KLSE Winner

Chickens Were Running Around

2012-01-26T16:16:00.003+08:00

Gong Xi Fatt Cai to all Chinese investors! Do you gamble during CNY? Well, I'm not really into gambling, because the probability to win is very low even with small money. I rather spend the time to chit-chat with friends and get to know new friends.

Back to stock market. It's still January, but the some of the counters seems like going up a lot.

Earlier on, I have shortlisted 6 counters which I think they are undervalued and they can kept for value buy. Unfortunately, it's always easy to shortlist. When it comes to buy, I always queue at the lower price in hope to get a better bargain, or just want to wait for the price to be lower before queue. I'm not sure why I keep repeating this kind of mistake.

Not only that. I also worry about here and there, further price dropping or anything that can impact the share price, should I buy lesser lot and buy in stages, etc. Perhaps this are the common mistakes?

Anyway, all those counters are now releasing from my shortlist, because all of them have went up a lot. To be honest, I'm regretting when I see them everyday. I only can watch but cannot share the joy. That's taught me a very good reason for the beginning of 2012.

Good news does comes after a series of bad news, I have just discovered another undervalue counter on the past few days. I hope I can hit it this time. Will update if it comes true.

AMENDMENT #2: 2011 Share Investment Review

2012-01-08T21:35:00.001+08:00

Today is the last day of 2011. How do you feel?

I believe most of us feel excited, neither because of 2011 is ending nor 2012 is coming, just because it's New Year and we have few holidays to enjoy. Since it is the year end, it's time to review my local share investment portfolio.

Portfolio review is always good to know how well we did, where we did wrong and right, and how we can improve further for the coming years.

This year return is doing very badly compare to my target return. No doubt, 2009 and 2010 are the fruitful years for many of the investors. I'm not sure how you guys doing this year. I only have 8.3% return this year, compare to my target of 15%. In fact, a few percents was coming from the past few trading days. My 2010 return was 13.1%.

My sincere apology. After review my portfolio again, I noticed I have used the incorrect method to calculate my return. I took the total of my return divided by total cost of every trading made. This is wrong because I re-use the same cost to sell counter A and buy counter B. I should take the total investment I put into my CDS instead. No wonder I only have 8% return last year!!!

After correction with dividend and minus out brokerage fees, ~~my actual return was 11.6%. If I sum up with the total net dividend I've collected in 2011,~~ my total annual return was ~~15.2%~~ 16.3%! ~~I'm actually achieved my target of 15%! Hooray!~~

~~(Note: The return has yet to minus the brokerage fees, which is very minor.)~~

There is one experience anonymous from the newspaper claimed that he has ~~40%~~ 43.8% return this year. If it is true, I salute his return. If we look at KLSE index gap for 2011, it is only 0.8%, not even 1%. So ~~40%~~ 44% return for this year is really outstanding and successful. His strategy is focus on 3 to 4 stocks only, invest in warrant and invest those cold stock that normally investors do not interested.

Of course, there are rooms for me to improve my strategy, including cut loss on those counters which making loss with no prospect, increase the number of lots once target is lock down, try to avoid non-blue chip IPO counter, don't catch the falling knife, and finally don't buy something that I don't understand.

The most critical mistake I've done is invested in MEGB and MUDAJYA. They really impacted my 2011 return a lot, more than 30% net loss. On the other hand, the highest return counters would be AMEDIA, JTINTER and SUNREIT, ranging from 28% to 35%, excluding dividend.

I have increased my total portfolio investment fund 100% this year, including the return from last year. I hope I can increase another 50% for 2012 with the return from this year. I hope this can force me to save more and make me achieve my financial freedom goal faster.

For 2012 target, after a thorough review on my fund size, trading strategy and capability. I decided to ~~keep it~~ at ~~15%~~ get a ~~18%~~ 19% return this year. I hope I won't disappoint myself ~~again~~ with the lesson learned over the past 2.5 years. ~~In fact, I'm greedy and I want to set it higher, but I'm just not up to the standard yet.~~

~~I'm not a winner or loser this year, but~~ I do hope I will be continue to be a ~~real~~ winner in 2012.

How about yours? I do hope you have a good year for 2011 and even a better one for the coming 2012.

Happy New Year, folks!

Asian Successful Investors' Traits

2011-12-18T21:27:00.002+08:00

Recently, I have read many of the Asian successful stock market investors through finance magazines. Each of them is good and impressive, it's just like the The Market Wizards for Asian. I would like to learn from them, so I found out that they have some common traits and experience, which I would like to share with you here.

