When can we escape the rat race?
Do you want to be one of them until the day you die?
Or until your are 62, when the better 2/3 of your life is gone?
Tuesday, April 12, 2016
Thursday, April 07, 2016
Letter To Shareholders (2) - Performance Review 2016Q1
Welcome to the 2nd issue of ZZ Holdings Shareholders Letter.
Performance Highlights
Year 2016 started off with another round of sell-off, dragging the STI to a 5-year low of 2550. At that point, our equities portfolio was down as much as 15%. A strong rebound in March pushed us back into positive territory - fueled mainly by recovery of Super Group, Sembcorp and ST Engineering.
We are proud to announce that the company outperformed the market in 2016Q1, registering a 5.3% growth. This is a strong set of results, considering the STI continue to dip a further 3%.
In first quarter, we paid out over $500 in dividends, compared to just over $100 during the same period last year.
Operating Income - Record Revenue
In the 1st quarter of 2016, the company attained record revenue - roughly 22% higher than the same period last year. This is mainly attributed to higher than expected bonus in March, as well as unexpected windfall during the CNY season.
While we are pleased with the results, we do not expect such level of income to recur in the subsequent years.
Expenses for the quarter was 32% lower year on year - largely due to the absence of one-off big purchase (mattress) in Feb 2015. On the other hand, expenses were much higher in March 2016 due to the purchase of Daskey Keyboard, higher apparel and restaurant expenses.
If we exclude all one-time purchases, our expenses would be about 7% higher.
Opportune Trade In ST Engineering (STE)
We took advantage of the bear and brought STE during the January lows. While the initial plan was to hold it for the long term, we decided to capitalize on the opportunity to lock in the gains for our portfolio. This is in consideration that we have unlisted STE securities, and will continue to profit even if it continues its uptrend.
Overall, we held on to the stock for 2+ months and profited roughly 3 years of STE dividends. We believe there will be opportunities to buy back this defensive conglomerate for a lower price in the near future, or at least within the next 2 years.
Financial Accounts - Preparing For The Future
In March, we setup a Citibank Maxigain Account - which grants an interest of 80% of SIBOR + Step Up to 1.2%. Given the trend of rising SIBOR rates, this account has the potential to generate more than 2% risk free interest in the future. These are extremely attractive rates (for cash holdings) in exchange for a slight dip in our short term interest income.
Following that, we setup a Standard Chartered Securities (SCB) account, paving the way to overseas exposure. Our plan is to eventually grow our business beyond Singapore via the IWDA (World Index). As of now, the board is still deciding between using SCB or Interactive Brokers - this is a long-term plan and more details will be announced as we finalize the strategy.
Finally, we added CIMB Cash Upfront to our repertoire. This account cuts both buying and selling commission to 0.12% (from 0.25%), substantially reducing our future transaction costs.
Outlook
Our main revenue source continue to remain uncertain. We will work to find a replacement as soon as possible. Meanwhile, we are actively managing costs - the board do not expect expenses this year to exceed 2015, given that we have made most of our big purchases last year.
Quarter 2 will be a strong dividend period, with a vast majority of our holdings going XD. At the same time, we will look to accumulate more bargains to grow our passive income.
Performance Highlights
Year 2016 started off with another round of sell-off, dragging the STI to a 5-year low of 2550. At that point, our equities portfolio was down as much as 15%. A strong rebound in March pushed us back into positive territory - fueled mainly by recovery of Super Group, Sembcorp and ST Engineering.
We are proud to announce that the company outperformed the market in 2016Q1, registering a 5.3% growth. This is a strong set of results, considering the STI continue to dip a further 3%.
In first quarter, we paid out over $500 in dividends, compared to just over $100 during the same period last year.
Operating Income - Record Revenue
In the 1st quarter of 2016, the company attained record revenue - roughly 22% higher than the same period last year. This is mainly attributed to higher than expected bonus in March, as well as unexpected windfall during the CNY season.
While we are pleased with the results, we do not expect such level of income to recur in the subsequent years.
