Thursday, December 30, 2010

Malaysia REIT report – December 2010

Doesn't matter if market up, down or flag, our portfolio help us generate positive return which make us sleep soundless at night. The portfolio outperform long term FD rate again for the past 6 months. We received dividend of RM4,550 half yearly. Currently we have total cash of RM4,392 on hand while total market value of our portfolio worth about RM138,845. If we were to sell all our holdings base on today's market value, we should receive cash of RM143,000, return of about 30% base on original investment amount of RM100,000 since Jun 2009.

Our latest purchase on last Aug 2010, CMMT and Sunreit, gave us unrealized profit of about 12% in less than 4 months. Going forward, we do not expect to receive similar return, as the price of the REIT continue to break higher record every months. We hope to see market pull back, as this will provide us good opportunities to buy more share with lower price.

For next coming quarter, we intend to add some consumer related stock, let see if any good opportunities coming!

Saturday, December 25, 2010

How to survive for long term investment

Invest in stock market is similar to sailing, there's no smooth sail, we always face with storm and bad weather, hence our boat or ship is always shaky. While stock market is making it's all time high in terms of index performance, actually not many investor making all time high earning. The reason? I understand from one of my client, because he could not stand with the shaking situation and fear factor, he sold the share too early. Will you jump down from the ship before reaching the destination?


We can not predict the weather and do not know when the storm going to come. Weather forecast in TV quite ofter goes wrong. Similar to stock market investment, we do not know when is the right time to buy or sell, but we can prepare for it. Always ask a question, if a stock price goes down after you buy it, what is your plan? Many people would like to ask, is tomorrow stock price will go up or down? What happen if North Korea start a WAR? If you are a short term trader, not even need to ask if tomorrow market will up or down, as you are trading according to the trend, be it up trend or down trend. If you are a long term investor who plan to buy share in next five years, there's nothing to worry about market's movement, since you are not going to sell the stock tomorrow. In fact, we should be happy if market start to go down, as this will enable us to buy more share with cheaper price. 


The next question, would you choose small boat or big ship? For me, if you able to take risk and sail for short distant, then can opt for small boat. Always monitor the boat's condition, if there's any leaking, change the boat for your own safety. As the time use for repair is very costly and usually is a waste of time, the chances are very high that the boat will sink. Sailing for long distant should choose big ship, as this's not only reduce the risk of facing with bad weather, but also risk of sinking in case of knocking some rock, although the speed might be slower compare to motor boat. 


Similar to investment, it's very hard to predict how's the economy doing in next 5 years and we are not sure if a company can survive for the next 10 years. If you choose a small boat, then need to take extra care and always change the boat if the company turn bad. For me, I prefer Big Ship, the industry's leader for investment, as this kind of company tend to overcome difficult economy situation and also get higher chance for it to continue with business in next 20 years. As long as the Big Ship is moving, a bit slow is not a big deal, as my investment style is not looking for biggest return, but consistent stable return is good enough.


Merry Christmas and Happy New Year!!

Sunday, December 19, 2010

Swimming naked

My friend recently read a book regarding Warren Buffer, he ask me what's the meaning of the quote: "You only find out who is swimming naked when the tide goes out."

This is one of the famous quote in Warren Buffer's Letter to share holder. Few year's back, I also not seem to understand the actual meaning. When I read more books about Warren Buffer, finally I understood the whole story.

The story is, when the tide is up, everything will float, good stuff, bad stuff all float very high. (Even the supper heavy pig will float as well) At this time, if I ask you to point out who is naked, it's very difficult. You can only tell when the tide goes out.

In the investment world, we should try to prevent invest in "naked" company (the problematic company). Especially when tide goes high (Stock Market Index goes high), good stocks and bad stocks all move high and break the record. So do you know how to find out who is naked now? Try to find out how's the company doing (last few quarters when economy not so good) in the past before you invest, ask yourself am I buying at the high end?


Friday, December 17, 2010

The Rich know the power of compounding


Further to my blog of “Invest for future”, take the example of the tables. Let assume investor B start the investment at age 19. For first 7 years, he put $6,000 every year at an average growth rate of 10%. (7% interest plus growth) After 7 years he stop his contribution but let the Principal continue to grow at the rate of 10%.
A second investor, A, start invest at age of 26 (age when B finished with his contribution) A continue to contribute $6,000 every year until age of 50.


The result shows that B who made the contribution early and who make contribution for 7 years only ends up with more money than A who made the contribution at a LATER TIME with 24 years!
The rich know how to use TIME and MONEY with the power of compounding to generate more wealth! That is what we always say, Start early and invest for long term.

