Stock Market - Experience Sharing

Trading a Business?

2012-01-29T23:23:00.000+08:00

Haveyou ever think of “Trading as a Business”? The idea of this bookis quite good, a successful businesses generate more cash than itconsumes, so do the trading.

Chinesesay, In every crisis, there's an opportunity! However, thevery first thing is having a trading plan – the strategies to makemoney, minimize the risk and increase profit! “No one plan to fail,but fail to Plan!”

Alwaysstart with small amount, practice make perfect. Don't afraid to makemistake, as every mistake will give new experience. The experiencegain will enhance in your future plan. Most important is admit themistake done, if you buy a stock, but the share price go down, cutlost first! Stop investing if you are in doubt where's the directionnow! Don't let the mistake become bigger! I like the quote fromWarren Buffet, “There's only 2 rules to make money in stock market,first, never lose your money. Second, never forget the first rules.

Tradingis not speculating or gamble! Never listen to news, rumors or tips,do your own analysis. Many people don't know when to buy, as theydon't understand trading is probability! Gambling always lose becausethe probability is not at your side.

Dealwith your own psychological difficulties, learn to control greed andfear. Daily movement of price and volatility of the stock market isthe fact, if you can not take it, this type of investment may not beright for you.

Tradingis not mean get rich quick scheme! Trading is not making easy money as well! It's a serious business with proper planning. If you start with $1,000, every year only need to make 4 trade whichearn 25%, you will become millionaire after 10 years!

Last,build up your investment knowledge with latest equipment ortechnology to improve your trading skill, building wealth andsecuring your capital!

Happy Dragon Year 2010

2012-01-23T17:53:00.000+08:00

Wishing you a fabulous New Year full of Great Achievement and Experiences!

Plantation Stock

2012-01-11T00:01:00.000+08:00

Do you know what is this?

This is Palm Oil Tree in Malaysia. I like the Palm Oil farm, it's the gift from Mother Nature - the resource which can grow and sell with high price. It can make into cooking oil, margarine and various oleochemicals. Malaysia having the world's largest plantation company - SIME Darby, which produce 5% of global production. Beside, there are many others small to medium size plantation company listed at Bursa as well.

A friend ask, "Do you buy Plantation Shares?" I say, "Yes"
Then he ask again, "Do you plan to sell it, as it's almost at the high price now?", I say, "No, because I plan to keep it for long term."

Yes, the world's economy may not stable right now, many news from Europe, especially about the financial crisis. But, who care... let say, today you own a Plantation Company that produce very good income for you, do you sell the farm today because worry about tomorrow's news?

You can check the Palm Oil's price at this web: http://palmoil.com/exchanges
We do not know Market will up or down tomorrow, so just forget about it.
I don't know if tomorrow Palm Oil's price will up or not... but i know, if I own a good plantation, with hard working and honest farmers, the future's earning will increase and making profit.

As long as you don't pay too high to own it, the Stock Market's pricing fluctuation is an advantage for us.
.
Some figure:
1. Production cost for CPO is about RM1,500 per ton. Average CPO price for the past 2 years was above RM3,000, this is ample of profit margin!
2. It take 3 years for palm oil tree to bear fruit and will continue for the rest of 13 years.
3. Don't forget after 16 years, the land's price will increase as well, then the owner can decide if want to replant or develop the land for other purpose.
.

Malaysia REIT report – Dec 2011

2012-01-02T11:11:00.001+08:00

Theportfolio generate gross cash dividend of RM5,434.83 for the past 6months. The total gross dividend for the year is RM10,646, this implythe total return of 10.6% p.a., or 9.6% net after deducted taxagainst our initiate investment of RM100k. This is equal to receive extra cash of RM800+ every month without doing anything, which make us sleep well at night even market crash tomorrow.

Wepurchase from the market the new Pavilion REIT (Pavreit) with our cash in hand when it was listed in Bursa last month. As of year end closing, we havecash of RM3,554.16 after including the cash dividend and deducted thecost pay for Pavreit.

Currently,the value of our portfolio worth RM161,161.66, if we were to sell ourholding base on today's market price. (initiate investment ofRM100,000 Jun 2009) However, we do not have any intention to sell ourportfolio in near future.

Innext few months, we expect Amfirst and Hektar going to give RightIssue, we will adjust our portfolio base on market condition anddecide if going to subscribe the Right Issue or not.

.
The purpose of this report is show how to build consistent investment return (we are not expect frequently buy and sell from this portfolio) and at the same time keep track of our REIT investment portfolio and return.
.

The different between Fundamental and Technical Analysis

2011-12-22T15:49:00.000+08:00

Just read one article, you know how the author describe Fundamental and Technical Analyst?

In a shopping mall, a fundamental analyst would go to each store, study the product being sold and then decide whether to buy it or not.

A technical analyst would sit on the bench in the mall and watch people go into stores, then he study the patterns or activities of people going into each store.

So, we can actually combine both:
1. Fundamental analysis shows us What To Buy
2. Technical analysis shows us When To Buy
.
Below two eBook from CIMB, feel free to download:

1. Fundamental Analysis
2. Technical Analysis
.

Flipping the Stock

2011-12-18T23:52:00.000+08:00

My friend ask me, how to make money in stock market? Actually, making money in stock market is not so difficult, there are many tools available today. Investment is all about plan with goal, strategies and follow by action. One of the easy strategy use by many is Buy and Hold. Some suggest to buy only when market crash.

It's true, timing and opportunity! While waiting market to crash, sometimes, we may use small percenage of our money to trade the stock. All the business actually involve in trading, buy low and sell high. The manufacturer buy raw material, process and sell at higher price to make profit The agent buy from factory and sell to consumer with higher price to make profit. Sometimes we also call this method as Flipping Strategy- buy the stock for short term, with intention to sell it quickly on same day or few days.

The best time to trade is during the uptrend formation. We know something is hard to move, but once move, it's hard to stop! Yes, momentum, stock price also observe the same movement. Many investor would like to ask, why the stock move up? Sure got something! But it doesn't matter for investor like us, we only care how to ride on the trend and make the profit.

As I always advise my friend, stock can talk! Listen to them carefully, volume and price movement will tell you everything! For example, before the party end, usually it will follow by big volume and the price is flag or down. If you happen to buy the stock, get out of it before the music stop! Every stock can talk, if you DO Not understand their meaning, better stay out until you study and understand their language.
.

Single Tier Dividend - Good or bad for retail investor?

2011-12-10T15:38:00.001+08:00

Two years ago, Malaysia government introduce the system of Single Tier Dividend. There will be a transition period of 6 years until 31 Dec 2013 for the existing company to comply with this system. Many are so excited, because they say, oh... nice... now dividend receive no need to pay tax and no need to declare as well. Few weeks back, when I discussed with my team here and I noticed that many still unaware that we, as individual investor will lose a bit, especially for retiree. Why?

Let look first why government want to introduce this system? Many reasons given, the main one, save administration cost to refund tax to individual and individual no need to pay tax as the tax under company is a final tax. By doing that, i think the main reason, Government want to boost their tax income!

Imputation System
The current system for dividend pay out is call Imputation System. For example, when a company make a profit of $100, government will take $25 (25% of tax) so the profit after tax is $75. Let say, now the company want to pay out all the profit as dividend (usually the company seldom payout 100%), so the tax paid by company are passed to share holder as tax Credit. (S110) In this case, the company will have Imputation Credit of $25.

Share holder receive $75 as net, but need to declare RM100 as gross income with 25% tax deducted. In this case, many still assume they will receive gross dividend as $75, but actually the gross is RM100 and you can claim back 25% if your tax bracket below 25%...

Let study the actual case under Dutch Lady (Dlady) annual report :

In Dlady's case, the 2nd special interim gross dividend is 40 sen, but 30 sen was recorded in company's statement. So the total paid out is: 64,000k (total shares) x 30 sen = $19,200k.

For the year of 2010, total payout was $46,400k and was recorded in P&L Statement:

In above case, if investor bought the share just before Dlady declare the 2nd special interim dividend, he will receive net 30 sen, the dividend voucher will record as gross 40 sen, tax deducted 10 sen(25%).
If the share holder fall under tax bracket of 19%, he is entitled to a refund of 6%.

Single Tier System
Under this system, tax paid by company (25%) is final tax. When a company make a profit of $100, government will take $25 (25% of tax) so the profit after tax is $75. Let say, now the company pay out all the profit as dividend, there will be no more Imputation Credit.

Share holder receive $75 as net, no need to declare as income.

Assume after 2013, Dlady still pay the same amount of 2nd special interim dividend, under the company's statement, it will mention as 30 sen under Single Tier Dividend. (same under company's statement)

Share holder will receive net 30 sen, it's tax exemption and not require to declare.
So, now you know the reason why no need to declare dividend under Single Tier System?
Share holder is unable ask for refund of 6% in the above case, so it's very clear who will benefit most in this system!

P/s: If i am a major share holder of a cash rich company, I may consider only payout huge dividend after 2013, so that no need to declare personal income tax!
.

What you have learnt from Stock Market?

2011-12-05T00:04:00.001+08:00

Oneof my friend told me, he dare not invest in stock market, because hefeel that market is unstable at the moment. Some day up and followby few days down, he was unable to sleep well when he involved inStock Market last time.

Whywe invest in stock market? If a company's stock selling at one dollartoday, tomorrow and one year later, what's the fun to invest in stockmarket? We know one thing, inflation always happen, today's assetworth 1 million, it can become 1.2 million one year latter. Yes, wewant Capital Gain! This is true only for investment grade stocks! Weneed market up and down to make money.

Thesecond thing I like to invest in stock market is because ofliquidity. You can sell the stock you buy and take the cash within 3working days. Hence, you need to select the right stock to invest,avoid those stock with low liquidity, unless you are very rich andwilling to wait for years.

Stocksdo pay dividend, if you know how to “save” high dividend stocks.We particularly like the stocks which pay dividend with the increasedividend rate every year. Many still don't know they can sleep wellif choose this kind of stocks.

Tryto make money when you buy. Buy on the day when market crash! Cheapsales are every where. Find the value stock, buy the value of 1dollar with 50 cents, then you know at the time of buying, you hadearn 50%.

There'sno secret of creating wealth in stock market. All you need to do isfind the investment grade stock, buy when market go down. Make surethe stock pay dividend of more than bank's FD rate. Invest in Stockmarket is high risk only in the case of you do not know what you aredoing!

Some Stock Market Trading Tips

2011-11-06T18:47:00.000+08:00

Volume – If the stock continue to make record high (up trend) for few days (or weeks), beware of sudden increase in volume (3x more than previous 3 days). Check the price, if the price stagnant or go down a bit, sell the stock immediately. This is the sign of “Big Leg” unload their stock.

Onthe other hand, if the stock go down (down trend) for few days (orweeks) and the price already stagnant then suddenly the price go downwith volume increase, then take a look at the price. If the price notgoing down further, buy some at this point, it will rebound soon.

Buy up trend stock - If you want to go north, then find the train go to north. If you accidentally take the train that go south, jump down (Cut Loss) immediately before it's too late. The logic is simple, if you want to buy stock that can moving up, then buy the stock that start to move up. Many investor seem doing the opposite, they did not buy the up trend stock, then always ask, why the stock can not go up?
Do not expect to buy at lowest – I will not buy the stock that making the lowest record, because you may find tomorrow's price lower than today. However, you can put this stock in your buying list, buy some when the down trend reverse. The best is when the price start moving up 5% or 7% from lowest, bear in mind to follow above strategy in point 1 & 2.
Do not predict the market – Trade according to market's trend, not only buy the uptrend stock, we need to listen to the market. If you notice the top loser, the gap down is very big and the top winner, the gap up is smaller, then try to hold more cash than share. If you happen to trade the stock at this period, try not to hold too many share, as now cash is king. But remember to pick up the share when it reach bottom by using the above strategy.
Market Crash – Market crash is an opportunity, this will happen 2 or 3 times every year. This may due to sudden incident or some bad news. Don't panic, this is time to collect Blue Chip. Let the price fall for few days (or weeks) when it stable, just use the above strategy to buy it.
Keep your winning stake – Beside using stop loss and lock in profit, we need to know when to keep cash. I keep the same amount of fund for trading, the winning part will buy more REIT or some stable Blue Chip stock. This will ensure we do not vomit out what we have made from stock market when market suddenly crash. Though you may have proper cut loss plan, but when your fund grow big it may become hard to control, hence I maintain the same amount (or only increase small percentage) in trading. In case if market crash, I can always sell REIT and buy those good stock when opportunity arise.
.

