DBS, OCBC & UOB: How High Can Singapore Banks Go? — Transcript

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1. 0:05Welcome back everyone. My name is Adam
2. 0:06Rusman.
3. 0:06>> Hello Victor.
4. 0:07>> Hi everyone.
5. 0:08>> Thanks for joining us today. We're going
6. 0:09to talk about Singapore banks once again
7. 0:11because all three Singapore banks, DBS,
8. 0:14OCBC, UOB
9. 0:16are at all-time highs.
10. 0:17>> Yeah. I'm I'm very happy to achieve for
11. 0:18a lot of Singaporean investors.
12. 0:20>> Yeah, and I think a lot of people
13. 0:22actually like the banks. They invest in
14. 0:23banks. Nowadays, I hear people saying
15. 0:25just invest in DBS can ready.
16. 0:27>> [laughter]
17. 0:28>> Two months Two months ago, I was at a
18. 0:30counter at community centers. The lady
19. 0:31was asking me whether
20. 0:33can still buy DBS bank.
21. 0:34>> Everything is Everything is very robust
22. 0:36buying DBS. So, all three banks are at
23. 0:38all-time highs and we're going to answer
24. 0:40the question, "Hey,
25. 0:41all of them are at all-time highs.
26. 0:42And the valuations look a bit stretched.
27. 0:44We're going You're going to go into that
28. 0:45as well. Uh but can they go even higher?
29. 0:48I think a lot of people who are might be
30. 0:50asking this. For those who are already
31. 0:51holding on, they might think can it go
32. 0:52higher? Should I trim my position?
33. 0:54Again, we're not recommending anything,
34. 0:55but we're going to answer the those
35. 0:57questions. And someone who's looking at
36. 0:58this, can I jump in now? You know, stuff
37. 1:00like that. Uh so, what do you think? Why
38. 1:02why are all three banks are at all-time
39. 1:04all-time highs now?
40. 1:05>> Yeah, I I think to to give a context, if
41. 1:08you go back a year ago, right? That was
42. 1:11not how people view the banks because
43. 1:14uh we are expecting the interest rate to
44. 1:18uh to drop, right? To decrease moving
45. 1:20forward because everything start to
46. 1:22stabilize.
47. 1:23But of course, no one knows that the war
48. 1:25is going to happen.
49. 1:26And because the war happened this year
50. 1:28in 2026,
51. 1:30uh it caused the inflation and Fed has
52. 1:32been holding the interest rate. So, in
53. 1:34the past, let's say we are expecting the
54. 1:36interest rate to drop, right? People are
55. 1:38expecting the banks to reprice at a
56. 1:40lower interest rate moving forward
57. 1:42as the interest rate drop.
58. 1:44But
59. 1:45with now the interest rate continue to
60. 1:46hold, right? They are repricing at a
61. 1:48very stable rate moving forward. So,
62. 1:50there's no drop in terms of their net
63. 1:51interest income and they looks like they
64. 1:53have stabilized the thing. Unless
65. 1:55there's a sudden drop, then you can
66. 1:56expect the net interest income to
67. 1:58to slow down or decrease even further.
68. 2:00All right. And the next thing that we
69. 2:02have always been saying that the wealth
70. 2:04management and the fund management of
71. 2:05the banks, right, uh
72. 2:08have improved significantly as any holds
73. 2:10the non-interest income. So, to give you
74. 2:12a context, right, if you look in terms
75. 2:14of DBS, back in 2006,
76. 2:18fund management and wealth management
77. 2:20accounts 13% of the total non-interest
78. 2:23income. The rest are like trading and
79. 2:25all these, which is slightly more
80. 2:26cyclical and all these.
81. 2:28Then you come back to 2025, now it
82. 2:31accounts 33% of the total non-interest
83. 2:33income. So, that means all these are
84. 2:35recurring management fee that is very
85. 2:38stable. So, the bank now and the bank in
86. 2:40the past is totally very different. Then
87. 2:43if you look in terms of the OCBC, back
88. 2:45in 2006, it was only 10%. The fund and
89. 2:49wealth management was only 10% of the
90. 2:51total non-interest income, and right now
91. 2:53it's 29%. For UOB, it was 14% in 2006,
92. 2:57and right now it's about 23%. All right.
93. 2:59For UOB, they didn't really grow this a
94. 3:01lot because their main focus is still
95. 3:02the credit card. So, there's a bit of
96. 3:04different strategy over over here. All
97. 3:06right. But, overall, you can see all
98. 3:07three banks, right, their fund
99. 3:09management and wealth management
100. 3:11recurring income, actually increased
101. 3:13significantly throughout the years.
