So when will the market bottom out?

The bottom will be somewhere in the next 12-24 mths. ie Dec 09 to Dec 10. What? 24 mths? So my portfolio has to suffer another dunno how many % downside? What kind of prediction is that!?? Well, let's start with the disclaimer first, nobody ever predicted nothing. Bell said nobody needs phones, Ford said nobody needs cars, and the most famous one: Bill Gates said nobody needs computers. So that is just my contribution. It won't be right. Maybe we have already seen the bottom. Who knows? Maybe we didnt avoid the Great Depression scenario. We just don't know yet. 

Ok, let's get to the facts. 

Few trillion dollars have been forked out. Wall Street will be rescued. Global coordinated efforts to help stabilize the whole banking and credit system have done the trick. The life-and-death crisis has been resolved for now. We are out of the ICU, for now. But the stock market keeps tanking! Well, the patient is still very sick. Still on drip and breathing weakly. It takes time to heal. There are still bad stuff in the financial system that needs to be cleared. More disposals and write-off before we are good to go. May go back to ICU again also. But chances not high. Hopefully! We don't want Great Depression II. Check this post. 

As for the "real" economy, it has started to slow and will continue to slow. Esp US. It is said that we need another few trillion dollar fiscal packages for Main Street. The common folks stuck with paying mortgages that cost more than their homes need money. And those pple using credit card loan lines to buy food and pay bills. So wait for some help to come in the next few weeks. Then we need to wait for China to come back. The credit bubble that fuelled part of China's spectacular growth has burst, so China feels some impact, but it's economy is robust enough to withstand the negative impact. 

Given a few quarters, it will come roaring back. And hopefully, it will lift the rest of the world up. In terms of magnitude, we are probably not far from the bottom. Or may already be at the bottom. But in terms of time, things need time to recover. Positive catalysts on the REAL economy must appear before the market can move up. They won't appear so soon but quite a good likelihood it will come in the next 12 to 24 months. 

So time to open the purse strings, it's the great Singapore sale on SGX coming up!

Game Theory - Part 2

This is a continuation of the last post on game theory

Just for argument sake, let's look at the taxi industry in Singapore. There are 6 taxi companies, ie 6 prisoners. The Big Brother is of course Comfort, with 60% market share, having 14,000 taxis out of the total population of 23,000 taxis. Then there is No.2 SMRT with 3,000 taxis or so.

Currently everyone is just following Big Brother moves and nobody is saboing one another. Which is very good for the industry, as profits can improve for everyone. However, passengers suffer lor. We have to accept price hikes no matter what.

Actually, if you think about it, 1 taxi co. can play punk and not follow suit. E.g. SMART taxi sabo the rest by reducing flagdown rate $2, which is significantly lower than its rivals' $3. By doing this it can actually gain market share. Well that's theory lah, in reality, it will not work bcos

1) Passengers currently cannot choose taxis in a taxi queue, so some kind of mentality change needs to take place, maybe like local celebrities leading the movement of choosing taxis in a queue or something

2) Taxi drivers of SMART may not be smart enough (no pun intended :) to realize this can actually boost their revenue and hence protest fervently to the lower flagdown rate

3) The taxi capacity (or supply) in Singapore is actually very tight, demand for taxis at peak hours dramatically exceeds the taxi population capacity, hence there is no need to resort to cutting prices to gain market share to boost revenue at this stage.

Well all this would change as our society matures. Some day in the distant future, taxi usage may decline and taxi population may actually exceed demand and there will be such a need to resort to price wars.

But even so, as one can imagine, after SMART reduces flagdown to $2, Comfort can simply reduce to $1.90 and crush all competition. So nobody will dare to do such things today. So in this set of prisoners, the outcome is usually quite favourable bcos there is a dominant leader that can dictate others' decisions.

However, back to our distant future scenario, taxi usage is in decline and most taxi co.s are struggling, in desperation, SMART, Prime, SMRT and Silvercab merge to form one company which will now have 50% market share. This new entity then reduces flagdown rate to fight Comfort. We may see the worst case scenario in the prisoner dilemma, ie both parties suffer as they reduce prices but yet cannot gain market share. However this will actually be very good for consumers.

Well, that's a sort of real-life game theory analysis of industries. Hope it can give some insights when you think about the companies that you want to invest in.

Game Theory - Part 1

Game theory is something that was very popular about 10 years ago I think. It tries to mathematically deduce what is the best course of action given a set of circumstances. The most simplistic example would be the famous Prisoner Dilemma.