Regret Now or Regret Later

2011-11-05T13:32:00.000+08:00

Investingis about decision. Many people know asset/ shares will increase invalue. When the market go down and the opportunity come, how manypeople dare to take action? Many people afraid to make decisionbecause of fear. They fear of doing something that they will laterregret. Because of this, many people fail to make the decision torestructure their portfolio, end up holding too much cash!

Byavoiding the tough decisions, sooner or later, we must face secondforms of regret – the regret of not taking any action, when we lookback, things we do not done cause greatest regret.

Infact, we can always deal with regrettable decisions by repairing ouraction. Our regret only intensifies as we realized the price we'vepaid by delaying important investment decision.

Inthe journey of life, we are likely to evaluate our choicesdifferently. We can improve our financial or life decision when timecome. We can invest regularly or invest when opportunity arises. Ifyour existing portfolio is not optimally positioned, take action tofix it now. If your stock or portfolio not making any money, plan tocut loss to avoid further regret. Do not delay the important decisionor allow fear of potential short term volatility to derail yourimportant investment decision.

Don'tcome one day you say, “if I know earlier...”, Chinese say, if youknow earlier, there will no beggar in the world any more.

How many hunting dogs do you have?

2011-10-12T23:59:00.000+08:00

Justread about one article, illustrate investment as hunting. You canhunt in group, or alone. Smarthunter always hunt with dog or group of hunting dogs to reduce their effort.

Traders who trade every day is similar to hungry hunter who killsevery day. It's better to train many dogs that can help in huntingjob. Let the money work hard for you, money hunt for more money.

Whereassome hunters seldom hunt, but he bleed the dogs and sell to thosehunters who need it. He 's business owner or Investor who create thebusinesses and looking for passive income. When the hunting seasonscome, many hunters looking for dogs, they willing to pay high price,especially those dogs can run very fast.

Timescome when winter season approach... many hunters will sell their dogas they do not know how long the winter last, it could be one monthor one year, nobody know. “Winter season” is very scary for thosehunter who never prepare, sometime they need to eat the dog if wantto survive as nobody want to buy their dog because all the hunterscan not hunt too and they are out of money. This is the time when smart investor make theirprofit... they will buy those good quality dogs with reasonableprice, keep it in the safe place, feed it and grow it. They hope onedays, after the winter end, they can sell the dogs with good price.The only conditions is they need to have extra fund, as nobody knowwhen the winter will end.

Oneday, the sun coming out and winter end. All the hunters coming outagain and look for dogs to help them. Those hunters who own dogs nowcan sell with very good price, this is how they make the money. Ofcourse, they will hunt too because now they have many good qualitydogs can help them. Have you prepared to be a smart hunter?

Market Crash... buy more or cut loss?

2011-09-23T00:40:00.000+08:00

Last few days, we sawthe market having fun, crash like crazy, people panic selling like notomorrow. Yesterday we saw US Dow Index down by 283 points, at thetime I write this notes, it's down by another 350 points, Dow Indexcurrently stand at 10,774. Many investors force to shake out in thisvolatile market with one of question in their mind, if the market godown further, should he continue to average down, or should he cutloss?

To a new investor, hewill confuse, as many will suggest to “Cut Loss”, whereas,someone might say, no, it's time to buy more so that you can averagedown to reduce the cost. I think in order to do the right thing (letdo not care if this's correct way or not), one must understand what'sthe purpose or intention when he bought the stock. Is it for shortterm speculating purpose? Or is it for long term investment purpose?Also, he may want to find out if the share he bought is mean forspeculate or investing grade.

You should “Cut Lost”or sell first and think later if you fall under the below categories:

Initially you just plan for short term to earn fast money, but something reverse happened.
You can not afford to lost more that 5% of your principal.
You believe the momentum theory which say that something hard to move, if move hard to stop.
You are more to Technical Analysis which say that once the support line is break out, the share price will move down to next level
You do not understand the company, don't know what they are doing, basically know nothing about their profit record, so better cut first and regret later

However, you canaverage or buy more if you believe the below:

You have proper long term plan and strategy for investment.
You are prepared if tomorrow market close for few months and you fund is stuck there and you can still sleep well and enjoy life.
You believe people are fearful and you want to be greedy to buy cheap now
You like the Fundamental of a company and it's a 5 star investment grade.
You know the company well and have done enough home work which lead you to believe that their earning is proven, consistent and having room to grow

Every trade is a new separate decision, it got nothing to do with previous trade. "Average down" is not to be used as a reason to reduce cost. For me, if I bought a stock and it's share price went down out of my expectation, I will sell first if it's a speculate stock. Especially when I read the news on the Edge yesterday, one of the title read, "Swee Joo is to be delisted on 26 Sep 2011", just think if someone own this stock without cut loss at 5%, it will become a total loss now.
.
If the stock I bought is an investment grade, I will not cut loss. However, I will not average down either, instead I will use my investment style which I feel safer in the way, see my previous post, Buy when price down or when price up?

It's a waste of time toask why the share price going down, as there are simply too manyreasons. It's better to know your position, intention or purpose ofinvesting and the condition of the target company.

Do you like the stable market?

2011-09-17T23:58:00.001+08:00

In natural science, thebalance environment always see something like this:

Electron = Proton, orwhat we say, Positive is equal to Negative.

Similar in stockmarket, if nothing happen:

Buyer = Seller

In this case,technically the stock price will remain the same all the time. (thisis boring ya, just imagine if a stock just remain the same pricetoday, tomorrow or next year) Once a while, some kind of news willspark the imbalance, like what we faced in 2008, the financial crisiswhich caused few big banks to meltdown, making seller more thanbuyer. Sometimes, the seller became panic and want to sell stock likeno tomorrow and dump the share price at what even price.

Recently, market seemto encounter the similar imbalance again. It's full of negative newsevery where. It remind me of one famous quote:

It's a mistake to sellsomething worth 1 dollars for 50 cents with the hope to buy it backat 30 cents.

It's also a mistake ifyou refuse to buy something worth 1 dollars which now sell at 50cents because you believe that it will drop further to 30 cents.

It's definitely amistake if you buy something at 1 dollars if it only worth 50 centswith the hope to sell it above 1 dollars.

It's time for valueinvestor to act and use their wisdom again.

What cause the share price going down?

2011-09-13T13:37:00.000+08:00

Every day,share price change up, down or stay side way. What cause theshare price to change? In fact, nobody really know the answer, eventhe experience traders.

Some special event,like financial crises, those experience know share price will godown, but they can not predict how much it will go down and when itwill end.

If you treat share as“goods”, most probably the supply and demand cause the share price to change. More buyer will create higher demand, then the price will going up.In the normal circumstances, demand = supply, hence share price willstay flat. In the event if the market is full of negative news, it create more seller,meaning supply more, the price is under selling pressure andtend to move down.

The funny thing is,share is not something necessity, it's not something everybodyneed in daily life. Today's buyer can become tomorrow's seller. If a country sparka war, everyone will become panic as because they only want to holdcash. This will hammer share price to become historical low.

There are many events such as politic, economy, investment opportunities available,currency change, company's profit and loss status, inflation andinterest rate will give impact to share price. All these will givemarks to a share price, be it positive or negative marks. Since every thing is unpredictable, hence, predict the market's moving is a waste of time.

Share market is a bigocean, it's full of jaws and crocodile, don't ask me who they are?They could be you or me or any business men. Times come, thebusiness man would like to press down the price to force you sell himat low price. Some other time, the business man would raise the priceto ceiling high in order to sell you at high price. Investor need toact like a business man, investment is actually similar to doingbusiness, price is what you pay, value is what you get. Sell toothers when the price is high and buy from others when the price islow. If you can do that, then your journey of life is full of goldalong the way.

Investment Note Book

2011-08-31T22:52:00.000+08:00

Do you have the habit to write a diary? I wrote investment diary, record down every trade done in stock market, buy or sell, in a note book. This keep remind me, every trade need proper planing start from research, monitor, set target price, list the Main Factors, execute the trading and sell strategy including if something went wrong.

Planing – Before buying a stock, have a plan, be it for short term trade (speculate) or invest for long term. List down the reasons why want to buy this stock. Invest in a stock is not as simple as buying 'kuih' at night market, you are not paying few dollars but thousand, hence need to be serious and careful.

If there is no reason of buying a stock, meaning you could have know nothing about the company or haven't done enough research. Usually I like to ask, “do you dare to buy more share if the stock price go down further tomorrow?” If the answer is “No” or “Not Sure”, then better think twice, maybe it's not good time to buy. Another question I like to ask, if tomorrow Stock Market close for 3 years, do you still want to buy the stock? What happen if tomorrow US market crash 1,000 points due to what even reason?

After doing some research to come out few points to support the trading, it's time to monitor and set target price. Just wait for months, once a while, sales will come. Some day, you may find there are many stocks falling in price, some discount 10%, 20% or even 30%. (like what's happen last few weeks) Soon you will notice many negative news in news paper or internet. It's time to test your skill and ability to act differently from others. How firm are you stand still with your original plan?

In this situation, I find my note book very useful, I will read through all the mistake done in the past and other investors experience, it's the time to use logic thinking plus the experience to conclude the decision. "Money is similar to rain, there are million and trillion of it, it need to go some where, build a pool to prepare for the rainy day to keep this water, if not, it would be a waste to let it go some where" - one of the quote from a experience investor.

Some snippets about TENAGA (TNB)

2011-08-23T14:28:00.001+08:00

TNB is the only electric power provider in Malaysia, the business is monopoly but they can not simply raise the price. My father was ex-worker from TNB, hence I know TNB since the first day of listing when I was studied at form six. Bursa market was so hot during 1992 bull run (that time know as KLSE), it came to record high of 1300+ points in one year. TNB IPO price was $4.50, it went to $7.20 on first day of listing. In few months time, TNB went to record high of $20. Then one day, out of sudden, it drop to RM15.50. One week later, TNB close at RM10. In the next one to two year, TNB ranging from $7 to $10.

One of my father's friend, Mr Lim, he bought some TNB share at $9. He added more when it drop to $8. When TNB drop to $7, he bought again but with more lots than before. That time, I don't understand the method, but later I noticed this is call Cost Average Down. In 1994 to 1995, people seem to forget about previous pain, TNB share price reached $12+ again and Mr Lim disposed all TNB shares after holding for 1 and half years.

The market was almost flag till 1997 when a currency crisis occurred. One day morning, rumors came from Thailand and spread all over Asia countries. During that time, we noticed a group of fund managers started to create panic environment in the country by keep on selling and caused KLSE index drop 40 to 50 points in 2 days. One week later, market started feel the panic and fell even more. Add to the worse, Ringgit kept on falling against USD, until one time reached $4.50 per USD. Many people panic, worry and start to dump shares at what ever price available. Some even ask if value of share can fall to Zero?

TNB started to fall from $10, people buy at $8, some at $7. One month later, the price was $6.50, where Mr Lim started to place buy order with minimum lots. The following few months, more people feel the pain and dump the shares like no tomorrow. Mr Lim continued place buy order at $5.50, $4.50, $4, $3.50 till the lowest price $2.50. On 1 September 1998, ex PM Dr Mahathir announced several action and economy stipulated package, including peg Ringgit at 3.80 / USD and arrested Anwar. KLSE suddenly reversed and surged more than 100 points. TNB also surged from $4.50 to $5.60. The next day, TNB closed at $6.50. Those who cut loss already missed the boat as they dare not buy at $2.50 or even $4.00. Also, they have no chance to buy back as the market turn was unexpected and fast.

Mr Lim started to disposed TNB in 2001/ 2002 when the price range from $10 to $12, with the holding period of 3 years plus. There was no other big event until 2008, US trigger another financial crisis. The Dow index fell from 12,000+ to 6,000+. Nobody really believed that the market can fall continuously for 7 days which sent Dow to 9,000+. Market follow by few days up and few days down, but the overall trend was down. The down trend continue for about 11 months plus in the whole world. TNB also fell from $10+ to $4+, but this time I loss contact with Mr Lim, as he already migrated to other country and I did not know if he bought any shares.

Base on last few time's trading record, seem Mr Lim will start to buy TNB if it fell 40% from the average price before big fall. Let say $10 was average price before the fall, the 40% is about $6, assume he averaging down till $4.50, his average price would be around $5. He then will sell the share during the next cycle bull run. If this is true then he could have sold TNB around $7+ in the last 2 years.