102. 3:14>> Yeah, I think Singapore has become
103. 3:17like a basically a global wealth hub uh
104. 3:20over the last 5-10 years, or maybe 15
105. 3:21years. They've been building on this for
106. 3:22a long time. We're now I guess global in
107. 3:26that sense. So, a lot of wealth is
108. 3:28coming here
109. 3:29from even after the Iran war.
110. 3:31>> Yes.
111. 3:32>> No, the people
112. 3:33>> from Dubai to here
113. 3:35and Hong Kong with the
114. 3:37and they know back then with the taxes
115. 3:38and all that, money was coming here as
116. 3:40well.
117. 3:40>> We are considered politically neutral,
118. 3:42that's why a lot of the funds are
119. 3:43flowing here. So, the wealth management
120. 3:45is doing very well. On top of that, the
121. 3:46interest rate is is very stable now at a
122. 3:49uh high for the US Fed. They didn't
123. 3:51decrease, they have been make it steady.
124. 3:53>> Yeah, in fact now the Fed is talking
125. 3:55about hiking the rate if the inflation
126. 3:58is continue to go up. Yeah, so
127. 4:01and that's the reason why I think all
128. 4:03the three banks
129. 4:04hitting all-time high.
130. 4:05>> Okay, because their performance is still
131. 4:08very good.
132. 4:08>> Yep.
133. 4:09>> So again, we couldn't predict the Iran
134. 4:11war was going to happen.
135. 4:12>> Yes, correct.
136. 4:12>> So so these are things that just they
137. 4:14just you just something just throws
138. 4:16something into the into the works and
139. 4:18you go like, "Oh, things things change."
140. 4:20>> Yeah, yeah.
141. 4:21>> So if you go back to the previous time
142. 4:22that we we we talk about the banks,
143. 4:25our thesis at the point of time based on
144. 4:27that current situation is that I mean
145. 4:29you you still can hold a bank, but the U
146. 4:31is still higher than the SGXU, the
147. 4:3410-year SGXU.
148. 4:35>> But based on price to book, let's say
149. 4:37let's take a look at DBS, right? So I
150. 4:39think earlier of 2025, I still remember
151. 4:40that
152. 4:41I think we did a session on the
153. 4:43valuation for the bank, right? So and I
154. 4:46give my take on the DBS, right? So DBS
155. 4:48was hitting like plus two standard
156. 4:50deviation. So they have actually
157. 4:52exceeded their valuation level in '06,
158. 4:54'07. And my lawyer Peter pointed out
159. 4:56that wealth management business is now a
160. 4:57bigger business, so maybe the market is
161. 4:59pricing more than that, right? So but
162. 5:02you know, my take last year, a year ago,
163. 5:04DBS is really expensive.
164. 5:06>> Mhm.
165. 5:06>> All right? And then after that Iran war
166. 5:09came and then the price retracted back,
167. 5:12all right? And now
168. 5:13as we in our 2026 of course it's
169. 5:17two no no two three SD.
170. 5:19>> Three standard positive three standard
171. 5:21deviations.
172. 5:21>> Yeah, record.
173. 5:22>> Okay.
174. 5:23>> Okay, the valuation is new record, all
175. 5:24right? So
176. 5:26and I think if you have been investing
177. 5:27in the market long enough, I think
178. 5:30you would have seen that all you have
179. 5:32seen is this thing called reversion to
180. 5:33the mean, okay? So I don't know how this
181. 5:36thing will continue to go, okay? I'm
182. 5:38happy for all the investors who made
183. 5:39money on DBS, but at the same time I'm
184. 5:41very worried.
185. 5:42>> Okay.
186. 5:42>> Because the valuation is way
187. 5:44overstretched. Okay.
188. 5:45>> All right. So I guess that's the next
189. 5:47natural question is how high can it go
190. 5:49looking at the chart here?
191. 5:51Positive three standard deviations for
192. 5:52in terms of price to book for DBS.
193. 5:55How high can it go? And someone who's
194. 5:58looking at this, can I should I hold?
195. 6:00And you know, ride the wave or try to
196. 6:02trim?
197. 6:02>> Okay. So, actually let's go back to last
198. 6:04year. If I held DBS last year, I would
199. 6:07stand in the position where I would
200. 6:09trim. And would I regret?
201. 6:12Now is it 3 SD?
202. 6:13>> No.
203. 6:13>> Okay.