Trait #1 - Daring

None of them are play safe by starting from small amount of investment. Play safe won't get you far just like fixed deposit. Most of them invested 100% of the wealth into it. They are daring and taking risk once an opportunity is discovered. Besides, they also daring to invest during great uncertainty. That's why their return is very high compared to others when it is succeeded.

Trait #2 - Encountered Failures
Apparently none of them can win and grab money from the stock market from the beginning till the end. Because they are daring and take risk, they encountered big failure as well. Most of them encountered more than one time. But that's not the big deal, they review why they fail, come out with alternative solution, wake up and try again. This is how they success.

Trait #3 - Hardworking

To stand out from the crowd, they have to do something different than others. Most of them spend a lot of time to study and understand what they are doing as well as relentlessly discover their winning method. If only based on basic fundamental and technical analysis, or understand what others have also understood, everyone should have already make it.

Trait #4 - A Leader

They are not followers, because they have their own strategy and insight. Once they discovered the opportunity or threat, they will dare to take action.

From what I noticed, luck is at most only contains 10% of our success. 90% is rely on our hard work, insight discovery and daring. If we can possess these 3 traits and a few % of luck, we may become one of them. Of course, I'm still learning from them.

Digital Media Counters

2011-12-04T19:57:00.000+08:00

I believe some of you have already notice the potential earnings and prospects of local digital media counters. There are not many digital media counters in Malaysia, just a handful of them, like AMEDIA, CACHA, DIGISTA and MMODE.

Between them, 2 of the long listed counters, DIGISTA and MMODE have went up 3 to 4 times recently, where AMEDIA and CACHA are just listed recently. Have you invest any of them?

In fact, they are not really the pure media counters. They are the mixture of media and technology. They need to continuously to develop their technology and follow the leader's step out there to improve to their products, services and income. Unlike traditional media counter, these digital media counters have to allocate quite a portion of the profit for technology development. That's why you don't see them distribute much dividend to the shareholders, some of them even no dividend at all.

Another similarity of these counters are the Price Per Earning Ratio (PER). Most of them are low PER counters, around 4-6. Compare to traditional media and technology counters, their PERs are obviously low.Why is that? Are they undervalue? If so, why all of them undervalue?

Well, I guess this digital media industry is consider still new in Malaysia. According to history, not many of the local company are success by involving in technology sector. Look at the bunch of technology counters, how many of them can go out of Malaysia and return with a lot of profits? Many of them are penny stocks. Well, I would say so far the most successful technology company belongs to Jobstreet, and that's already reflect on it's share price.

I'm not saying we are not creative, but we are lack of creative people to come up with bunch of ideas. Until today, our manpower outflow issue has yet to be rectified, due to our poor management of the country (The Government). Compared to technology leaders like US and Taiwan, we still have a long way to go.

So in short, since they are low PER, how good are these digital media counters? They are making money and they will make more money in the near future. The prospect of this sector is definitely good and the competition is yet to be stiff. I foresee they are safe to invest right now.

The only risk is we are lack of relevant manpower in this industry. If we don't resolve this problem, I foresee the company development is most probably remain within the country. I mean there is a growth limitation in the near future.

Coastal Contracts Bhd

2011-11-27T12:21:00.000+08:00

One of my favorite low PER counter, COASTAL has released it's latest quarter result on 24 Nov. I believe this counter has draws many investors attention, due to it's low PER and the capability of making money from the time of economy crisis until today.

Surprisingly for the first time, it's EPS has been dropped from 11.1 cents to 7.59 cents compared to previous year's quarter. The drop of revenue and profit are mainly due to lower number of vessels delivered and lower fleet utilization rate for vessel chartering. Nevertheless, it's gross and net profit margin has increased by 2% and 5% respectively.

From my opinion, the delivery of fewer vessels were due to lower demand impacted by the growing concerns over Eurozone sovereign-debt crisis, as we can see the global stock market were heading south for Q3 this year. Where by the demand should be picking back in Q4 and 2012.

Overall, the outlook for offshore O&G industry still looks good with the crude oil maintain at USD100 per barrel level. It is still a healthy growing company for 2011, with a net cash of RM180m. By next year, it can utilize it's net cash of over RM200m to do it's business expansion, which provide a very good opportunity. If not, it should provides better dividend yield to the shareholders. By looking at it's track record over the last 5 years, it is a good business to invest with, provided with reasonable dividend yield.

