Saturday, November 26, 2022

Expanding Your Circle Of Competence

“Circle of competence” is a phrase which is often used in the investment circles (pun intended). Basically, one should invest in companies and organizations that he/she knows, and by knowing very well how they are structured, operate, sustain and of course, be profitable.

While the term “circle of competence” is easily bandied about, it is not so simple while trying to put it into practice. For everyday retail investors like you and me, the main (or probably only) company/organization that we may have competence is at where we work. Problem is, even though we may be in a company that deals with a certain sector or industry, we do not have the full picture of what is going on, since we are not C-suite employees of the said companies. Also, if we are working at a sunset industry, it is not that wise to invest in it knowing that its growth (and dividends) may be dwindling as time goes by.


Institutional investors, on the other hand, have a large circle of competence; they have an army of analysts who are experts in their own fields to provide inputs, and they have the channels to speak with C-suite executives directly to get a sensing of the goings-on at their respective sectors/industries.


So, does that mean we cannot expand our own circle?


I will provide you four ways on how to expand your circle.


Way #1: Read More


There are tons of resources conveniently available online (business and financial news sites, investment forums, etc.) and offline (business books, periodicals, etc.), so I would think this is the easiest way to start off improving your circle of competence. 


Way #2: The Inside Scoop


The next source of information would come from your family members, friends and acquaintances, or rather, their line of work. Although there is no harm in asking about their jobs and the sectors/industries they are in, but this way may seem too mercenary and make your relationships “business-like”. The key thing here is not to ask too much of it in a session and be moderate. If you are not comfortable with it, then just skip this way altogether.


Way #3: Observation


Observation can be done in many forms. One form is to see what products and services that you and others are using. Another is to ask questions on why certain people like to use a product or service, like a personal survey of sorts. After these, continued research is necessary to look at your answers further. Though this may seem incomplete without the whole picture, the ultimate result of any company/organization is to get its customers use their products and services, and these are the people that you are observing/asking in the first place.


Way #4: Go Broad


This is more of a counter-way (and a spoiler) to improve one’s circle of competence, and it is to invest in a broadly diversified market index fund. If you have the whole market in your portfolio, then there are less worries on whether you know a sector/industry sufficiently. However, going broad is likely going to provide average returns, as compared to entering individual sectors/industries.


You can mix-and-match the above ways, such as getting into sector/industry specific funds or adopt a core-satellite approach (Way #4 + Way #1/2/3), or combine ways #1, #2 and #3 together for more holistic research. If you have found a new area in your circle to invest in, do not go all-in and always diversify your portfolio.

Friday, November 18, 2022

Are Tech Stocks Doomed?

The news of the technology (or tech) sector getting a big hit is everywhere, and so is the subsequent layoff news that followed: Meta had laid off some 11,000 jobs; Twitter had axed around 3,700 (though some may had left due to their own volition)1 and our locally based Sea Ltd had cut around 10% of its workforce for the past six months2

Even earlier in late 2020, China had begun its tough regulatory measures such as antitrust and data security on its own technology firms e.g., Alibaba and Tencent3. Though signs of easing were seen since June 2022, the continued Covid-related lockdowns dampened the recovery.


Flashback to the onset of the pandemic around two and a half years ago, tech stocks were seen as the darlings and the “new world order” in the post-pandemic world, in which even myself had held that opinion (and still has). Prices of technology and its related shares soared, with pandemic-friendly counters such as Netflix and Zoom went uphill and plateaued between 2020 and 2021, before coming back down again starting this year.


There were several reasons, both actual and deemed, for this. The main one would be rising interest rates, and the other was the return of the pre-Covid normalcy. From a valuation point, the prices of these stocks were overvalued due to the hype, and the two aforementioned factors caused them to go back to Earth. Some even attributed it to the fall of cryptosphere. Whatever the cause and/or effect, in my opinion, there is no single big variable but a multitude of them that resulted in this tech bust.