204. 6:13>> Because it was a
205. 6:15My investing principle is that, you
206. 6:17know, I won't overpay for a good stocks.
207. 6:19I mean, DBS is a good stable stock in
208. 6:21Singapore, right? So, I won't overpay
209. 6:23for it, right? But if the valuation is
210. 6:25way overstretched, all right, I will
211. 6:27start to trim.
212. 6:28>> Mhm.
213. 6:28>> All right, in trenches. So, we have our
214. 6:30selling strategy all together, right?
215. 6:32And yeah, so this is something that I
216. 6:34would do, okay? So, of course
217. 6:36in the hindsight now, okay? You look
218. 6:39back, I I should have trimmed that.
219. 6:40>> Mhm.
220. 6:40>> All right, it's uh now it's 3 SD.
221. 6:42>> Who can predict a war? Who can predict a
222. 6:44war? Who can
223. 6:45>> predict that?
224. 6:45>> And it was supposed to go down now, it's
225. 6:46supposed to go up. All right, no one can
226. 6:48foresee that. So, it's that's why
227. 6:50investing is
228. 6:52not that easy.
229. 6:53>> Mhm.
230. 6:54>> All right,
231. 6:55>> [laughter]
232. 6:55>> I think at at a point of time when we
233. 6:57did right, it's based on whatever
234. 6:59information out there and we can based
235. 7:01on the probability and we assign and we
236. 7:02do a bet. But it does not mean that when
237. 7:05you do that, you 100% you're going to
238. 7:07get it. It's not like investing is not
239. 7:08like that. You never get 100% in terms
240. 7:10of probability.
241. 7:11You always get either high probability
242. 7:13or low probability, but there's always a
243. 7:15case that things will go against you and
244. 7:17you must accept the fact you must accept
245. 7:19the fact that is is normal investing.
246. 7:21>> Mhm.
247. 7:22>> Right? If you always want to think that
248. 7:24you are right
249. 7:25and everything you you you invest, okay,
250. 7:28will definitely be right, then it's
251. 7:30going to be very emotional draining for
252. 7:32you in investing. So, this one you need
253. 7:34to understand. You you don't anchor on
254. 7:35the price, but we focus back on the
255. 7:37valuation at that point of time.
256. 7:39>> Mhm.
257. 7:40>> And this is exactly what I do, right? I
258. 7:42mean, my in-law bought OCBC, right? In
259. 7:462020. That was like the COVID, right?
260. 7:49Nobody wanted
261. 7:50banks. It was low. I think we talked
262. 7:52about banks for a long time, right? So,
263. 7:54they were 2020, 2021 was one of the best
264. 7:56time to really accumulate. I mean, we
265. 7:58accumulated bank ourselves. So, my
266. 8:00in-law also my father-in-law also
267. 8:01bought, right? And then I think I
268. 8:03remember he bought about 850 to 9,
269. 8:05right? And then
270. 8:07a lot of his friends also bought at one
271. 8:08time. And I think 2022, the prices of
272. 8:11the go up. And then a lot of friends
273. 8:13wanted to exit at 11, 12 dollar range,
274. 8:15right? So, he kept asking me whether he
275. 8:17should he sell cuz a lot of his friends
276. 8:18sold. I told him, "Look at the
277. 8:20fundamental, right? Look, OCBC now is
278. 8:22still cheap. I think it doesn't make
279. 8:24sense to sell, right? So, continue to
280. 8:26hold." So, once it reaches $15, he come
281. 8:30and ask me, "So, can sell now?"
282. 8:32>> [laughter]
283. 8:32>> I say again, you ask me, I will base on
284. 8:34my fundamental. I think it's still
285. 8:36cheap, all right? It's it's not
286. 8:38And then once it started to reach 17, it
287. 8:40was started to reach the fair valuation
288. 8:42of the bank, right? So, I say,
289. 8:45"$17 you still can continue to hold,
290. 8:47right? I mean, the interest rate is
291. 8:48still on the high side, so the bank
292. 8:50should continue to do well, right? So,
293. 8:53and then only until like earlier of this
294. 8:55year, Iran war, all right? I think the
295. 8:57OCBC was trading at about 22.5
296. 9:01there about, all right? And there were a
297. 9:02lot of uncertainties, right? A lot of
298. 9:03stocks in the US had started to crash,
299. 9:05going down, right? Asian stock going
300. 9:07down. So, you ask me whether
301. 9:09should we exit because now at the time
302. 9:11of the war was just breaking out and
303. 9:13then we were not very sure as to how
304. 9:15things going to happen. Oil prices, a
305. 9:17lot of analysts were predicting they're
306. 9:18going to hit 200 dollars per barrel,
307. 9:20right? So, I still remember those days.