For the uninitiated, I will give a Singapore version. Say two opposition party members ganna sued by our beloved Gahmen and are put into difficult situations. The Gahmen needs either one of them to confess in order to sue them till their pants drop, so has resorted to interrogate each of them separately whether they want to confess to their crimes.

Gahmen: Hey loser, if you confess your crime and sabo your friend, we will lighten the sentence for you.

Opposition: I will never befray my comrade, screw you!

Gahmen: You sure? Your friend in the next room is going sabo you, you know?

Opposition: You are lying! He will never betray me, we play Goli together one!

Gahmen: Look we are the most transparent, most efficient, most clean Gahmen in the world basically here are your choices:

1) If you don't confess, and he sabos you, you get sued $1mn, he just pays $1000 for wasting our time and walk away
2) You confess and sabo him, you pay $1000 and walk away
3) If you both sabo each other, you get sued $1mn each
4) If you both don't confess, basically we lock you two up for 3 days, you both pay nothing and then you can walk, bcos we have no other way to get evidence

Transparent enough right? So it depends whether you trust your friend or not, if you really think he will not sabo you, then you should not confess.

Opposition: He will never betray me, we play Goli together one!

Ok, so that's Prisoner Dilemma. How does it apply to investing?

Essentially, a firm in a competitive industry is always in the prisoner's situation.
1) If the firm cut prices and competition doesn't, then it gains market share
2) If competition cut prices and the firm doesn't then it loses market share
3) If both cut prices, then both are in a worse situation than before
4) If both maintain prices, or even better, both raise prices then both parties will improve their situations

Well, value investors look for firms that won't get into this kind of situation. Firms in businesses where there is no competition or somehow the firm has a huge economic moat that shields it from price wars or other threats.

In the next post, we shall discuss a real life competitive industry involving Prisoner's Dilemma

How to be a millionaire?

Based on the recent poll, most people actually got the right answer. I guess it's the way the question is structured and the answers are listed out. So congrats to those who chose the last answer (1.134mn answer).

Btw, the question is "If you save $1600 a month and your money earns you 10% return per yr on average, what is your total savings at the end of 20 yrs?"

So that's the answer, just save $1600 a month, let it grow at 10%pa, in 20 yrs you become a millionaire. I guess most readers would say, hey that's not exactly an easy think to do. Some households don't even EARN $1600 a month. And most households in Singapore can barely save a few hundred dollars. And 10%pa is very high target, what's more you need to make 10%pa for 20yrs!

Well, you are right! It is not easy, it's not meant to be easy. If it's that easy why don't we see millionaires everywhere? (Well actually they ARE everywhere, about 70,000 of them in Singapore.)

Nevertheless, I think there are a few takeaways here.

1) If you are really determined about becoming a millionaire, this is one sure way to reach your goal instead of relying on some lucky event to happen in your life. E.g. waiting for your HDB or condo en-bloc, or punting the stock market, or winning 4D etc.

2) Time is an element that you can control. Say if you are not sure you can hit the 10%pa, but we are sure about 5%pa right (bcos CPF pays 5%) then work with 5%. The same amt, $1600 compounded at 5% will reach $1mn in 27 years. So the trick is to start early. If poss. better start to start at age zero. Start for your children! Hehe.

Btw I have to spreadsheet that will calculate this for you. Send me an email at xtam.sg@gmail.com if anyone needs one.

What could have happened?

The past few weeks actually went passed normally for most people NOT reading this blog. Common folks getting on with their daily lives, occasionally watching the news and see indices around the world fall 25% in one week, goes WOW and moved on. About 10,000 pple were digusted bcos they got conned to buy some Lehman mini-bonds. But actually that's quite far from what could have actually hit them worse. Oblivious to them and partly to me as well is the probability of a financial meltdown that could have happened. We always talked about it. But this has only happened a couple of times in history, usually localized in 1 or 2 countries (this round think Iceland, and maybe Korea) and only once on a global basis: the Great Depression.

When the first bailout plan failed to pass, it was said that we were close to the financial meltdown, systemic breakdown, start of the depression, beginning of the end, whatever you call it. But then global authorities took pain to alter the state of things, and here we are. *Phew* What a relief! And we can continue to just talk about financial meltdown without really going through it.

Well, what could actually happen?

Since I have never lived through one, I can merely speculate. And I assume most readers wouldn't have experienced one as well, so let's just ponder through the following scenarios and try to empathize.