Another business opportunity for Coastal to bring in more revenue is that it looks for strategic business partner to work on offshore structure fabrication. But so far there is yet to have potential candidate. I hope the management walk the talk about this.

I have yet to re-invest into this COASTAL since the previous profit taking. By looking at the current share price, it stands at PER of 5, which has the potential to go up to 7 or 8 in a strong bull situation. I strongly believe this counter is a long-term investment counter to go for, if it can revised it's dividend policy and confirm it's future business plan in the near future.

Masterskill Continues to be Loser?

2011-11-18T23:32:00.000+08:00

MEGB (Masterskill) finally released it's latest quarter result today. Yes, as expected and predicted from all analysts, it is a very disappointed outcome.

MEGB's Q3 2011 net profit has dropped for almost 80% compared to previous Q3 2010, mainly due to poor revenue of 24% and continuously high expenses. High expenses is okay. But MEGB has started 3 consecutive quarter results with lower sales with higher expenses. And this quarter is the worse ever, due to the same reasons given in last quarter report.

As per prospect comment from the report, it still talk about the same craps like previous quarter. As mentioned in my previous post, I have totally loss confident in this company. The stupid comment under prospect even make me more sick. It mentioned that the directors are confident of achieving satisfactory results for the full financial year of 2011 given prevailing market conditions. Oh come on, how to consider achieving satisfactory result if the outcome is 50% poorer than last year? This is call Confident when you deliver poor result? What? It's totally craps. Sorry, I cannot accept it as an investor.

Okay, I better stop complaining. I admitted that I made a mistake in picking MEGB as part of my portfolio and repeating mistake that I was holding it for too long. As a result of dim future prospect and suspicious management quality, I have offloaded all my MEGB shares on last week at the price of RM1.36 and put it as a full stop.

Well, perhaps that's the major problem on new listed company, no historical and proven record. It's the same like HOMERIZ which I encountered the same problem, but at least I do like it's management quality. Anyway, I do like to take the risk as it may provide me huge potential return. Now I'm putting my hope on AMEDIA and PCHEM.

Happy Investing, folks.

Olympia Industries Berhad

2011-11-13T18:09:00.001+08:00

I have a quick read through at OLYMPIA latest annual report 2010 this afternoon. Well, I took a look just because I'm it's subsidiary, Jupiter Security Sdn Bhd customer. Jupiter Security Sdn Bhd is one of the brokerage firms in Malaysia and I'm using Jupiter Online as my trading platform.

Talk about Jupiter Online, I think it is the best and most stable trading platform and portal I ever had. I have been consistently using it for more than 2 years and I love it a lot compared to OSK, Maybank and CIMB. On the other hand, CIMB trading platform is the lousiest compared to all of them.

Anyway, as Juniper Security Sdn Bhd offers low rate and good trading plarform for it's customers, I'm sure it is making money. For FY2010, it has gain after tax profit of RM1.7 millions, compare to making loss last year. I'm happy to see that. However, the overall company performance is still very poor since 2009. I'm unable to invest in this counter even though I like it's subsidiary a lot. This is because this company is not making money, at least for the past 3 years and I don't see significant improvement yet.

What surprised me is that I noticed Tan Sri Lim Kok Thay is one of the 30 shareholders for OLYMPIA. As this is not a money making company, I just wonder why Genting big boss is investing in this company. I don't think he has time to use Jupiter Online for share trading at his own? Perhaps OLYMPIA is political link counter?

What do you think?

Review of My Portfolio

2011-10-30T16:44:00.004+08:00

The stock market is turned from bear to bull within 3 months time. The bear has brought down KLSE 270 points and last for almost 3 months. The recent bull has comes back for more than a month and bring back KLSE 140 points.

I believe most of the people did not manage to buy at the bottom of 1,310-1350. It's unpredictable. Not only that, many people also make loss from the bear and afraid of 2nd dip. In fact, this is the best time to test your strategy whether it is working. For me, my existing strategy is definitely sucks and need a lot of improvement. I'm surrounded with fear and I did not discipline enough to do my cost dollar averaging.

Anyway, let's look at my portfolio compare the worst and the latest as below:

26-Sep-2011 (Worst day)

28-Oct-2011 (Latest Price)

My result is badly drag by MUDAJYA and MEGB. From the trading result above, we can tell the followings:

1) Blue chips have less impact during bear market. If you really don't like to see negative a lot and you don't dare to buy during dip, go for blue chips.