Recently, there's another new crisis trigger by US, as of today Dow Index already fell continuously since beginning of August 2011 from 12,000+ to 10,855. TNB also fell from $7 to $5.55 right now. We may not know when is the highest and lowest for every cycle, but we can know near the bottom once it start to stable or rebound. I am sure the history will repeat again this time!

Happy Investing

2011-08-20T20:22:00.000+08:00

Stock market is the great place!

But for some, it could be a pain, especially when people loss money. As the rules always come to say that losing money is 10 times more than winning. The feeling of losing one thousand is equal to earning ten thousand.
.
With this volatile market which expect to continue in next few months, some people come out an idea of selling all your stocks and buy Gold. This has caused Gold price hitting highest record at $1854, when more people believed the story. Nobody can tell if Gold will continue to break higher record, but what we can tell is the trend is coming now. You can switch to Gold if you feel happy, the worst case if it's wrong, just switch it back, not a big deal.
.
The most important is your feeling, you need to feel happy when you invest. We feel happy when we are free from tensions and relax, love the way of living and love everything around us.
.
Happiness is a choice, every second of everyday, you make a choice. You can choose to buy shares for dividend, if this way you feel more relax and less tensions, especially when receive a pay cheque, feel graceful for making the right decision. Do you feel happy?

Learn How to Play the Money Game

2011-08-14T23:51:00.004+08:00

What is money? Everyone know the answer... but do you know money is one of the biggest pain in most people's life? Some will think how nice if I do not need to work every day. What's the key principal for lasting Wealth ?

The key to wealth is positive Cash Flow
Anything reduce the amount of Cash is Expenses
Anything that increase your Cash Flow is going to expend your level of Wealth.
Time can change for Money, but Money can not buy Time (Everyone is equal, 24 hours a day and will expiry if you don't use it)
Cash can be generated from 2 main source, Passive and Passion.
The aim is to build the Money Making Machine to generate Passive Income, let the money working for you.
Money Making Machine need time to grow and generate income.
Money management is to balance Expenses and Income (Expense = Income)
The key to Financial Freedom: Income > Expenses

In summary, learning how to play money game is important, it's involve certain skill and strategies to accelerate your income. Once you have more income, you may need to learn the skill of manage the money. Final stage is know how to invest the money effectively.

Once achieve Financial Freedom, you may stop working as the money lasting is forever (or you choose continue to work). Remember, the GOAL of creating wealth is to help you grow yourself into the best person. Have a lot of money is not the principal goal... nobody can take the money along with them when they leave in the end... it took me years to understand this!

Back to basic - Invest in a business

2011-07-24T00:12:00.004+08:00

Nothing is so hot! ... Apple, everyone is talking about it right now, because of iPhone and iPad sold like hot cake! That's why the share price jump to history record, close at US390! Many analysis give the target price range from $480 to $525, do you think it's a good buy?

You can find the answer by referring to 3 basic financial reports. How you know if a company is making money? Just look at the Income Statement or sometime we call it Profit and Loss Statement. The top part is Revenue and Expenses. Well the most important data is profit... Yes, the profit is real, without profit, the rest no need to see, not even think about buying the stock.

Want to know how much the Asset? Just look at Balance Sheet. Why call this Balance Sheet? Because you always find this report Asset = Liability, balance at both side. As a share holders, the company actually borrow money from you, but the company no need to return it. That's why the formula look like this:
Asset = Liability + Equity

Sometime Equity we also call it Share Holder's Fund. If the company borrow money from the bank, it need to pay interest, but if it borrow from Share Holder, it does not require to pay back or give any interest. Only some companies is kind enough to give out some dividend. This is a disadvantage to share holder and as a share holder, he can only sell this "ownership" / shares in the Stock Market. That's why for the reason, investor should invest the company with a lot of profit as only with profit can help the company grow big in term of Asset and Share price will eventually being reflected. In theory, we need company with minimum Liability, so that ROE and ROA almost the same and balance formula look something like below:
Asset = ~~Liability~~ + Equity

Finally, the last report, Cash Flow. The company must able to generate positive cash flow in order to fund and continue to grow big. Beware of financial fraud too, the account Receivable and Liability should not grow bigger and bigger, if any, should read as a red flag, avoid it no matter what.

Once you understand these simple report, you will know the answer if Apple is worth to buy or not!
.

Malaysia REIT report – June 2011

2011-07-10T19:28:00.000+08:00

The portfolio still generate positive return against FD rate for past 6 months. We received dividend of RM5,211.58 for 6 months of 2011. This dividend is slightly more, as we only received RM4,392 on previous 6 months.

The whole portfolio is starting to generate very stable dividend of slightly more than 10% per year. We also achieved more than 50% return base on original investment amount of RM100,000 since Jun 2009, but this is meaningless since we do not want to sell our shares in next few years.

Our investment purpose is to build a “Portfolio” which able to generate positive dividend / income, and we continue to increase this percentage of return every year. (currently this return rate is 10%, compare to 8.5% since we started)

Together with dividend of RM5,211.58, currently we have total cash of RM9,604.16. As per plan, we wanted to buy some consumer related stock, but we did not do so, as there will be another new REIT counter going to list next month. We keep the cash for now and going to buy this new REIT or maybe some other REIT if they fall in price.

Sharing with others - Make You happy

2011-07-07T18:11:00.000+08:00

Nothing is so great in life by making others happy and making all people happy. Many success and rich people like to shares with others. Life is no meaning, the meaning is what you "Give" it. There's why the more you give, the more you will expect in return. How I can help others to enjoy happy life? Money is important, but doesn't mean having a lot of money equal to happy life. Sharing with people to turn their dream into reality is going to make you more happy once you have reach the level.
.
Investing will become simple if you write down the purpose and strategy. Once these points properly spell out, the direction is very clear, you will know why taken certain action. The strategy will help you making money in relax way, much simple, easy and less worry.

.
Just like journey of life, stock market going up and coming down every day. Some day it will continue to go up for few months, whereas some months it will go down. This is the beauty of the stock market, try to take advantage of it, don't let it become your pressure, let it become your pleasure and your friends. This is how the experience look at the trending of stock market.
.
With the proper planing, making money is easy and simple, kind of "Money Making Machine". Just appreciate and happy what you have obtained, this will create feel good emotion in daily life. As long as invest in right direction, making money is not a big deal, since we already know the way, if it's not happen today, it will happen tomorrow or in future. The next stage is making profit or losing money will not matter you anymore. That's the highest level or the experience level in stock market, once you have reach this level, making profit in stock market is not that difficult anymore.
.

Why I like to play Monopoly?

2011-06-17T23:59:00.000+08:00

Playing Monopoly is fun, I think one will doing good in stock market if understand the meaning of the game. Start with 10 thousand, one may end up become very rich or bankrupt. Each time, when past the “Go Starting Point” the player can collect some money, I call it monthly salary.
.
So, how to become rich in this game? By collecting “monthly salary”? No. The purpose of the game is to generate passive income with the “Asset” that can collect “rental” or “income” when you upgrade it. But, the “Asset” can not be bought, it need to wait for opportunities. We may not know when opportunities will come, hence some extra money on standby basis is very important.

When it's you turn, you need to move or take action but the outcome is depend on luck and opportunities. Some time you exchange or trade with other user certain “asset”. The purpose is try to keep the best Asset that you feel good to generate the passive income. The priority here is passive income instead of capital gain.
.
Similar in life, most of us start with salary income, each month collect some hard earn money. We start to invest certain “Asset” that can generate regular passive income. These assets can be properties or shares. Beside protection against inflation, properties can generate regular rental income as well. We can opts to buy physical properties or REIT in stock market. Stock market provide a very good plat form for all investors to sell or buy the company in the form of shares. This is a convenience way, as one no need to trade the whole company. The only problem is you need to choose the good asset so that the asset can be hold for long term and will not go burst. (never buy the bad asset – the company's with negative earning)
.
We have option to choose, buy, sell, wait or ignore the price on Stock Market that offer to us every day, hence luck is at our side. We see so many people like to trade the 'asset' and thinking of able to generate some capital gain. This is the beauty of stock market, it create opportunities for one to buy the “good asset” and sell the “bad asset”. If you still think the only way of making money is stock market is “buy low and sell high”, you may not understand the meaning of investment and concept.
.
Of course, “buy low and sell high” is everybody intention to make money in stock market. Sometime I do that as well. I always remind myself the concept of investing, “buy good asset, dispose bad asset”, never buy any 'bad asset” no matter how cheap the price, as it's the value that we are looking for instead of price that somebody willing to pay. If I were to sell one stock, the reason should be one of the below:
1. the stock is too high in price versus it's value
2. or it already turn bad, or
3. I have discover another better asset, hence would like to exchange it.
.
You can not find below in the game:
Advantage of waiting, wait for opportunities to come. Once a while, “cheap sales” will come, everyone turn panic, through the shares like no tomorrow. This is the time to collect the “good asset” in cheap price. Then time is your friend, let the compound interest doing the job - a simple 7% will double your money in every 10 years. What if you obtain 14%? It would double your money in every 5 years.
.
Last if you ask me why play Monopoly, the reason could be passing time, may be tried to keep on remind the meaning of life, enjoy the walk through process. It's very similar to journey of life, once you know the meaning, you will appreciate and enjoy what you are doing everyday.

How good is your knowledge as speculator?

2011-06-13T13:09:00.001+08:00

I have gather some of the below points, especially for those who like to trade a lot in Stock Market, at least you need to know the answers for below questions:

1. Is stock market a kind of game?

Stock market always change, we need to follow the condition, make decision base on the card on our hand. If you take the bad card, try to minimized the loses, in this case, good card will win more, whereas bad card will lost less.

2. How do you decide when to buy or sell?Look at stock market as a forest instead of a tree, when stock market down, almost all the stocks will follow.

3. What is most important when buying a stock?

Timing – if you buy at wrong timing, even the good stock will not going to make any profit.

4. What contribute to stock market's short term movement?

What others think - it's technical condition base on buyer and seller's decision, if more buyer than the seller, the price tend to go up.

5. What contribute to stock market's mid term movement?

Interest Rate will give impact to stock market in mid term, normally it will take some time to see the impact. When the return of bond is low, more fund will move to stock market.

6. What contribute to stock market's long term movement?

The economy's growth rate will impact long term movement of stock market. Whoever can predict the industry's direction, he will make a profit.

7. When is the time to sell a stock?

Do not care about profit or lost, the time to sell come, just sell it. The price you pay should not determine if you want to sell a stock. The future earning of a company will going to reflect on the stock price.

8. When the volume is small, but the stock price moving up, is this good or bad?

It's safer to buy a stock when volume is small, as the stock move from weak holder to strong holder. On the other hand, when the price is high, the stock move from strong holder to weak holder, it's bad news to stock market.

9. When the market having good news, but a stock price is flag, should you sell or buy?

You need to sell the stock, as there's always a reason for the price not moving up.

10. Market participate should think like Doctor, Engineer, or Maths Teacher?

Doctor, who need to observe the symptom, think for the next course of action. If realize the decision wrongly make, find for solution immediately. Flexible is very important, take the logic combine with imagination. Do not hesitate or insist you are right at the beginning.

11. What is most dangerous things you may do?

Make use of the news but judge incorrectly.

12. What's the different between Trader and Speculator?

Speculator observe and analyze the situation, then decide if want to buy or sell. He believe there's a reason for a stock to go up or down. The inexperience sell a stock because he want to take profit without consider if the stock will go up, he only look at profit or loses.

13. Will you buy a stock that you already sold at lower price?

Every trade should be a new trade, nothing to do with the history trading price.

14. What's most important thing for investor?

Planing – if buy for long term capital investment, today or tomorrow's price movement is not important.

15. If all investment bank recommended a stock, you will:

Be careful, somebody going to sell the stock, you better sell before it.

16. If insider recommended a stock, you will:

Sell it, just act opposite what they do, they will not tell you what they going to do.

17. Is the politic impact stock market?

Yes, Interest Rate and Tax policy will give impact to investor decision making and influence the future earning of enterprise.

18. Is international politic impact on stock market?

Yes, for instant, Gulf war directly impact on stock market, as those fearful sold the stock. It will also give impact to industries earning, the country's income balance and trading contract.

19. Do you think speculator can sell at high and buy at low?

He lied if he told you he can always do that.

20. You should read the trend once a week, a month or everyday?

Looking at the price chart every day will not going to help you, but you need to keep update on the latest news. Weekly chart is just nice to capture the trend and give you a peaceful mind.

