To The Moon

Stories About Making Money (2)

The title is making money not investment. 😊

3. Intimate Relationship [Miser]  

This third story, shared by my brother, is about his friend's parents and their unique approach to investing. 

Over the years, this senior couple has focused exclusively on two stocks: DBS and OCBC. They studied every price movement meticulously, analyzed the annual reports, tracked dividend payment histories, and kept an eye on interest rate trends both locally and in the U.S. 

They would buy these stocks whenever their prices dropped, accumulating more shares with each "unreasonable" or unexplained dip.

Because they were so familiar with the price patterns, they traded these stocks within a predictable range—buying at the lower end and selling at the higher end, consistently making small profits. 

When the prices surged to what they believed were unsustainable levels—whether due to market euphoria or a bull market—they sold off a larger portion of their holdings, securing significant gains. 

Once the excitement faded and the market returned to its usual calm, they resumed their range trading strategy while also collecting dividends. In bear markets, they took advantage of lower prices to buy even more shares.

In essence, this couple treated these two stocks like their personal ATM, “withdrawing” money whenever opportunities arose. 

Their approach represents a case of “specialization”,  with a single-minded focus on just two stocks. These companies are too large to fail, unlikely to be delisted, and are closely regulated. It is likely that this couple endured some tough lessons in their early years of investing, leading to a deep understanding of what it takes to make money from the market.

While it is difficult to replicate their strategy, given the distractions and temptations of the latest investment trends, their success underscores the value of expertise. Mastery often comes from doing the same thing over and over again until you know every detail intimately.

4.  The NAV & NTA 

The 4th story is about two of my friends who made  gains from their investments in the stock market. Let's call them A and B. They have a few things in common: both started trading shares in their 30s, are family-oriented, and approached investing with caution. Given their age and family responsibilities, they were understandably risk-averse, which might have actually worked to their advantage.

Let's start with A's story.

A worked a salaried job while maintaining a side hustle for about 20 years. He lived simply, spending little on himself, and paid off his apartment in cash, leaving his CPF (Central Provident Fund) untouched. By age 54, he had already met the popular financial goals of "1M65" and "1M55" (aiming for $1 million by age 55), goals frequently discussed by financial bloggers. A taught himself how to read annual reports and make informed investment decisions.

His first major success came in 2016 with the SMRT saga. During a period when SMRT faced severe issues with service reliability and maintenance, A bought shares as the price plunged to around $1. Reasoning that SMRT, as a key component of Singapore's public transport, was unlikely to fail entirely, he anticipated government intervention. He was right: Temasek eventually offered to buy out SMRT at $1.68 per share, netting him a profit of about $160,000.

After that, A mostly stayed out of the market until 2022, when the SPH (Singapore Press Holdings) saga unfolded. SPH's business was struggling as paper-based media declined, and its stock price fell from over $4 in 2017 to around $1 in 2020. Seeing an opportunity, A noted that SPH:s Net Tangible Asset (NTA) value was around $1.80, and he speculated that a buyout might happen. True enough, Cuscaden Peak eventually offered to acquire SPH at $2.35–$2.40 per share. A earned another $150,000, bringing his total profit to $300,000 over eight years.

Two  years ago (2022), A shared he actually shifted to a more passive approach, regularly buying ETFs listed (after SPH debacle) on the SGX to save himself the time and effort of researching individual stock. He set a goal to achieve $100 per day in dividends then, and he already  hit that target, earning around $3,000 per month or $36,000 annually. He keeps his focus solely on local shares and ETFs listed on SGX.

Now, A's latest target is to generate a steady income of $1 per minute, which would amount to $1,440 daily. A tall order.

B's Story

B began his career as a salaried worker before venturing into entrepreneurship by starting a small business. In his early 30s, he developed an interest in the stock market and immersed himself in learning the intricacies of investing, inspired by the principles of value investing espoused by Benjamin Graham and Warren Buffett. With a young family to support, B adopted a conservative approach to investing, focusing on undervalued companies with solid fundamentals and dividend payouts.

To aid his decision-making, he built his own Excel spreadsheet to analyze key financial metrics such as Net Tangible Assets (NTA), Net Asset Value (NAV), and Price-to-Earnings (P/E) ratios. Unlike A who limited his focus to local stocks, B explored undervalued opportunities globally.

One of his most notable successes was with Popular Holdings. The company, listed on the Singapore Exchange (SGX) in 1997 at $0.37, faced significant challenges in the mid-2000s as the rise of online media led to a decline in book and print sales. Many bookstores in Singapore and those located at Bras Basah Complex, including prominent names like MPH, Times Publishing, Borders, and Dymocks, exited the market or shuttered during this period. While Popular attempted to diversify into property development, these efforts were largely unsuccessful.

Despite these headwinds, B recognized potential in Popular after analyzing its annual reports. He noted that the company held significant market advantages in Malaysia and Hong Kong, even as its local operations struggled. Moreover, the stock's NTA and NAV exceeded its market price, signaling undervaluation. Employing cost averaging, B purchased shares as the stock price declined. This is a good example of cost averaging.

When Popular's substantial owner, Mr. Chou, decided to delist the company in 2015 at $0.32 per share, B realized a profit of nearly $200,000 from his investment. This success was one among others, including his investments in Disney, Starbucks, DBS, Creative Technology, and Metro. One of the great skills B has is knowing when to sell (he doesn't hesitate to sell) when the company reaches his so called 'profit margin, target price or valuation level' .

In recent years, B has shifted his focus away from the stock market to concentrate on his business ventures and enjoy a more relaxed lifestyle.

A and B are the only two persons I know who have not lost money to Mr Market. Amazing right?

5. Next story .. akan datang (coming soon) under same subject title...