Value Investor?

[Temperament]

By logic, pyramid up is the safer route to take. Then please explain why the GURUS don't really practise it.

May have something to do with them having too much money. When the market turns and a big fish buys in - the market tends to run away from the big fish. The only way they can get large enough amounts to move the dial is to pyramid down. IMHO that is an advantage for us (until we become big fishes as well )

Ha! Ha!
Excellent counter logic. I think it is true for the Big fish swallowing IKan Billis that panic easily in a bear market.

[brzuo]

Equity relies on management people and may change significantly. Property is relatively stable.

[opmi]

^^ property OR equity - usually it is mutually exclusive. Usually investors prefers one over the other. Rarely people do both extensively.

Most property 'investors' made their first bucket of gold from their HDB or private property because they need to stay somewhere. Lots of double income degree holders HAD to buy private or EC because their combined income is too much for HDB income ceiling. THEN the LONG property boom came. BTW if you own only 1 property, you are not an property investor.

Equity investors are by choice. It is probably harder (due to big swings) to make their first bucket of gold from the stock market and keep it. Probably have to actively do homework to invest in equities. Successful equity investors are rarer than successful property investors, for now.

[safetyfirst]

however many stocks one has or even if he buys ETF monthly or yearly, to me, it still would be one investment cat.

Let me explain:

to many folks out there, perhaps some 80% of singaporeans, their HDB forms their biggest asset. This could be worth say 500k to 1m, depending on location and size.

Now,assuming this is fully paid off, if one is talking about his portfolio of $200k, this portfolio could form up anywhere from 20% to 40% of their entire asset.

Even if he has a basket of 20 or 30 stocks consisting of different companies in different industries to manage their risks, we should not forget that 60-80% of their asset is still one thing, ie their home!

Of course, when their portfolio grows to say 5m, this figure will probably dwarf their home cost. Having said that, when that happens, many might give up their HDB for a condo or a small landed in a land scarce Singapore.

I still can't understand why Singaporeans (in general) love property so much*. I've always much preferred equities as an asset class, but almost all my friends talk about having an investment property and "passive rental income".

If this is an asset allocation problem, then many Singaporeans have it - most of their wealth is tied to property and it is an illiquid asset which CAN go down, contrary to what many people may think.

*I've been trying to understand this phenomenon since 2008 when I first starting tracking property news and the property market.

Hi MW, my guess is that for most people, they find it harder to understand businesses than properties. And stock prices can get volatile, most people cant take it when the stock drops 20-30% or more. For singapore properties, you seldom see a drop of 20-30%. Subsconscioulsy, properties appear to be safer than equities

[safetyfirst]

...

Successful equity investors are rarer than successful property investors, for now.

Haha, does this signal the start of the bull market for equities and/or the start of the bear market for properties?... Interesting question to ponder.
Personally, i find the stock market more attractive in the past few years, find it less interesting lately. Starting with 2014, i have been trying to find other activities to keep myself occupied. Stocks are becoming less interesting... Still find property prices not low enough.. What to do, wait lor

[specuvestor]

I still can't understand why Singaporeans (in general) love property so much*. I've always much preferred equities as an asset class, but almost all my friends talk about having an investment property and "passive rental income".

If this is an asset allocation problem, then many Singaporeans have it - most of their wealth is tied to property and it is an illiquid asset which CAN go down, contrary to what many people may think.

*I've been trying to understand this phenomenon since 2008 when I first starting tracking property news and the property market.

They are equity investors are trend-followers, same for the property market. I have seen "value investors" among property market, albeit a minority. Does it sound familiar with our equity market?

I have seen a real case. A run-down terrace house was bought cheaply, rebuilt from scratch, to fully utilize the plot-ratio and space. It was sold later for good profit, within months. It is a value investing, isn't it?

I have seen an ex-classmate of mine, started from HDB five-room, upgraded to EC, than private properties, with a "value mindset", rather a trend-follower. He has done well with the "passive" property investment, on top of other investments.

I am not an property expert, but I reckon the basic principle of value investing, is applicable to property market too. I have always reminded myself to be open-minded, to asset-classes beyond equity, and also those different strategies from mine, although I have to chose one suit me best.

Agree with Weijian and Ray168... it's about leverage and cheap credit because it is collateralised. On an unlevered basis, property returns are paltry, not to mention work need to be done for rentals.

And because people don't usually flip their primary home, they have positive reinforcements as their property make inflation plus returns.