21. Do you think it's important to analyzed history record?

Yes, because you can not predict the future, at least need to learn the history, built the experience so that you can think in different way for future decision.

22. A big company sue a small company, if you will be buy, which one to buy?

Buy the small company, as this small company must be doing very good until big company want to take some action to protect the earning.

Why people loss money in Stock Market!

2011-05-31T23:49:00.000+08:00

Few days ago, one customer from Bank told me that he lost few hundred thousand in stock market few years ago. Until now he dare not buy any stock, but the market keep on going up. I told him making money in stock market is very easy provided you know what you are doing and having the right strategy, but he choose not to believe me, but unfortunately I do not bring my record to show him the proof.

This remind me, after understand his situation I try to summary why people loss money in Stock Market, some of the points was my personal experience in years:

Do not have clear direction about investment, just follow tips or buying Unit Trust recommended by Bank staff who not even invest into it... in other words, they do not know what they are doing... OMG!
Never having plan to calculate the risk verses return. Do you dare to jump down the train if you expect it to go North, but instead it went to South?
Greed and Fear – do not let it control you, but use this as weapon to take advantage of others.
Protect your fund – having margin of safety before buying a stock, always ask if you buy near the high end record?
Make compound interest as your best friends – always buy the industry leader and ride on them over time to see the result in long term
Know your position – are you a Investor, Speculators or Trader or mix... all of them having different method and strategy, do not confuse with each others.
Respect the market trend, Tsunami never give face / chances to anyone...

Market is unpredictable if you buy for speculation. If below is true:

Stock = Business

Then buying a Business always looking for predictable profit. If the profit is predictable, then the business is predictable and of course, Stock price is predictable too!

Anyone can be a millionaire!

2011-05-17T07:39:00.000+08:00

My father was not a millionaire, it doesn't stop me to become a millionaire. If you are not a millionaire, it doesn't mean your child can not be a millionaire. Teach them nothing wrong being “rich” and the “concept” of being wealthy. Money is not everything, but almost everything needs money.

Start from your child's first born and save $300 for him every month until he reach 18, then stop contribution and untouched the money until reaching 55, with a minimum of 6% return every year, he will become millionaire at 55. Yes, only 18 years and doing nothing.

If you increase the contribution from $300 to $600, then will shorten 14 years to wind up with $1 million. Similarly, if you increase the return rate of 6% to 12%, it will also shorten 14 years. What happen if you combine both? (contribution of $600 and earn 12%) Just do the calculation yourself.

I only start this method after having my first job, luckily never too late. My dad never teach me this concept or contribute pocket money into special account. To have a 12% return in stock market and save money every month is something very easy and achievable. All it takes is save money, invest in right company and let time be your friend. Understand your spending, aware where you are now, where do you want to be and what are you willing to do to get there is the basic of achieve the target.
.

Are you invest in the Best Company

2011-05-03T22:33:00.004+08:00

Not long ago, I shared about rotten company (just click on Rotten if want to view the article) and there are at least 5 of them since then. Today's local news paper announced, “Sumatec Resource Bhd fell after being told by Bursa Malaysia to restore its finances or risk being delisted”. It share price down almost 50%, at the close was 13 cents only, all time low.

I foresee this counter will going to drop in next few days. Many people fail to realize the fact, they just speculate the counter and think it is very 'cheap'. I can tell, you will find tomorrow's price is even cheaper. Investment is similar to doing business, not just buy or sell share, at least you need to know what sort of company you are buying.

Today, if your friend ask you to join him open a restaurant, would you just simple give him the money, without asking any question? One must try to understand what's the return, is the restaurant can survive in next few years, the profit margin and try to find out others relating matter. Hence, investment should also base on business concept.

I noticed some of my clients trading into this company few months back, which I have also made know to them try not to invest in this type of company, but they did mention that they can cut loss if the company turn bad. Really, are you sure? Can you cut lost today at 50% of yesterday's price? Anyway, we all have freedom to choose, if want to trade (buy or sell) a profit company, or company not making any profit or not sure if making any profit, but selling at “cheap” price.
.

Dividend Reinvestment Plan

2011-04-19T16:50:00.001+08:00

Dividend Reinvestment Plan (DRP) is very new concept in Malaysia, till now, only two company provide DRP, namely Maybank and AMMB (one more REIT company going to implement DRP soon). This is suitable for those who think they do not have time to monitor the stock market or read through the research reports and ideally want to keep on invest the great company for next few years.

From the history record, in US, if someone invested Pepsi in 1980, $2000 with became $150,000 at 2004. (start with 80 shares will become 2800 shares through DRP)

If invested Philip Morris in 1980, $2000 will worth $300,000 at the end of 2004. (start with 58 shares, turn to 4300 shares) - data took from Ibbotson Associates:

What is the advantage DRP to investor?

Since last year, Maybank gave share holder an option to choose, share or cash during dividend announcement. Those who opt for DRP will entitle to buy share with the dividend pay at 10% discount from VWAP. For example, current share price for Maybank is RM8.70, those who opt for free share is base on RM7.70. Hence, every dividend you can reinvest with 10% discount and no need to pay brokerage. Sound great?

DRP will also cause share price become more volatile. Just monitor the stock price before dividend announcement, after Ex Date and Payment date. This is another opportunity for those who would like to trade on this stock.

DRP work best if you want to invest in great company and don't foresee to sell for few years - the convenience, easy and cost effective way to build share holding by using cash dividend to buy additional shares.

After you have million dollar!

2011-04-04T16:53:00.001+08:00

Have you ever think of what are you going to do if you already save and achieved one million? Let the passive income always more than expenses, it will turn you become financial freedom, if not a millionaire, it's just timing issue, whether you reach destination earlier than others. It really does not matter, if you know this is achievable target, sooner or later you will be there, what's the point to rush and give yourself pressure? Do you really feel more happy after having one million?

Most of people think that they will feel more happy if they are millionaire. May be you should ask those millionaire, they will say, you wear the same cloths as yesterday, eat more or less the same meal, live in the same house. You may not feel extra happy as when you have 900 thousand, 800 thousand or even 500 thousand previously when you first achieved that target. Perhaps you may go out to celebrate with friends, travel to some places, but after some time, everything back to normal.

Happy or not is just a feeling, the way how you look into your life. Perhaps more mature, the way look into the money is different, the way how to spend the money to obtain the happiness. Like the journey of life, one million is just like a “road mark” at road stated 10,000km from the destination. There's not much meaning looking at the mark when you pass through, may be we need to enjoy waterfall, the green trees, beautiful birds singing and many more along the journey.
.

Buy a business with reasonable price

2011-03-27T21:55:00.000+08:00

As long as there's profit, you will not go bankrupt. This is the only way to survive in any business, similar for business buyer. The business you buy or planing to buy must be able to generate better return than cash, if not, why bother about invest in the business, isn't it more safer to put money in bank to earn interest? Hence, the reasonable return of any investment should be able to generate at least 3 times Fix Deposit can provide.

Buying a business, we may want to ask how much the return can we obtain per year after deducted the expenses. Use the profit figure divided by the principal, we will get to know how much of return in percentage per year. Today, if we are not buying the whole business, instead buying a few shares of the company, it work the same way.

I came to know a company, Mithril, listed 7 years ago, never seem to make any positive income, every year incurred losses. The boss should close down the business, better put money in bank, where can earn some 3% of interest every year. Wonder why still a lot of people willing to buy this stock everyday, the price is 6 cent now. If anyone still want to buy Mithril, I think it's better to buy it's loan stock, Mithril-LA, it will mature next year, having 1.5 times securities value, hence no need to worry if the company can not repay full value of RM0.78 plus 3% for 2 years.

Aware of the Trend, chase the up trend, cut the lost trend

2011-03-09T18:40:00.001+08:00

The bull run market already reach 2nd years aniversery, nobody know when is the end of bull run. Hence, if anyone going to continue trading in the stock market, he should at least know the company before invest. Read news paper, blogs, research and come out conclusion on which industry having the greatest potential to continue the up trend for the next 6 months. Technically, in 5 years time, if you can hit right only 6 times, with 100% profit every time, 50 thousand become 1 million is not a problem.

Cut loss is very important strategy, this may cause you miss a chance of making some money in certain time, but it will help to protect the pricipal from bigger loses in most of the case. Some people would like to know how much percent to cut loss, I think it would be wise to cut lost if a stock already down 10% from the peak.

Also, need to learn the opposite way, chase the up trend, do not cut the profit, let the profit run. Once you understand concept, you can apply "buy the up and not buy the down" investment strategy. Only buy the up trend stock (the stock that making profit) will ensure you continue making profit. Buying a losing stock (down trend stock) may only incurred more loses, as you might already making the wrong decision to buying company that going to turn bad or management is not honest. The strategy can combine with 10 days moving average buying method, do not buy those stock below 250 days or 50 days moving average.

Let the profit holding continue remain in your portfolio, no need to take the quick profit, there's nothing to worry for the winning stock. This will ensure you having the greatest profit in the bull run.

Invest in stock market is similar prepare a war, preinvestigation on current scenario is a must, knowing when is the right time to trade, what's the current trend, plan and execute the strategy, combine with technical and fundamental analysis, do not panic or fear when something unexpected happen. This will increase your successful rate.
.

Know the Company before you invest

2011-02-28T00:19:00.003+08:00

Seven years ago, Petronas published an ad at one of local news paper, looking for someone who interested to run a petrol station. So I applied for one too. After several interviews, finally I was told my application was rejected (due to government's policy, they are more encourage "bumi" to become partner with them, as one of the interviewer told me) One of my friend told me that time, "why so difficult go and apply, just buy their shares, since you know they going to expend their business, few years later, you might earn more than what you earn from a petrol station operator. At that time, PetDag share price was around RM4.50, and today the price is RM13.++, after one round of one for one bonus issue.

Let's do the calculation, with principal of RM150,000, bought PetDag shares at RM4.50, I can buy 33,300 shares. Today, after bonus issues, the total shares will become 66,600. With last Friday's closing price of RM13, the total market value is RM865,800, yet to include yearly dividend. That is RM102,000 per year or RM8500+ per month. This is actually better than operate a petrol station, unfortunately I did not invest into PetDag's share though I had study the company and know them well from management to financial result. Currently they are the top retail petrol station at Malaysia, after overtook Shell's position last year.

Sell the Loser or Sell the Winner first?

2011-02-27T13:45:00.001+08:00

If you need the money and the only option is to sell some of your shares, which counters would you sell first? The one that already making money or the one that is in the losing position? You might take out the list and compare the cost with the current market price, most of the people tend to sell the stock that already making profit and retain the worst performing stock in their portfolio. Almost 90% of people will do this, that's why only 10% of winner making money in stock market because the winner let the profit run but cut the loser very early to limit their down side.

Listen to the market, it can talk to you. When you buy a stock and is making money, the market is telling you are right, so let the profit run. When the trade is losing money and getting worse, the market is telling you to get out. A bad trade is like a dead fish, the longer keep it, the worse it smell.

Investor need to think like a winner, the winner don't add to or "average" losing position. They sell the losing trade and find the new opportunity. They may add to the winning trades, always remembering that any time market can turn and prove them wrong.
.

Buy when stock price down or when stock price up?

2011-02-13T07:33:00.003+08:00

Local market started go down, many stocks fall below 30 days moving average, experience investor know opportunity will come. One of the strategy for short term trader is “Sell when stock go down, Buy when stock go up”. Many will think they should buy when market go down, but experience trader only buy when a stock started to move up.
.

The reason is if you buy when a stock price start to move down, you might end up catch a falling knife. For example, a stock fall from $3.30 to $2.80, would you buy at $2.80? If someone buy at $2.80 and the next day the stock price rebound, I would say he is a lucky guy. He may not so lucky every time. What if after he buy the stock, it keep falling to $2.50 and further down to $2.00 after few more days. What if the stock price stall at $2.80 for few months? Hence, it's wise to buy near the bottom and the best is only buy when the price just start to move up.
.
If you say, nevermind, I am rich and can afford to average down, I will keep on buying every 5% down until it reach $2.00. But doesn't it would be a lot better if one keep monitor the stock along the way when it go down and start to buy only when it rebond at $2.20 till $2.80, it would come with same result compare with the one average down, but more safer in later way. Because no one know if $2.00 is a bottom for this stock until it rebound at $2.00, what if it continue to go down to $1.50 after break below $2.00?
.
Hence, buying a stock should try to buy when it start to move up in price near the bottom, not the reverse. A right time to sell is when it start to move down when the price near the high end.
.