Expenses for the quarter was 32% lower year on year - largely due to the absence of one-off big purchase (mattress) in Feb 2015. On the other hand, expenses were much higher in March 2016 due to the purchase of Daskey Keyboard, higher apparel and restaurant expenses.
If we exclude all one-time purchases, our expenses would be about 7% higher.
Opportune Trade In ST Engineering (STE)
We took advantage of the bear and brought STE during the January lows. While the initial plan was to hold it for the long term, we decided to capitalize on the opportunity to lock in the gains for our portfolio. This is in consideration that we have unlisted STE securities, and will continue to profit even if it continues its uptrend.
Overall, we held on to the stock for 2+ months and profited roughly 3 years of STE dividends. We believe there will be opportunities to buy back this defensive conglomerate for a lower price in the near future, or at least within the next 2 years.
Financial Accounts - Preparing For The Future
In March, we setup a Citibank Maxigain Account - which grants an interest of 80% of SIBOR + Step Up to 1.2%. Given the trend of rising SIBOR rates, this account has the potential to generate more than 2% risk free interest in the future. These are extremely attractive rates (for cash holdings) in exchange for a slight dip in our short term interest income.
Following that, we setup a Standard Chartered Securities (SCB) account, paving the way to overseas exposure. Our plan is to eventually grow our business beyond Singapore via the IWDA (World Index). As of now, the board is still deciding between using SCB or Interactive Brokers - this is a long-term plan and more details will be announced as we finalize the strategy.
Finally, we added CIMB Cash Upfront to our repertoire. This account cuts both buying and selling commission to 0.12% (from 0.25%), substantially reducing our future transaction costs.
Outlook
Our main revenue source continue to remain uncertain. We will work to find a replacement as soon as possible. Meanwhile, we are actively managing costs - the board do not expect expenses this year to exceed 2015, given that we have made most of our big purchases last year.
Quarter 2 will be a strong dividend period, with a vast majority of our holdings going XD. At the same time, we will look to accumulate more bargains to grow our passive income.
Thursday, March 31, 2016
RWS Staycation
I went to RWS Casino for the first time in like 2+ years today! If my
memory didn't fail me, this is my third time into our local casino.
The first in Jan 2012, second time in Aug 2013, and today in Mar 2016.
Why: Let's just say I was offered a night stay at an extremely luxurious hotel room at Sentosa, completed with steam bath facilities. On top of that, I just felt like getting away from work for a couple of days. And what can you possibly do there if you don't go into the casino, right?
----------------------------------------------------------------------------------------------------------------------------
Obviously, I have done my "homework" prior to going there - reading up on game rules, consulting my "ex-croupier NS mate", finding out which games have the lowest house edge.
Let's be upfront here - there is no game in that place where you can have a positive ROI. To me, it's purely entertainment. Set a fixed amount of entertainment expenses (play the game with the lowest house edge, so that you can play for a long time), any win is purely bonus.
The best one stills goes to Blackjack - where you can lower the house advantage to below 1% if you play correctly. With 'a bit of luck', I was able tip the scales slightly to walk out a small winner (on top of earning back the levy).
My most shocking observation was how many people were playing HORRENDOUSLY, yet still think they are right. I can't even describe the atrocious mistakes they were making mathematically. They boost that they've been playing for years, and I cannot imagine how much money they have thrown to the casino by making such mistakes over and over. RWS need such people to survive I guess. I just pity those old aunties and uncles who are just wasting their 'blood sweat' money on these.
Examples include:
1. Betting on sidebets with terrible odds like "Perfect Pairs".
2. Surrendering when they have 12, 6, 7 and all sort of reasonable hands against a dealer 8, 9, T. Their logic is if I got a 6, I will bust very easily against a dealer 8.