308. 9:21I say, "If you are worried and then you
309. 9:24are not very comfortable, you want to
310. 9:26build up cash, you can consider trimming
311. 9:29half, right?"
312. 9:30And then I think he did.
313. 9:32>> Okay.
314. 9:32>> Right. And I told him, "The valuation is
315. 9:34very near to the 2007 level. Although it
316. 9:37is not haven't exceeded that level yet.
317. 9:40>> But it is a good time to catch up to
318. 9:42trim. Right? So he trimmed. Right. Now,
319. 9:45on the high side, now also you see at
320. 9:46the time of this recording it's about
321. 9:47$25.
322. 9:48>> Okay.
323. 9:48>> Right. So
324. 9:49>> up a little bit more.
325. 9:50>> It went up a lot. Yeah, a little bit
326. 9:51more. Okay, 10% more. Okay. So
327. 9:54on the high side, he shouldn't trim now.
328. 9:55>> Yeah. Okay.
329. 9:56>> But at the point of time, you see there
330. 9:57are so many opportunities
331. 9:59>> your father-in-law still love you?
332. 10:00>> Um yeah, he still [laughter]
333. 10:02buy me food.
334. 10:04But you again you
335. 10:05>> It goes back to the valuations cuz I
336. 10:07think a lot of people look at prices.
337. 10:08>> Yes.
338. 10:09>> And they think oh it's going up, it's
339. 10:10getting expensive. But actually price
340. 10:12and valuation is two different things.
341. 10:14Cuz your price can be your price could
342. 10:15be going up, but actually valuation-wise
343. 10:17it's still reasonable or still
344. 10:18undervalued.
345. 10:19Uh until
346. 10:21you know and then you don't you don't
347. 10:22actually have to sell it. But sometimes
348. 10:23people just take a look at the price and
349. 10:25then they think oh it's time to sell.
350. 10:26>> So right now if I
351. 10:29look at the valuation for CVC, oh it's
352. 10:31like almost at the '06 '07 level. That
353. 10:34was one of the
354. 10:35>> highest point.
355. 10:36>> Right? So at least he still got some
356. 10:38share. Half half of the share he he kept
357. 10:40it. Right? He wanted to cash out
358. 10:42everything. I told him no need la. Just
359. 10:43partial. You don't need to Investing
360. 10:45when it comes to selling or buying is
361. 10:46not a
362. 10:48all in all out. Right? You can always
363. 10:49buy in tranches. Right? Because we can
364. 10:52never ever catch the lowest. We can
365. 10:54never ever sell at the highest. So our
366. 10:56strategy here is always like okay, you
367. 10:58can sell in tranches if you
368. 11:00still confident that there's there's
369. 11:02still upside, but at the same time the
370. 11:03downside seems to be quite obvious. Then
371. 11:05you can trim.
372. 11:06>> So you basically adjust your exposure
373. 11:08based on valuation.
374. 11:09>> Yeah, and of course your portfolio
375. 11:10location.
376. 11:11>> location. I mean of course you want to
377. 11:12recycle capital and all that. That's
378. 11:13other considerations. But in terms of
379. 11:15like a single stock
380. 11:17lens,
381. 11:18if it's getting more and more expensive,
382. 11:19you kind of like reduce your exposure
383. 11:21along the way. You don't just go all in
384. 11:23all out. And then you just kind of
385. 11:24adjust it.
386. 11:25>> Unless the valuation is very stretched
387. 11:27to the point that it does not make
388. 11:28sense. Right? So I've jumped all the
389. 11:31three banks together and formed this
390. 11:33chart over here and I you can see the
391. 11:34long-term since 1996, right? Right now,
392. 11:36like Roshan say, OCBC is above the 1 SD
393. 11:39based on long-term. I put the three
394. 11:40banks together, they are also above the
395. 11:421 SD based on long-term and they they
396. 11:44are at the range where they are in the
397. 11:46previous peak in the 90 99 and also the
398. 11:502006 2007 peak. They are they are at the
399. 11:54range already, right? Of course, the 90
400. 11:5697 98 that 99 that year the the range
401. 12:00went even further. They can they go as
402. 12:01high as close to three times book value.
403. 12:04So, right now in terms of book value,
404. 12:06yes, this is expensive, but if you go
405. 12:09back to at the point of time during the
406. 12:10book value, right?
