市公司中最低者之一。

该公司在今年9月底时负债1亿6700万令吉，等于股东基金的91%，属债高公司之一，在金融风暴中，该公司曾被银行追债而几乎陷困，后来借助法庭庭令才渡过难关。

为了减轻债务，该公司已在今年5月委任顾问，研究将具有良好盈利纪录的子公司亿维雅太平洋（Heveapac）上市，以套取资金减低母公司的负债，该公司也发凭单给股东，凭单长达10年，由今年3月算起。

盯紧第四季盈利
该公司本财务年每季都有可观盈利，首三季每股已取得19.55仙的净利，如果第四季能保持第三季的纪录的话，全年盈利可达25仙，以目前63仙的股价计算，本益比才2.5倍。

假如你购买这只股票的话，我建议你应盯紧该公司第四季的盈利。

如果未来几个季度能保持本财务年首三季的盈利额的话，就说明了该公司已走出了金融海啸的阴影，债务问题亦可迎刃而解。

Time is Money. Money is Time.

Time is Money
Most people make most of their money by "selling" their time. Some are able to "sell" their time at "obscene" super high price while sold theirs at dirty-cheap price. Their price difference can be amazing XXX times the lowest paid person in the same company.

Unless you have Bank of PaPa or Bank of MaMa behind you, the greatest financial asset generator is our time. We either "sell" it at higher price or "sell" more of it at lower price for the same absolute amount.

So this sense: Time is Money!

Money is Time
When we spend more of our time in making money, we will have more money. But, if we really think or correctly estimate/forecast that we may not need so much more money, then it follows that we will have more time, more time to pursue other things or activities, other than making money.

Money is LIMITLESS; but our time is LIMITED and FINITE. We only live ONCE.

Since we only have that much of our time so it is up to us and ourselves to argue that more money is needed to buy more of the stuff to find pleasure in them is more precious than the time spent on other activities that may not actually require spending of more money? There are some inexpensive ways or you may change the ways to find that your own little pleasures. Seek and you may find them.

Frasers Commercial Trust (FCOT): Trading at an unwarranted discount

High quality assets, strong sponsor.
Frasers Commercial Trust (FCOT) owns 10 properties across three countries with retail and office components. FCOT derives some 52% of its gross revenue from Singapore, which comprises China Square Central, 55 Market Street and Alexandra Technopark. These assets are either high-quality commercial property located near the heart of the financial district or high-tech business space development at the fringe area of the central-region of Singapore. FCOT
also owned four commercial properties in Tokyo & Osaka. Other asset includes Central Park (Perth) which is a premium grade office tower and the tallest building in Perth. Located on St Georges Terrace, Central Park is a pre-eminent business address, in the heart of the CBD and shopping precinct. Its sponsor is Frasers Centrepoint Limited (FCL), subsidiary of F&N, giving FCOT rights of first refusal to a possibly rich pipeline of sponsorowned assets for future acquisition. In the near to middle term, StarHub Centre, Alexandra Point and Valley Point are possibly slated asset injection targets for FCOT, if they prove yield-accretive to unitholders.

Stable income.
FCOT also enjoys a number of blue-chip long-tenure leases (such as Commonwealth of Australia, BHP Billiton Petroleum etc.) and master leases that provide long-term income stability to the REIT along with potential for rental upside. Approximately 65% of FCOT's revenue is derived from such leases. 25% of its gross rental income also has built-in annual rent step-ups. We also see scope to grow income through asset enhancement initiatives and acquisitions.

Trading at an unwarranted discount to book.
But FCOT is trading at a 57% discount-to-book compared to the broader Office REITs which are
trading at 30% discount-to-book. We believe that one reason could be a legacy issue; this being FCOT was formerly known as Allco Commercial REIT before it was bought over by FCL in 2008. However, given the current high quality assets, strong sponsor and stable income, we feel that the high discount is unwarranted. Instead, we apply a more reasonable 40% discount to our RNAV to derive a fair value of S$0.18. This translates to an estimated total return of 14.7% (Price Upside: 8.6%; Distribution Yield: 6.1%).

Maintain BUY rating.
Unit consolidation underway. Meanwhile, FCOT is looking to consolidate five existing units into one, which it opined will improve market perception and attractiveness of its units. It has already gotten in-principle-approval from SGX-ST for the proposal and is now awaiting
unitholders' approval.

