Friday, 12 July 2019

Are Stock Mailing Lists Worth It?

For time-pressed investors who are looking for stock ideas, with sufficient capital to take action.


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A common question I often get is how and where I get my investment ideas from. If you count just SGX, NYSE, NASDAQ and HKSE (the stock markets I'm most interested in), there are a gazillion listed stocks alone...all of which could provide an opportunity. So where does one get started?

For me, I get my stock ideas from anywhere and everywhere. It could be from reading the news, an analyst report, a (non-fiction) book, seeing a brand when I'm overseas, or hearing about a "stock tip" from my friends. 

As long as you cultivate an open eye and mindset, there really are opportunities to be found everywhere. For instance, my investment into Disney (almost a 50% gain now) was sparked off when I noticed plenty of children carrying Frozen and Marvel-themed backpacks while I was out on a casual stroll through a neighbourhood mall. That piqued my curiosity enough to wonder and decide to study the parent stock (Disney), and the rest is history.

I'm always on the lookout for opportunities, even in casual conversations with friends or colleagues who aren't stock investors, because sometimes even the latest consumer trend could be the next multi-bagger. After all, that was my experience with Apple when I was younger; I would certainly also invest into Dyson now if only they were listed!

But if you struggle to spot opportunities like these, there's another solution that has recently popped up on my radar: subscriptions to stock mailing lists.

Similar to analyst reports from brokerages, these stock mailing lists are run by often seasoned investors who dedicate their full time to researching and writing about stock opportunities. While most aren't as technical as the ones you get from your local brokerage, they're usually easier to read and also provide insights into stocks you've probably never heard of before.

Free resources online

If you know how to discern the good picks from the bad eggs when you're reading for investment ideas online, then frankly speaking, you don't need to pay for stock mailing lists because you're fully capable of finding your own stock ideas! 

Save the money and use your own time to generate your own picks instead.

But if you're not a fan of the resources online, then perhaps following an investor whose opinion you value could be a good starting point. Some of such investors I respect write for free online, while others charge for their time and effort spent. Some offer both free and paid resources (including yours truly. IPO resources from me will always remain free on this blog.)

Bear in mind that not every investor goes in deep into research either. By the way, some of the best resources I read for investment ideas include articles by The Fifth PersonInvestment Moats, and Dr WealthCheck them out if you haven't already.

Almost everyone has an opinion on a stock. What's undervalued to one investor could be overpriced to another. At the end of the day, you need to be able to judge for yourself. So if you're concerned that you don't know how to differentiate between the many differing opinions on the web when it comes to stocks, then a good tip would be to follow the writers whom you respect and know they do not compromise on their research process.

If you find there aren't enough of such free resources for you, then perhaps a paid subscription to a stock mailing list might be another place to look.

Are such stock mailing lists worth it?

It really depends on what you wish to get from such a subscription. Generally, if you're looking for viable investment ideas, such a service could be useful because they curate what they believe to be quality stocks and narrow down the entire universe for you to focus on a few opportunities.


While some of the reports go into pretty extensive detail and financial figures / ratios as well, they're definitely not as detailed all the time, so you'll have to manage your expectations there.

Two important factors to consider before you subscribe are:

  1. Profile of the research analyst(s)
  2. Cost
You'd want to make sure their investment profile is one that resonates with you. For instance, it could be pretty useless subscribing to a newsletter that looks solely at growth stocks if you're a purist in value investing.

To determine cost vs value, an easy way to calculate it would be to divide the number of stock ideas or reports that you'll be getting by the subscription fee. Everyone's threshold would be different when it comes to assigning a dollar amount to such a value, but personally, I'm willing to pay up to S$50 for a really good stock idea. Hence, if I'm paying S$200 a year to a subscription that doesn't give me at least 4 good stock ideas to look into in any given year, then I tend to terminate my membership thereafter.

Folks who aren't suitable for such mailing lists

Of course, not everyone might be suitable to start with such mailing lists. If you've a small capital base, then you might be better off doing your own research instead. If you've plenty of time on your hands, then perhaps you could save the monies as well and DIY.

Based on the mailing lists where I'm subscribed to, I've also realised that the following profiles of investors may not be entirely suitable:

Dividend investors - many of the mailing lists available focus on overseas stocks, and for Singaporean investors, you'll be subjected to withholding tax which make it a lousy strategy to build your dividend portfolio based on overseas counters. You'll be better off looking at REITs instead, or check out Dividend Machines by The Fifth Person to learn how to do your own research.

Investors who buy purely on "stock tips" - if you're expecting to be spoon-fed such that you can immediately put your money into a stock just by reading a report, then these mailing lists would be a recipe for your own disaster. 