407. 12:12At the point of time, it makes sense to
408. 12:13sell all the banks because at the point
409. 12:15of time
410. 12:17they are they are they are dividend
411. 12:19yield, right? It's traded at or below
412. 12:23the 10-year SGS yield.
413. 12:25>> Singapore government bond.
414. 12:26>> Singapore government securities. If your
415. 12:27risk-free bond is like that, it does not
416. 12:29make sense to get the same yield
417. 12:32and I invest in them.
418. 12:34>> Yeah.
419. 12:35>> But if you look at right now, the TTM
420. 12:37dividend yield for DBS about 3.78%,
421. 12:40the OCBC about 3.29%
422. 12:43and UOB is about 3.88% based on
423. 12:46depressed dividend because they reduce
424. 12:47the dividend.
425. 12:48And the 10-year SGS is around 2.09%. The
426. 12:5110-year
427. 12:52uh SSB yield
428. 12:55is about 2.06%.
429. 12:57>> So, like 2% and then 3 plus percent for
430. 12:59banks.
431. 12:59>> Yes, correct. So, there's still a a
432. 13:02That's why the strategy of not selling
433. 13:04everything
434. 13:06it because there's still some room
435. 13:09for the banks to run. But if you were to
436. 13:11go in
437. 13:13to the bank right now, then you must be
438. 13:15prepared because there's more downside
439. 13:18than upside.
440. 13:19Right? It's it's reverse. The risk
441. 13:20reward is reverse. There's more risk
442. 13:22than reward going at this stuff.
443. 13:24>> Yeah, but looking at the the the price
444. 13:25to book now is above 300 basis above the
445. 13:28mean
446. 13:29and your yield is only 3 plus percent.
447. 13:31>> Correct.
448. 13:32>> So it's actually not great.
449. 13:33>> So like for us we when we bought when
450. 13:35the risk reward was very high, even when
451. 13:37let's say OCBC were to crash and they go
452. 13:40through the down cycle again,
453. 13:42the probability of them going back to my
454. 13:44$9 price is I won't say it's totally one
455. 13:47but it's low low probability.
456. 13:51So
457. 13:52So if you
458. 13:54if you buy at this uh the probability of
459. 13:57you losing money and making money yes
460. 13:59you can make but you are taking a lot of
461. 14:01risk to make this amount of money.
462. 14:02That's what I'm trying to say. It's a
463. 14:03bit risky right now for people who enter
464. 14:05but people who already bought long time
465. 14:08ago
466. 14:09you you should not be all out. There's
467. 14:11still room for the the banks to run but
468. 14:15how how much room? I don't know.
469. 14:17>> Yeah.
470. 14:17>> I really don't I can't predict.
471. 14:19>> Again we are not giving any advice and
472. 14:20we cannot really time the highest and
473. 14:22lowest. Nobody can, right?
474. 14:24>> So actually we look at the CEO of DBS,
475. 14:26right? Piyush Gupta. He sold a lot of
476. 14:28shares in 2024, you know, at
477. 14:3135 to 42 dollars that range. All right
478. 14:35and that's like in 10, 20 million close
479. 14:37to 20 million shares there about if you
480. 14:39add it up all together, right? Yeah
481. 14:40that's a this is a former CEO of DBS.
482. 14:43All right now Tan Su Shan took over, all
483. 14:44right? And on a on a high side again
484. 14:47he shouldn't have sold, man.
485. 14:48>> [laughter]
486. 14:49>> Now it's 66 at the time of this
487. 14:51recording.
488. 14:51>> say that insiders sell for any reason,
489. 14:53right?
490. 14:53>> Yeah well many reasons. Maybe he's
491. 14:54retiring, right? Stepping down. He's
492. 14:56going to take the money and do something
493. 14:58else, right? But the new CEO relatively
494. 15:00young, all right? Recently
495. 15:02sold 400,000 shares for 6 million. So
496. 15:06if you ask me is this a good valuation?
497. 15:08Let's look at the fundamental again DBS
498. 15:10uh somehow it may yes it's good because
499. 15:133 SD she's selling at 3 SD. Pretty good.
500. 15:16Cashing out some
501. 15:18share that she owns. I will continue to
502. 15:20run as DBS. I think it's a good
503. 15:21decision.
504. 15:22>> Okay.
505. 15:23>> Yeah.
506. 15:23>> All right. So, I think we want to kind
507. 15:24of like summarize in a sense that this
508. 15:27is why the banks are doing so well,
509. 15:28because of inflation.
510. 15:30>> Holding up interest rates are holding
511. 15:31up. And of course, now they have more
512. 15:33recurring wealth management, fund
513. 15:34management
514. 15:35segments in their business now.