2) Dividend does help you to improve your return yield and they also have less impact during bear market. So go for high dividend yield stock, like REIT.

3) Don't invest in poor financial result or cocky boss stock, like MEGB. It has already dip to RM1.10+ before the bear comes. I'm too naive that I think I can sell at a better price. So it is still in my portfolio.

4) No matter how worst it is, if the fundamental is remains, it will bounce back. So do dare to do dollar cost averaging for your counter. Examples are construction stocks like MUDAJYA and UOADEV.

5) If you have limited bullet and not invest in blue chips, try to cut loss @ 10% to 12% so you have more capital to invest at a better price during dip market.
6) If you want to have an outstanding return, you must dare to buy in the bear market where the stocks are already undervalue. Be greedy when others are fear.

My annual target for this year is to achieve 20% with RM100k capital, which is now behind the schedule even though I have took some profits before this. I only have 2 months left and I got to buck up from now.

Buy American. I Am.

2011-10-09T20:37:00.001+08:00

THE financial world is a mess, both in the United States and abroad. Its problems, moreover, have been leaking into the general economy, and the leaks are now turning into a gusher. In the near term, unemployment will rise, business activity will falter and headlines will continue to be scary.

So I’ve been buying American stocks. This is my personal account I’m talking about, in which I previously owned nothing but United States government bonds. (This description leaves aside my Berkshire Hathaway holdings, which are all committed to philanthropy.) If prices keep looking attractive, my non-Berkshire net worth will soon be 100 percent in United States equities.

Why?

A simple rule dictates my buying: Be fearful when others are greedy, and be greedy when others are fearful. And most certainly, fear is now widespread, gripping even seasoned investors. To be sure, investors are right to be wary of highly leveraged entities or businesses in weak competitive positions. But fears regarding the long-term prosperity of the nation’s many sound companies make no sense. These businesses will indeed suffer earnings hiccups, as they always have. But most major companies will be setting new profit records 5, 10 and 20 years from now.

Let me be clear on one point: I can’t predict the short-term movements of the stock market. I haven’t the faintest idea as to whether stocks will be higher or lower a month or a year from now. What is likely, however, is that the market will move higher, perhaps substantially so, well before either sentiment or the economy turns up. So if you wait for the robins, spring will be over.

A little history here: During the Depression, the Dow hit its low, 41, on July 8, 1932. Economic conditions, though, kept deteriorating until Franklin D. Roosevelt took office in March 1933. By that time, the market had already advanced 30 percent. Or think back to the early days of World War II, when things were going badly for the United States in Europe and the Pacific. The market hit bottom in April 1942, well before Allied fortunes turned.

Again, in the early 1980s, the time to buy stocks was when inflation raged and the economy was in the tank. In short, bad news is an investor’s best friend. It lets you buy a slice of America’s future at a marked-down price.

Over the long term, the stock market news will be good. In the 20th century, the United States endured two world wars and other traumatic and expensive military conflicts; the Depression; a dozen or so recessions and financial panics; oil shocks; a flu epidemic; and the resignation of a disgraced president. Yet the Dow rose from 66 to 11,497.

You might think it would have been impossible for an investor to lose money during a century marked by such an extraordinary gain. But some investors did. The hapless ones bought stocks only when they felt comfort in doing so and then proceeded to sell when the headlines made them queasy.

Today people who hold cash equivalents feel comfortable. They shouldn’t. They have opted for a terrible long-term asset, one that pays virtually nothing and is certain to depreciate in value. Indeed, the policies that government will follow in its efforts to alleviate the current crisis will probably prove inflationary and therefore accelerate declines in the real value of cash accounts.

Equities will almost certainly outperform cash over the next decade, probably by a substantial degree. Those investors who cling now to cash are betting they can efficiently time their move away from it later. In waiting for the comfort of good news, they are ignoring Wayne Gretzky’s advice: “I skate to where the puck is going to be, not to where it has been.”

I don’t like to opine on the stock market, and again I emphasize that I have no idea what the market will do in the short term. Nevertheless, I’ll follow the lead of a restaurant that opened in an empty bank building and then advertised: “Put your mouth where your money was.”

"Today my money and my mouth both say equities."

Warren E. Buffett, Chief Executive Officer of Berkshire Hathaway, a diversified holding company.

When Will Index Correction End?