In the long run, the tech sector will still see growth in the form of new products and services. Innovation is an infinite resource and this applies well in the world of tech. Sounds inspirational? Well, making these statements are the easy part, and operationalizing them is the more difficult aspect. 


First, the tech sector is huge and often interconnected with other sectors and industries. For instance, Apple is a tech company but also a lifestyle one; Tesla is a tech company but also into electric cars; Netflix is a tech company but also provides entertainment content, and so on.


Second, selecting a potential successful tech company is difficult, especially when there are so many players around in almost the same field. Going back to the pre-Dot Com bust period of the late 1990s, there were a few listed internet search firms (Excite, Lycos, Yahoo, Infoseek, etc.), and did we know then that Yahoo would prevail (at least till the mid/late noughties)?


If individual picking is hard for you, then perhaps we can go the exchange traded fund (ETF) way. There are a number of tech ETFs, and thematic ETFs that touched on tech-related stuff (green energy, electric cars, cybersecurity, etc.). Investing in ETFs would bring about slower growth as compared to (hopefully) picking the winning company, but at least it is diversified enough to provide a buffer.


The last word: tech is still a sector/industry (although is broad-based), and I would advise diversifying into other sectors/industries and asset classes to give a broader exposure to the financial markets in general. A tech-concentrated portfolio would be more doomed than a diversified portfolio with different asset classes, regions/countries and sectors/industries, in the event of a market downturn.


1 – Wamsley, Laurel. It’s the end of the boom times in tech, as layoffs keep mounting. NPR. 16 Nov 2022. (accessed 17 Nov 2022)


2 – Reuters Staff. Sea Ltd laid off 10% of workforce over past six months – The Information. Reuters. 15 Nov 2022. (accessed 17 Nov 2022)


3 – Zheping, Huang. In Just One Year, Beijing’s Crackdown Has Changed Corporate China Forever. Bloomberg. 2 Nov 2022. 17 Nov 2022)

Sunday, October 23, 2022

Are REITs Doomed?

Begging the question, are REITs doomed? It is fitting to have this in our minds recently, with a number of Singapore-listed REITs (or S-REITs) going to the very lows for, at least, the past two years. According to the iEdge S-REIT Index1, the freefall started sometime in August 2022, after a period of zigzagging that occupied much of the period from June 2020.

Yet, if we look back a little further in the same index, the elephant in the room is the massive drop between February and March 2020. We knew what happened during this time, but very few people were harking that REITs are doomed (on the contrary, the famous panic line uttered was “everything is doomed”, or some variations of it). The difference between then and now is attributed to two of the common investment biases at play, which are recency and anchoring, and the main fuel is, of course, interest rates.


Interest rates, as I had written a few times (here and here, to name a couple) have a profound effect on the entire market and economy. The ripple effects of rising interest rates, ceteris paribus, will lead to higher cost of debt and, in a more long-winded fashion, preference for short-term bonds and bank deposits as the go-to choice of parking one’s capital (which I will go into later). This would result in REITs getting hammered (or doomed) as the asset class is associated with being sensitive to interest rates, since they are usually geared and their seemingly-so high yields are challenged by very safer instruments.


Which is why the recency and anchoring biases are at play here. 


Headlines and topics from financial media, blogs, forums, etc., were constantly harping on REITs and their generic inverse relationship with interest rates in the past few months. Obviously, being bombarded with this news and information, it would be occupying our brains for a while. This is recency bias. Closely following is anchoring bias, where investors would (usually) base on the assumption of higher interest rates equates to bad omen for REITs.


A Business Times report on 15 March 20222 stated that close to 75% of S-REITs’ current debts are either on fixed rates or hedged through floating-to-fixed interest rate swaps. This meant, in general, that high interest rates do not really impact much on the debt profile, at least in the short term. Provided high interest rates do not prevail for the next three years or more, this aspect is somewhat mitigated by the S-REITs.


Speaking of the narrowing REIT risk premium (i.e., the difference of yield between REITs and a safe-haven asset) due to rising short-term bond and bank deposit rates, from some investors’ viewpoints, for REITs to be competitive with a current yield rate akin to short-term bonds and bank deposits, REIT prices would need to go down, and very low down. Though we know going to zero is almost impossible, but for some REITs they represent a very huge discount to their respective book values.