You can view my sample portfolio of how to build stable income over years: Malaysia REIT report

Sunday, December 5, 2010

How to choose good stock in share market?

Recently one of my friends asks a question, “Market is quite high now, you see the Index almost reach all time high record of 1500, do you think I should invest in stock market right now?”

This is a typical question, yes; market is highly unpredictable and volatile. Let’s assume short tem stock price will move in 3 directions, up, down or unchanged. Hence, if you say stock price is high and expect it will go down, the chance for you to get it right is about 33%.

Economy will grow, population will grow and the great business will grow big too. Past records show that, banking, consumer product, Energy Company, health cares are growing bigger each year. The idea is to choose the leader in these industries and invest the first 20% of your fund if you afraid too high to invest now. Ask yourself a question, "if the share price of the company you invested going down by 10% in next few weeks, would you going to buy some more?" If the answer is 'NO' or 'NOT SURE', then you are not ready for the investment. If one really understand the great business, the decrease of share price is an opportunity to buy more shares. After all, you are buying the industry leader, why be fearful when stock price going down? Assume you own a great restaurant with a very good business, would you going to sell it if somebody predict the economy is not so good next year or Korean is going to start a war?

Saturday, December 4, 2010

Barbell Investment Style - Part 2



Investment portfolio need balance at both side, meaning we need to buy those stock that can generate good dividend and provide capital appreciation. However, the journey for investment is not simple, usually you need at least 3 years to see the result, no pain, no gain!

Saturday, November 20, 2010

Do not too emotion in Stock Market!

Let say now you having a lump sum of fund and plan to invest in shock market.
You know market is hot for quite some time, the price of many stocks already moved up, those who bought earlier have quite significant of profit. You know currently is not best time to buy a stock as correction might come any time, it just a matter of time. Hence you wait, wait and wait for correction, hopefully can invest when stock price pull down a bit. One week, two weeks and three weeks, but there’s no pull back or correction. You can not wait any longer, as the price keep on going higher.

Finally you decide to buy now, hopefully can make a quick profit when the price go higher, maybe it will continue to go up for few weeks and take profit to sell it for quick money, buy back when it go down. This is very good idea, ya?, what’s a perfect plan. However, most of the time, you tend to buy at high price when the stock price is up and sell when the price go down, though sometime you earn some pocket money. There are many investors out there having the same idea, the clever idea but continue doing the same mistake.

When market start the down trend, everybody sell like no tomorrow. Some will just sell and hope to buy back at the lower price... panic! Some may not do anything, but feel worry to see their wealth keep on decrease in value. If this happen to you, then you could have lost the fun of investment and creating pressure yourself. Follow market’s trend will not going to make you rich!

Smart investor know that market’s movement is just the change of number, be it up or down. Serious investors are more concern about the future profit of company instead of short term price movement. Do not let the stock price control your emotion. Do not let the fear or greed control your emotion. Control of emotion need to learn from experience, meaning you need to learn from the mistake. To overcome this, I suggest investors to write down your plan before invest / buy a stock. Write down the reason why buying the stock, if you decide to sell, record down why you want to sell. Finally review the result, be it earn or lost, review the result and action plan. We can learn from our mistake by doing so, the idea is don’t let it happen again in future.

Saturday, November 6, 2010

Petronas Chemicals Group Bhd - Part 2

After compare with Dow Chemical and BASF, lets take a look the PChem financial ratio:

Profit after tax: RM2,594 million
Number of share ex IPO: 8,000 million
EPS: 32.42 cents
NTA ex IPO: RM1.97
Total Asset: RM26,824 million
Gearing almost 0 ex IPO
ROE is 16.45
ROA is 9.67
No growth story to tell, earning flag
Dividend yield: 3% if price at RM5.05

PE is 15.6 if price at RM5.05, 16x if price at RM5.20 (compare to Saudi Basic Industries PE 14x, PTT Chemical Pcl PE 20x)

What is the fair value for PChem?
Normally try not predict the price, but let assume below scenario will happen:

  • PChem with market cap of RM40 billion and become one of the top 10 on Bursa
  • PChem carry Petronas brand, to be included into FBM KLCI
  • Global stock market, especially Dow Chem and BASF continue the up trend
Should the above happen plus the GLC effect, PChem can trade up to 20x PE. However, base on volatile index from others chemical companies, the low side can trade near 12x PE. It will be somewhere between RM4.20 (not likely to happen as earning is up trend now) and RM6.20. Hence the pivot point is around RM4.90, let see how much the price give by institutional through book building on 12 Nov 2010.