515. 15:36>> non-interest income, yeah. But even for
516. 15:39wealth management business, actually
517. 15:39when I study them, I mean, I do at other
518. 15:42part not DBS, but other business.
519. 15:43>> Mhm.
520. 15:43>> When the downside come, you get hit, no
521. 15:45matter how recurring it is, because the
522. 15:47AUM drop. Once the AUM drop, your
523. 15:49recurring fees, management fees all
524. 15:50drop.
525. 15:50>> Mhm.
526. 15:51>> So, that applies to like your ETF
527. 15:54providers, MSCI. You know, they do have
528. 15:55asset ETF management fee tied to the
529. 15:57ETF. The same thing can be applied.
530. 15:59Yeah.
531. 15:59>> But the banks now do have more
532. 16:00diversified income streams.
533. 16:03>> It's a it's Now we are global hub for
534. 16:05wealth and all that.
535. 16:06>> not as like interest rate dependent as
536. 16:08compared to the past.
537. 16:09>> I think it still is, but less dependent.
538. 16:11>> Yeah, yeah, yeah.
539. 16:12>> All right. So, that's why the banks are
540. 16:13doing well, that's why the banks are
541. 16:14all-time highs. But again, someone
542. 16:16watching this go, "Oh, it's They look at
543. 16:18the price."
544. 16:19>> Some people might
545. 16:20>> go, "Is it going to go higher?" Some
546. 16:21people might go, "Oh, no, when is it
547. 16:22going to turn around?"
548. 16:23>> Yep.
549. 16:23>> And then again, you can't just look at a
550. 16:25price itself, because looking at price
551. 16:27is just
552. 16:28it's just a price.
553. 16:29>> Yeah.
554. 16:30>> Go back to the valuation, and in this
555. 16:32case, it's PB or the yield. And then you
556. 16:34compare that to the the risk-free rate
557. 16:36in Singapore.
558. 16:36>> Yes, correct. Yeah.
559. 16:37>> And then you kind of make a decision
560. 16:38based on that. And then you adjust your
561. 16:39exposure based on that.
562. 16:41>> All right. I mean, people who have
563. 16:42bought early,
564. 16:43they can continue to benefit from the
565. 16:45upside. But people who are going in now,
566. 16:47be prepared that you're taking more risk
567. 16:48than than those people who have bought
568. 16:50earlier.
569. 16:51>> Okay.
570. 16:51>> So, again, you have to ask yourself what
571. 16:52type of investor you are, right? I mean,
572. 16:54I My in-law told me that one of his
573. 16:56friend bought OCBC before oil overnight
574. 16:58crash, and hold until today. Return very
575. 17:00good.
576. 17:00>> Wow.
577. 17:01>> Never cash in, cash out, good time and
578. 17:03down time.
579. 17:04>> Diamond hands.
580. 17:04>> Diamond hands. Just [laughter] Just
581. 17:06continue. And now, the return is really
582. 17:08fantastic.
583. 17:09>> Mhm.
584. 17:09>> All right. So,
585. 17:10um
586. 17:11you know, you invest in a stock that the
587. 17:12intrinsic value will grow over time, it
588. 17:14makes sense to hold it over time. All
589. 17:16right. It's just that,
590. 17:17there will be bull and bear market along
591. 17:20the way. All right. Can you hold through
592. 17:22that cycle? All right. So, some people
593. 17:24if they focus too much on short-term
594. 17:27performance
595. 17:28then of course you will regret a lot of
596. 17:30time.
597. 17:31Should I cash out? I yeah, should have
598. 17:32bought more. All right. It's
599. 17:34never-ending process. All right. So, it
600. 17:35depends on what kind of style you are.
601. 17:37All right. And of course, never ever be
602. 17:40too greedy also. I mean, if you bought
603. 17:42in 2020 and then now I mean last year
604. 17:45let's say you cash out
605. 17:47and then I yeah, I shouldn't have cash
606. 17:48out. All right. This is on the
607. 17:49hindsight. All right. I think if you
608. 17:51make a profit 2x I think easily 2x for
609. 17:53banks if you bought from 2020 until now.
610. 17:56Excluding the dividends, yeah. All
611. 17:58right. You should be happy about it.
612. 18:00Okay. I
613. 18:02pity those who bought at the high and
614. 18:03then have to sell at the bottom when
615. 18:05COVID crash happened. People panic, they
616. 18:07sell their bank.
617. 18:09Those are the one that even I feel very
618. 18:11sad for them.
