Saturday, November 23, 2013

It's a bull market, why investor lost money?

We all know, the stock market all over the world is currently in the bull run (up tread) for more than 3 years since 2009. However, still we found many investors not making money, some even lost the money during this period. What's the reason?
In the bull market, not all stock are in the same up tread. The reason is not all the business are making profit, some with good profit but some of them with profit decline, or even continue to make lost for few quarter. As an investor, don't forget when we buy a stock, we are actually buying part of the business. If you buy a business that was making loses, even the stock market continue to climb up, you may end up losing money.
Predict the market. Many investor think that they can predict the market, they buy when stock index near 1,000 point, sell when the stock index hit 1,300. That's was 30% profit and hope to wait it come down to 1,000 point again. But the market is not going down, it when all the way to 1,500 points! Then he try to find another stock. Looking for new opportunity, however, most of good stocks are breaking record high, the only left, the penny stocks. Then he try to buy some of them. Few months later, the stock index up till 1,800 points, but the penny stocks, came with mix result, some going up and some going down.

The bull market is only happen after maths... you may say, “if I know the stock index will up from 1,000 to 1800 points, I will not sell my blue chip stock”. I can tell you, not many have the will to hold it even for one year. For example, when I recommend my client to buy Maybank at 2012, some of them start to buy. ( When the stock move till $9.00, many start to sell it already.
Do you want know how long I hold my Maybank stock? Five years? Ten years? Let me tell you, it's longer than that, I started invest into Maybank since I was at Form Six, though I only have my small pocket money. Over the year, when the market went down, if I had extra cash, I will turn it into Maybank stock and never sell it, or sell very small % if the stock went up a lot. I don't remember how many times Maybank stock hit above $10 and went below $5... I also not remember how many times it gave bonus shares or how many times it gave Dividend and recently through Dividend Reinvestment Plan.

This is one of the secret how to make money in long run, let the good business appreciate in value over the year and you will notice their dividend keep on increasing. If you are patient investors and would like to invest over the year, do come out a plan and consistently buying a stock every month or every quarter no matter stock price up or down. Of course, you may buy more if the stock price going down on that year. Try not to sell it, as the good business will keep on growing, you will know what's the meaning of investing after 5 or 10 years later!

Thursday, November 7, 2013

Barakah - Can you make profit of 40% or more from this stock?

Barakah is RTO company just list on Bursa on 6 Nov 2013, for details of the company, just refer to below Maybank Research:

Right now, the share price is around RM1.00, in the best case scenario, as per above research, they give the target price as RM1.40. (I think RM1.20 is reasonable).

Since the stock already jump up from 60 cents to RM1.00, investor might have missed the boat. However, there's a RCULS (Barakah LA) which now trade at around 62 cents. This RCULS can convert into Barakah share at 1:1 after one year (next year 2014 Nov). If 2014 the stock price for Barakah remain at RM1.00, investor can convert RCULS to Barakah stock and make a profit of at least 40% for one year. If Barakah stock price trade at RM1.20, then investor can make profit of about 100% for one year.

The risk is, what happen if Barakah stock price drop by 40% next year? (This will only happen if their profit drop by 20% or more, which is very rare case) If really Barakah stock drop to 62 cents on 2014 Nov, then investor who invest the RCULS can just sell the Barakah stock and take back 62 cents. Investor will lost money if Barakah stock price fall below 62 cents, again, the percentage for this to happen is very slim)
p/s: On 22 Nov 2013, this Barakah-LA now close at $1.20, investor already make more than 40% in less than one month!

Monday, November 4, 2013

What happen to Insas?

In the stock market, sometime you may find something look "cheap" but yet to discover by others.

Due to some good news, stock X have been moving up by more than 100%, from the low of 31 cents to $1.30 recently. The question is, how can one take advantage of this, since you already miss the boat? One of the way is to find out who is their major share holder. Sometime, if you are lucky, you may noticed company A hold 30% of stock X, however, company's stock price is yet to pick up...

Don't need to think twice, one can just buy into company A stock and wait for the magic.

Recently, we have similar case happen in Bursa Malaysia again... this time, company X is Inari, whereas company A is Insas. The time when we spot Insas was 55 cents, and today it's share price give a big jump again close at 78 cents...

The question is can Insas go higher from this level? This stock is fundamentally strong, profit is increasing every year and no need for me to elaborate further. Buying at this level, need to have certain "Kung Fu" if not, better stay side line.

If you are the one who worry too much, then don't touch this stock! (not only this stock, in fact, don't involve in stock market at all if you tend to worry)  Stock market is the best place for us to learn the journey of life. Smart investor know the price fluctuation is part of their life, the point is to take advantage of it to make some money. Sometime, making money or not don't matter, but to enjoy the journey. Price movement will not affect their life. In case if the stock price move into direction different from what they anticipated, they know what to do next!