Friday, November 5, 2010

Petronas Chemicals Group Bhd - Part 1

Last few weeks quite busy with one stuff, Petronas Chemicals Group Bhd (PChem), I went to visit one of their factory located at Gurun. It's huge (about 1km x 1km, see picture) and nice place, the guard ask for the I.C. to exchange with a entry pass. There are 4 to 5 building (factory) inside the area, they arrange car to drop you from one building to another.

Why visit PChem? Because they intend to list the company on Bursa Malaysia, some preparation job involved by the Investment Bank, hence follow the team.

Who is PChem? 
Do you hear about BASF Petronas Chemicals? Or Optimal Olefins (M) Sdn Bhd? Never mind, if you don't, but Petronas, everyone know in Malaysia. PChem is one of Petronas subsidiary, for purpose of listing, it combine 22 chemicals company. PChem plan to raise RM12.5 billion through IPO (biggest IPO in Malaysia history) involve issue of 2.48 billion shares. (after listing Petronas hold 69%) The price for Institutional will be fixed through book building at the range of RM4.50 to RM5.20.

What is PChem doing?
It's very technical, basically convert feedstock gases into various petrochemical derivatives and polymers - Olefins & Polymer (5.1 mtpa) *million tan/annum, and Fertilizer & Methanol. (5.6 mtpa) About 45% of revenue come from local, 15% from China, the rest export to Asia.

What's the selling points?
According to PChem, they buy feedstock from Petronas, so having advantage on cost over other players. (I doubt this point, as the past 3 years, profit was actually in down trend)
Better profit margin in rising crude oil environment, as cost remain stable. (not sure if this is true, as TITAN actually badly hurt in 2009)

What's the negative points?
Very volatile business, good years profit really good, bad years can go negative.
China is in the midst of setting up their own Petrochemical plants, meaning potentially 15% down in profit.


Sail the boat by follow direction of wind - Dow Chemical listed on NYSE, as per above chart, the price quite volatile from Jan to Sep, after Sept, it started the uptrend till now. Similar trend shown for BASF, share price now almost near 52 weeks high. If we assume all chemical companies having the similar trend, then PChem is another Malaysia Boleh! At least for next few weeks!
.

Asia Top 200 best company

According to Wall Street Journal, they choose the Asia top 200 companies base on cost efficiency, profitable and most respective business to face the global challenging. Below are some of the name appear: 

Alibaba.com Ltd
Infosys Technologies Ltd
Samsung Electronics Co.
Apple Inc
Cathay Pacific Airway Ltd
Singapore Airlines Ltd
PT Astra International Inc.
Siam Cement PCL
Public Bank Bhd
Jollibee Foods Corp
Woolwords Ltd
Taiwan Semiconductor Manufacturing Co.

Again, Public Bank from Malaysia go into the list this year. So, you know which company to consider if market crash! Click here (Invest for Long Term)  if you know to know how much Public Bank grown in past 10 years!

Tuesday, October 19, 2010

How to build retirement income for life?

New economy impact - we know salary going to increase, services and goods price going to increase faster than previous year. Policy can not be changed but we can plan and take advantage of this to invest for future, especially build up retirement income. One of the way is invest in REIT.
Several reasons why buy REITs:
1. Low interest rate - with current interest rate for FD around 3%, the return from REIT is better. For instant, with $10,000 invest in REIT, one can earn passive income of about $800 per year, as compare to deposit in bank to get around $300 per year.

2. Property is an appreciating asset
Before you buying any REIT, ask yourself if you have holding power when market deteriorate like what we have gone through in 2008. If you have holding power and do not sell during the downturn, you will almost inevitably lose money on it. After 2008, property price did rise and stabilize. In fact, any market downturn is a good opportunity, we expect few years later similar to 2008 will happen again.

3. Assets beat playing the market
The asset always be there, even the market downturn or financial crisis in 2008, if you do not sell it, you will not lose money. REIT is an asset like property which provide more liquidity, hence the price will move up and down, it's the nature for stock market, don't fear when market down.

4. Market conditions don’t matter
Investor with long term objective should be less concerned about the market's movement up or down. Anyway, property will always appreciate in value, compare to deposit in FD, you will not enjoy benefit of capital appreciation and advantage of inflation. Of course, if you want to speculate, REIT is not the right investment tools.