Investment or Speculation

2011-02-02T16:49:00.001+08:00

Similar to traveling, investing need to have clear direction where we want to go. A ship without direction in the middle of sea will lost finally. Are you invest for regular income and cash flow or invest for capital gain? Many people say they want both. The reality is, you can choose only one, either regular return of 9 to 10%, or something not regular which can give you more than 100% or lost all your capital.

Not many want to choose investment return of 10% from dividend receive, they think it's too small the return. Almost 80% of people think that they can buy low and sell high to gain from capital return. However, many of them change their mind if after they buy a stock and the share price fall below their buying price. They dare not cut lose, but continue to hold until the lose become widen, some even exceed 50% of their capital. Some even think that they can get the dividend and hope one day the share price will recover.

If you are choosing to gain from capital appreciation, bear in mind you need to set the cut lose point should the stock price go against the direction. This is very important, because this will protect your capital from further loses. Speculation is something either you win or lose, the rules is try to win 6 or 7 times out of 10 then you will still gain in long term. There's nothing in the middle, where you want to gain from capital then suddenly change your mind to gain from regular income. As only certain stock can be invested for dividend, some volatile stocks are not suitable invest for dividend. Have you set the clear direction?

Exchange Trust Fund – Xinhua 25

2011-01-25T00:04:00.000+08:00

ETF (Exchange Trust Fund) provide cheaper way in terms of cost for those who want to invest into stock market. ETF normally having lower management fee compare to Unit Trust. CIMB Xinhua 25 is one of the ETF provide an opportunity for investors who want to invest HK Stock Market, from Bursa Malaysia without bothering about currency exchange rate and reduce risk of invest into single stock in Hong Kong.

As per the name, Xinhua China 25, involve direct holding of 25 large company in China. I do not know why they choose 25 but not 23 or 28. Though the name is China, but it's more mirror to HK Stock Index, as per past record show it's more sensitive to Hang Seng Index's movement.

There are many reasons people invest into China/ Hong Kong. I think the main reason for you to invest into it, should be you believe China / Hong Kong stock market going to be in up trend for next 3 years. Why choose CIMB Xinhua 25? The answer is because CIMB provide market maker together with other 2 broker, hence the share is quite liquidate, do not need to worry if there's no buyer or seller. Beside, they will distribute all the dividend receive from these 25 companies to unit holders after deducting their cost on yearly basis.

Who should invest in this ETF? My opinion, if you have lump sum of money, with planing to invest into Hong Kong stock. Second, you don't want to check the price every day, instead, feel once a week is good enough. Last, you want to practice the method of cost averaging and eliminate the risk of invest into single problematic company.

Cook frog with cold water!

2011-01-13T23:23:00.000+08:00

I still remember, the story about how to cook frog with cold water. Frog, due to it's cold blood type, we put it in cold water, it will not jump. Gradually, we heat up the water, so water turn from cold to warm, from warm to hot, from hot to boil. The frog was so comfortable until it did not realized the water turn hot and boil, it died peacefully.

I am not a frog, at least know how to recognize the condition of environment, always ask if current market is too hot? If 100 marks is hot, I will rate current market as 75 marks. I plan to sell some holding at 80 marks onward, not being too greedy, let others to earn some profit so that I can sleep with peaceful mind. Don't be one of the frog when you invest in stock market, don't be too comfortable when the price or index moving higher everyday. In fact, you should worry about the markets' breaking another high again. Don't be the frog, died without knowing what happen!

New Year Investment Plan

2011-01-08T15:09:00.003+08:00

It's first week of 2011, time to sit down, think and plan what we going to do from here. How much investment return you have made last year? Like Christmas' present, it's already opened, be it positive or negative, doesn't matter, the most important, we want to plan and take action so that we can obtain similar return as last year if not better.

Let's look at the current situation, oil price start the up trend again. Malaysia government also raised the petrol price recently. CPO price now above RM3,800, almost all time high record. Inflation is expected to follow soon. As an investor, we know money if keep in bank, it's not going to do any better in this situation. We need to turn our money in some kind of asset that will benefit us, meaning inflation proof.

We will continue to hold on our investment portfolio this year, for sure they going to increase in value coming months due to inflation. We know when more people become rich (high income nation), good asset and great company's stock will increase in value. Further, Malaysia will be reclassified as "Advanced Emerging Market" effective Jun 2011, that's why we notice many foreign fund inflow at first week of 2011 pushing the index to record high of above 1500 points!

Malaysia REIT report – December 2010

2010-12-30T00:14:00.001+08:00

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!

How to survive for long term investment

2010-12-25T22:59:00.000+08:00

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!!

Swimming naked

2010-12-19T19:10:00.001+08:00

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?

The Rich know the power of compounding

2010-12-17T23:59:00.003+08:00

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

How to choose good stock in share market?

2010-12-05T23:03:00.004+08:00

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?

Barbell Investment Style - Part 2

2010-12-04T22:36:00.002+08:00

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!

Do not too emotion in Stock Market!

2010-11-20T21:57:00.003+08:00

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.

Petronas Chemicals Group Bhd - Part 2

2010-11-06T00:00:00.005+08:00

After compare with Dow Chemical and BASF, lets take a look the PCG 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 PCG?
Normally try not predict the price, but let assume below scenario will happen:

PCG with market cap of RM40 billion and become one of the top 10 on Bursa
PCG 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, PCG 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.

Petronas Chemicals Group Bhd - Part 1

2010-11-05T20:21:00.005+08:00

Last few weeks quite busy with one stuff, Petronas Chemicals Group Bhd (PCG), 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 PCG? Because they intend to list the company on Bursa Malaysia, some preparation job involved by the Investment Bank, hence follow the team.

Who is PCG?
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. PCG is one of Petronas subsidiary, for purpose of listing, it combine 22 chemicals company. PCG 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 PCG 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 PCG, 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 PCG is another Malaysia Boleh! At least for next few weeks!
.

Asia Top 200 best company

2010-11-05T00:05:00.005+08:00

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!

How to build retirement income for life?

2010-10-19T07:09:00.005+08:00

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

Insider Asia Model portfolio 398 - Buy REITs

2010-10-12T00:36:00.001+08:00

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.

Investment rule one - never lose money

2010-10-11T12:04:00.001+08:00

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!

How to earn Passive Income from Real Estate Investment Trust?

2010-09-26T00:32:00.004+08:00

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).

Rotten is worst than...

2010-09-24T10:31:00.005+08:00

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.

Invest for long term

2010-09-18T20:25:00.001+08:00

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!

散户赚钱到底难不难?

2010-09-17T23:44:00.001+08:00

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？

Continue to read: http://www.cgcheng.com/gucheng/xuexiao/11162.html

Invest for future

2010-09-08T16:49:00.009+08:00

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!

Common Myths about Mutual Fund

2010-09-07T19:47:00.004+08:00

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.

REIT - Better than bond and FD for capital protection

2010-08-27T12:59:00.003+08:00

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.

Millionaire's portfolio

2010-08-21T17:42:00.001+08:00

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.

Coconut Water

2010-08-17T23:03:00.000+08:00

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

Trader talk

2010-08-16T15:45:00.002+08:00

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

Investing - think like rich

2010-08-10T16:16:00.001+08:00

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?

Malaysia REIT report

2010-08-05T12:30:00.010+08:00

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?

Warren Buffer's tips for investor

2010-07-28T22:38:00.002+08:00

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.

Road to be a millionaire

2010-07-10T14:26:00.007+08:00

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 think you would like to have or spend - this is a way to ensure we can start to save money.

What we looking for is picked 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 not knowing how to choose the right stock or heard from friends' experience of loosing money in stock due to lack of knowledge about investment. 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:

The REIT - how it benefit you

2010-06-26T15:37:00.006+08:00

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.

Is Dow Jones Stable now?

2010-06-22T20:24:00.004+08:00

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.

你可以怎樣投資產業

2010-06-19T17:01:00.004+08:00

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

Stock Prediction

2010-04-29T22:43:00.007+08:00

How good is a stock analysis in predicting a stock direction? In fact, if they can achieve 50 marks, it's consider above average. For instant, if they recommend a buy on certain stock and it's already move up certain percentage, we are not encourage people to follow the trend. If you opt to buy, just buy a portion will do and must run away faster then other if there is any sign of reversal.

If they tell you to stay away from certain stock, then the opportunity of making money going to appear. We should use contradict thinking to avoid follow others to make investment decision. The reason is due to many people follow their advise, whoever want to sell already sold, hence the selling pressure will gone after a while, it's time to buy and collect good stock near the bottom.

Buy stock if there's a drop, if small drop, buy small portion. If big drop, buy big. No discount, then don't buy!

Plug – Forming Uptrend

2010-03-26T20:32:00.008+08:00

Today, I am going to write about a company list on Nasdaq, Plug Power Inc., from technical point of view. It's very obvious the stock has formed upward trend since early March 2010. The trend is hard to form, however, once form it's hard to change.

For those with long position can opt to hold it until the trend change. I do not know when the trend going to change, but will sell immediately if it hit one of the below indicator:
1. fall below 30 days MA
2. extra large volume appear

For those who has yet to buy but want to ride on the trend, can consider to buy if the stock pull back around 0.65 (plus minus 3%). Short the counter if the price move below 30 days MA for more than 2 days.

The above strategy has proven high successful rate, however this is not the indicator of 100% true, please follow the trader strategy to protect your profit.

Related link:
How to be a Trader

安全的利润

2010-03-25T19:15:00.003+08:00

对待已经走上多头趋势的个股:
1. 已经上路的好股票坚定持有
2. 准备上路的好股票择机买入
3. 还没上路的好股票自选跟踪

什么叫多头趋势？
多头趋势是五岁小孩一眼能看出来的趋势。最重要的指标就是30日均线，一只上路的股票什么时候该卖出，就看两个指标：异常放量和跌破30日均线。

放量过顶好还是缩量过顶好？
这两种都好，最不好的就是正好处于中量过顶。

什么叫异常放量？
先评估过去三天的平均成交量，如果今天的量是过去的成交量平均值的三倍以上就是异常放量的初级信号，但是如果当天大盘是大跌的，那么个股中出现放大量就要打折扣计算。如果已经形成多头趋势之后，异常放量就要注意减仓。

什么叫多头信号？
要突破飙升之前先做缩量回压两根阴线这样的纸老虎走势, 有效长阳、事不过三、回眸一笑的纸老虎走势等...

作者：真庸来源：股市在线

主力怎样消灭空头？

2010-03-25T18:43:00.004+08:00

四种非常重要和经典的牛股盈利模式，
1. 先挖坑在逆转，消灭恐慌盘；
2. 量价反双向背离加对称横盘，消灭套牢盘；
3. 新高横盘，消灭获利盘。
4. 最后全方位歼灭空头，形成多头趋势。多头趋势仍在。

作者：真庸来源：股市在线

Interest and Gold price

2010-02-01T23:27:00.006+08:00

Prediction by HDBS, economy already recovered and short term interest rate is expected to increase in next 6 months.The recovery of economy going to take time, hence, expected long term interest rate to remain stable.

What would be the impact to Gold price? In view of the short term interest rate going to increase, the cost of holding gold would increase. People going to liquidate their position and they will when gold price start to show weekness. From the chat, gold price has breakout the long term resistence of USD1000 recently and touch the high of USD1200+. However, the gold miner chat not show the similar pattern. Who is the buyer that cause gold price go up all the way after breaking USD1000 level? Well, the research report show for top 10 holder of gold, all are countries but except the top buyer, which is a company. Since they bet on the gold price will going up, sooner or later, when the price going soft, they will force to liquidate their position.

Another similar commodity, oil, which expected to stay at the range of 70 to 80 dollars. Oil price will remain flag for time being, after hitting the peak of USD130+, now remain stable at around USD70. In 2009, Oil unable to break out USD80, this show that the demand is not as high as market anticipated. Further, Rusia and China make a deal on building up oil pipe to suply oil for China at an undisclosed price also indicate that supply is able to meet demand for China due to Rusia has no other choice to pay back the loan, except exchange with oil.

Let review the similar post by end of the year if the prediction is correct or not, as personally I am not quite agreed with the prediction of Interest Rate is going to give any impact to gold price.