Although such safe instruments are in vogue, one must remember that only a few years ago, their yield and rates were considered low by many investors, and (you guessed it) people flocked to REITs. The lesson here is obvious: for any financial instrument, every day is not a Sunday.


Frankly speaking, REITs looked appetizing now.


Now the big counter question cometh: what am I going to do?


A few things that you need to know and do. On the “know” part, as I had stated above, there are no “forever Sundays” financial instruments (and asset classes/regions and countries/sectors and industries). On a related note, there are no “forever Mondays” in economic conditions, too, as we all know at the back of our brains that things will get better, sooner or later. For this, “do” diversify; going into your investment portfolio on a well-diversified basis would at least provide lesser losses than a concentrated one.


On interest rate hedging employed by the S-REITs, while it is done on a whole front, it pays to read further each REIT’s debt profiles, which are available from their annual reports and presentation slides, and factor into your fundamental analysis. If this is not your investment style (i.e., passive), then consider going into one of the five REIT ETFs available (which I had shared a bit here).


While writing this, I had read about the hints on lowering future rate hike numbers. This may spell good news for REITs in general. So, they may not be doomed at all?

1 – iEdge S-REIT Index. SGX. (accessed 22 Oct 2022).


2 – Li, Candace. S-Reits hedge against rising interest rates. The Business Times. 15 Mar 2022. (accessed 22 Oct 2022). 

Sunday, October 16, 2022

An Open Letter To New Investors

Dear new investors,

If you had started your investment journey within the last two to three years, it is a bumpy ride to begin with. When things were starting to get rosy, COVID-19 had shaken the world, not just on the physical health front, but also on mental and economic fronts, too. Yet, there is a silver lining amongst this period of gloom, with work from home, or WFH, related counters experiencing a boom (especially the technology sector).


Just when we thought things were going back to normal, we were inundated with a series of unfortunate events and happenings: the global supply chain squeeze; inflation soaring with spiking of interest rates trying to combat it; rising energy and commodities prices; geopolitical situations, and so on, which directly and indirectly caused the financial markets tumbling back to COVID-19 times, and some alluding it may get worse.


When your first step into the investing world was this tumultuous, it was natural to feel fear, panic and confusion. You might have had a sort of mismatching of expectations: “investing was supposed to be smooth sailing, as what my family members/friends/peers had experienced before, but it was not to be when I started”. You may be wondering what you had done wrong, or whether your luck with investing is out of sync. The stock that you had just bought gone down X percent, and the REIT that you had recently entered had made you lost Y dollars. Yes, I had seen these lamentations going on around me, in real life and on virtual platforms. It is understandable to have such reactions, which could range from mild pessimism to outright despair. 


However, as with all things, markets and economies go through a cycle. Right now it is on the downhill route. When will it bottom out, or resume going up, is anybody’s guess, but they are going to happen someday. In the meanwhile, remain calm, continue to invest (either through periodic contributions or to seek out opportunities in such times) and ride out the storm.


As investors, we should not be concerned about returns over one day, one week, one month or even one year. Investing is a long journey, which I had always reiterated, and it should last at least ten years. This period, although trying, will represent only a short event in your investment path. Therefore, do not let the general situation hamper your thoughts and well-being. 


As cliché it may sound, and difficult to carry out in practice than in advice, but it works most of the time: keep calm and carry on.


Yours truly,


The Bedokian.

Monday, October 3, 2022

What And Where Am I Looking At Now?

Granted that I do not write about individual counters frequently (save for the “Inside The Bedokian’s Portfolio” series), I had decided to pen down what and where I am looking at now, as a form of airing and sharing my thoughts. A huge disclosure and disclaimer here that we are presently owning these counters and doing an averaging up/down. Do your own due diligence and research before entering.