5. Property keeps on giving
Of course, these asset can be given to someone you love or your family. Parent who want to save money for their children's future may start to invest some money on monthly or quarterly basis. This is very best way for buying an asset and inheritance to their children.


Read more:  Malaysia REIT

Tuesday, October 12, 2010

Insider Asia Model portfolio 398 - Buy REITs

Noticed one article from Insider Asia Model, they are buying some REITs:

Quote
As such, we have decided to move some funds into real estate investment trusts (REITS), which offer fairly good yields on relatively low risks. We acquired 20,000 units each in AmFIRST REIT, Al-Aqar KPJ REIT and Quill Capita Trust for a total consideration of RM66,600. 
To read more...
Unquote


This is not a good news for us, as usually those stock recommended will going up due to many people chase to buy. Below are the price for the 3 counters as of today's closing price:
AmFirst REIT: RM1.18
Al Aqar REIT: RM1.15
Quill REIT:  RM1.00
Let's keep this record and see if these REITs counter going up.

Monday, October 11, 2010

Investment rule one - never lose money

Today I randomly choose one book from my library, it's related to Warren Buffer.
Chapter one - the writer say,
Rule No.1: Never lose money. Rule No.2: Never forget rule No.1. This is the second time I read this book, felt so important and need to write down some points for future reference.

Yes, never lose money in stock market, if you fail to do this, better do not invest. The question is how not to lose money? I think first step is find a company that always pay out stable dividend. Invest and plan to hold it for at least one year. If you can find a company say pay out dividend of about 8% p.a., then holding for one year at least better that FD.

But why need to hold for one year, someone think they should sell high and buy low? I am not as clever as those who can find the high and sell it, so I choose second option, buy and hold good company. Since we only target those company paying consistent dividend of 7% or 8%, these company can grow 20 or 30% is not a problem. Hence, holding for one year should see the result. One year later, we can review the result, is 8% good enough? Usually notice the share price already go up 10 or 20% due to good performance of financial result. In case if the share price still remain the same or lower, then we may need to review the company's overall result again before further decision make.

This is the meaning of Never Lose Money!

Sunday, September 26, 2010

How to earn Passive Income from Real Estate Investment Trust?

Most of people not aware of advantages of REIT investment which cover all types of industries, high dividend yield of about 7% to 8% annually, low entry cost, support by higher corporate governance. The best is you as an investor, no need to predict or ask if tomorrow market ups or down, just think long term. 
If you have FD in bank or bond as one of investment, it's advisable to move portion of fund into REIT to earn higher return.

What Is Real Estate Investment Trust?
A pool of money from investors is invested in properties, i.e. office building, shopping malls, warehouse ... and managed by REIT managers. (For detail of M-REIT, click here)

What REIT can offer?
- advantage to invest in property market and enjoy diversify in many types of industries instead of invest in a single physical property.
- maintained and managed by experience property managers, maximize the operating income of properties
- ownership of high quality real estate

Why invest in REIT?
- liquidity - REIT can be bought and sold easily today or tomorrow
- high dividend distribution, 90% to 100% of rental given back to investor and tax efficiency, where investors are tax only once.
- affordability - investor can buy a small portion with low entry cost

How to make money with REIT?
- passive income - sustainable distribution of dividend which pay quarterly or half yearly.
- take advantage of inflation - rental generally increase in tandem with inflation rate, this long term growth of distribution will not happen for FD or bond
- potential capital appreciation - though this is not guarantee, but usually properties will increase in value every year.
- the beauty of stock market - at time when fear control the market, everyone keep on selling their stock, hence it's great opportunity for us to buy these cheap "properties", like supermarket doing cheap sales!
Every market down trend is a great opportunity for us to make money in REIT.

Can I apply loan to buy REIT?
Yes, but not all bank provide such facilities. Bank normally provide housing loan (physical property).

Friday, September 24, 2010

Rotten is worst than...

Is market down scary?
No at all, it's more scary if the company become rotten. The "rotten" company is the one making loses year after year with sign of going bankrupt soon. In my earlier year of investment, I like to buy this kind of company, because of it's low price, thought can buy more with less money. Later I noticed what's the point to buy this kind of "rotten" company as the share price keep on lower and lower and is unable to recover when market up again. Usually the rotten is very hard to cue. From past experience, 10 out of 9 times, all these "rotten" company will turn bankrupt, so why invest in these type of company since there are so many others out there doing better? (Recently, another S company turn rotten and the share price drop from 70 cent to 18 cent now)


Market crash is not a problem provided you invest in quality stock. We know in long run, the economy will grow and big company with good management will always grow in value. This should be the first criteria of investment plan, never look at the "rotten", seek for top excellence company, not only leading in country's industries, but also well known internationally.