619. 18:12>> Okay.
620. 18:12>> So, once again it depends on the
621. 18:13investor cuz like for example someone
622. 18:15who's an income investor
623. 18:16>> Yeah.
624. 18:16>> he just hold through it regardless of
625. 18:18the valuation and just collect the
626. 18:19dividend cuz that's their strategy for
627. 18:21their portfolio and their financial
628. 18:23needs basically.
629. 18:23>> Yeah. And my low yield is like what?
630. 18:26Close to 10%.
631. 18:27For OCBC.
632. 18:28>> Okay.
633. 18:28>> I yeah, very good. It's just better than
634. 18:30putting money in the bank.
635. 18:31>> Okay. But still he still decided to trim
636. 18:33a portion.
637. 18:34>> Yes. Yeah. Because
638. 18:36traditionally their mindset is that if
639. 18:38you don't sell how do you make money?
640. 18:40>> [laughter]
641. 18:40>> Okay. Okay.
642. 18:41>> Yeah. So, I understand because I when I
643. 18:43started investing at the time I have a
644. 18:45lot of seniors who think like that. If
645. 18:47you don't sell how do you make money?
646. 18:49But actually investing you don't have to
647. 18:50sell sometimes. You can make money
648. 18:52through dividend.
649. 18:52>> But you still have your dividends.
650. 18:54>> Yeah.
651. 18:54>> Okay.
652. 18:55>> Of course. You have to come back and
653. 18:56tell me oh, OCBC so much dividend.
654. 18:59>> [laughter]
655. 18:59>> Yeah.
656. 19:00>> Yeah. I think another thing is sometimes
657. 19:01what you can do is that if it goes up
658. 19:03then you basically sell to recoup your
659. 19:05capital.
660. 19:06>> Yep.
661. 19:06>> That's one strategy that some I think
662. 19:08quite quite few people use as well.
663. 19:09>> Yeah.
664. 19:09>> So, you kind of like
665. 19:11protect your downside in that sense.
666. 19:13Yeah.
667. 19:13>> You can trim a little when the bank
668. 19:15really drop then you just buy back on
669. 19:16your own.
670. 19:16>> Yeah.
671. 19:17>> Yeah.
672. 19:17>> But again, mean reversion to the mean
673. 19:19always happen in the stock market. So,
674. 19:22I hope it's not in the very sharp drop.
675. 19:25All right, if DBS ever happen and I hope
676. 19:28the book value catches up catches up.
677. 19:30>> Okay.
678. 19:30>> So that the
679. 19:31PBP multiple will start to go back to
680. 19:34your 2 SD, 1 SD or even average.
681. 19:36>> All right.
682. 19:37>> Right. Yeah. Because now the market is
683. 19:38already pricing that all the book value
684. 19:40is going to grow very very fast.
685. 19:41>> Okay.
686. 19:41>> Yeah.
687. 19:41>> So once again, we are not making any
688. 19:43predictions. We have no idea
689. 19:45which way it's going to go, but at this
690. 19:46point, this is this is the valuation and
691. 19:48it's up to you how you want to
692. 19:50you know, manage your portfolio based on
693. 19:51that information. Some people have
694. 19:53dividend strategy, they'll hold on to
695. 19:54it. Some people feel like it's going to
696. 19:56be a bit stretched, I'm going to trim.
697. 19:57Some people say, I'm just going to hold
698. 19:58on and you know, cuz I think it's going
699. 20:00to go higher.
700. 20:00>> Yeah. Correct.
701. 20:01>> Um but for us
702. 20:02>> or if the
703. 20:04dividend yield of the banks is way lower
704. 20:06than the risk-free rate
705. 20:08>> Then it makes sense to change it.
706. 20:10>> then clear everything.
707. 20:10>> Yeah. So again, it all depends. Um but I
708. 20:13think the takeaway that we want to give
709. 20:14someone here is that if you're watching
710. 20:16this, you can't
711. 20:18No, have a look at prices and then oh,
712. 20:19in hindsight, I should have done this.
713. 20:21>> Yeah. Yeah. Yeah.
714. 20:22>> Because that's based on an outcome.
715. 20:23>> Yeah.
716. 20:23>> It's an outcome-based um kind of like
717. 20:26thing. Whereas you should make your
718. 20:28decisions based on process.
719. 20:29>> Yeah.
720. 20:29>> At that point in time, what is my
721. 20:30process? What is what are my principles
722. 20:32and you practice valuation discipline.
723. 20:34>> Yeah.