The recent hammering of the equities and REITs asset classes, plus the preference of depositing capital in short-term bills and bank deposits due to the shrinking risk premium and rising interest rates, had seen prices of erstwhile favoured counters plummeting. It is at such times that we can find some buying opportunities, given the perceived cheap prices they are now.


I will share three counters, plus two bonuses, on where we are likely to deploy our capital next as part of our active rebalancing management.


What And Where #1: Apple (listed in NASDAQ)


As with most other counters in the technology sector in 2022, Apple’s plunge was no exception; its price had dropped around 24.1% year-to-date (YTD). Reasons attributed to this fall are many, among them the impending recession that is coming, the slowing down of iPhone production, etc.


Despite the negativity, Apple is still in a strong financial position for the past three to four years: it has an increasing free cash flow (FCF) position; its earnings before interest, taxes depreciation and amortization (better known as EBITDA) is increasing, albeit slower within the last two years; and its total liabilities were constantly within the same range (see Figure 1 below).


Selected Financial Figures















Total Liabilities






Fig.1: Selected financial figures of Apple. Figures in millions. Apple’s year end date is 30 Sep (Source: Yahoo Finance, Seeking Alpha).


Going into price movement, Apple’s decreasing YTD was not really in a straight line, but rather in an up-down fashion. If a YTD figure was to be taken at January, March and August, it would not have been as low as -24.1%, but rather -1.7% at best.


Traditionally, Apple’s best quarterly EBITDA numbers in a calendar year were at the quarter ending in December, a trend which I had observed since 2010, as this period is associated with year-end holiday shopping. Based on guesstimates, the trend should follow through for 2022, and this may spell yet another jump for Apple’s share price by that time.


Bedokian’s Apple Average Price/Share: approx. USD 75.39


What And Where #2 & #3: Frasers Centrepoint Trust & SPH REIT (listed in SGX)


The relaxation of COVID-19 rules meant that in-person shopping and dining (and tourists) were back in vogue and revenge. In other words, the retail segment is back. However, rising interest rates meant higher cost of loans, and the narrowing margin of risk premium meant investors would want to be compensated with a higher yield for the extra risk taken. In my opinion, these two major factors contributed to a fall in REIT prices throughout.


Taking into consideration the raised points above, I would use three major metrics for the selection of favourable retail REITs in our portfolio to add: low price-to-book ratio (P/B), low gearing and respectable yield. Frasers Centrepoint Trust (FCT) and SPH REIT came into my spotlight (see Figure 2 below).



P/B Ratio


Yield (trailing)










Fig. 2: Selected figures of FCT and SPH REIT (Source:, with P/B ratio calculated from available figures).


These two were selected based on their locations of their properties (FCT primarily in heartlands, and SPH REIT possessed Paragon in the Orchard Road shopping belt). Furthermore, for FCT, it is an uncommon occurrence for its price to go below the net asset value, hence it is a good opportune time to load further.


Bedokian’s FCT Average Price/Share: approx. SGD 2.04

Bedokian’s SPH REIT Average Price/Share: approx. SGD 1.02


Bonus #1: Russell 2000 Covered Call ETF (listed in NYSEARCA)


The Russell 2000 Covered Call ETF (RYLD) is a dividend-generating counter that uses covered call strategies to generate income. As I had shared here before, the compromise of covered call ETFs is the limited upside of the share price, in exchange for relatively higher dividend yields, so this style of investing may not be for everyone (thus, being categorized as “bonus” here). Think of it as a high interest account with no capital guarantee.


Anyway, the YTD price had gone down 23.8%; even with a trailing dividend yield of 12.41%, it is still suffering from a loss of 23.8 – 12.4 = 11.4% or thereabouts. In my opinion, it is feasible to add into this counter as this is much better covered call ETF compared to the rest (I will write more on this ETF in a later article).


Note that RYLD is sitting inside our trading portfolio and not our investment portfolio, due to its options characteristic.


Bedokian’s RYLD Average Price/Share: approx. USD 21.63


Bonus #2: iShares FTSE China A50 ETF (listed in HKEX)


In my 2022 preview (here), I had talked about venturing into China, and my selected proxy is the iShares FTSE China A50 ETF (2823.HK).