Saturday, September 18, 2010

Invest for long term

It's time to receive annual report again... I like the last page of report from Public Bank:
Quote
If a share holder of Public Bank had bought 1000 shares in Public Bank when it was listed in 1967, and assuming the share holder had subcribed to all right issues to date and had not sold any of the Public Bank's share, he would had in the end of 2009, 135,398 shares worth RM1,529,997 based on the share price of RM11.30 at the end of 2009. In addition, he would had received a total gross dividend of RM632,643 whilst only spent capital outlay of RM48,760 for rights issues.
Unquote

As of 17 Sep 2010, Public Bank share price worth RM12.70, let do some calculation here:
135,398 shares: RM1,719,554
Dividend: RM 726,643
Minus Right Issues RM48,760

So, total return is RM2,397,437 for 43 years, or RM55,754 per year. The conclusion, one need to invest in good company (shareholder friendly with growing business) and invest for long term will able to see the power of compound growing in capital!

Friday, September 17, 2010

散户赚钱到底难不难?

每个进入股市的人,都怀揣着一个名叫“赚钱”的梦想。
实力机构想赚钱,普通个人投资者(俗称“散户”)也想赚钱 只是,我们发现,大多数的散户股民却常在赚钱的美梦里,重复着更多凄凉的赔钱故事。即便是赚到钱的散户们,也容易陷入“辛辛苦苦三五年,一朝回到解放前”的“轮回漩涡。
散户赚钱到底难不难?问题的关键到底哪里?怎么才能突破?

Wednesday, September 8, 2010

Invest for future

Many think that they don't have any money, there's no point to investing. The truth, investing is the process of building wealth, you can start with any amount, $100, $200 or $500, the earlier the better.


Do you know that what ever amount you invest per month for 7 years at 10% is the same amount you can withdraw per month for-ever without touching the principal?


If you set aside $500 per month for 7 years, you can take $500 per month - forever. (as long as you able to get 10% annual return) 
This is the way how to build stable monthly income!

Tuesday, September 7, 2010

Common Myths about Mutual Fund

Recently noticed a lost making investment product from my father, guess what -- Mutual Fund. Invested 12 years ago with principal of $4000, today the market value is worth $1512. (OMG, a loss of 62%) Why invest in Mutual Fund and there are still many invest in Mutual Fund, they might not aware of common myths:


1. Fund management said for people who know nothing about investment, mutual fund is best for them. This is not true, as for the case of my father, he bought and kept it for more than 12 years but end up in lost position. One still need to learn what's fund management and how to invest in the fund than simply listen to sales agent.


2. Buy the fund and keep it for long term will profit in the end. Sales agent always tell investor to invest for long term, but the Fund never guarantee with profit not to mentioned about benefit from compound interest. (also read the disclaimer clause, past performance never guarantee the future...)


3. The best time to buy fund is any time. Buy at any time? Fund management claimed that the fund is managed by professional that take care of market timing, investor just need to buy at any time. This is not true, as the fund is subject to market movement, sometime the fund will sell at very low price. Seem one need to buy low and sell high? If want to buy low and sell high, why trade the fund which cost you 5%, whereas if you trade directly in stock market, only 0.5%.


4. Fund management take care of risk as the fund manage by professional to have diversified set of holdings. This is not true as the risk involved is similar to invest directly into stock market. Also, is it through asset allocation can really reduce the risk? If yes, why so many fund still selling below the initiate issue price? Why investor need to pay 4 or 5% of management fee each year for this kind of result? Investor need to pay management fee even the fund show negative performance?


5.    Buy with cost averaging method, then will have positive return in long term? If you do this, will end up dig a big hole for you! If the fund was not performed in good years, don't expect it will profit in future.



Friday, August 27, 2010

REIT - Better than bond and FD for capital protection

After study the rich's portfolio, noticed that they allocate about 20% of their wealth in REIT and 30% in bonds. I would think that it's safe to divest the bond's part into REIT, spread into all types of REITs. The purpose is to further diversify the risk, a particular REIT's actually already diversify into many properties, now we just play safe by investing in all types of REITs, such as retail, residential, healthcare, office, industrial... 