1. Global stock markets collapse 90-95% from its previous high. This means STI will fall to 300. Yes, the no. of Spartans fighting 10,000 mini-bond investors no I believe it's Persians. Dow falls to 2,000 and Hang Seng 2,500. It will take roughly 25 yrs to surpass the previous peaks. As of now, global markets are roughly 50-70% from previous highs, though we averted the Great Depression scenario, we are not quite well off either. It will probably still take 8-10 years to surpass the previous peak made in 2007. But nevertheless, count ourselves lucky.

2. Many banks will fail, and I mean maybe like 40% of all the banks in the world or something. Globally, almost 10,000 banks failed during the Great Depression, bank runs were ubiquitous. Most people basically lost all their deposits bcos if everyone went to their banks to withdraw their savings at the same time, the bank definitely cannot pay up - which constitutes a bank run. This is scary if you think about it. Entire savings gone! The global authorities knew this and have put a stop by guaranteeing all deposits. Singapore did that too recently. In Iceland, they were a bit too late, so what they did was restricting everyone from withdrawing any money from the banks! Even foreigners who deposited in their foreign branches. Imagine your Maybank account getting frozen! But then, that's probably the right thing, bcos bank runs were one of the main reasons that led to the Great Depression. Ultimately the global financial system is built on confidence, without that, banks cannot exist, credit lines cannot exist, business cannot function, global economy cannot grow. We have ensured that credit lines will exist. Bank runs cannot occur. So this is good.

3. This time round, if things did go wrong, although we probably won't see 10,000 bank failures, some will still go. More of Northern Rock, IndyMac etc. When banks fail, corporations that rely on banks for credit to do their business cannot survive, there will be worldwide bankruptcies. My guesstimate is 40% of all listed companies going bankrupt. 80% of SMEs will fold. It will be a disaster on Richter Scale 10. Financial tsunami is an understatement. Nothing will be too big to fail. In fact bankruptcies become daily affairs. Workers will be just waiting for their turn, waiting for their co.s to go belly up.

4. With bankruptcies we have unemployment. During the Great Depression, unemployment hits 25% in the US. Today, it will probably hit 20% globally and maybe 33% in Singapore. So 1 in 3 people you know will be unemployed. Most likely you will also be unemployed. Most people will go broke. Their mortgages will be greater than the prices of their homes. And they have no money to pay. Govt may pass laws to stop banks for seizing these pples' properties bcos if they did, then we will see millions of homeless pple.

5. Those lucky ones with a job see salary cuts of 50-70%. Average household income falls drastically, consumption and prices follow. This time round, commodities are falling like autumn leaves already. Ultimately, goods and services prices will also fall 50-70%, but this comes at no relief bcos 30% of households have no income, those with income has only half of what it was. People cannot spend and hence less spending, less production, less jobs and the vicious cycle continues. So the Gahmen is right. Price increase is actually GOOD! ERP up GOOD! MRT fare up GOOD!

6. Global GDP falls 40% to USD 25trn or so and Singapore GDP halves to USD 60bn. Our reserves of USD 100bn come into play to help Singapore, probably to finance some sort of massive fiscal spending like reclaiming land to link all the islands surrounding Singapore, including Tekong, Jurong Island, Sentosa and building 100km bridges to Kusu Island and Bintan. Still it will take 5-10 years for GDPs to return to previous levels.

In short, it's Armageddon. So aren't we glad we averted this outcome and can blog about it?

Value investing versus technical trading

Some time back there have been some debate on other blogs about whether value investing works better, or technical trading works better or turtle style works better or whatever. It is very logical to think that technicians detest value investors and vice versa. Bcos their investment philosophy is completely different.

One buys stocks that are mundane, cheap, stable earnings based on fundamental analysis. One buys based on short term newsflow, charts, momentum etc. It is very tempting to think that these different investors fight a lot. Like Cats versus Dogs, Chu vs Han kingdom, Man U vs Liverpool etc.

To summarize the styles a bit, they probably look like the following:

Champion style: Buy low sell high - sure win one!
Short selling: Sell high buy low - sure win too!
Value investing: Buy low, sell lower
Technical trading: Buy high target sell higher but usually sell low

Ok, just a joke. This is not your Wikipedia definition of the different styles. And also styles do not dictate whether you can win in this game. No matter which style you use, more than 80% of all investors underperform the markets and most retail investors don't even have positive gain to talk about.

At this point, I would like to draw an analogy to pop music.