Suntec REIT: Downgrade to HOLD on valuation

Private placement to fund MBFC buy.
Suntec REIT recently closed the book of orders for its private placement to partly fund the acquisition of Marina Bay Financial Centre (MBFC) Phase 1. (Recall that Suntec REIT has proposed to acquire a one-third stake in MBFC Phase 1 from Cheung Kong Holdings Ltd and Hutchinson Whampoa Ltd. on an agreed property value of S$1,495.8m, which includes rental support of S$113.9m over a 60-month period from the completion date of the acquisition.) The private placement of 313m new units was 3.1 times oversubscribed, with the issue price per new unit fixed at S$1.37 following an accelerated book-building process. The trading of the new units on SGX-ST has commenced on 9 Dec 2010. The gross proceeds from the private placement amount to approximately S$428.8 million - 97.5% of it will be used to partially finance the acquisition, while 2.5% will be utilized to pay for advisory, underwriting, selling and management fee as well as other estimated fees and expenses.

Tight initial yields.
Suntec estimated that the FY11 net property income (NPI) for the MBFC acquisition to be around S$60.6m. This gives a fairly tight initial yield of 4% on the acquisition. The acquisition will, however, further enhances the income diversification of Suntec and reduce its reliance of income stream on any single property (~75.9% of total NPI of existing portfolio is currently derived from Suntec City). The MBFC acquisition will also act as the trend-setter for the emerging "Premium Grade A" office space that is debuting around Marina Bay area, on the back government's commitment to pump more than S$1b into infrastructure works to support Marina Bay's growth over the next 10-15 years.

Downgrade to HOLD.
While the effective interest rate of 3.12% per annum for the S$1,105m debt facility came in lower than expected, we see the need to increase our cost of equity from 6.0%to 8.2%, as we further finetune our CAPM assumptions to account for the slightly heightened risk aversion in the equity market. This in turn raises our WACC rate from 5.08% to 6.09% and lowers our fair value from S$1.63 to S$1.50. Hence we downgrade our rating to HOLD on valuation grounds, given that its estimated total return is less than 10%, even though we continue to like the trust for its high quality assets and exposure to the Marina Bay area.

分享锦集: 富向冷中求

冷门股是指交投不活跃及每天成交量低的股票。

跟交投活跃及每天成交量高的股票，刚好相反。

在这一轮的牛市中，根据证券业人士的估测，到目前为止，活跃参与股票交易的，基本上还是来自投资机构，如公积金局、单位信托、资产管理公司等，股市中人通常称他们为大户。

至于散户，至今仍按兵不动，这种现象一点也不奇怪。

在所有牛市的初期，甚至中期，在熊市中搞到遍体鳞伤的散户，都心有余悸，他们惊魂未定，担心股市的外势只是虚有其表，恐怕进场后再度中计，因此多数采取观望的态度。

反向策略熊市进场
但是，江山易改，“赌”性难移。这些在鳄鱼潭边徘徊的股友，到股市疯狂时，在贪念的催促下，最终“忍无可忍”，还是跳进鳄鱼潭中，成为鳄鱼的点心，历届牛市历史都是这样重演着。
我一再提醒散户，采取反向策略，在熊市中进场，低价买进优质股，就不动如山，心如英语所说的：“坐着走过牛市”，以逃过股市大鳄的利爪，全身以退。

最好策略以静待动
四十年的股市实战经验告诉我，经验不足，财力薄弱的散户，绝对不是大户的对手，要想打败股市是不可能的，散户的最好策略就是以静待动；以不变应万变，不与狼共舞，紧握你的股票，最后一走了之，股市和大鳄都奈何不了你。

股市有如过山车，你在过山车的座位上，套上安全带，任由过山车向前窜高逐低，你就是抓紧栏杆不动，你就会安然无恙的到达终站，如果你自作聪明，企图搞花样的话，你准会被摔出车座送命。

大户在股市中，操作活跃，可以赚钱。因为他们具备散户所无法做到的优越条件。

散户如果跟着他们，闻风起舞的话，最终必定遭殃。

因为散户无论在市场情报、经验、资讯和人才素质方面，都不可能跟他们相比。

股市这个充满陷阱的地方，即使专职专业投资者也难免马失前蹄，何况是玩票性质的无知散户呢？

基金不能购冷门股
大户由于资金庞大，交易数量动辄以千万股计，他们通常只对交易量大及交投活跃的优质股感兴趣，对于交投不活跃，难以买到大宗股票的公司，完全不感兴趣，这也难怪，因为他们所管理的基金，投资者随时都可以退出。