724. 20:35>> And you stick to process and then you
725. 20:36repeat the process again and again.
726. 20:38>> Yeah.
727. 20:38>> So even if the outcome doesn't actually
728. 20:39go the way you want because something
729. 20:40like a war happens, you can't predict
730. 20:42that. You're sticking to your process.
731. 20:44>> Correct.
732. 20:44>> As long as you have majority of the
733. 20:46outcome in your favor
734. 20:48>> Yeah.
735. 20:48>> it's it's okay already.
736. 20:48>> Yeah.
737. 20:49>> You can't catch every boat.
738. 20:51>> Yeah.
739. 20:51>> Right. It's okay to miss some boats.
740. 20:53>> Yeah. Because if you
741. 20:54I think if you always place your success
742. 20:56on the outcome all the time, then you're
743. 20:58going to get like I think a bit
744. 21:01>> I think it's very draining to you.
745. 21:03>> Yeah. Yeah. Because you always think I
746. 21:04need to be right. I need to be right.
747. 21:05But you should be comfortable with the
748. 21:07fact that I made this
749. 21:09decision based on this process that it
750. 21:11was the right decision for
751. 21:12>> Yeah.
752. 21:13>> for that particular stock, and that's
753. 21:14it.
754. 21:14>> And if you are new to investing, I have
755. 21:16this message for you. You can never ever
756. 21:18buy a stock
757. 21:19at the lowest.
758. 21:21You can never ever sell a a stock at the
759. 21:23highest.
760. 21:24>> Uh-huh.
761. 21:24>> All right, if you are aiming for that,
762. 21:25good luck.
763. 21:26>> Yeah.
764. 21:26>> Sometimes
765. 21:27>> Sometimes you can.
766. 21:27>> Sometimes you are lucky.
767. 21:28>> That's right.
768. 21:28>> Sometimes you are lucky, yeah.
769. 21:30>> Yeah.
770. 21:31>> Most of the time, no.
771. 21:32>> Yeah.
772. 21:32>> I buy so many times so far, I only I
773. 21:34think we got it only one time in the
774. 21:35past.
775. 21:36in the past [laughter] 5 to 10 years.
776. 21:37One only, one only. One only, yeah. If
777. 21:40you get got one time, it means you're
778. 21:41very lucky.
779. 21:42>> [laughter]
780. 21:42>> Once.
781. 21:43>> Okay. So, I think that's what we wanted
782. 21:44to answer for this round table, right?
783. 21:46If you're looking at the banks, why is
784. 21:47it so high, and why is it can it go even
785. 21:49higher? Uh the answer we can't predict,
786. 21:51but then based on the valuation, this is
787. 21:53>> Yeah.
788. 21:54>> what we see, yeah, based on the price to
789. 21:55book and the yield. Uh and again, the
790. 21:58takeaway is you should base your
791. 22:00decisions on your process,
792. 22:02>> Yes, correct.
793. 22:02>> not on hindsight,
794. 22:04what the what the prices are, and could
795. 22:05have been, and all that stuff, because
796. 22:07that would just eat you up.
797. 22:08>> Yes, correct.
798. 22:08>> Uh so, if you have a process, stick to
799. 22:10it, and you know,
800. 22:12uh that should hold you all the way
801. 22:14>> Yeah.
802. 22:14>> your investing journey.
803. 22:15>> Okay.
804. 22:16>> So, I think that's pretty much it
805. 22:17>> Yep.
806. 22:17>> uh for banks and chance for today as
807. 22:19well. Anything else?
808. 22:21>> That's all.
809. 22:21>> That's it.
810. 22:22>> Banks to the moon.
811. 22:23>> To the moon?
812. 22:24>> We almost reached the moon.
813. 22:26>> Yeah. Okay. I mean, it's good to see our
814. 22:28banks doing so well. I mean,
815. 22:29>> I'm happy for a lot of Singaporeans.
816. 22:31>> Yeah.
817. 22:32>> Yeah, who invested. But,
818. 22:34>> Yeah.
819. 22:34>> uh cautious.
820. 22:35>> Cautious, right?
821. 22:36>> Be cautious.
822. 22:36>> Okay. All right. So, with that, my name
823. 22:38is Adam. We're with Victor. Thank you
824. 22:39for joining us. Any questions about
825. 22:40this, comments, put them in the comment
826. 22:42section. We'll have a discussion with
827. 22:43you. Uh if you like this round table,
828. 22:45please hit the like button, and
829. 22:46subscribe. Many more round tables coming
830. 22:48up, and we'll see you again.