2011-09-18T13:25:00.002+08:00

It's been 2 months, KLCI index has been dipping for more than 10% as of Thursday closing. What we are looking forward? Will this be a small or big bear?

As I mentioned in my post earlier, the problem is not so complicated as the financial crisis in 2008. Thus, it may not go back to where it starts again. Perhaps 2 to 3 months correction is consider a norm, as no index can goes up forever.

By looking at individual stock, some discounts are given. Do you feel like buying them? Or you worry it will dipped further? In fact, most of the counters in my portfolio are small-cap stocks. Their share price have been corrected quite a lot! With such situation, let's don't talk about making money, to not making loss from stock market also seems very challenging. So what is your existing strategy? I bet most of us hold and wait, right?

I've reviewed my portfolio this morning and some of them seem really terrible. The worst counters are MEGB and MUDAJYA. They dip the most. For MEGB, it's fundamental and prospect are badly affected. The drop of it's share price is reasonable and I unable to release on time. As for MUDAJYA, the fundamental is a little bit affected, but the prospect is still there. Overall, construction counters are dropping badly, not only MUDAJYA, so changing horse won't help much. I've been practicing dollar cost averaging (DCA) for this counter. But the dropping of this counter is like no tomorrow.

I did not invest further on MEGB, because I don't think it is worth anymore for me to invest further after I've done my study on it. Yes, the business model looks very simple. It's peers like HELP and SEG are doing very well. MEGB itself also did quite well in 2010. However, it's earning capability has changed a lot in 2011, especially in this latest quarter. My bad that I did not follow-up closely on this counter. I did not aware there is change of SPM credit requirement, SPM result delay, etc. I was totally blank until I read those craps in the latest quarterly report. I committed a serious mistake on this.

For MUDAJYA, I really don't think it has much problem so far. Thus, I will still continue to allocate some capitals and do DCA on this counter for few more times. I even sold all my CEPAT shares and swapped them into MUDAJYA shares last few days ago.

I know it looks very risky, and the share price can drops further. From my observation, the share price dropping can be due to foreign fund managers under top 30 shareholders are offloading their shares from this counter. Thus, it is generating huge sell orders for the past 1.5 months.

Nonetheless, I still don't see any problem on this counter and I think it still has a bright prospect. The value now looks really a super value buy. Besides cash flow reserved, courage is highly required to do DCA during this time. Everyone is fear for further dropping, but I take this calculated risk and act on it. Hopefully it will bring me good return.

The experts are expecting this is a small bear and it should ends in the early of next month. Let's see how it goes.

Happy investing, folks.

The Management Integrity Lesson

2011-09-01T17:06:00.000+08:00

Selamat Hari Raya and Happy Merdeka Day! I hope you have a great holiday for the past few days.

I went to Times bookstore yesterday and I read a local Chinese stock magazine. A reader wrote in and ask about how's HEVEA doing and what is it's prospect. Interestingly, the author regret that he did write a bright future and good prospect for HEVEA early this year, due to the misled from HEVEA's management. The management told The Edge that they are started to export their products to China and they will improve their revenue and profit in the near term.

Unfortunately, HEVEA reported a very poor result for 1H2011. They did not being honest of what they told the journalist and the public. In contrast, EVERGRN management told the journalist and the shareholders that they will facing a very challenging business environment and high cost material. The author expressed that he is very frustrated and lost confident and trust with HEVEA management integrity. He urged the reader stays away from the company which the management is lack of integrity.

After reading the article, it recalled one of the companies in my portfolio, Masterskill (MEGB). I still have 4.5 lots in hand, and my average buying price is RM1.78. Today, it has dropped to RM1.32 due to surprising poor result in 2Q11. If you are following MEGB news announcement from the beginning, you will learn how good the CEO Dato Edmund talks about his company.

He told the journalists in early March that anything below RM2 does not justify keeping the company list. And he is considering to up his stake in the group. He always emphasized that the company fundamental remains strong. Yes, even in the latest quarter report. I have the feeling that he is talking bull shit. He never raise his stake, is he? The company is not making money lately due to PTPTN has changed the maximum value of it's loan from RM60,000 to RM45,000 and minimum entry requirement for nursing programme from 3 to 5 credits at SPM level. Does it still consider fundamental remains strong? Hey, this will impact the future earning significantly!