当投资者把投资单位卖回给他们的时候，他们必须在短时间内付款给投资者，如果他们所拥有的股票是交投淡静的冷门股的话，他们无法将股票套现，无法应付投资者的“挤提”的话，他们的基金就有可能面对倒闭的危机，所以，基金不能购买冷门股。

冷门股价值严重被低估
基金对冷门股不感兴趣，往往导致冷门股价值严重被低估，跟热门股形成强烈的对照，热门股受到股票行分析师的青睐，不断的发表研究报告，即使是公司小小的变动，他们也会马上加以分析，作出评估。

所以，热门股，尤其是大资本的优质热门股，它们的价值，尽人皆知，根本不会有隐藏价值的存在。

冷门股就不同了，由于没有人加以分析推荐，交投又不活跃，长期被股市中人冷落，它们被忽略，价值往往被严重低估。

这种股票，只有深读年报，勤于挖掘的投资者，才会发现它们的价值，从而买进，作为长期投资，取得丰厚的回酬。

不买冷门垃圾股
避免投资机构热衷的热门股，把注意力转移至较不热门，长期被忽略的股票，深入挖掘，找出它们的价值，然后好整以暇地买进，作为长期投资，这类股票跌幅有限，上升空间很大，风险也就相应的较低。

但是，投资于冷门股，要特别注意，千万不要买冷门的垃圾股，因为一旦股市大跌，你无法脱售，而所拿着的股票的公司，又长期亏蚀，股票最终可能变成废纸。所以，千万不要买冷门劣股。

冷门股由于交投淡薄，甚至长期没有交易，在这种情形之下，跟非上市公司没有什么分别。所以，在买进的时候，就应抱着投资于非上市公司的态度，准备长期锁在保险箱中。

这种投资法，只有买进盈利长期上升，资产自动增值及负债低的公司，才有可能取得丰厚的回酬，你以低价（以每英亩的买进价格为标准）买进油棕成长股，长期持有，几乎是稳赚的。

有行无市怪现象
买这类股票，享受不到买热门股的刺激，但回酬往往是更可靠及更丰厚。

冷门股之所以会变成冷门，一方面是因为大部分股票操在大股东手中，不会轻易脱售，形成在股市中流通的股票越来越少。

另一个原因是买这些优质冷门股的散户，都是长期投资者，买进后就不卖，结果股市中的流离股进一步减低，形成了有行无市的怪现象。

还有一个原因，就是冷门股多数是资本小的公司，在股市中流通的股票原本就不多，若有人发现其价值，长期吸购的话，票数就更加少，成为冷门股中的冷门。

不可借钱购买
由于冷门股难买难卖，所以，千万不可借钱购买，否则的话，当股价暴跌时，你可能面对银行逼仓，银行不会理会股票的价值，他们的唯一目标是卖掉你的股票，收回债款。所以被逼仓的冷门股，跌幅往往惊人的大。

即使在目前的牛市中，仍可找到价值被低估的冷门股，他们的共同特点是有良好的业绩纪录，资产雄厚，更重要的都是拥有大量现金的公司。

它们每股拥有的现金为：格林尼（RM1.00）；哈礼申（RM0.84）；菲马机构（RM1.16）；KESMI（RM0.76）；RCI（RM0.53）。

格林尼的母公司为林威，该公司拥有大量未种植土地，每年增种新树整1万英亩；哈礼申是由印尼华侨控制，菲马集团（Kumpulan Fima）拥有菲马机构（Fima Corp.）约60%股权，KESMI是由新加坡人控制；RCI的母公司为美佳第一控股（MFCB）。

曾渊沧@股友通讯录-2010 年12 月份

11月的股市就像一个倒转的V字，先升后跌，打回原形 。美国联储局开会结果揭晓，将在明年第二季结束之前买入9000亿美元国债，其中6000亿美元是印出来的新钱， 另外3000亿美元是回收的钱。我之前已向大家解释过，过去一年，美国联储局实际上是不断地向市场回收资金而不是注入资金，这是静静地退市。现在，联储局总算清楚地告诉大家，新的注资额有多少、回收资金有多少及回收的钱再重新注入市场有多少。

