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Showing posts from 2011

The different between Fundamental and Technical Analysis

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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

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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

Single Tier Dividend - Good or bad for retail investor?

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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, Government can boost their tax income and save a lot of follow up work! 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 ta

What you have learnt from Stock Market?

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One of my friend told me, he dare not invest in stock market, because he feel that market is unstable at the moment. Some day up and follow by few days down, he was unable to sleep well when he involved in Stock Market last time. Why we invest in stock market? If a company's stock selling at one dollar today, tomorrow and one year later, what's the fun to invest in stock market? We know one thing, inflation always happen, today's asset worth 1 million, it can become 1.2 million one year latter. Yes, we want Capital Gain! This is true only for investment grade stocks! We need market up and down to make money. The second thing I like to invest in stock market is because of liquidity. You can sell the stock you buy and take the cash within 3 working days. Hence, you need to select the right stock to invest, avoid those stock with low liquidity, unless you are very rich and willing to wait for years. Stocks do pay dividend, if you know how to “save” high divid

Some Stock Market Trading Tips

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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. On the other hand, if the stock go down (down trend) for few days (or weeks) and the price already stagnant then suddenly the price go down with volume increase, then take a look at the price. If the price not going 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 s

Regret Now or Regret Later

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Investing is about decision. Many people know asset/ shares will increase in value. When the market go down and the opportunity come, how many people dare to take action? Many people afraid to make decision because of fear. They fear of doing something that they will later regret. Because of this, many people fail to make the decision to restructure their portfolio, end up holding too much cash! . By avoiding the tough decisions, sooner or later, we must face second forms of regret – the regret of not taking any action, when we look back, things we do not done cause greatest regret. . In fact, we can always deal with regrettable decisions by repairing our action. Our regret only intensifies as we realized the price we've paid by delaying important investment decision. . In the journey of life, we are likely to evaluate our choices differently. We can improve our financial or life decision when time come. We can invest regularly or invest when opportunity ar

How many hunting dogs do you have?

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Just read about one article, illustrate investment as hunting. You can hunt in group, or alone.  Smart hunter always hunt with dog or group of hunting dogs to reduce their effort.  Traders who trade every day is similar to hungry hunter who kills every day. It's better to train many dogs that can help in hunting job. Let the money work hard for you, money hunt for more money. Whereas some hunters seldom hunt, but he bleed the dogs and sell to those hunters who need it. He 's business owner or Investor who create the businesses and looking for passive income. When the hunting seasons come, many hunters looking for dogs, they willing to pay high price, especially those dogs can run very fast. Times come when winter season approach... many hunters will sell their dog as they do not know how long the winter last, it could be one month or one year, nobody know. “Winter season” is very scary for those hunter who never prepare, sometime they need to eat the dog if

Market Crash... buy more or cut loss?

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Last few days, we saw the market having fun, crash like crazy, people panic selling like no tomorrow. Yesterday we saw US Dow Index down by 283 points, at the time I write this notes, it's down by another 350 points, Dow Index currently stand at 10,774. Many investors force to shake out in this volatile market with one of question in their mind, if the market go down further, should he continue to average down, or should he cut loss? . To a new investor, he will confuse, as many will suggest to “Cut Loss”, whereas, someone might say, no, it's time to buy more so that you can average down to reduce the cost. I think in order to do the right thing (let do not care if this's correct way or not), one must understand what's the purpose or intention when he bought the stock. Is it for short term speculating purpose? Or is it for long term investment purpose? Also, he may want to find out if the share he bought is mean for speculate or investing grade. . You should

Do you like the stable market?

In natural science, the balance environment always see something like this: Electron = Proton, or what we say, Positive is equal to Negative. . Similar in stock market, if nothing happen: Buyer = Seller In this case, technically the stock price will remain the same all the time. (this is boring ya, just imagine if a stock just remain the same price today, tomorrow or next year) Once a while, some kind of news will spark the imbalance, like what we faced in 2008, the financial crisis which caused few big banks to meltdown, making seller more than buyer. Sometimes, the seller became panic and want to sell stock like no tomorrow and dump the share price at what even price. . Recently, market seem to encounter the similar imbalance again. It's full of negative news every where. It remind me of one famous quote: It's a mistake to sell something worth 1 dollars for 50 cents with the hope to buy it back at 30 cents. It's also a mistake if you refuse to buy som

What cause the share price going down?

Every day, share price change up, down or stay side way. What cause the share price to change? In fact, nobody really know the answer, even the experience traders. Some special event, like financial crises, those experience know share price will go down, but they can not predict how much it will go down and when it will 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 will stay 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 and tend to move down. The funny thing is, share is not something necessity, it's not something everybody need in daily life. Today's buyer can become tomorrow's seller. If a country spark a war, everyone will become panic as because they only want to hold cash. T

Investment Note Book

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. Ano

Some snippets about TENAGA (TNB)

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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 disp

Happy Investing

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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

Learn How to Play the Money Game

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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 strateg

Back to basic - Invest in a business

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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 = Liabilit

Malaysia REIT report – June 2011

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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 n

Sharing with others - Make You happy

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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, tr

Why I like to play Monopoly?

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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. .

How good is your knowledge as speculator?

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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? Inter

Why people loss money in Stock Market!

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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 ad

Anyone can be a millionaire!

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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 contri

Are you invest in the Best Company

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 f

Dividend Reinvestment Plan

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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 Mayban

After you have million dollar!

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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. 

Buy a business with reasonable price

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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