The strategy should be to use these stock ideas as a base to go forth and conduct your own research and judgement. If you don't take ownership and effort with your own money, then that is almost akin to speculating, and you're just setting yourself up for a higher failure rate.


Reviews:

I'm currently subscribed to several mailing lists where I receive periodic updates on stocks that they reckon are worthwhile investments to go into. From there, I sieve out the ones that sound appealing enough to me, and proceed to do my own research and analysis before I decide whether to buy or skip. 


Here's my review of 4 resources, and I hope this helps you decide if it'll be suitable for you as well before you sign up:

1. Alpha Lab by The Fifth Person

Their proposition:


Discover market-beating stocks and learn how to identify the best value-growth and deep value stocks from around the world. As a member of Alpha Lab, you receive new stock ideas and our complete video analysis on the companies’ four core areas: business model, management, financials, and valuation.
Watch us break down our analysis of a company for you. We currently cover companies listed on the Singapore Exchange, Bursa Malaysia, the Stock Exchange of Thailand, the Hong Kong Stock Exchange, the New York Stock Exchange, and Nasdaq.
I concur with many of their stock picks, many of which they've bought at an even lower price than me, lol. However, due to the subscription price, it'll be best only for time-pressed investors who already have a substantial capital base (eg. min. $20,000) to start.

2. Stansberry Pacific Research

Looks at global stocks across several stock markets, and particularly delves into undervalued gems in Asia. From their newsletter, I came to know of several companies that are benefiting from the growth of China, that I didn't previously know of. Here's some data extracted from one of their recent stock picks:



"It also has one of the highest profit margins in the industry, with operating margins of 13 percent, and a return on equity of 37 percent. In contrast, Ford is at 4.2% operating margins, and half of company X's ROE. 
While Ford produces 2.6 million vehicles a year from 29 different factories, this Chinese carmaker manufactures 1.25 million cars a year from just 11 car plants in China."
An interesting option for value and growth investors who are looking to capitalise on the growth of Asia and Asian stocks.

Patreon

Disclosure: My own stock subscription list.

I also run a Patreon with such reviews, but be forewarned that my reports are generally very long, given the depth of financial analysis and qualitative evaluation. I would say this is only for readers who like my style of investing, and who have ready capital (but no time) to spare to do your own research.

Each report generally takes me about a week to research, and another 2-3 days to write, so I take immense pride in the articles I write here as I go in-depth and even look at the next buy / sell levels that I'll take action on. My Patreon is basically a place where I park my own investment thesis before I buy / sell a stock, except that paid readers can access them as well.

Nonetheless, my investment profile is definitely not as prolific as many other investors, and I wouldn't recommend for most people to subscribe to me unless you (i) wish to support my blog and (ii) look at stocks in a similar approach like me i.e. qualitative > quantitative, although both aspects must and are always analysed.

VIA Club

Disclosure: Affiliate links included for VIA Club.

Stanley is a respected investor within the Singapore and Malaysia scene, as he sloughed through 8 years before he started seeing massive gains in his portfolio. Today, he is a full-time investor and spends his hours researching and sharing about companies, including SGX-listed ones. If you're keen on following someone with a $1.5 million investment portfolio and potentially mirror his trades, then VIA Club might just be for you.

In fact, if you've followed his call in December on Facebook, you would be sitting on 50% of profits by now...within just 7 months. Back then, he released a report on Facebook, deeming it as his "favourite company for 2019". (Psst, it was my favourite stock in 2018 too.)
Stanley's portfolio, available on VIA Club

You'll also get access to:


  • Live updates on a cool S$1.5 million portfolio
  • Weekly market reports and stock analysis
  • Premium podcasts with senior management of listed companies
  • Community discussions

I have a similar investment approach to Stanley's and his picks are usually stuff already on my watchlist as well, which is why I generally appreciate reading through his reports and thoughts on the company before I start my own research.

Here are some of his other investment picks:



For those of you who are keen on US, HK and SG stocks, then Stanley's picks may be right up your alley. And if you're interested to try it out, you can use the promo code "SGBB" to get 25% off (valid till end July 2019) so it brings the price down to just USD 126 a year. 

That's less than $15 a month for one good stock idea.

If you're not willing to fork out that amount, don't worry - there's always free resources as well. Just scroll back up and you'll find the links to those :)


With love,
Budget Babe

Sunday, 7 July 2019

Are you paying too much for formula milk powder?


Insights into the milk powder industry and why I switched Nate to a wallet-friendly brand with higher quality and value.