2. Failing to 'hit' their 12-16 against a dealer showing 7 or greater. This is one of the most common beginner mistake.
3. Failing to take advantage of hands where they have the greatest odds of winning. A huge part of blackjack comes from getting as much value as possible from these hands - that includes doubling down and splitting when the dealer has a weak up-card (6, 5, 4, sometimes 3 and 2). I have seen so many cases of people giving up their 'double' chance in such situation. How I wish I could play their hands for them.
AND GUESS WHAT?!
There is no rule saying you can't refer to "basic blackjack strategy" while seated at the table!!!
All along I just refer to the chart for the more difficult cases (like whether to double up for Ax hands).
Seriously, if you want a 'chance' against the casino, at least do a bit of homework. Not rely blindly on gut-feel and luck.
The first in Jan 2012, second time in Aug 2013, and today in Mar 2016.
Why: Let's just say I was offered a night stay at an extremely luxurious hotel room at Sentosa, completed with steam bath facilities. On top of that, I just felt like getting away from work for a couple of days. And what can you possibly do there if you don't go into the casino, right?
----------------------------------------------------------------------------------------------------------------------------
Obviously, I have done my "homework" prior to going there - reading up on game rules, consulting my "ex-croupier NS mate", finding out which games have the lowest house edge.
Let's be upfront here - there is no game in that place where you can have a positive ROI. To me, it's purely entertainment. Set a fixed amount of entertainment expenses (play the game with the lowest house edge, so that you can play for a long time), any win is purely bonus.
The best one stills goes to Blackjack - where you can lower the house advantage to below 1% if you play correctly. With 'a bit of luck', I was able tip the scales slightly to walk out a small winner (on top of earning back the levy).
My most shocking observation was how many people were playing HORRENDOUSLY, yet still think they are right. I can't even describe the atrocious mistakes they were making mathematically. They boost that they've been playing for years, and I cannot imagine how much money they have thrown to the casino by making such mistakes over and over. RWS need such people to survive I guess. I just pity those old aunties and uncles who are just wasting their 'blood sweat' money on these.
Examples include:
1. Betting on sidebets with terrible odds like "Perfect Pairs".
2. Surrendering when they have 12, 6, 7 and all sort of reasonable hands against a dealer 8, 9, T. Their logic is if I got a 6, I will bust very easily against a dealer 8.
2. Failing to 'hit' their 12-16 against a dealer showing 7 or greater. This is one of the most common beginner mistake.
3. Failing to take advantage of hands where they have the greatest odds of winning. A huge part of blackjack comes from getting as much value as possible from these hands - that includes doubling down and splitting when the dealer has a weak up-card (6, 5, 4, sometimes 3 and 2). I have seen so many cases of people giving up their 'double' chance in such situation. How I wish I could play their hands for them.
AND GUESS WHAT?!
There is no rule saying you can't refer to "basic blackjack strategy" while seated at the table!!!
All along I just refer to the chart for the more difficult cases (like whether to double up for Ax hands).
Seriously, if you want a 'chance' against the casino, at least do a bit of homework. Not rely blindly on gut-feel and luck.
Sunday, March 20, 2016
Current System (2012 - 2016)
It's been almost 4 years since I did my last PC Overhaul. Back then, Ivy Bridge (LGA1155) was fresh from the oven. That has since been succeeded by Haswell (LGA1150), Broadwell (LGA1150) and SkyLake (LGA1151).
For some reason, my computer is starting to act up again recently. I don't know if it's due to Windows 10, weak PSU (which I suspect), or just the parts getting old.
Since then, I've made some minor upgrades and purchases. (most recently a mechanical keyboard!)
This is a post for my own reference. As of now, I have not decide on when to do the next major overhaul.
-------------------------------------------------------------------------------------------------------------------------
For some reason, my computer is starting to act up again recently. I don't know if it's due to Windows 10, weak PSU (which I suspect), or just the parts getting old.
Since then, I've made some minor upgrades and purchases. (most recently a mechanical keyboard!)
This is a post for my own reference. As of now, I have not decide on when to do the next major overhaul.
