Article on Oil Price

Interesting Article on Oil Prices Trends. - Why Oil Prices Keep Falling?

This article provides a clear explanation on the decline of oil prices.

Key summary of this article:

1) Supply is increasing steadily due to shale oil and oil sands developments in USA and Canada respectively. There are also less supply disruption in Middle East region (i.e Libya). Furthermore, Saudi Arabia, one of the key members of OPEC is not willing to cut supply and lose market share. 

Source: International Energy Agency

2) Slowing demand in China and Europe. The slow down in China is becoming more apparent. While China might not suffer a hard landing, growth has tapered to 7.4%, lowest since 1990. Europe economy is not doing well and disinflation is a major problem. ECB is pull out every trick in the bag to prevent Europe from falling into deflation.

Implications: Oil prices will stay low unless there is a major supply disruption. While current oil prices will discourage more explorations in USA and Canada, existing supply will continue as CAPEX had already been committed.

Investment Themes for 2015

1. US Financial/REITs sectors will continue to do well. The above sectors had weather the financial crisis of 2009 and the low interest rate environment is aiding the profitability of this sector.

- The inflation in US is going to be moderate in the coming year. Federal Reserve will remain dovish on hiking interest rates, as the fed rises rates to tackle inflation. Investors will continue to reach for yield and seek better returns for their portfolio, through high yielding equities, bonds and REITs. 

2. SG Financial/Retail. Singapore's economy will continue to grow and increase spending by the government will spur businesses in the Retail, Exhibitions and Service industry. 

- Tourism will increase due to marketing efforts of Singapore Tourism Board to promote Singapore as a choice destination due to SG50. Low fuel prices will make travel more affordable and increase visitorship to Singapore.

- Singapore's government is boosting the economy through additional fiscal spending for SG50's celebration. There will be a big push by government bodies to setup events and exhibitions in conjunction with SG50. 

Investment Goals for 2015

1. Spend more time analyzing the market.
- I will review one investment article every week to enrich and improve my investment skills. I believe that we need to gain fresh ideas so that we can sharpen our investment. This will also allow me to formulate new investment thesis as I gather my ideas and thoughts.

2. Focus on high dividend (yield >4.5%) and growth (growth >7%) equities.
- This strategy will allow me to generate passive incomes from my portfolio. I will use market volatility to my advantage and accumulate positions in those equities. I also hope to save at least S$50,000 this year and deploy them into my portfolio. 
- Not all sectors will be performing well in 2015.Service, Hotel, Retail, Finance related stocks should perform well this year barring any external shocks in the economy.

3. Look at alternative investments.
- I will spend more time analyzing alternative investment. I hope to start with luxury watches this year and spend more time understand the market for such watches.

Investment Review for 2014

As 2014 draws to a close, it is time to review my strategies for the past year.


I had four strategies for 2014. 
1) Add unit trust with corporate bonds exposures
- I didn't manage to add corporate bonds into my portfolio. I only manage to add a unit trust that has exposure to high yield bonds in US. However, this investment was pretty much stagnant and I exited the position in the middle of the year.

2) Add US ETFs/Unit Trust into my portfolio.
- My call on US ETFs positions was correct except for the energy ETFs. I bought an US unit trust and made >20% profit from that position.

3) Add Singapore ETFs when oversold.
- I managed to add SG ETF position and sold them off for some profit. 

4) Add growth and/or high dividend stocks into my portfolio
- I added additional positions in RMG @ 2.98. 


Overall, 2014 is a quiet year for me. I hope 2015 will be more eventful year for investment.