2022 had not been kind to the Middle Kingdom: extended lockdowns due to a zero-COVID-19 policy, the big property developer busts, geopolitical tensions, etc. Regardless, my guesstimate for the next decade would see China as continually growing as it is going to become a more complete economy with its still manufacturing base available, a rising middle class to sustain consumerism, and their seemingly autarkic technology sector.


I had selected the 2823.HK due to the A-Share holdings and the diverse sectors. I will write more on this ETF in a later date.


Bedokian’s 2823.HK Average Price/Share: approx. HKD 18.08




When the markets open later today, we are not sure how these counters’ prices would go. Internally I had set different levels of entry prices to commit different tranches of our capital (hint: the 10-30 rule1) over the course of next few months, but when prices are recovering above my entry price, we would hold back and probably divert the funds to the others, or just stay put.


All data and information stated above are as at 30 Sep 2022.




1 – The Bedokian Portfolio (2nd Ed), p131-133

Saturday, October 1, 2022

Keep Calm And Carry On

Equities are tumbling, REITs are falling, long term bonds are battered, commodities prices are inching up and, despite the inflation, cash is king.

In other words, your Bedokian Portfolio might have turned on its axis.


In the current economic situation where there is an armed conflict, a commodities crunch, supply chain issues, inflation, interest rate hikes, threat of a huge recession, etc. It is kind of scary. On the other hand, it kind of felt surreal as well. Never mind that our investment portfolio value is going down, maybe by 5%, 10%, 20%, or so on.


I had explained earlier that it is not a surprise where one's diversified portfolio is suffering a downturn, because that is how it is, at least for the short term. To me, an investment portfolio's runway should be at least a decade long, so (as I had always said) such moments are nothing but kinks in a long journey.


For passive Bedokian Portfolio investors (like Bob currently), you may have not even noticed all these things going on, for your rebalancing could be done probably once every quarter, half-year or annually, where you would transact according to the weightage of the portfolio and the price as at that time.


For active Bedokian Portfolio investors (like myself), you would probably look out for opportunities in the markets, buying up sustainable securities belonging to different asset classes that had fallen from their mean/value and/or selling those which had risen above their averages, while rebalancing your portfolio at the same time


Giving in to panic and fear is the last thing on an investor's mind. We should instead look for chances and sensible bargains. Notwithstanding the different macro, geo-political and socio-economic situations and scenarios, are you feeling the same thing back in February – April 2020? And with it, did you remember what happened after that?


Short of a nuclear doomsday event or an alien invasion (or both), the markets will pick up and continue churning after a period of downness


Keep calm and carry on.

Monday, September 5, 2022

Bank Interest Rates: It’s Like Back In 2001

I recalled the time when I was flipping through a newspaper trying to find out the latest fixed deposit rates of the banks and finance companies. Yes, the internet back then was not so friendly in terms of having consolidated information within a click, so going for print media was the next best thing on seeing things in one page.

I was trying to park SGD 10K for about a year, as back then I did not know much about the stock market (and buying shares meant getting minimally 1,000 of them, which I could not afford, and through a phone call), interest rates was the main passive money making concept that I knew (and to think I had just graduated from an economics discipline).


The highest one-year fixed deposit rate then was about 3.25% from a finance company. This finance company had (and still has) a branch in Bedok, so I decided to walk around the vicinity to look for it (again, back then there was no smartphone for me to google the address on the spot). In the end, I went to another finance company instead (offering 3%) as I was lazy (and inherently cautious carrying SGD 10K worth of cash) to walk around further to look for the one that I had planned originally to go to (turns out that if I had persevered my journey to the next block, I would have had earned an extra 0.25%).


Interest rates were quite high then; I remembered mortgage loans were around 5% to 6%, and savings accounts were about 1.x% to 2%.