What happen when interest rate increase?
Bond price will go down if interest rate increase. Same will apply for REIT, however, most of the time, rental will increase in every 3 to 4 years. This partially offset the negative impact of interest rate high, though cost of financing will increase. It would be a good opportunity to buy good Reit with best price.  (Actually due to inflation, most of REITs will increase in value every year, hence quite rare can buy REIT at cheap price, if so happen, it's a bonuses)

Why we ignore about bonds and replace with REIT?
The reason is from the history record of US between 1990 to 2010, the average REIT's return is 9.9% vs fix asset income and commodities of 7.5% and 4.5% a year. The stock market have the return of 10.3% return, however, one need to have courage to buy near the bottom and sell at the high. However, it is difficult to buy near low and sell high, further, how can one knows when is low and high? You may miss out one of the opportunity and your return will actually much lower.

Hence, REIT's are the true total return, no matter market up or down. They provide long term dividend and capital appreciation. Any down year is a chance for your to invest more with lower cost and provide better dividend yields. 
 

Saturday, August 21, 2010

Millionaire's portfolio


According to latest's world wealth report, the rich (with asset more than 1 million) had their average allocation of asset as follow: 

Stock 29%
Bonds 29%
Cash 17%
REIT 20%
Others 5%

The rich seem are not risk taker but rather looking for stable income. What do you think about your investment style today, perhaps we should take a look the millionaire in the mirror.

Tuesday, August 17, 2010

Coconut Water

Coconut Water contains organic compounds possessing healthy growth promoting properties that have been known to help:

  • Keep the body cool and at the proper temperature
  • Orally re-hydrate your body, it is an all natural isotonic beverage
  • Carry nutrients and oxygen to cells
  • Naturally replenish your body's fluids after exercising
  • Raise your metabolism
  • Promote weight loss
  • Boost your immune system
  • Detoxify and fight viruses
  • Cleanse your digestive tract
  • Control diabetes
  •  Low in Carbs  99% Fat Free  Low in sugars
  • Aid your body in fighting viruses that cause the flu, herpes, and AIDS
  • Balance your PH and reduce risk of cancer
  • Treat kidney and urethral stones
  • Boost poor circulation

Monday, August 16, 2010

Trader talk

Since the end of  World Cup, the local market started to go up. Currently, the market is entering the phase of Trading stage, many investors had became traders, a sign where market move to high side.
Trader is someone who try to take advantage of market movement. Trader (he is not an investor), who buy and sell shares using technical strategy, normally buy when a counter start to show bullish sign and ride on the up trend until it started to slow or at early stage of down trend. Everyday, trader will run a program (usually with certain indicator and scan by computer) to find out those counters which can be trade.
Cut loss is one of the most important rule a trader follow. When everyone expect something is supposed to go up but does not, it usually will go down. There's why if your remisier or friends tell you a stock will go up because of so and so (many reasons), but they do not go up, you better run first and normally it will go down. Trader will sell the stock even face with loses when down trend come, you should not be a trader if unable to cut loss at time when suppose to sell.
The right way to eat mangosteen
For those who want to make quick money by using trader strategy, New Economic Model (NEM) and Sarawak stock play could be the possible advantage before announcement of state election. Below are list of counters and reference price as of 13 Aug 2010:
HSL 1.50
CMSB 2.48
UBG 2.26
Encorp 1.06
Weida 0.81
Dayang 2.10
SWKplnt 2.1
Scable 1.05
Penergy 1.43

Tuesday, August 10, 2010

Investing - think like rich

Investing is a process of building wealth. In stock market, many think that investing is try to buy low and sell high. Those try to buy low and sell high, we call them trader (or speculator) but not investor. There's nothing wrong to buy low and sell high (be a trader), as long as you can make money, who cares,  but this is not the right concept for investor.

Investing should be buying an asset or business that can generate stable income. The famous investor, Warren Buffer, became billionaire by investing in good and monopoly company. Let's take a look at local millionaire, do you see Genting or Public Bank's owner sell their business today and buy back tomorrow and sell again next week? No matter how high or low the share price, they are doing nothing with their share holding. As they know their company will keep on growing and business will expand every year, why bother about their share price.


Some of my friends came and ask me to recommend some good stock for investing. Others came and want to learn more about investment. I always tell them to have a clear mind and decide if you want to be a trader or investor. Don't try to use trader's concept and apply as investor. To be a successful investor, you need to think like rich. The rich own good asset and business that will generate passive income even they are not working today. In Stock market one can buy good business any time, however, one question is at what price you willing to pay. Of course, good business may not sell cheap if you buy it now. The beauty of stock market is the price keep on changing, once a while, like supermarket, it will do a promotion, at time many items sell at discount price.