Readers who have been following my parenthood journey from Nate’s birth late last year will probably recall that we were first feeding him a different brand of formula milk, which cost us almost $60 each time.

Coupled with the cost of numerous diapers, baby clothing, feeding needs and more, the amount we were spending on Nate each month was no small sum, and it was going to hurt our wallet if we continued to pay $60 every 10 days for a tin of milk powder to meet his demand.

Thus I embarked on numerous trips to the supermarket and took it upon myself to research all the different milk powder brands available, by comparing them on both price and nutritional levels. The findings were unsurprising (you can view my excel sheet here), and proved what I had always suspected: price does not necessarily equate to quality when it comes to milk powder.

Shortly after that, I switched Nate to Nature One Dairy. This post explains why.



The milk powder industry

There are various milk brands being sold in Singapore, all touting different benefits for your child, and when it comes to country of origin, a quick Google search will show you that milk from Australia is said to be among the best for your child.

However, not all milk formula brands in Australia have their own manufacturing facility. Some brands outsource their production to various factories – some owned by them, others owned by a third party manufacturer. I had the privilege of meeting the CEO of Nature One Dairy recently to chat about how the industry works, how milk is produced and sold, among other relevant topics. That was when I found out that Nature One Dairy manufactures all its infant milk formula in their own pharmaceutical grade manufacturing facility in Australia.


We’ve all heard of the infant milk formula contamination saga last year, so I asked about the controls that Nature One Dairy has in place to prevent incidents like these from happening. By having a cleanroom with controlled environmental parameters such as temperature, humidity and pressure, as well as filtered air and the highest cleanliness standards, this is how they (and the best manufacturers in the industry) reduce the risks of contamination to almost zero.


And of course, by being a manufacturer and selling their own products, they’re able to maintain their high stringent standards and quality. This also reduces third party risks, as well as middlemen costs – which translates into…


Lower prices

My child’s nutrition and health is non-negotiable, and I absolutely do not believe in giving a cheaper brand of milk powder just because I’m trying to save money.

However, as my research has proven, contrary to popular beliefs, the most expensive milk brand is NOT the best nor the most nutritious. But don’t take my word for it – go to the supermarket and compare the nutrition levels for yourself, or you can ride off my excel sheet here.

The funny thing? Most milk formula brands cost more than double in Singapore as compared to Australia. Yes, the same brands!

Nature One Dairy formula prices are similar to the average median pricing in Australia (between $20 to $30) regardless of whether it is sold in Australia or Singapore and this is something I really appreciate. The slight price difference is mainly due to currency exchange rate, costs for export, transport and import costs.

Since switching to Nature One Dairy, I’ve reduced my monthly expenses on infant milk powder by 50%.

That’s the equivalent of more than $1000 saved in a year.

But is the quality guaranteed?

Price is not always indicative of quality, as the stock market will tell you. The same goes for the infant milk powder industry, because all Australian manufacturers cannot release goods for sale or export unless the products have passed stringent testing requirements first, and obtained health certificates for export.

For Nature One Dairy, their manufacturing facility undergoes regular and strict onsite auditing and inspections by the Australian government, Dairy Food Safety Victoria, the country’s Department of Agriculture and Water Resources, and more.

Okay, but then why do some brands charge such high prices?

Perhaps the best people to answer this question would be the spokespeople of the brands themselves, but from what I’ve observed, many of the more expensive brands also seem to spend a lot more on marketing and freebies – all of which cost money, and surely that money has to come from somewhere.

For instance, I frequently see many of those brands as sponsors at many pregnancy conferences, and paying prominent lifestyle influencers who charge considerable fees for sponsored posts. One example would be a popular lifestyle influencer in Singapore, who was initially feeding her daughter Enfamil, then later did a sponsored post promoting Abbott, and then recently promoted Bellamys. Personally speaking, while I’ve nothing against her, I’m unable to figure out which she thinks is the best milk brand for her child anymore, because I’ve seen her change her tune each time a new brand sponsors her for a post.

Singapore: the crackdown on the milk powder industry’s marketing

As a consumer, I’m not a fan of what I feel are misleading product names in the milk powder industry. For instance, names like Gain IQ and Intelli-Pro gave me the impression that if my child drinks those, they’ll make him smarter, but when I compared the nutritional levels, I found no evidence that this will indeed be the case.

Some other examples include Enfamil's marketing message, which is that they're "scientifically formulated to support overall mental and physical development, with ingredients DHA, ARA, choline, prebiotics, zinc and iron", while Wyeth S-26 claims that they "contain 26 specialized ingredients to complement the learning environment for nuturing your child's mind". Well, guess what? The same ingredients can be found in other brands as well, which are retailing for almost half the price.