There are many styles a pop artist can follow:
A-Mei: strong voice, dance a lot, bold and catchy tunes
Yanzi: R&B music, sweet young thing look
Morning Girls: Act cute, kiddy songs etc

There are basic guidelines to be trained to perform in different styles. Eg. For A-Mei style, vocal singing training, dance training, music and song writing training and probably a lot of real life experience in pub performing etc. For Morning Girls, no need vocals or song writing, just act cute.

Styles do not dictate whether you can sell double platinum albums. Some styles have better chances, some don't. Artists from different styles do not necessary hate one another and fight all the time. They respect one another's talent and attempt to bring better music to their audience, if anything. (Well sometimes they do fight, but not a whole lot :)

Value investing is just a style. One that some people believe and I believe has a better chance to make money. Just a slight advantage. But you can make it big with other styles too. Bernard Baruch is a multi-millionaire trader. Jim Rogers, George Soros bet on global macro trends. Jesse Livermore reads the tape. Peter Lynch, value and growth at reasonable price.

There are a few guidelines/basics on how to do value investing, eg. buy with margin of safety, don't time the market, look for co.s with stable earnings etc. However it doesn't mean that if you know all these, you will make money. In fact if you follow them strictly by the textbook, it is not going to work.

It is the same with technical trading, global macro betting, turtle style, tape reading etc. There are the basics, you learn them. Doesn't mean that you follow them strictly, you will make money. It takes a lot of effort, time, and usually luck as well for all styles.

And it doesn't help anyone to criticize other's style. Some people are good at certain styles. Some are good at others. More than 80% of all investors fail to beat market returns, regardless of which style they use. All styles can make money if you develop the flair, find out what ticks.

Ultimately investing to make money is an art, and in this aspect, investors are also like pop artists, most will falter, some spent their lives singing only in pubs, a small % can make a decent living as an artist and only a handful sells double platinum albums. If we put in decent amount of effort in developing a good investment philosophy and style, I would like to believe that we will be rewarded. May not beat the market, but it should be a positive return and add good incremental cashflow to our household income.

Focus on cashflow and not capital gain

When people say they do investing, there is a tendency for most people to focus on the capital gain that each investment will bring in. Eg. Ah Beng buys SGX at $3, today is $6, so his perceived capital gain is 100% and he is happy like a bird. Or Ah Gou buys a property at District 10 for $1mn in 2006 and today it is valued at $2mn, his capital gain is again 100% and he goes and buy a Ferrari. This is very natural and it's got to do with our primitive wiring and we cannot easily re-wire our brains.

However as long as we don't sell and lock in whatever gains, there is no cashflow coming into our pockets. And in most cases, it is actually not to our advantage to lock in the gains. Take the example of Ah Gou's house, if he sells, he gets his $2mn but the a similar house in District 10 will now cost $3mn. So he has to downgrade. And for Ah Beng, he sells and lock in his gain, but now he needs to find something else than to park his money, and in this market, it is difficult to find things that are safe.

Furthermore, price that Mr Market dictates has nothing to do with the true value or the intrinsic value of the asset. ie Mr Market may say that SGX can sell for $6, but it is really worth $6? And so did Ah Beng really double his money? Again the Mr Property Market says Ah Gou's house can sell for $2mn but is it really worth $2mn? If we cannot be sure, then why do we always look at our portfolio value at the end of the month and go smiling when Mr Market says your portfolio is up 10% this mth or down 20% next mth?

So instead of looking at the at the absolute price of the asset as dictated by Mr Market, perhaps the better way to look at investment is the real cashflow that it can generate for us. For stocks, since most people go for capital gain, there may be very little cashflow to talk about. Unless you keep buying and selling stocks and make sure some cash in generated every year or every quarter. However that means you need to be very good at market timing and studies have shown that most people sucked at market timing. So at some point in time, one should think about how to extract stable cashflow out of the portfolio regularly in order to enjoy some of the fruits. I mean no point holding on to stock certificates until you are dead right?

Assuming that your portfolio have grown substantially large over many years, one way would be to slowly sell some shares (assuming that they are infinitely divisible) as one approaches retirement so that cashflow can be generated and support a meaningful lifestyle. Another more realistic way would be to have a good % of dividend stocks that will generate some cashflow even if you don't sell any holdings.

Warren Buffett probably knows this better than anybody and that is probably what he has been doing this for 50 years. I estimated that Berkshire's stable of companies can generate USD 6-8bn of cash every year on an asset size (not original capital amt!) of roughly 220bn, so that's a 4% cash yield, on current asset size. Of course he can buy 100% of the company and demand all cash generated to go to him. That's not quite possible for us lah.