-------------------------------------------------------------------------------------------------------------------------
- Processor
- Intel® Core™ i5-3570K (4 Cores, 3.8Ghz)
- Mainboard
- ASUS P8Z77-V Pro
- Graphics Card
- Powercolor Radeon R9 270X 2GB GDDR5 (Replacement in 2014)
- Memory
- G.Skill Ripjaws 1600Mhz DDR3 CL9 4GB x 2
- Storage Drive
- Internal
- - Crucial m4 SSD 256GB (SATA III)
- - Seagate 250GB (SATA 2)
- - Seagate 500GB (SATA 2)
- - Western Digital Caviar Black 64MB 1TB (SATA III)
- External
- - Western Digital My Passbook 2TB (Black Color)
- - Western Digital My Passbook 2TB Ultra (Blue Color)
- Display
- Dell 2713HM, 27" (Brought Jan 2013, warranty replacement in Dec 2014)
- Audio
- Creative Sound Blaster ZX (Impulse buy in Jan 2014)
- Optical Drive
- HP dvd1270 24X SATA Writer
- Power Supply Unit
- FSP Aurum CM Modular 650W 80 Plus Gold
- Casing
- Coolermaster 690 II Advanced, Black & White Edition
- Operating System
- Windows 10 64-Bit Professional (Upgraded late 2015)
- Speaker
- Logitech X-230
- Keyboard
- Daskey Professional 4 (First mechanical keyboard, brought Mar 2016)
- Mouse
- Logitech Performance MX (Brought 2015. Previous mouse use in office)
Sunday, March 13, 2016
Bitter First, Sweet Later
Sharing one amazing piece I come across from our very own government board: The $5-latte problem.
I suggest reading through it before continuing further.
...
Essentially the article presents 2 common school of thought to retirement:
1) Work and save reasonably for 30+ years.
2) Focus all energy to increase income, and spend freely to reward yourself.
Both are perfectly viable strategy.
And then, somewhere along the way, a small group of people "discovered" a third method.
In the meantime, you live in a simple and self-sufficient manner, spending money as efficiently as possible. This way of living is not about extreme miserliness, but more about reorienting yourself with what is meaningful in life that happens to be free or costs little."
I suggest reading through it before continuing further.
...
Essentially the article presents 2 common school of thought to retirement:
1) Work and save reasonably for 30+ years.
2) Focus all energy to increase income, and spend freely to reward yourself.
Both are perfectly viable strategy.
And then, somewhere along the way, a small group of people "discovered" a third method.
"At age 25, instead of thinking of saving just S$500 a month like everyone else, you can go all out. You
draw on all the resources of youth and time to accumulate as big a
stash as you can while you're young, such that you hit a six-digit sum
in your 30s and use the power of compounding to do the rest.
In the meantime, you live in a simple and self-sufficient manner, spending money as efficiently as possible. This way of living is not about extreme miserliness, but more about reorienting yourself with what is meaningful in life that happens to be free or costs little."
This sums up the essence of my saving strategy.
Let me strip it down further using the example in the article. Assuming same rate of return, which one gives you more money in the end?
1) Saving $500/mth for 30+ years.
2) Saving $2500/mth for the first 5 year of your working life, then never saving a single cent for the next 25 years.
...
Yep! Scenario 2 results in a higher retirement nest!!! Doesn't that sound unbelievable and counter-intuitive?
The absolute numbers are not what's important. The message here is to demonstrate the power of time and compound interest.
...
"The philosophy behind this idea is known in Internet circles as FIRE, or financial independence and retiring early."
I have shared many bloggers in previous posts who have achieved FIRE, and the article introduced even more local and overseas ones.
Need more inspiration/living proof? Here are 5 active bloggers drawing 5 digits passive income a year.
Need more inspiration/living proof? Here are 5 active bloggers drawing 5 digits passive income a year.
I am working hard to follow in their footsteps - Not as extreme as some of them, but at a pace that I am comfortable with. (I still drink bubble tea, eat restaurants, buy expensive gadgets... occasionally)
That day can't arrive soon enough.
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