Also back in 2001, the United States (U.S.) federal funds rate was around 5.x%. Tracking the movements of both rates, it is obvious that our local interest rates and the U.S.’ were (and still are) positively correlated. Therefore, when news of the U.S. Federal Reserve planning for more rate hikes, expect our side to do the same, be it on fixed deposits, savings and mortgage rates.


Fast forward to now, we are now seeing bank fixed deposit interest rates going up into the regions (around 2.x% for a 12-month tenure) where it was unheard of for almost 15 years (I picked fixed deposit rates for a clean comparison as they are typically unencumbered with step-up and promotional rates, which are typical of savings accounts). And these rates are relatively comparable to the current offerings from treasury bills and Singapore Savings Bonds.


Having a 3% fixed deposit rate is unprecedented now, but remember, it was the norm back in 2001. Being in a near zero-interest-rate-period (ZIRP) for a long time, it is hard to blame new investors, most of whom entering the markets within the ZIRP, of not factoring in interest rates in the overall scheme of things. A diversified portfolio approach is still prudent in certain and uncertain times, and times of differing economic conditions, including interest rate movements.

Sunday, August 28, 2022

My Name Is Bond…

Never in the history of my investment experience that I had seen such mass enthusiasm on bonds. It is understandable as we are in a rising interest rate environment, which favours short-term treasury bills, and the fear of a coming real recession, which bode well for longer term bonds as a safe haven. Suddenly, what is seen as a boring financial instrument is now generating so much attention.

Here is an interesting trivia: Did you know that the global bond (or fixed income) market is larger than that of equities? In 2021, the global fixed income outstanding stood at United States Dollars (USD) 126.9 trillion while the global equity market cap was at USD 124.4 trillion1. Though by a narrow margin, this would likely be widened in 2022 when the equity market cap is facing a downward pressure.


Bonds usually fill in the role of the counterweight to equities, and these two would form the most basic of investment portfolios. The weightage of both varies, but the oft quoted one is the 60/40 equities/bond ratio, which is still used as the benchmark standard.


The reasons why bonds are added to a portfolio mix are due to its differing correlation with equities, and the traditional go-to asset class during bad market days. However, the correlation notion has been challenged as bonds do display high positiveness with equities at certain points in time. A rising interest rate setting is not good for bonds (especially longer-term ones) as it would lose their demand if the coupon rates were lower than that of the prevailing interest rates.


Regardless of the macro intricacies of bonds, correlation and rates, an investment portfolio should last at least 10 years (my minimum timeframe) or more, and we do see the usefulness of bonds in providing some sort of safety net and volatility dampener. The other way would be to diversify further with more asset classes, as what The Bedokian Portfolio added with real estate investment trusts (REITs), commodities (gold, silver and oil) and cash, to make the whole correlation thing more varied.


To end off this short post, do remember that the bonds that I had mentioned here are good quality bonds, i.e., issued with investment-grade credit ratings, typical of good government and corporate bonds.


1 – Kolchin, Katie, et al. 2022 Capital Markets Fact Book. SIFMA. July 2022. (accessed 28 Aug 2022)


Monday, August 22, 2022

Interest Rate Parity: A Simple Overview

With all the hype of interest rates going around, it is probably time for me to write about one little known relationship between interest rates of different countries and the currency exchange between the said countries. Introducing the concept of interest rate parity.

What Is Interest Rate Parity?


According to Investopedia, interest rate parity is “a theory according to which the interest rate differential between two countries is equal to the differential between the forward exchange rate and the spot exchange rate”1.


Putting it simply, assuming a scenario of two countries (Country A and Country B) with interest rates of 5% in Country A and 3% in Country B, the currency exchange rate between the two will adjust by 2% in the future (either Country A’s currency would depreciate by 2% or Country B’s currency would appreciate by 2%).


Investors would go for “more bang for the buck”, so if a country’s interest rates are higher, they would naturally flock there with their capital to earn more. Eventually, all things would equalize out in the form of currency exchange rates. These happenings are, of course, theoretical, and certain conditions must be assumed, e.g., free flow of capital exists between the two countries. In the real world, things may not be that simple with all the microeconomic, macroeconomic and regulatory factors and circumstances at play.