I’ll willingly pay more for higher quality, but my research has shown that it isn’t the case.

Are higher nutritional levels better?

Some mothers believe that milk powder with higher nutritional levels are better for their child, but I personally don’t believe in that because only nutrients that are within legal limits are clinically proven to be safe, and those that exceed legal limits might have side effects on babies. Moreover, in the milk powder industry, higher nutrients may not necessarily be better; it is all about balance.

Our babies’ digestive system and organs are not yet fully developed, so I’m also concerned of the potential issues that could arise later if we consistently feed them nutritional levels that their system (eg. kidneys) may not be mature enough to process. However, there aren’t enough studies (yet) to show the impact of this on babies, so as parents, we will need to determine what we feel is best for our children, and then live with the consequences of our own choices.

Is more prebiotics better?

Manufacturers often add prebiotics (often found as FOS, GOS and/or inulin within the ingredients list) to milk powder to mimic the effects of oligosaccharides that occur naturally in breastmilk. However, these substances are not absorbed in the small intestine, and reach the large intestine as essentially intact. Breastfed infants generally have softer stools compared with formula-fed babies, and this difference may be due in part to the presence of oligo- and polysaccharides in breastmilk.

Moreover, GOS and inulin-derived substances are hardly digested in the small intestine. As there is virtually no systemic exposure to these intact oligosaccharides, the only possible adverse effect identified has been an increased osmotic potential within the colon, which can potentially lead to increased water loss and dehydration. It has thus been concluded that these substances, either alone or in any combination, at concentrations up to 8 g/L will contribute to increased osmotic potential in the colon of formula-fed infants.

If that’s confusing, here’s an easier and potentially more useful guide: the legal limits under the governing food standards in Australia and New Zealand.



Is more DHA better?

Not necessarily. I’ve written on this before, so do read my findings here.

TLDR summary: There’s no conclusive evidence to prove that more DHA makes your baby smarter.

For me, I care a lot about the source of the ingredients as well. Given that DHA can be obtained from fish oil or algae (keep a lookout for crypthecodinium cohnii oil in the ingredient list), I prefer the former.

And that’s another reason why I picked Nature One Dairy, which uses DHA from fish oil, over some other brands such as Enfamil, Similac and S-26 which use DHA from algae instead.

Here’s the legal requirements governing the use of such acids in milk powder produced in Australia and New Zealand:





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Benefits of Nature One Dairy

You know you can be assured of the highest-quality milk when it is sourced from grass-fed cows in Australia, where the cows are free to graze on the pristine pastures of Gippsland, thus producing consistently high-quality milk. In addition, their milk formula is gluten-free and does not contain sucrose, maltodextrin or any sweeteners. Lactose (the natural sugar present in human breast milk) is the only source of carbohydrate.

All products are manufactured in an ISO-8 pharmaceutical-graded facility that has been specifically designed for infant formula production. All infant formula brands have been formulated by food science technologists to mirror (as close as humanly possible) a mother's breast milk.

All ingredients used in the manufacturing of Nature One Dairy infant milk formula also have to go through strict microbiological and chemical testing and analysis by nationally accredited laboratories in Singapore and Australia. Their formulas are also halal-certified by the Islamic Coordinating Council of Victoria (which is responsible for halal food exports from Australia) and the Australian Halal Authority & Advisers. It is also recognised by the Islamic Religious Council of Singapore (Muis).

As a manufacturer, they also manufacture for other brands, such as NTUC's FairPrice Gold Infant Formula.

For those uncertain whether to choose between their Standard or Premium formula, the difference is that the Premium range has higher levels of nutrients and GOS (a prebiotic), which some babies may not take well to. Hence, if your baby frequently experiences diarrhoea and bloatedness, then the Standard range may be better suited for them instead. And for parents who want to feed organic milk instead, there’s the Organic range as well.

What’s more, as Nature One Dairy produces pregnancy milk and infant formula for between 0 – 6 years, there is no brand switch needed in between. After 6 years, growing children can progress to the Student Formula if desired.

Pick an affordable milk formula brand without compromising on quality for your child. Choose Nature One Dairy today.

Nature One Dairy milk products can be found online at RedMart, or bought directly off retail shelves at Sheng Siong, Cold Storage, Giant or FairPrice (organic, student & adult range only).

I’m really glad we switched to Nature One Dairy, and I hope that this post will be useful to those of you looking for a more affordable milk option too.

This post was written in collaboration with Nature One Dairy.