In the past, almost every 2 or 3 years, something would happen and created panic selling, stock market went down by 15 to 20%, or even more depend on the degree of crises. At time, one just need to pick up a good business (of course not any cheap stock), waiting for 20 to 30% return is not a problem. Rich knows when to buy at right price, that's why recently our local tycoon T.Ananda Krishnan decided to privatize two company Measat (RM4.20) and Tanjong PLC (RM21.80) at price which look value to him.
Before you start to invest, have you think like rich today?

Thursday, August 5, 2010

Malaysia REIT report


Our Malaysia REIT portfolio since Jun 2009 have outperformed the long term FD rate in the market. The portfolio start with $100,000, during the year, we have received dividend of $8977, represent about 8% after deducted tax. We were target only to obtain stable income of slightly more than FD, but it came to our surprised, included unrealized profit of $23,000, the return is more than 30%. If we decided to sell all the holding today, we will have the total cash of $132,000.


Two new REIT listed on bursa last month, i.e. CMMT and SunREIT. We use the cash received from dividend to purchase some new shares. Though the expected dividend from these newly listed REITs are not as good as our existing holding (we expect about 7.2% return on dividend for CMMT and SunREIT) but for purpose of diversify and reduce the risk of buying too many unit in one REIT, we purchase some new shares. Since listing, CMMT done at the lowest price of RM0.975 and SunReit lowest at RM0.875. We could not buy at the lowest, but manage to buy some when it start to move up. Compared to today's market price, within 2 weeks, the newly purchase units had gave us 3% of unrealized profit.


Investor who is hunger for yield have lifted the price of REITs, which is something we do not want it to happen, as this may reduce the opportunity for us to invest with cheaper price in near term. Finally, one of my friend recently ask, what will happen if market crash in next few months? My answer to him was, don’t fear when price go down, as it’s time to take advantage of this to lower the investment cost. Isn’t it investor always looking forward to buy good properties at very favorable prices?


Wednesday, July 28, 2010

Warren Buffer's tips for investor


1. Look at stock as part of businesses. Ask yourself "How would I feel if stock market is closing tomorrow for the next 3 years?" If i am happy owing the stock under that circumstances, i am happy with business. That frame of mind is important to investing.

2. The market is there to serve you and not to instruct you. It's not telling you whether you are right or wrong. The business result will determine it.

3. You can not precisely know what a stock is worth, so leave yourself a margin of safety. Only go into things where you could be wrong to some extend and come out OK.

4. Borrow money is most common way that smart guy go broke.

5. The stock does not know you own it. You have feelings about it, but it has no feeling about you. The stock doesn't know what you paid. People shouldn't get emotional involved with their stocks.

Saturday, July 10, 2010

Road to be a millionaire

Today we going to exploit the way how anyone can be a millionaire through investing in stock market.
Similar to buying a house, one need to have down payment before start the first investment. The first thing we need to do is start saving money today. Only spend on what you need, instead of what you want - this is a way to ensure we can start to save money.

What we are looking for is to pick the right investment that can generate stable income in good or bad time. In this case, stock market provide greatest flexibility for one to start with. Many investors think that stock market is risky and hard to make money. They lost confident due to lack of knowledge to choose the right stock or heard from friends' experience of loosing money in stock market. They never know that invest in stock market can become a millionaire if you choose the right stock, invest in good company with proper trading plan.
What is good company? The answer is simple, the company with good profit and good management. To find out this kind of company, one may need to do some homework, try to find out the company's financial status, profit level, liability and potential growth in future.... If you never do the homework, then better do not invest in stock market, unless you have a good investment adviser who can help you to do this.
Rome was not build in one day, similar to your road to become millionaire. It's a process of build wealth slow and steady, but not a very long time as others may think of. Let me give you and example of how this can be achieved.

Say if you plan to buy a new car (Honda City) with down payment of $18,000, monthly installment of $750 or yearly $9000 for seven years.

But if you change your mind of not changing the new car, instead use the money for investment for the rest of 7 years, earning 12% dividend, how long you will become millionaire?

Answer: Start to invest begin with $18,000, continue add on the principal of $9,000 every year for the rest of 7 years then stop. Let the principal continue to earn 12% dividend every year, you only need 25 years to become millionaire:


Saturday, June 26, 2010

The REIT - how it benefit you


Want to take the ownership of the property and participate the income generated by the property? If the answer is yes, then buying REIT could be an option, instead of buying physical asset.