The most bull shit is the first 2 paragraph under commentary on Prospects. MEGB bull shit about they still able to make money from this business and maintain healthy balance sheet. They also bull shit that despite the high inflation and low GDP growth, they are still maintain it's competitive edge. If they compared to the latest results from HELP and SEG, MEGB has nothing to proud of.

Anyway, I'm glad that they are honest to the analysts about their problems. So as usual, those 'PRO' analysts has downgraded MEGB from RM3.xx to RM1.7x-1.9x. It's a joke. Those analysts have totally misled by the management. I'm really suspecting about MEGB management integrity.

The reason I haven't let go MEGB shares is because I do believe the 2H11 result may getting better compare to 1H11. It's NTA is already RM1.29. I think the share price would be taking this price as the baseline. Anything below this price would be worth to look at, if the management claimed that their 'fundamental still remains strong'.

Another thing is that they have strong cash flow. I hope they will spend the money carefully and properly to bring back the revenue and profit. With the high dividend policy, I decided to keep it and wait for 3Q11 result. Perhaps I'm too stubborn. Let's wait and see.

Management integrity, it is too important!

What Are Stocks (Part 2)?

2011-08-21T18:48:00.001+08:00

Debt vs. Equity

Why does a company issue stock? Why would the founders share the profits with thousands of people when they could keep profits to themselves? The reason is that at some point every company needs to raise money. To do this, companies can either borrow it from somebody or raise it by selling part of the company, which is known as issuing stock. A company can borrow by taking a loan from a bank or by issuing bonds. Both methods fit under the umbrella of debt financing.

On the other hand, issuing stock is called equity financing. Issuing stock is advantageous for the company because it does not require the company to pay back the money or make interest payments along the way. All that the shareholders get in return for their money is the hope that the shares will someday be worth more than what they paid for them. The first sale of a stock, which is issued by the private company itself, is called the initial public offering (IPO).

It is important that you understand the distinction between a company financing through debt and financing through equity. When you buy a debt investment such as a bond, you are guaranteed the return of your money (the principal) along with promised interest payments. This isn't the case with an equity investment.

By becoming an owner, you assume the risk of the company not being successful - just as a small business owner isn't guaranteed a return, neither is a shareholder. As an owner, your claim on assets is less than that of creditors. This means that if a company goes bankrupt and liquidates, you, as a shareholder, don't get any money until the banks and bondholders have been paid out; we call this absolute priority. Shareholders earn a lot if a company is successful, but they also stand to lose their entire investment if the company isn't successful.

Risk

It must be emphasized that there are no guarantees when it comes to individual stocks. Some companies pay out dividends, but many others do not. And there is no obligation to pay out dividends even for those firms that have traditionally given them. Without dividends, an investor can make money on a stock only through its appreciation in the open market. On the downside, any stock may go bankrupt, in which case your investment is worth nothing.

Although risk might sound all negative, there is also a bright side. Taking on greater risk demands a greater return on your investment. This is the reason why stocks have historically outperformed other investments such as bonds or savings accounts. Over the long term, an investment in stocks has historically had an average return of around 10-12%.

What Are Stocks? (Part 1)

2011-08-17T22:06:00.002+08:00

The Definition of a Stock

Plain and simple, stock is a share in the ownership of a company. Stock represents a claim on the company's assets and earnings. As you acquire more stock, your ownership stake in the company becomes greater. Whether you say shares, equity, or stock, it all means the same thing.

Being an Owner

Holding a company's stock means that you are one of the many owners (shareholders) of a company and, as such, you have a claim (albeit usually very small) to everything the company owns. Yes, this means that technically you own a tiny sliver of every piece of furniture, every trademark, and every contract of the company. As an owner, you are entitled to your share of the company's earnings as well as any voting rights attached to the stock.

A stock is represented by a stock certificate. This is a fancy piece of paper that is proof of your ownership. In today's computer age, you won't actually get to see this document because your brokerage keeps these records electronically, which is also known as holding shares "in street name". This is done to make the shares easier to trade. In the past, when a person wanted to sell his or her shares, that person physically took the certificates down to the brokerage. Now, trading with a click of the mouse or a phone call makes life easier for everybody.

Being a shareholder of a public company does not mean you have a say in the day-to-day running of the business. Instead, one vote per share to elect the board of directors at annual meetings is the extent to which you have a say in the company. For instance, being a Microsoft shareholder doesn't mean you can call up Bill Gates and tell him how you think the company should be run. In the same line of thinking, being a shareholder of Anheuser Busch doesn't mean you can walk into the factory and grab a free case of Bud Light!

