Wednesday, December 02, 2009

Response to the recent Internet criticism

Since my article came out in AsiaOne, I've been subject to quite a hefty amount of criticism from readers. You can find the article and comments here :

I will attempt to address the address the criticisms here :

a) I am a scrooge.

My dividends currently afford me a lifestyle like a fresh graduate professional who spends all his income. While lower than the typical median income earner, I can hardly call it a scrooge lifestyle. I am very possibly a scrooge during my single days because I simply did not have expensive hobbies and kept my full expenses to about $1,100 every month after giving my mum an allowance. As a married man, my dividends provide a modest stipend for my wife, I continue to give some money to my parents and I have enough left to take public transport and feed myself.

b) My parents are rich.

That's a relative term. My parents bought landed property and paid off the loan in the 70s. In the 80s they ran a pet shop. Revenues were variable but rents were fixed. The business folded in the early 90s. My dad took up work as a production operator and my mum washed dishes in a canteen. Life was hard but only in that sense and I apologize if this statement was misinterpreted. People who think that success can only be bestowed upon people who spent their childhood without water and electricity may be disappointed that I do not fit that mold. We were hardly rich.

c) How I funded my way through university.

I borrowed from my dad's CPF and paid back every cent. I started out $22K in debt, paid everything off in 2 years and then I could not just build a portfolio, I could even pay for my Masters degree course as well.

d) I do not enjoy life.

Well I do enjoy life. But there is no way I can prove it.

What I cannot apologize for:

a) I do not have a balanced life.

Guilthy as charged. I'm a son and husband, hold a full time job, author books, manage a portfolio and have to constantly upgrade by getting Microsoft certifications and some financial credentials. I remember taking 21 exams in 2001, some IT, some finance, had to even read two languages French and Japanese to remain competitive.

b) I am an only child and will stand to inherit landed property.

I am not responsible for my parent's family planning style. I have inherited nothing yet and my dad can always sell off the house in the future. I fail to see how this can be an advantage in the field of investments.

c) I live with my parents.

They are not getting any younger. Who is going to look after them in the future?

A minor note on the numbers and skepticism regarding my stock strategy :

a) To accept that you can have $24,000 annually from a $250,000 portfolio, you have to believe that some stocks give can give about 10% a year. There is'nt a lot of stocks which do this but they exist.
b) The payout is generated by a few key stocks which yield more than 10% and a smaller proportion which yield less than 10% for diversification purposes. This portfolio may not be well-diversified even if I have about 20 stocks in my portfolio.
c) I am aware of the high risk of the strategy and is currently diversifying with stock which yield 6-8% but have better growth opportunities.


Busta said...

Why do you bother to defend yourself? Some of the flaming posts in CNA forum are nonsensical to start with.

In any case, I'm also a firm believer of dividend investment but I think having 20+ counters in a portfolio is too much to handle. Perhaps 8 to 10 will be more manageable. There is no need for over-diversification if you truly believe in your investment.

Christopher Ng Wai Chung said...

Thanks for the support, Busta. I have to defend myself in case some colleagues, relatives or friends were to buy the negative publicity.

goat said...

Hi Christopher,

I am your supporter since I read your article in the sunday times.

Like you, I currently have about $4.8k dividends yearly, about 10% yield. My target is to build it up to $30k dividends yearly.

Reginald said...

Hi chris,
Do not worry about what others say or think. I believe you have the correct way of investing in shares. I am in the same boat as you and am into the same shares as you. I just let my money work for me and collect the dividend every 3 months. I currently have 6 counters.

Christopher Ng Wai Chung said...

Thanks guys, I think that readers who can confirm that 10% yields are possible will be able to vindicate my approach to investments.

Reginald said...

with my investments, it is around that amount 10%.

Musicwhiz said...

Hi Christopher,

Yes, it is very possible indeed. Just to provide some support for your statement about a 10% yield on some counters. If you had bought during the lows in the bear market the yields for some may even exceed 10% by quite a margin!

As such, I own companies which pay dividend yields ranging from 3-4% to about 10% too, so I can relate. But of course my style is not true dividend investing; but a mixture of growth and yield to balance out my portfolio.


P.S. - Ignore the trolls. I used to have them on my blog too, and they can be a nuisance; but human beings will always behave like this. It's because of envy, jealousy and insecurity.

Wealth Journey said...

A little late in discovering your blog but yes.

I concurred that dividend pays you to wait for the capital appreciation and dividend yield of 10% would be possible.

As for myself, I am like musicwhiz, I buy the companies first and the dividends is a bonus that pays me to wait. So dividend yield for me is < 5% at the moment.