Nevertheless, at some point in time, when we are closing on retirement, we need to focus on how much cash the portfolio can generate every year. And personally I don't think it is wrong to practise that now, even though we may be 20-30 yrs away from retirement. I would be quite happy if my portfolio can have a cash yield of 2-3%pa for a start.

As for property, needless to say, the focus should be on how much rental the property can fetch, instead of thinking whether you can sell this property for $1,100psf after you bought it for $1,000psf. As a rule of thumb, I think we should only buy properties that can generate a sustainable rental yield of 5% over long period of time.

The focus on capital gain also means that we have to constantly buy and sell in order to lock in profits and find new buys. Now value investors do not like to play this game of buying and selling too frequently. It does not fit their investment philosophy and it serves only to make brokers happy. So they focus on cashflow. When thinking about the next investment, ask whether the investment can generate you good cashflow yield over a long time horizon, not whether you can sell at a 10% profit in 1 mth's time.

Are we at the bottom yet?

The short answer is no, but...

1. In terms of magnitude, yes it's pretty scaring, some markets are close to 70% from the previous peak, China is down 50%, India is down 40%. But the US, where everything started, is down only 28%, and Footsie down 27%. Developed Asia-wise, STI is also quite resilient, down about 36%. Hang Seng down 46%, Japan down 37%. So magnitude wise, maybe 60%-70% done. There may be another 10-15% downside, and things should pacify. Timeline-wise, things started to unfold only last June or so. We hit 1 year anniversary not too long ago. Bear markets don't last 1 yr. Usually 2-3 yrs, so chances are, we see some rebound then returning to downward trend until fundamental gets better.

2. Fundamentals. The saying few mths ago was that the sub-prime market was US$1trn, so we have seen write-downs of US$500bn, another 50% more to go. But now, it is not just about sub-prime isn't it. The whole financial industry is in trouble. And if you look at all these bad stuff, ie mortgages, CDS, CDOs, we are talking about US$3-5trn, or even US$10trn according to mega-bears' estimates which would be 70% of US GDP!?!! So how far are we from the bottom? Man, I have no idea, but we are nowhere near the end. But then again, the whole financial industry is built on confidence, if everyone thinks that the bailout will be successful, then it doesn't really matter if we still have US$ X trn of bad stuff. Bcos the market will look past all this and start pricing in a recovery.

3. The real economy only just started to slow. US GDP dropped two quarters ago but it is still positive. China GDP growth is still 8%, may need it to go to 6% or something. Usually it takes at least 4-6 quarters before GDP growth recovers. The stock market would be 1 or 2 quarters ahead of that bcos it always looks forward. So based on this measure, recovery is at least a few quarters away.

4. We are only at the bottom when nobody is asking whether we are at the bottom. Everybody stops talking about markets. Maybe this blog gets updated once a year. And this blogger writes about restaurants or cars or girls or something totally not related to investment. And none of our friends are in finance bcos those those that wanted to join freaked out, and those that were in finance got fired or their co. blew up. Think Lehman, Washington Mutual, AIG, Northern Rock!

Conclusion: it is not clear yet if this is the bottom, a lot of conflicting info pointing to different outcomes, my guess is that we are not quite there yet. One thing sure is that this uncertainty will continue. So brace yourselves for more volatility in the markets!

Penny stocks - continued

So, 600+ stocks out of the 700+ listed counters on SGX are penny stocks (trading less than $1). What are the implications? What are some takeaways one can develop?

For me, the few takeaways are as follows:

1. The market is cheap. The stock market can tell you the prices of stocks, but not their true values. When these kind of statistics get on the newspaper, you can tell, yeah things are quite bad, there may be some real bargain going on. But somehow, it feels like it is not the bottom yet. It has to be total despair when prices go way, way, WAY below their intrinsic values. Nevertheless, things do look cheap now. Just that they can get cheaper :)

2. Small frys get killed. Despite its mood swings, the market is not stupid. I am not sure how the same stats look in the best of times (was it maybe 100+ out of 700+ are penny stocks). But this stats did ring a warning in me. Yes not all 600+ counters are really lemons, we can find gems here. But how many? 300? Not likely, 100? Maybe, if we stretch our imagination and start building castles in the air a bit. But my guess is more like 10-20 real good co.s with fundamentals that can bring in cashflow for the next 30 yrs. (I am arbitrarily guessing here, no hard facts to support one...)