The management of the company is supposed to increase the value of the firm for shareholders. If this doesn't happen, the shareholders can vote to have the management removed, at least in theory. In reality, individual investors like you and I don't own enough shares to have a material influence on the company. It's really the big boys like large institutional investors and billionaire entrepreneurs who make the decisions.

For ordinary shareholders, not being able to manage the company isn't such a big deal. After all, the idea is that you don't want to have to work to make money, right? The importance of being a shareholder is that you are entitled to a portion of the company’s profits and have a claim on assets. Profits are sometimes paid out in the form of dividends. The more shares you own, the larger the portion of the profits you get. Your claim on assets is only relevant if a company goes bankrupt. In case of liquidation, you'll receive what's left after all the creditors have been paid. This last point is worth repeating: the importance of stock ownership is your claim on assets and earnings. Without this, the stock wouldn't be worth the paper it's printed on.

Another extremely important feature of stock is its limited liability, which means that, as an owner of a stock, you are not personally liable if the company is not able to pay its debts. Other companies such as partnerships are set up so that if the partnership goes bankrupt the creditors can come after the partners (shareholders) personally and sell off their house, car, furniture, etc. Owning stock means that, no matter what, the maximum value you can lose is the value of your investment. Even if a company of which you are a shareholder goes bankrupt, you can never lose your personal assets.

Is Recent Crisis Differs From 2008?

2011-08-12T23:19:00.000+08:00

I'm so sorry. I supposed to write something on Monday or Tuesday evening. But I was rushing for a tender and I did not sleep for 2 days. I have totally no chance to update this blog for the past 10 days. That's make me think of my financial freedom plan.

So have you find out what is wrong with the market for the past 5 to 6 trading days? I found the article below written by Francesco Guerrera from the Internet and would like to share with you.

There are three fundamental differences between the financial crisis of three years ago and today's events.

Starting from the most obvious: The two crises had completely different origins.

The older one spread from the bottom up. It began among over-optimistic home buyers, rose through the Wall Street securitization machine, with more than a little help from credit-rating firms, and ended up infecting the global economy. It was the financial sector's breakdown that caused the recession.

The current predicament, by contrast, is a top-down affair. Governments around the world, unable to stimulate their economies and get their houses in order, have gradually lost the trust of the business and financial communities.

That, in turn, has caused a sharp reduction in private sector spending and investing, causing a vicious circle that leads to high unemployment and sluggish growth. Markets and banks, in this case, are victims, not perpetrators.

The second difference is perhaps the most important: Financial companies and households had feasted on cheap credit in the run-up to 2007-2008.

When the bubble burst, the resulting crash diet of deleveraging caused a massive recessionary shock. This time around, the problem is the opposite. The economic doldrums are prompting companies and individuals to stash their cash away and steer clear of debt, resulting in anemic consumption and investment growth.

The final distinction is a direct consequence of the first two. Given its genesis, the 2008 financial catastrophe had a simple, if painful, solution: Governments had to step in to provide liquidity in droves through low interest rates, bank bailouts and injections of cash into the economy.

As Warren Buffett once wrote to his shareholders, "we have usually made our best purchases when apprehensions about some macro event were at a peak".

So have you managed to collect some discounted stocks for the past 5 days? Or you are waiting for a better entry point to enter? Or you are listening those experts not to catch a falling knife?

Whatever it is, I hope you did not panic and sell of your shares, because perhaps it is just a downgrade of US credit rating, but not another 2008 crisis.

Anyway, The stock market has been go up for so long, I've awaited for so long for it to come down. On the other hand, I've took profit and sold CEPAT and UCHITEC 10 days ago in order to provide some cash flows for me to do some share swapping. So I decided to take the risk to buy some on past Monday morning.

Since I don't have time to monitor the market, I can only issue a buying price for those counters I think it is cheap for me. Who know, they are all matched within 1 hour. To be honest, I've hit a very bad entry time, where there were a lot more discounts on Monday noon and Tuesday morning. Anyway, what is done, is already done. I can only learn from my mistake.

Everyone can predict the market movement, but not everyone can be correct every time. So we will see our stock market's fate next week. Most of the Q2 result coming out very soon, we will see.

All the best, folks!

The Introduction of Stocks

2011-07-31T14:47:00.000+08:00

Wouldn't you love to be a business owner without ever having to show up at work? Imagine if you could sit back, watch your company grow, and collect the dividend checks as the money rolls in! This situation might sound like a pipe dream, but it's closer to reality than you might think.