今次6000亿美元的新增资金多吗？实际上只是市场预期的下限，10月中旬，股市出现调整时，市场所提出来的理由是什么？那就是当时市场突然收到风，说新一轮量化宽松的规模不会太大，大约只有5000亿美元,这与之前更多人以为会像去年那样注入近2万亿美元差得很远。

现在新一轮量化宽松的结果也的确与10月中旬市场所收到的风或者说预计的金额差不多，是属於市场较低的预期。有趣的是， QE2只有6000亿美元，与预期2万亿差得很远，只是市场预期的低位，11月上旬股市凭什么大幅上升?

原因只有一个，那就是大户已经控制了市场的情绪。大户不理QE2的规模，硬把股价炒上，试一试市场可以接受的短期顶位在哪里，股市一升，人的贪念就出现，人人争着买，股价就再升;QE2公布后，好消息已出尽，还有什么理由炒？好消息出尽，没了好消息，股市就会向反方向「创造」坏消息。是的，近日的坏消息，除了两韩
炮战之外，余者皆是大鳄精心炮制出来的。先是人为的制造中国加息的恐慌；然后是已沦为大鳄打手的美国评级
机构对欧洲几个国家的国债评级降低；当股市一跌，人的恐惧心就出现，不卖掉股票睡不着。如果你至今仍无法
克服贪婪与恐惧心，你肯定不可能是一名一流的投资者。

中国国务院推出4招來压通胀，分别为确保市场供应、完善补贴制度、加强监管及严惩恶意炒作，还说必要时要直接干预物价。这是一边放火，一边救火的作法，一手推动内需，增加老百姓的钱，制造通胀，另一手则压通胀。这对在新加坡上市的龙筹股带來压力。我一直认为，通胀不是大问题，如果收入高过通胀，通胀只是「快
乐的」问题。

台湾的五都选举终於结束了，这一次的选举，最大的特点是不论国民党或是民进党，都绝口不提台湾与大陆之间的独统问题， 大家集中话题於地方行政、论政积、地方发展蓝图… … 这是好事， 天大的好事。
2000年，民进党陈水扁上台后，台独课题就成了陈水扁的炒作，吸取选票的唯一方法，陈水扁对台湾的经济发展不关心，个人是大贪官。但是，为了争取选票，就不断地玩弄统独问题，把台湾民众撕裂、互相仇视，结果
社会严重分裂，终於民进党被陈水扁搞垮了。2008年，国民党重新上台执政，民进党痛定思痛之後，决定放弃陈水扁那一套，以理性、务实的态度重新定位。意味着两岸关系将维持相当长的一段良好关系，因为民进党已经改变了，变为务实得多的政党，不会无缘无故地像当年李登辉、陈水扁那样挑起事端、制造紧张。将来，台湾两党轮替，就算民进党再度执政，两岸关系也不会有太大的改变，极端思想已失去市场，务实思想成了主流。很肯定的，这对投资者而言是天大的好事。

南北韩局势突然紧张，过去许多年，每隔一段时间，北韩穷极就会发恶，目前就是要收点钱。北韩在打两百枚炮弹之前，可能早已事前在全球各地股市大量沽空。
南韩身娇肉贵，不想打仗。对中国而言，今日的中国也不会再打韩战了，因此当北韩闹事闹到差不多时，相信中国会出手制止北韩再胡闹。北韩也心知肚明，吓唬吓唬可以，真的大战，美军实力足以占领北韩，南北韩局势尽管紧张，但是不会真的变成大战。

股市走势依然飘忽，不要去猜，也不必猜。现在比较值得做的事是趁调整买入之前你想买而未买的股，经过了这一轮的调整后，部份股份的股价出现了相当大幅度的调整，PE下降了，我认为也许是时候考虑吸纳。我经说，投资要有耐性，当人人一哄而入，抢购PE极高的股时，你应该耐心地等调整。一场大牛市，股价不是天天向上，而是经历多次的调整，想买股，就应该坚守不买贵的原则，等股价出现调整，PE相对较低时才市。同时，也不可以有「捞底」的态，我们不可能很准确的以最低价买入，只要你认为PE值是相对低就行了，买入后股价是升是跌都不要理。