Real World Applications


There are a few real-world scenarios where the theory of interest rate parity is applicable. A financial instrument called currency swap is one example, where the capital principal and/or interest rate could be exchanged with another currency, to obtain favourable loan interest rates. Currency swaps are also used to hedge against foreign exchange fluctuations, which a lot of multinational companies and real estate investment trusts utilise.


Forex traders also use the theory of interest rate parity to implement strategies and calculations to earn profits.



1 – Hayes, Adam. Interest Rate Parity (IRP). Investopedia. 5 Sep 2021. (accessed 21 Aug 2022)

Wednesday, August 10, 2022

Treasury Bills: What Are They?

The rise in interest rates in recent months has seen yet another rise in interest (pun intended) generated, based on what I have read online (yes, the Bedokian does scour the WWW for information) and offline amongst my friends, acquaintances and colleagues. First, there was (and still is) the hype over Singapore Savings Bonds, or SSBs (which I had written a piece here). The upcoming buzzword is “treasury bills”, or T-bills for short.

Introduction Of The T-Bill


In fixed income nomenclature, bills are debt instruments, issued by a government, whose duration is one year or less. Hence in layman speak, they are bonds with a very short term.


Due to this short-term nature, the coupon rate of a T-bill tends to be similar with the prevailing interest rate as at the time of the former’s issuance. With a tenure of one year or less, it is akin to a form of fixed deposit that you will find in banks. You could sell the T-bill on the open market before maturity, but it would be subject to market forces and you may profit or lose some amount, so it is recommended to hold it till maturity.


Under The Bedokian Portfolio’s classification, the T-bill belongs to the cash asset class due to its two main characteristics: the short duration and the positive correlation to prevalent interest rates, from which how cash derives its returns. Liquidity wise, it is easy to just sell it on the open market and get back the principal, though as mentioned in the previous paragraph there are market risks involved.


The Workings Of The T-Bill


Unlike other debt instruments, where the coupon is paid half yearly or annually, the T-bill’s coupon is paid upfront. T-bills are issued at a discount below par value, and the difference is the coupon/interest paid out. For example, I had applied for a one-year T-bill at the minimum bid of SGD 1,000, and after the closing of the application, the T-bill is issued at SGD 950, and I will get back the SGD 50. This SGD 50 is the coupon/interest for the T-bill, which the yield works out to be 5% (50/1000). When the T-bill matures, the full SGD 1,000 sum is returned.


For retail investors like you and me, Singapore T-bills can be applied using cash, Supplementary Retirement Scheme (SRS) account and Central Provident Fund (CPF) account through the three local banks: DBS, OCBC and UOB (note: you could sell your T-bills over the counter at either one of these three banks). Applications using cash and SRS can be done online or through the automated teller machines, while in-person applications are required at the bank where the CPF investment account is at.


Once you had settled on using cash, SRS or CPF, the next step is to bid (or auction) for the T-bills, which is a bit more technical as compared to applying for SSBs. There are two ways to bid for it, competitive or non-competitive. Competitive bidding is where you will input an annual yield number (in percentage and up to 2 decimal places) and that number signifies your lowest acceptable yield. In non-competitive bidding, you just accept whatever yield you are getting. From here, you can see that using a non-competitive bid can almost guarantee issuance, while a competitive bid depends on what yield number you put in; if your submitted number is higher than the result, you would not get the T-bill. If you are in the know and can roughly guesstimate the prevailing yield, then you may want to attempt a competitive bidding.


Unlike SSBs, where there is a consolidated limit of SGD 200,000 per individual, T-bills (and other Singapore government bonds) limits are much higher (at least SGD 1 million) for each issuance. Also, you can submit as many bids as you want, whether through non-competitive or a series of competitive bids with different yield numbers.