How to be a trader who can maximize profit in Stock Market

2010-01-28T23:41:00.003+08:00

1. Remember, trading is simple, fun and making money in stock market is easy provided you make a trading plan.

2. Take care of your risk and maximize your profit by follow the trading plan.

3. Stop loss by follow the trading plan to protect against bigger losses.

4. Always trade with the trend.

5. Always buy at support and sell at resistance.

6. Be patient and wait for best trade.

7. Build your confident so that your trade get better and profit get bigger trade after trade, but not over trade.

Lear Corp - a stock you should avoid

2009-12-08T23:15:00.004+08:00

Wanted to know who's the most "talented" management? The answer is Lear Corp... a stock "LEA" listed in NYSE. Not long ago, someone bought a share of LEA on JUN with cost of USD0.50, if he check the stock now... it trade at USD60 per share now!! (history share price)

The truth is, today's LEA is not the same as LEA bought on JUN. The management was actually wiped out holders of previous class common stock and created a new share! The share bought before the co. restructure became null. Yes, LEA is newly restructured but under the same old management team...

(To read more on the story of how "creative" the management to reorganize ...)

Different between gambling and investing

2009-11-22T23:25:00.005+08:00

As an experience investor, if you can predict the future, it's like having a crystal ball who know how a stock going to perform tomorrow. Hence, it's very important to select a good company with predictable earning, say in next 3 to 5 years, else, it would be no different like gambling in casino.

We may need to have a proper plan before making any investment decision. Once the plan is drafted, we would have a very clear target on what's we going to achieve in next 3 or 5 years. At least a solid company that can generate profit, not a small profit, but big one, at least 100 million! A stable profit margin with good dividend yield would be an added advantage.

Investment decision is actually not about doing something that is right, but not to do something that is wrong! As incorrect decision will cost you thousand of dollar. Beside the predictable future earning, we need to consider the entry price as well. If there is no more room for the stock price to surge, we have no reason to buy the stock immediately.

Trader's Technical Analysis

2009-10-04T14:11:00.015+08:00

Below are the summaries of a course that I attended in one of the workshop.

What are the 5 common mistake done by trader?
1. Buy Cheap
A trader need to know what's the current trend for a stock, be it up tread, down trend or side way. A trader will do better if trade in the same direction as intermediate and longer terms trends. Do not simply buy cheap, as tomorrow can become cheaper. One of the example is Flag Formation break up, then it good tendency the stock will go up.

2. Holding onto hope
This is another mistake done by trader, even he already plan when to cut loss, but when the stock price move down, he just can not follow the plan and hope one day it will rebound again. No body know when it will rebound and in this case, a trader will lost the opportunity to find another potential stock and lock the capital in one stock.

3. Ignoring about Risk Management
If a trader trade without a strategy, then he will not able to control the risk and emotion. When the sell signal appear, he may not know when to cut loss and protect the capital.

4. Ignoring about Floor and Ceiling
Some trader forgot about support and resistance levels - The best place to buy a market is near the support levels and the best place to sell a market is near the resistance levels. However in bull market, once the resistance levels have been broken, it will usually provide a support on subsequent pullbacks.

5. Loss unnecessarily
Beware of double bottom "W" or triple bottom, sometimes it's a descending triangle.

What are the 5 strategy trader can use?

1. Trend Trading
By identifying higher high and higher low, one can know when is the start of up trend. Similarly, one can catch the reversal by identifying Lower Low and Lower High. The other thing is follow the moving average, a combination of two moving average is the most popular way of finding trading signal. Look for reversal signal by two popular indicator, RSI and Stochastics.

2. Buying at Low
A good sample can be used by identifying Bullish Harami or Morning Star.

3. Sell at High

Normally if Shooting Star or Bearish Harami are good signal for selling.

4. Support and Resistance breakout
Tried to identify breakout price early, it's better follow by volume. However, if you miss the early signal, do not worry, wait for a retest. Market correction up or down usually retrace the previous trend. You can measure the correction in an existing trend in simple percentage. A minimum retracement is usually one third of prior trend, the max retracement is usually two thirds. Fibonacci retracement of 38% and 62% are also worth watching.

5. Chart Formation Breakout
Say for a stock with 20 days moving average, each time it touch a 20 days moving average, it start to rebound. However, if one day it break down the 20 MA, then sell immediately.

Why you want to buy a stock now?

2009-10-03T18:05:00.004+08:00

When you heard about Dow fell 203 point, would you rush in to buy?

If most people think the answer is yes, then you will noticed the Dow index close higher on October, especially the first two days. However, this is not the case, it's probably good time for those trader to log in some profit right now and wait for one to two weeks for more clearer direction.

For those who want to buy a stock for investment now, may be you need to ask a question why you want to buy a particular stock. A proper plan need to develop, don't wait until its price goes up or down to think about it. Many investor not sure why they bough a stock, so when the price down suddenly, they are not sure what to do next.

Every investor and every stock present different indicator or reason, one need to carefully consider before open the position. Just ask yourself if now the stock fairly value? What's the price would you want to sell and the reason is due to stop loss or the company report lower quarterly profit?

In weeks to come, perhaps we will find a stock used to trade at 50 now drop to 40. Is it a good buy now? May be yes or no. Buying stock that look cheap maybe is not a good idea, as usually we tend to catch a falling knife. It's always better do nothing and let it going down until it touch the floor, let the price stable and start to rebound, then buy it with proper trading strategy plan in place.

How to be a trader who can maximize profit in Stock Market

2009-09-13T23:34:00.009+08:00

Now we know that for Dow Jones index, at least there's another months for market to sustain with current trend, when more countries claimed that recession is over. Hence the world stock markets will not having the reverse impact for now, unless there's unexpected bad news happen. Today we going to see how trader maximize profit in stock market.

To answer the question, first we need to know how to calculate the chances or percentage of winning. From random survey result, most traders are making 55 winning trade out of 100 trade involved.
The most common mistake for a trader is putting too much fund in one single trade. Due to the big amount involved, we tend to have the pressure and caused miss appropriate decision making. Many new traders enter the position and hope to gain big amount in one day. However the experience traders know that in a short term trading, the more frequent buy and sell with large amount tend to eat all the principal amount with a few time of big trading mistake.

The trader who survive are those who trade with certain percentage in any single transaction. If you do not have a lot of principal, the common used method would be cut loss in a very tight range. They may even consider 1 to 5 minutes' graph to minimized the loses incurred.

Over confident is a big risk for trader, the same pattern can happen in last several times, but not necessary the next will happen in same way, if one think that he can predict the next move, he already done a very serious mistake. The trading system can point out if “X” happen, then “Y” will follow, but not for every cases. The trading system only increase your chances of win in long run but not a guarantee!

All the traders will have a good days and bad days. Some days you will earn, but others you may lose. Each month one or two days you may earn a big profit, this is what the trader will earn, not nine to five kind of living. The problem is you never know when the “big” profit going to come, it could be the day when you never follow trader's method is the winning day.

Once you have tested with your trading system, then we need to follow it without any exception. The point is making fewer mistakes and making mistakes that are less severe.

How to protect your fund when market down?

2009-08-12T20:29:00.004+08:00

Usually when stock rally, those who bought at low or almost bottom low would feel very happy as they realized now the asset become more in terms of value. But the only worry is how to protect those fund from being hint by sudden market down turn?

There are many strategy can be used, one of them is switch the fund to some other asset type which could provide some protection against market down turn. For instant, say initially one have investment portfolio of 100K and he started to buy at some where near the market bottom. (Though we may not know exactly the market bottom, but with certain tools or chart, we can catch some good fish in the calm water near the bottom) Since we have caught the fish near the bottom, usually market will start to move up in next few months. We will notice our portfolio value increase with paper gain, say 130K or 150K.... Since now market already up for 2 or 3 months, we may want to think of the way to protect our fund from sudden market swift down. In the same time, we do not want to lost opportunity to enjoy the rally or bull run, then we can consider to maintain the original value of our portfolio of 100K by selling some holdings. Say now the value of investment portfolio is 150K, then we may consider to sell 50K and let the original 100K to remain the equity market.

One common mistake done by investor, they try to invest the additional 50K in equity market again by searching for others stock to buy. This is not the correct way, since the purpose is to protect our fund from market sudden down trend, if we invest in some other stock, then our portfolio is going to move down as well if something unexpected happen. We would suggest to swift the fund to some other investment class which we foresee will go up or at least maintain the value when equity market move down. The are many choice available in the market, such as Gold, Money market fund, bond fund or fix deposit.

For those Malaysians, they are very lucky, since there is one Malaysian (1Malaysia) fund available where the NTA is always 1, at any time, no matter market up or down. (you can not find any fund else where in the world) Another added advantage, there's no up front charge involved. Hence, if you foresee there's a need to buy an insurance to protect additional gain, then this fund could be a right choice for you to part it for the time being. When the market down again, one can consider sell the fund and invest in equity market again. In the worst case, if we are wrong and market continuously to go higher, we still have the original 100K of investment plus 50K of the fund size which will provide reasonable return!

How to earn money when Dow made new record?

2009-08-03T22:24:00.005+08:00

Many readers would like to ask, is now a start of bull market or a bear market rally? They want to know, what to do now.

To answer the question, first we need to find out what's our opinion with current market stage, be it bear or bull? From the news paper, many expert pointed out that the current market up trend is a bear market rally and advised investor be more careful. If we think this is a bear market rally or a false bull, the we will sell and stay away form the market.

The question, is now consider bull market or not? To a serious investor, the answer to this question worth million dollar. To enter the market at a small bull and sell when bull turn mature, it's very easy to double your asset. If one invest 500 thousand and double or triple the money in next 2 or 3 months, he can become a millionaire, hence we say this is million dollar worth answer to the question.

Still remember on Oct 2008, when Dow continuously down for 7 days and make us confirm the forming of bear market? In fact, before October 2008, the market had down for at least four months. If using the three months theory, we can confident to say, that was a bear market. Every one started to predict the future and advised worse would follow. Yes, we had experienced worst market crash in the history, Dow went south till March 2009, before start to rally. On earlier Jul 2009, technical chat form Head and Shoulder, but Dow index able to break through the resistant level and go higher.

On Jul 20, 2009, we experienced Dow continuously up for 6 days. If the indication of bull market is true, we should have at least 3 months for this strong rally (or you can call it bull run) to end, which I estimate till earlier or mid October 2009. Only time will tell if what we think now is true or not.

A lesson for those Greed and Fear in Stock Market

2009-07-27T00:16:00.004+08:00

Stanford was a guy living in 70 century, he used to work as government servent cum tempolary actor. He feel the life was plain with no achievement. In one of the holiday season, he visited his uncle, who was a fund manager. He always heard his uncle's discussion with clients about which stock to buy or sell and how much they have earned. Since then, he had fall in love with stock market with believing that he can become a millionaire by investing in stock market.

After Stanford returned to New York, he managed to save for 10 thousand and he decided to buy Public Film holding at USD10. In 1974, Standford very happy with this transaction as he knew from his uncle's conversation with their clients, Public Film Holding had a very good business prospect with good future earning. He also feel that the buying timing was correct as the stock already fall from 30 plus to 10 USD now, it must be a very good opportunity to buy at this price.

One month later, Public Film Holding stock price drop till USD8, Stanford feel it's must be bottom now, rebound will happen very soon. So, he decided to buy more stock by borrowing USD20,000 personal loan from a bank. However, it caught him by surprise, as the Public Film Holding's stock keep on dropping till USD5. At that time, he calculated and noticed paper lost of USD twenty over thousand already incurred. He had lost all his saving and own a bank more that 10 thousands. He was now in a cross road pending deciding to sell or not to sell the stock. More bad news coming, the stock price now fell further to USD4 and the bank had sent out notice to chase for his loan payment. Stanford feel very up set and think of ending his life. He kept on drinking day after day till one day accidentally drop to a drain, broke this leg and admitted to hospital.

His uncle came to visit him in hospital and try to understand what was actually the problem.
Since Standford was his only relative, his uncle help him to settle the bank's borrowing. His uncle gave him an advise, TRADING IN STOCK NEED "PATIENT". DO NOT GREED, DO NOT BUY IN ONE TIME, WHEN THE CONDITION UNCLEAR, DO NOT TRADE... Stanford lost faith with stock market now, he told his uncle he want to sell all his stock and do not want to touch the stock market anymore. His uncle laught again and told him, DON'T NEED TO AFRAID WITH STOCK MARKET, SELLING NEED "PATIENT" AS WELL, when the stock price near bottom, should not sell just for reason of avoid loses. Even if you sell now, not much money you will can recover. Since you do not want to touch the stock anymore, just treat you have through away the stock. His uncle want him to promise this and send him a greeting card every Christmas to inform him that the Public Firm Holding's stock not yet sell.

