Working the SET come dividend time

[Supaluke]

Curious to understand the various strategies used by members who invest in and trade the SET.

I have a modest investment and my Thai partner has also.

In the past I have done well, profits greater then losses and well above inflation. I'm not shooting the lights out, but making some steady profits over the years. The 10% tax on the dividends is something I'm very mindful of.

My Thai partner doesn't have that concern.

So, anyone care to share their trading ideas or strategies in regards to the SET.

I appreciate that this can be a delicate subject and one man's trading idea is another's folly, so feel free to PM me.

Generally, I'm interested in Shares/Stocks that pay a decent dividend (even if I have to pay that 10% tax).

Usually my buying indicator is when the share price crosses the 30 day moving average in a positive direction.

Sure, it's 'old school' the 'Trend is your Friend' style of investing, but it's worked for me in the past.

Curious to know your approach to trading the SET, especially as we are entering soon the reporting/dividend time of the year.

[fletchsmile]

There are people who make money out of trying to time investments, and on dividends looking at historic price tends before and after dividend time to exploit what they see as technical factors, eg some people buy certain stocks and hold for the dividend then sell, and knowing that people look at trends around particular stocks and come up with stats and so around dividend time. This isn't my style though, and use of technical indicators and charts isn't my style either, although it can be useful just to be mindful of it. Sometimes if everyone believes and acts on that belief something it can become self fulfilling. So whether you agree with and believe it doesn't matter so much as others do believe and act on it.

Personally I don't invest in individual Thai stocks these days. There are a variety of reasons for that, including compliance reasons, effort and time required and nature of the market, availability of info, additional time reading in Thai etc. Thailand isn't by any means a perfect market. Being connected to other market participants for info and rumours is something as a foreigner I'd also be at a disadvantage in. Also, while I understand well investment principles, I don't necessarily always know the Thai market, in the same way I grew up in other markets.

Basically my belief is that over time I'd struggle to beat the best active fund managers on a risk adjusted basis, and really can't be bothered putting the time and effort in to do so. Especially as Thailand is just one of many markets - albeit an important one to me living here. So my preferred route is identifying the best mutual funds or unit trusts for Thai equities.

Additionally for unit trusts/ mutual funds as well as getting access to expertise I can spread risk. I use them for long term investment. Not trading

Another benefit of mutual funds if you work and pay tax here is that you can often get tax benefits on Long Term Equity Funds (LTFs) or Retirement Mutual Funds (RMFs), which can effectively mean you get a 1000 baht investment for a cost as low as 650 baht after tax relief factored in, providing you hold for certain periods.

On funds, more often than not its better to take a fund that doesn't pay dividends / accumulation units so their is no distribution and no tax on it. In contrast for a dividend paying fund you can elect to pay tax at a flat rate of 10% WHT on the dividend or at your marginal rate of tax. If you pay no tax and amounts are small / covered by allowances then paying at your marginal rate is OK.

Receiving dividends can be convenient even though not always tax efficient. Generally dividend paying investments I prefer in the wife's name as she is a housewife and pays little tax, whereas I pay tax.

There are usually no capital gains tax on most recognised mutual funds.

Generally also I'm more interested in overall return than dividend returns. So if I want to take out say 5% I just sell a few units and no tax. However, being married with kids, I like the idea my wife could hold dividend paying investments and just collect dividends if anything happened to me, without having to work out so much how much to sell. So while a bit less tax-efficient they can be useful and more convenient for some people.

For trading I prefer SET options and occasionally futures. Here I don't look at individual stock futures, only the index, and can take views on the market as a whole.

Also the market isn't well developed, so a retail investor knowing what they are doing has a decent chance. In contrast in say UK you're up against experienced traders and institutions with far more resources, systems, trading algorithims, speed etc. I also like being able to trade in different ways, eg strategic positions, hedge other positions, exploit pricing differences etc, compared to just long term investing. Given the leverage my trading activities are much smaller than long term investments, which are the core.

Nice too to be able to make money in falling markets, so while this year has been a poor one for me for the SET and long term investments, I've had a good year again on SET options trading.

Cheers

Fletch

Edited December 17, 2015 by fletchsmile