[Temperament]

I still can't understand why Singaporeans (in general) love property so much*. I've always much preferred equities as an asset class, but almost all my friends talk about having an investment property and "passive rental income".

If this is an asset allocation problem, then many Singaporeans have it - most of their wealth is tied to property and it is an illiquid asset which CAN go down, contrary to what many people may think.

*I've been trying to understand this phenomenon since 2008 when I first starting tracking property news and the property market.

They are equity investors are trend-followers, same for the property market. I have seen "value investors" among property market, albeit a minority. Does it sound familiar with our equity market?

I have seen a real case. A run-down terrace house was bought cheaply, rebuilt from scratch, to fully utilize the plot-ratio and space. It was sold later for good profit, within months. It is a value investing, isn't it?

I have seen an ex-classmate of mine, started from HDB five-room, upgraded to EC, than private properties, with a "value mindset", rather a trend-follower. He has done well with the "passive" property investment, on top of other investments.

I am not an property expert, but I reckon the basic principle of value investing, is applicable to property market too. I have always reminded myself to be open-minded, to asset-classes beyond equity, and also those different strategies from mine, although I have to chose one suit me best.

Agree with Weijian and Ray168... it's about leverage and cheap credit bacause it is collateralised. On an unlevered basis, property returns are paltry, not to mention work need to be done for rentals.

Paltry? Yes of course! Someone had worked out $1 million invested in a rental property compare to invested in a REIT, in "Singapore Investment Bloggers".
WE are talking about comparing the net cash return you will receive per year. Reit's dividend beats net rental income "hands down".
Alamak! Still so many people crazy about rental properties leh. Don't exclude me hoh!

[CityFarmer]

They are equity investors are trend-followers, same for the property market. I have seen "value investors" among property market, albeit a minority. Does it sound familiar with our equity market?

I have seen a real case. A run-down terrace house was bought cheaply, rebuilt from scratch, to fully utilize the plot-ratio and space. It was sold later for good profit, within months. It is a value investing, isn't it?

I have seen an ex-classmate of mine, started from HDB five-room, upgraded to EC, than private properties, with a "value mindset", rather a trend-follower. He has done well with the "passive" property investment, on top of other investments.

I am not an property expert, but I reckon the basic principle of value investing, is applicable to property market too. I have always reminded myself to be open-minded, to asset-classes beyond equity, and also those different strategies from mine, although I have to chose one suit me best.

Agree with Weijian and Ray168... it's about leverage and cheap credit because it is collateralised. On an unlevered basis, property returns are paltry, not to mention work need to be done for rentals.

And because people don't usually flip their primary home, they have positive reinforcements as their property make inflation plus returns.

I don't have extensive experience in property investment, but taking rental as the only profit for property investment, is like considering only dividend for equities investment, IMO

I should talk to property experts for their insight, when opportunity arises.

[Ray168]

They are equity investors are trend-followers, same for the property market. I have seen "value investors" among property market, albeit a minority. Does it sound familiar with our equity market?

I have seen a real case. A run-down terrace house was bought cheaply, rebuilt from scratch, to fully utilize the plot-ratio and space. It was sold later for good profit, within months. It is a value investing, isn't it?

I have seen an ex-classmate of mine, started from HDB five-room, upgraded to EC, than private properties, with a "value mindset", rather a trend-follower. He has done well with the "passive" property investment, on top of other investments.

I am not an property expert, but I reckon the basic principle of value investing, is applicable to property market too. I have always reminded myself to be open-minded, to asset-classes beyond equity, and also those different strategies from mine, although I have to chose one suit me best.

Agree with Weijian and Ray168... it's about leverage and cheap credit because it is collateralised. On an unlevered basis, property returns are paltry, not to mention work need to be done for rentals.

And because people don't usually flip their primary home, they have positive reinforcements as their property make inflation plus returns.

I don't have extensive experience in property investment, but taking rental as the only profit for property investment, is like considering only dividend for equities investment, IMO

I should talk to property experts for their insight, when opportunity arises.

Regardless rental or equity dividend income, we should also look for capital gain as a total investment package.

[specuvestor]

ya total return on invested capital, including rentals, are paltry on a non levered basis. There is a big diff between ROE and ROIC for properties, and people only remember the former.

CF your friend is a very sophisticated property investor if he can revamp and reconstruct the place. It's equivalent to comparing OPMI and vulture funds.