The Bedokian Getting The Feet Wet


We had recently applied for the 6-month T-bill (BS22115F closed on 4 Aug 2022) using cash and through UOB online banking (see Figure 1). One non-competitive bid and one competitive bid (bid at 2.8%) were submitted for SGD 1,000 each (see Figures 1.1 and 1.2 respectively):

Fig. 1

Fig. 1.1

Fig. 1.2

Here is an excerpt of the results of the T-bill BS22115F from the Monetary Authority of Singapore (MAS) website (Figure 2):

Fig. 2

There are many numbers, but just look at the first two rows will do: the cut-off yield is applicable to competitive bids, where if you submitted any number above that, the bid is out. The cut-off price is the eventual amount of the T-bill, which is 98.577 (remember the T-bill is issued below the par value of SGD 1,000). Multiply this number by 10 and your T-bill is worth SGD 985.77, and the amount of SGD 1,000 – SGD 985.77 = SGD 14.23 is the coupon/interest.


Both of our bids were successful, and we had 2 x SGD 14.23 refunded on 4 Aug 2022 (see Figure 3). This refund is also the T-bill coupon/interest amount.

Fig. 3

Since this is a cash application, the T-bills appeared in the Central Depository account on 10 Aug 2022 (Figure 4).

Fig. 4




Even if not for investment purposes, the T-Bills are another good alternative to store your cash which you foresee not using for at least the next six months to a year.



Saturday, July 30, 2022

The Bedokian Portfolio Blog’s Sixth Anniversary Post

Today marked the sixth anniversary of The Bedokian Portfolio blog.

My anniversary posts were usually filled with tips, advice and pointers; some current, some cliched and most of the time common sense. For this anniversary message, I would like to go into a recent occurrence and hope that there will be some lessons drawn from my opinions. That occurrence would be the crypto meltdown.


Crypto Meltdown


The first two weeks of May 2022 saw one of the largest events happening in cryptosphere. Known as the Terra-Luna collapse, investors around the world lost millions, if not billions, collectively. Consequently, there were a number of tragic happenings, ranging from big monetary losses to loss of life. 


And that is not all. As a result of the collapse, other cryptocurrencies began to fall in value, with Bitcoin, considered the “grandfather of all cryptocurrencies”, fell to a low of almost SGD 26,000 by mid-June 2022, sparking fears of what was called “crypto winter”.


While the dust was settling from the Terra-Luna downspiral, there were some aftermath stories emerging from stung Terra-Luna investors and traders, dictating the goings-on and providing learning points and lessons from the whole ordeal. The common points mentioned were the admission of greed and lack of diversification. This is the part where I will give my two cents’ worth (or maybe three cents due to inflation).


The Bedokian’s Opinions


Hindsight is always 20/20, mentioned by so many people. Yet, people who are deemed to be highly experienced in the field of investing/trading would sometimes fall into greed and its by-product “all-in” (i.e., no diversification). It is an emotion, after all, and on occasions I do feel this greed coming into my mind, which could be tempting at times. If I could earn a fortune by just going all-in into a rapidly rising asset, why not?


Problem is, no asset is growing at a fast pace without retracing, even slightly, forever. If one’s investing/trading (or gambling, a word which I am tempted to use for this post) on a rapidly rising thing, one must know the music would stop eventually, question is when. I understand that one may feel being FOMOed (fear of missing out) by letting go an asset too early in its rise and had languished on the opportunity cost, but the feeling could be worse if the asset’s price come crashing down, hard. One of the advice given in my early trading days was to be satisfied as long as there are profits, and start to prospect for the next potential one.


Ideally, investing and trading follow a set of rules, which are different from one person to another. These rules can be changed depending on certain circumstances, but the one thing one must not include in are human emotions, except for using emotions to one’s advantage (e.g., market sentiment and going contrarian). Greed is one thing one must not factor in: if an asset had reached the target price (as per the rules), just sell it, do not arbitrary set another higher sell price on the spot. We do not know what will happen next, and if a bad event does happen, we may be too late to react to it, since we retail investors/traders do not have first-hand information coming in quick. Diversification, which I had harped on so often in my posts, is a must-have to counter big losses in the investment portfolio and the emotion of greed.


Stay calm, stay safe, stay diversified, and do not go all-in.