Years after years, Standford follow what he had promised, send his uncle a greeting card every year, with wishing "Merry Christmas! Public Film Holding yet to sell!" His uncle will return a greeting card, written on "Merry Christmas... forget about Public Film Holding stock". Nine years later, as usual, Standford sent his uncle a greeting card, but this time his uncle return with an unusual wording, "Go and Sell the Public Film Holding now! It would be your most surprise Christmas gift!" On next day, Standford noticed from the dealer that Public Film Holding stock price had rose from US4.50 to USD74, about 17 times, compare to 9 years ago. This had never include the dividend that was paid on yearly basis. He sold all the stock and take back more than 900 thousand! Think of what's a silly action he may take 9 years ago... now he really understand what his uncle mean by "TRADING IN STOCK NEED "PATIENT".

Dow Jones - Head and Shoulders

2009-07-08T00:24:00.004+08:00

Recent and today's trading indicate the market turn week now, especially for Dow Jones Industrial Average. First it formed left shoulder, follow by head and last Friday right shoulder. Today's trading seem to touch support level and potential down side already formed. The chances are very high for market to go south and confirm this round of Bull run / rebound near "The End" of story.

How to avoid Potential Loss?

2009-06-28T17:10:00.004+08:00

Dealing with investment, one of the challenge questions always raise by investor, how to avoid potential lost in your investment portfolio? How can anyone predict that Lemon Brother going to collapse in 2006? There are many example people buying a stock that seem with very good performance, but turn bad after 1 or 2 years holding. It’s really hard for one to predict the market, especially on individual stock. However, there are several precautious steps we can take, in order to minimize the potential risk.

There is no free lunch in the world, especially in journey of investment. Some home work need to be done below getting involved to buy a stock. This include go through the last 5 year’s financial reports to ensure the company actually having the stable income and strong balance sheet. The hypothesis question, what will happen if financial turn bad, need to keep in mind of investors. What would be the main income to sustain the company’s operation in the worst case scenarios?

Even we find a good company to invest, do not invest all in one basket. The better solution here is trying to diversify into several different sector, each sector only select the best. Ideally, do not put more than 10% of the overall fund into one sector or stock. At least this will help to mitigate and drive to prevent huge potential lose that will incur should we over confident with our imagination on chasing high investment return.

Related link:
1. Lesson from Warren Buffet
2. The Purpose Of Investment

Warren Buffer Power Lunch

2009-06-25T18:10:00.001+08:00

Want to have a great lunch together with Warren Buffer, now can go to eBay and bid for it, at the time of writting, the bid is worth USD300,500. Great, maybe we can not affort to bid for this one, but we can still learn from him through his past experience.

Warren say he had yet to see the light in the tunnel, many of the stock bought by his company Berkshire Hattaway still remain around or below entry price. Those who follow Buffer's buying pattern, could be still suffer a big lost right now.

The ConocoPhilips bought by Berkshire Hathaway with average price of USD82.55. Now the price around USD41.

For Johnson & Johnson, the average brought price was USD62, now the market price is around USD55.

He also invested Kraft Foods with average price of USD33, now the price is USD25.

Of course, there are many others prefer stocks we may not have the chance to buy, but the above stocks are good enough for a layman to set a good example as investment portfolio should we ask if now is too late for one to buy a stock after the strong rally since Mar 2009. After all, we are trading with Mr Market, since the rally, some of stock may not look cheap anymore, so be carefull with the bid price offer by Mr Market, just ignore him if the price too expensive.

S Reit - Worth a look

2009-06-16T23:49:00.007+08:00

Below base on closing price on Jun 12, 2009:

Starhill Gbl （P4OU）
DY：10.1%，Closing price：S$0.71，NTA: S$1.43。

CapitaComm 嘉康信托（C61U）
DY：11.1%，PE：3.8，Closing price：S$0.91，NTA: S$2.94。

CapitaMall 嘉茂商产信托(C38U)
DY：10.0%，PE：4.3，Closing price：S$1.43，NTA: S$2.44。

SuntecReit 新达信托(T82U)
DY：12.9%，PE：--，Closing price：S$0.975，NTA: S$2.001。

SaizenREIT 最善房产信托(DZ8U)
DY：40.5%，PE：--，Closeing price：S$0.135，NTA: S$0.85。

Cambridge 剑桥工业信托(J91U)
DY：16.7%，PE：8.6，Closing price：S$0.36，NTA: S$0.73。

CDL HTrust 城市酒店信托(J85)
DY：13.9%，PE：--，Closing price：S$0.765，NTA: S$1.39。

MapletreeLog 丰树物流信托(M44U)
DY：12.3%，PE：7.1，Closing price：S$0.59，NTA: S$0.90。

LippoMapleT 力宝-丰树印尼零售信托(D5IU)
DY：15.8%，PE：--，Closing price：S$0.355，NTA : S$0.727。

MacCooklReit 麦卡特库克工业房地产(BU5U)
DY：25.9%，PE：--，Closing price：S$0.345，NTA : S$1.09。

AscottREIT 雅诗阁公寓信托(A68U)
DY：12.8%，PE：--，Closing price：S$0.69，NTA: S$1.51。

K-REIT K信托亚洲(K71U)
DY：13%，PE：23.8，Closing price：S$1.00，NTA: S$2.22。

First REIT 先锋医疗产业信托(AW9U)
DY：12.2%，PE：7.4，Closing price：S$0.625，NTA: S$0.93。

Currently, most of the Singapore REIT are trading around DY of 11% or more. Some of the counters are traded below 50% of the NTA. This is a good investment opportunity, just consider one can receive 11% dividend with potential capital return in next 5 years.

The reason why REITs trade at the discount of NTA was due to glommy economy especially those properties located in US and Europe. Due to the aggressive buying of new asset in past two years, some company actually borrow too much. Some of companies actually not able to pay the dividend as they need to generate or retain more cash. Couples of companies are considering right issue to pay for the debt or raise the capital to meet the comfortable level.

When more shares issues and circulate in the market, it will further damper the market price. Hence, one need to consider carefully before invest in REITs, not only the return on dividend rate and NTA alone. REITs is different from typical stock, it's depend on the rental to generate the cash flow and income, hence as long as they have the well diversified portfolio, be it in industrial or office building, we should have a very good return of more than 10%. The current under appreciated price provide an opportunities for one to enter this field with low cost.

Related link: Housing Investment

Dow Jones - Rally Sustainable

2009-06-08T17:24:00.002+08:00

As caught many investors in suprised, US market continue to break through 200 days moving average. Many traders will start to use this as indicator to enter the market as long term buying sign, at least for the next one week, more technical traders will start to move into market.

Housing Investment- how good is return rate?

2009-05-27T17:09:00.005+08:00

Singaporeans are obsessed with housing as an investment. Considering the large number of people scrambling to buy a house even during such times are telling signs that you can know nothing about equities, forex, commodities and derivatives, but you can never miss out on properties.

“Land is scarce, so property is a sure win bet here” are one of the main reasons why the HDB auntie next door and the lawyer opposite are saving hard to fund their next property.

I rarely hear people asking how much they will be yielding on their housing investment if you buy and rent for 20 years.

Many are simply just interested in the absolute gain. The absolute monetary gain (if any), is likely to be large as housing like derivatives are leveraged products!

Before I comment further, let’s do some maths here to see if it is really worth our while to buy a 2nd property for investment.

Assumptions:

35 year old Mr. Tan just bought a new 99 year leasehold, 1000 square feet property beside Kovan MRT station, for $620,000 that will TOP in June 2011.

He intends to rent it out in 2011 and has started paying the monthly installment of his home yesterday (2009 May).

He intends to hold the property for 20 years (till 2029), before selling it away. Note that the property will have a remaining lease of 77 years when he sells it away in 20 years.

His has opted a 3% fixed interest rate for a 20 year loan, at 80% cost of the property which is $496,000.

He will need to pay $2,750.80 monthly to the bank for 240 months. Total amount paid is $660,193. Hence, the property actually costs Mr. Tan $124,000 (20% downpayment) + $660,193 (interest and principal payments) = $784,193.

He estimates that he will collect an annual rent of $30,000 per year (4.8% yield based on $620,000), after factoring all expenses, including property tax (10% of rent), repairs, fittings and furnishing, maintenance fees (estimated to be $300 monthly), and property agent fees of the apartment. (Take note that your tenant do not need to pay the monthly maintenance fees as they are part of the rent. You need to fork it out for them!)

Mr. Tan is making conservative estimate that for the first 10 years, net rental income will be $30,000 per year. The next 8 years (since rent only starts coming in on 2011), net rental income will be $40,000 (net of expenses) yearly. He is conservative because he is aware that there are times his property might not have tenants (like during sars and now) and if he needs to renovate the house, there will also be no rental income for 1-2 months. Besides, when his property is 15 years old, he might not be able to rent it out at a premium as there may be more and newer apartments around his neighbourhood for rent, depressing his rental. The rental will be used to pay for his monthly installment to the bank as Mr. Tan’s CPF is currently used to service his HDB flat. Total rental income from the Kovan apartment is estimated to be $620,000 for the 20 years of investment.
Effectively, Mr. Tan got his Kovan apartment for “free” after renting out for 18 years! Sounds good! His payback period for this investment is 20 years.

Mr. Tan feels that it is reasonable to assume that his $620,000 property will appreciate at 4% per year when he bought it this month. Hence at the end of 20 years, he will be able to sell it for $1,358,000.

What is the annual yield of Mr. Tan’s investment after 20 years?

Answer:

Total cost: $784,193

Total gain: $620,000 (rental income)+$1,358,000= $ 1,978,000

Net gain: $1,193,807

Annual yield (using financial calculator, N=20, PV= 620,000, FV= 1,978,000)= 3.33%

I know my assumptions are not perfect. The rent collected over the years could be higher, the property being sold at 2019 could be much lower. However given the information I have at hand, I do feel that my assumptions and projections are rather realistic.

Personally I feel that buying a property in Singapore for investment shouldn’t be a long term affair, and Mr. Tan should sell his property if there are offers of $720,000 in 2011. His yield will be roughly 7% per year if he can sell it at that price.

On top of that, Mr. Tan has to handle tenants complains, difficult tenants, chase them for rents, handle repairs and renovation, be at mercy of disappearing tenants, be saddled with a large mortgage loan and be afraid to change his job for fear of lower pay and possible underperformance which might lead to retrenchment. That’s stressful!

All that for 3.33%?

However, on the other hand, Mr. Tan can retire comfortably after selling his Kovan property in 2019. With a large sum at hand, he can invest $1m in large companies’ preference shares yielding 4.5% (rather ironic) per year with semi annual payments. He will earn $45,000 yearly and together with his CPF monthly payouts, retirement life should be a breeze for him.

Life will be easy for him after that.

Not that bad afterall!

Well, so if you really want to invest in that property, make sure you can get it at a bargain price, so that your yield on both rental and capital appreciation can be much higher, even if you have to hold it for the long term.

Most importantly, do your sums right!

Supposed Mr. Tan does not invest in an apartment. Instead, he invest his downpayment of $124,000 and 2 years worth housing installment of $66, 0192 into a diversified portfolio of stocks, with an investment horizon of 20 years. I am assuming here that he has prudently set aside about $190,000 before purchasing the apartment.

In the earlier example, Mr. Tan obtained a gain of $1,193,807 at the end of 20 years. Hence, to be equally wealthy at the end of 20 years, what is the return of his stocks portfolio he must achieve (compounded annually) before he can be indifferent in purchasing the property or investing in the portfolio of stocks?

Using a financial calculator, (PV= $190,000, N=20, FV= 1,383,807), the required return of the portfolio is 10.44%.

Hence, if Mr. Tan is not confident that his stock portfolio can give a return of 10.44% annually, he will be much better off if he invests in the property and earn 3.33% return annually.

In fact, even if Mr. Tan can only sell his property for $700,000 at the end of 20 years, his stock portfolio must return an annualized gain of 6.93% for him to be equally well off.

The above (and below) example shows why it is so much “easier” to earn a higher quantum of monetary gain in the property market, compared to buying securities. Property is also physical and hence emotionally more “logical” (adage of everyone needs a roof over their heads) investment for most people. It is less prone to nasty shocks like your property losing 50% of value in a month, compared to commodities. Worse case scenario, you can stay in it but you cannot live on stocks!

The 2 examples are not to determine a better investment asset but rather to show the difference of return between 2 different asset classes. Properties being leveraged product will return a lower return on percentage terms but higher returns on absolute monetary terms.

In this case, it pays to be in debt!