There are numerous advantages to own the REIT over the physical asset. One need not require large capital and labor requirement, as the job already taken care by the management of REIT. Furthermore, the fund of the trust are pooled together to buy numerous properties which provide greater diversification to offset the risk of negative impact over single property.

When you buy REIT, you are essentially buying a physical asset with a long expected life span and potential for income through rental generated by the property and potential property appreciation. Since REIT require to distribute 90% of their income as dividend, meaning the holder is able to participate the profitability of the rental income.

With so many way to invest your money, stock, bond, mutual fund, property, REIT and others, it's important that any decision make should be well informed and follow with detail research if possible. REIT could be an unique type of investment that can fit to your investment portfolio.

Below latest article from The Star.

Tuesday, June 22, 2010

Is Dow Jones Stable now?

Dow Jones Industrial Average index show the up trend again after nearly one months' correction. The question is whether the market will continue to go up from this point, especially yesterday show one Shooting Star. I would expect index to challenge 30 days MA, if it can hold firm, then the chances are high for it to continue moving forward.

This week got another breaking news, Fannie Mae(FNM) and Freddie Mac (FRE) going to delist from NYSE. Again, proof the theory is correct, never invest in problematic company. If you hold the stock before the announcement made, sell immediately even if you have to encounter huge loses. This is to protect bigger loses that will follow if you continue to hold on to this stock.

From our experience, the delisting process will move the stock to trade on the over the counter bulletin board *OTC BB. The spread between the bid and ask prices having a big gap, hence there are substantial costs involved, only few people or market makers willing to trade and causing share volatility increase.

Saturday, June 19, 2010

你可以怎樣投資產業

錢該放哪裡?置產、買產業股或產業投資信託?

眾所皆知,投資房地產是最佳投資方法之一。不過,您是否想過,投資房地產方法不一定是置產,還可購買產業股。

在2005年後,投資者更多出另一種選擇,即投資產業投資信託,定期收取股息。

在3項選擇中,投資者應置產賺取增值、收租金;買產業股等待突然爆漲、派息;或投資產業投資信託收取固定股息?究竟何者為佳?


產業投資信託 - 不必大筆投資, 省卻後續麻煩

亞洲Hall Chadwick主席古瑪表示,大馬人平均一生中投資最大的資產類別就是產業,除了具抗通膨同時也是財富的象徵,更重要的是可留給下一代繼承。

不過,置產也讓投資者面對一些限制。比如人們一旦急需用錢時無法快速脫售,另外還需承擔銀行利率及負債,出租時難尋租戶。

“若要省去這些麻煩,人們可選擇產業投資信託。”

古瑪說,由於產業投資信託以單位出售,投資者即使沒有大量資金仍可投資。

雖然產業投資信託與置產都能達到資本增值,不過前者派息穩定,在流動性及稅務徵收都略勝一籌。

“同時,投資者在無須具備專業管理知識,也能擁有部份大型資產。”

他揚言,投資者將產業投資信託納入投資組合其中一部份非常重要,主要是這類型投資擁有長期回報的過往紀錄,較少受到股市波動及債券影響,可減少投資組合風險。

未來半年前景看好

投資產業信託,基於令吉走強將激勵國外投資者收購本地資產,如股票或產業。當國外需求上升,增值也隨著增加。

未來半年,產業投資信託在馬幣走強及通膨下,有望在高過或接近淨資產值交易。

“即將上市的雙威產業投資信托,其潛在總值超過40億令吉。一旦個別產業投資信託超越40億令吉,即可吸引外資。”

產業投資信託好處是可立即兌現,若暫停定存將遭罰款,而產業投資信託每季度及半年獲現金派息。

不會實際擁有房產

當然,有人質疑,雖然產業投資信託入門門檻低,但若置產並在期限供完,投資者將可擁有自己的物業。若投資產業信託則沒有固定物業。

一旦置產投資者必須借貸房價的90%,若是產業投資信託則無須大量金額。

仍有增值機會

另外,產業投資信託在20年後也會增值,加上資產通常都位於房屋熱點而非二手市場,因此無須擔心。

“別忘了若自己購買店屋,還得必須親自找租戶。投資產業信託全權交給管理人負責,省下不少麻煩。”


投資者可參與高成長產業股,尋求資本增值,同時也可購買產業投資信託,尋求穩定股息。



Posted and commend added from 星洲日報/投資致富‧產業焦點‧2010.05.29
http://search.sinchew- i.com/node/553611?k=產業信托