Singapore is a young country and has a unique economy that is very Govt driven, a small population educated to be obedient workers, no natural resources and no domestic market. So, how many good co.s can we produce? Sweden, the country with most no. of MNC per capita, has maybe 15-20 MNCs (like Ikea, Volvo, Ericsson etc). I think Singapore can be considered successful if we can produce just one or two.

So, one conclusion that can be made is perhaps as astute investors, we should not bother about investing in these small/mid caps simply bcos the odds of them growing to be great is miniscule. However if there are valid reasons to believe that some of these co.s can produce decent, stable cashflow in the long run and hence a good return on investment, then perhaps there is an investment case. This is similar to investing in See's Candy. It will not grow into giants like Walmart, but by paying at a right price, you can enjoy good cashflow for the next 30 yrs. (again in S'pore context, they must pay you dividends lah, unless you can buy over the whole co. like Buffett)

3. Invest with the leaders. Skip the small frys means the same lesson learnt here would be to invest in some stocks above some kind of cut-off. Most simplistically, stocks trading above $1, which is not very scientific lah. So maybe more tangible measures would be e.g Sales of more than S$1bn, Cashflow of more than S$100mn etc. Or maybe just invest in "global" household names. Not your St James Power Station, but more like Tiger Beer (Asia Pacific Breweries). Actually, really not that many. I cannot come up with another investable name.

4. The Singapore market has too few participants. When 84% of the stocks listed fall below S$1, it does say something about the breadth of investors here. Some bigger developed markets would have so-called "natural buyers" to support the market, eg. pension funds etc. Obviously they are not in Singapore. I am not surprised if it's only a handful of institutions trading in Singapore. Arbitrageurs in bigger markets will also bring prices closer to intrinsic values for listed entities. Again, perhaps our markets lack arbitrageurs.

Limited no. of players also mean the possibility of market manipulation. As a small individuals, go in with your eyes wide shut open, esp into small mid cap stocks which are easily subjected to manipulation. One popular trick would be pressing down the price of a good small cap, then taking it over or taking private, so even if you bought at a reasonable price, it is possible to lose bcos the acquirer will pay you a price even lower than that.

Hence back to the biggest takeaway: stick with the leaders.

Advertisement for my other blog and penny stocks on SGX

After 3 years and 120 posts I think I have covered more or less 80% of value investing, and 50-60% of investment and finance in general. I reckon there are about about 50-60 core concepts in value investing and I have more or less touched on all of them: margin of safety, circle of competence, value trap, economic moat/barrier to entry, stock markets' mechanism etc.

There may be a few more stuff to expand on Financial Statement Analysis. But it's very dry and I don't really enjoy writing about Financial Ratio and Cashflow. I am sure most people read those posts only when they want to get some sleep.

In the past 2 yrs, new posts have been slow at about 2 weeks per post bcos I can only write when new ideas, key concepts enter my knowledge base and well, new ideas and key concepts don't really come by the minute, hour or even days or weeks.

Meanwhile I have been working on another blog which I have simply named "Industry Knowledge and Other Information" which contains snippets of useful stuff (I think!)

The link is here http://industryk.blogspot.com/

It's in a very informal style and lots of no.s and statistics are included. More useful for myself than for pple who don't really want to think about what the statistics mean. Yes, the messages in the posts are not so clear cut. And sometimes, no message at all! :)

Well the latest post is about an interesting statistic: 84% of the stocks, or a whopping 600+ stocks listed on SGX are penny stocks (ie trading below $1). Of course, we are in a bear market, so what do you expect right? But let me share another statistic: less than 10 stocks trade more than $10 and less than 20 stocks trade more than $5. And in my short investment career, actually I can't really think of that many stocks trading at a high dollar amount. (Yes I know dollar amt doesn't mean anything, market cap is much more impt, but I am arguing from a simplistic angle).

I think all these statistics reflect a point: finding a real ten-bagger on SGX is 1 in a 100 or even less probable. Why? Bcos if the SGX has been around for more than 20 yrs and you see less than 20 counters trading at $5 or more. Assuming no stock split, and stocks IPO at $0.50 or so, it means you must be really good or damn lucky to identify that handful of $5-10 stocks.

Yes there are stocks that IPO at 20c, rally to $2 which would make it a ten-bagger. But they subsequently falter and return to their IPO price of 20c or even lower. Hence in my definition, they cannot really be considered "real" ten-bagger, right? So what does this all mean? Food for thought huh? I guess I will share my conclusions in another post. :)