I do not include buying stocks on margin as the interest rates are exorbitant and people do not buy stocks on margin for 20 years.

If you are Mr. Tan with $190,000 on hand, which would you choose? Apartment or stocks?

For myself, I am on a lookout for a freehold property of about 800-1000 sq feet in the prime district near a MRT station selling for $650,000. I believe that the property market will have some more way to go down till 2011 as large waves of TOP apartments will flood the market then, bringing down the rental and price of private apartments.

Hopefully I can be as rich as Mr. Tan in 22 years time!

Dow - Consolidation before the Bull run start

2009-05-18T15:41:00.004+08:00

Last week, seem US Dow has put the brakes on the recent rally after nearby 200 days moving averages. Many now wondering if this pause in upward momemtum is the end of the rally or a short break before the bull start again.

The oppinion we gathered from most of traders suggest that its more toward the bull side, meaning after short while of pause, Dow could move toward the resistance level of 9000 points. Let see what the result in next few days.

NASDAQ break through 200 Day M.A.

2009-05-04T12:02:00.002+08:00

Here is more comforting information that the US bull run may not be over so soon. Many analysts consider a stock moving above its 200-DMA to be a buy signal. Furthermore, it is also said that a bull market can be defined as one where major market averages are trending up above their 200-DMA. Through most of this bear market, we haven't seen many stocks or ETFs anywhere close to their 200-DMA. Now, that seems to be changing. Thanks to the advent of ETFs in the US, it is easier to track movements in sectors. The sector ETFs are composed of many stocks, and that lends more credibility to the moving averages. There are a number of sector ETFs as well as the NASDAQ 100 have moved above their 200-DMA recently.

Technology iShares
Network iShares
Semiconductor iShares
Consumer Discretionary iShares

In addition, the NASDAQ Composite is a hair away from crossing over its 200-DMA and the Telecom iShares. Materials and Industrials ETFs are also only a few points away their 200-DMA. Looking farther afield, the iShares FTSE/Xinhua China ETF crossed above and now seems to be consolidating at a level above its 200-DMA. Other major market averages such as the Russell 2000 are only a few points away from their 200-DMA. Will they be rejected or will they power through and confirm something stronger than a bear market rally is underway? Comments: It was the best month’s performance in the market since March 2000. Though we have negative news dominated the headlines, i.e. contracting of manufacturing orders, pandemic concern over the new “swine flu” virus, lower level of auto sales in 30 years, all these fail to stop investors from buying into the market. The next question is whether the momentum can continue in May or if the markets are getting ready to stage a pullback. From technical perspective, upside could be limited from here on, as the relative strength index are nearing overbought territory. The main catalyst to watch in this week will be the bank stress tests, which due out on May 7.

Stock Market - Dow Jones will up all the way?

2009-04-24T18:13:00.003+08:00

After many months of waiting, finally seem market have found the bottom at somewhere around 7000 points.
Who care the recession is coming? As long as we can continue to make money when the upward cycle form. I want to congraturate those who able to make some money in this bear market, but don’t forget about the worst market that we experience few months ago. If the resistant level of 8000 for Dow Index is not able to break through, then reversal could happen any time.
One important lesson learn from this bear market is “When to Buy”. There is only one simple rule – when the down turn form, do not catch the falling knife. Wait till the knife fall down – wait for the day where stock is not making lower low, monitor for 4 or 5 days of trading session. Then this would be very save for one to buy into a stock and wait for up trend!!

Dow Jones - Oh No - the Bear is winning

2009-02-22T23:53:00.005+08:00

After few months never write about stock market, now we have clear direction that down trend already form. From daily chart or weekly chart, we can see the same story not changed, each attempted rally has ended once the price approached the resistant. The bull consistently failed to send the price above the nearby trend line, which suggests that this will continue to be stronger level of resistance than many traders are hoping for.

Back to the figure, Dow Jones closed last week at 7365, almost near all time low of recent year. Similar to past economy down tread few years ago, Gold also become popular this time, in fact, it's one of the investment that can be long for now. As of Feb 23, 2009, Gold price closed at USD994, almost all time high in the year. Since last few years, Gold not only for decoration and saving anymore, but has became one of the popular investment tools.

If the situation not improving, we can expect Gold price continue the up tread due to most Government continue to print money to support their economy. More private company or even some Government body will think of using Gold as trading tools if currency continues to go south. It’s not surprise if Gold price increase 100% in next one or two years time.

Is Dow Jones reach bottom?

2008-10-30T23:00:00.006+08:00

Base on the last 20 days chat, there's yet to see the break out! Yesterday Fed cut rate by 1%, market respond was closed down 74 points.

So far, we could see double bottom already form. What we need to see is break out of 9200 points. If market turn south, it would down to next 8100 strong support level.

For record purpose:

Gold price = 752

Oil = 66.

18 days after crash of Dow Jones

2008-10-30T00:06:00.006+08:00

This is the most scary market – one of my friend told me yesterday. Dow Jones Industry Index continuously down for 8 days without rebound. The record as below:

-19, -348, -157, -369, -508, -189, -678, -128

As of Oct 10, 2008, DJI closed at 8451, compare to 8 days ago 10,700. This indicate a down of 21% just in 8 days. For the next 10 days, only 2 of the days rebound, the rest all at down side. At the time of writing this article, Oct 27, 2008, DJI broke another low record of 8256. Seem that market had not found the bottom. According to one of the market watches, this is due to hedge fund and investor fear of worldwide recession.

Actually, if the properly burble came from US and Europe, there should be no reason for Asia to follow the down trend. However, what we see now is Asia also follow the same down trend. The only reason can explain was 2 years of Bull Market already came to the extend that it’s time and good reason for investor to leave the market for now. In US, we saw many big bank and Insurance Company file bankrupt due to burst of subprime burble. US government injected 700 billions into market but seem no sign of recovery. We notice these few days’ market very volatile; the high and low range can record 900 points!

When the bad news came and market continue to go south, it’s the sign of bottom yet to be seen. However, few strange points would like to high light here for future record purpose.

The USD become stronger compares to EUR or others major currency. With the interest rate continue to go down, rising of USD seem to be no reason. The only point to explain could be investors think that holding other currencies might faced bigger risk compare to USD. Another point worth a look is JPY broke the 13 years high record against USD.

On the commodity side, Gold and Oil price also record year low of 713 / ounce and 63 / barrel. Tomorrow, I will post the chart of Dow Jones Industrial Average for purpose of studying if bottom already reach.

Quote of the Day

"I've never bought a stock unless, in my view, it was on sale." - John Neff

Loss money feel sad, earn money feel even pain, this kind of people not suitable invest in Stock Market

2008-09-28T22:10:00.003+08:00

How to know one is suitable invest in Stock Market? I always joking tell my friends, when noticed from news paper the stock you bought drop further till limit down again, take mirror and find yourself, if the face look bad, the eyes is red, please get the expert’s help, it could be you have overtrade. But you need to know your eyes is turning red or yellow… yellow could be hepatitis disease, go to see doctor immediately ya!

Always I make a joke to my fried, go to take a photo before start investing in Stock Market. After buying some stock for 3 months, take another photo. Then compare the two photos, if before enter the Stock Market you look great, fresh, handsome or beauty, but the photo later look sad without spirit, bore, you know, it could be you have no faith with Stock Market! Go and take some other investment option.

The volatile of Stock Market is very common, if one can not accept the price keep on moving down and feel sad till no appetite, this is yellow light! However when one day the Stock price moving up and you feel uneasy again, excited and can not sleep, this is red light! Go and put your money in the bank’s saving account!

Word of Wisdom for Stock Market

2008-09-12T19:03:00.007+08:00

There is no Win or Lose, no Fear or Greed.

All you need to know is find the right opportunities in stock market and be aware of when the opportunities end.

When price down, just buy without fear. When price up, sell and lock your profit without greed.

Market Down – How to Survive

2008-08-23T18:05:00.004+08:00

Most of the investor knows the theory, “buy low, sell high.” However, with the fear of an economic slowdown the market now moving up and down – volatility is back. The rapid downward movement makes it difficult for investors to fulfill the buy low sell high strategy. If you are not selling high, you are not freeing up cash to invest in the bargains that are becoming available in generally falling market.

However, there’s always active cash machine – dividend paying stocks become popular and powerful in down market. Those dividends get paid regardless of what direction stocks move. Less know, but important, is that dividends themselves can give you a tremendous rate of return, with no stock gains required. So even market stay flag or down for years, you can still get a decent return on your investment --- dividends. The true power and returns from dividends come from the rise over time as the companies behind those dividends grow and prosper.

In the down market, you can reinvest those dividends and accumulate more shares at cheaper prices. Or you can switch to an income strategy and take the cold, hard cash. You can rest assured that even as the market flips flops and falls, your cash will keep rolling in.

Investing is similar to taste of Strong Wine

2008-08-17T22:51:00.002+08:00

Many people like to ask, how much money should one invest into Stock Market is considered appropriate with good return? There’s no definite answer, to me, if one can afford to loss money in Stock Market and he can still enjoy the meal with good appetite, then it should be fine.

Most of people enjoy drinking, not only one bottle, but kind of few bottles in one short. I don’t know how people really enjoy with this kind of bottom up drinking, but for sure, if buying Share with this kind of behavior, your pocket is going to bottom up! (Chinese say Gang Pei, let the glass empty)

Actually, buying share is like tasting of X.O., little by little, with this slowness drinking, one can enjoy the process, taste it at least. Normally if drinking too much too fast, the only possibility is vomiting.

One should only invest with the money that intended to keep in Bank’s Fix Deposit account, say about 40% of net worth. Every month review the investment result before making any decision, in this case break your investment timing into separate portion, and don’t buy at one time. Again, look for long team… would like to use the investment Guru’s words, “Buy into the Company because you want to own it, not because you want the Stock to go up”.

The purpose of Investment

2008-08-03T16:01:00.004+08:00

Many people when ask why they invest… the first answer is to earn money. Yes, many of the advisor or instructor when given speech on investment, the answer is “Making Money”. Is that so simple?

Few years ago, there’s an old man migrate to America, he told that live was boring at there. As he didn’t know English, didn’t know how to drive, life was no meaning until he meat a man who told him to invest in Stock Market.

This eighty years old man, start to invest part of his money, about 100 thousand in stock market. After he bought the stock, his life being to change, first, he started to read news paper. He subscribed to 3 news paper and began to search for dictionary on the word which he didn’t understand. After 3 years, his English standard had improved a lot! Beside, he start to listen to TV news in order not to miss out any important news. This had improved his English literacy as well.

The strange thing was the hearing problem also being cured after these days of listen to TV news. The gastric problem also improved a lot and now he need to take one big bowl of rice for each meal. At night, like student doing home work, he will perform chat drawing, study PE ratio, read company’s Financial Report and perform analysis.

At last, someone ask, after so many year of investing, how much money did he earn? He say, he still in the learning stage… after so many year, he lost 2 thousand. He further explained that he learn so many thing and feel live full of meaning. This happiness if can buy with 2 thousand, then losing 2 thousand was not a problem anymore.

As investor, do you still think the purpose for investment is “making Money”? The main reason for investing should be enjoy live and increase value of it. Of course, if you can obtain both, then you are the most Happy Person in the world!

Picture: Temple Pagoda... God never promise sky will always blue!

The market is always wrong?

2008-07-19T22:54:00.007+08:00

In the recent market crashes, the KLSE fell about 1150 points, a drop of 350 points within 6 months. When the overall market is coming down, analysis tend to lower the target selling price of a company and increase the target selling price when the overall market is trending higher.

Whenever stock market has a lot of uncertainties, all stocks good or poor fundamental stocks will hammered down. However, we always believe crisis means opportunities. The recent drop in market prices creates magnificent investment opportunities. Even though the market may drop further as there are still a lot of uncertainties and outstanding negative news pending announcement, we believe there is great opportunity for long-term investment.

Warren Buffer believes that stock market is manic depressive, it always overreacts to positive as well as negative news. If the overall market sentiment is good, the stock price may surge sky high. However if the stock market is depressive, the stock market may go down to very cheap price. The market is there to serve you and not to instruct you. It is not telling you whether you are right or wrong. The business results will determine that.” The key factor is to purchase right business at the right time.

As a investor, we should hold good quality stock for long term, as a result of recent market crash, these stock are not expensive anymore and the price now become quite attractive. We need to prepare ourselves by understanding the intrinsic value of the stock. We should stop predict when market will reach its bottom (as no one will know until it reach its bottom) and take the advantage of uncertainty.