As you've probably guessed, here is talking about owning stocks. This fabulous category of financial instruments is, without a doubt, one of the greatest tools ever invented for building wealth. Stocks are a part, if not the cornerstone, of nearly any investment portfolio. When you start on your road to financial freedom, you need to have a solid understanding of stocks and how they trade on the stock market

Over the last few decades, the average person's interest in the stock market has grown exponentially. What was once a toy of the rich has now turned into the vehicle of choice for growing wealth. This demand coupled with advances in trading technology has opened up the markets so that nowadays nearly anybody can own stocks.

Despite their popularity, however, most people don't fully understand stocks. Much is learned from conversations around the water cooler with others who also don't know what they're talking about. Chances are you've already heard people say things like, "Bob's cousin made a killing in XYZ company, and now he's got another hot tip..." or "Watch out with stocks, you can lose your shirt in a matter of days!" So much of this misinformation is based on a get-rich-quick mentality, which was especially prevalent during the amazing dotcom market in the late '90s.

People thought that stocks were the magic answer to instant wealth with no risk. The ensuing dotcom crash proved that this is not the case. Stocks can (and do) create massive amounts of wealth, but they aren't without risks. The only solution to this is education. The key to protecting yourself in the stock market is to understand where you are putting your money.

What is Left For KLSE (Part 2)?

2011-07-24T14:46:00.000+08:00

Right, whoever managed to grab ARMADA IPO has 37% unrealized profit in your hand right now, if you haven't sell it. If you listen to OSK with it's fair value and sell when the market opens, you should be hitting your heart with your hand right now. Anyway, congratulations to those lucky subscribers who managed to hit ARMADA IPO.

As we know KLSE is hitting new high and index approaching 1,600 points, it is getting more challenging to make money from stock market. What is your strategy to continue to make profit from the market?

There are many strategies out there available. For fundamental analysis, I'm not sure whether you heard of dividend yield gap, Theme-Value-Time (TVT), PER with 52 weeks price range, etc. They are all quite well-known locally. I'm sure they can make money if you adopt any of them appropriately in the local stock market.

However, there is no free lunch in this world. All the fundamental strategies required you to do lots of homework. The mandatory condition beyond the strategies is to understand very well about the market and company you are investing. Without understanding, you are just like gambling. Your chances to make money is a lot better if you understand what you are doing. It's just like doing a business.

Like what Sun Tzu, the Art of War quoted, "If you know the enemy and know yourself, you need not fear the result of a hundred battles." Enermy perhaps indicating other investors and the market in the stock market, where yourself is your own attitude and the company you are investing.

Okay, I've enough bull shit. The rule of thumb is, get some good fundamental books and study it, apply one of the strategies, understand the market and your target company, reserve your capital, wait for the buy opportunity and invest. Of course, don't forget to adopt a good exit strategy, i.e. take profit at 30% or fundamental change, etc. I believe that's commonly how an investor making money from stock market.

To be frank, I'm getting less active in stock market for the past 3 months, mainly due to I'm too busy with my job. I have very limited time to do my homework weekly. So I rather choose not to invest for the time being unless I have done my full homework. That is why you don't see much stock recommendation in this blog since the past 3 months.

Good luck, folks.

What is Left For KLSE (Part 1)?

2011-07-13T22:52:00.000+08:00

KLCI is going sideway early of this year, but the index is moving slowly towards 1,600 points. Did you manage to earn any money from the local stock market during these 7.5 months period?

To be honest, I did make some. I made some handsome profit from IPO and unrealized profit from all the stocks I bought end of last years.

Let's talk about IPO today, as it is 'used to be' my favorite making money vehicle.

Since IPO is a vehicle which is almost proven to give huge return from the past records, a lot of traders and investors are targeting it right now. The chances to get it is really slim nowadays. Just look at MSM and ARMADA, the chance to get some lots is less than 10%, even you subscribed 100 lots. For small players and non-bumi like me, the chance is even lesser.

Of course, IPO is about luck. If we got it, it is a bonus for us. On the other hand, IPO is not 100% can make profit, there is always exception, just like UOADEV. If this is the case, a bonus is a bonus. We cannot rely on it too much. We have to put our focus on our trading strategy.

The bull trend has rally for almost 2.5 years and the index is approaching 1,600. How much more to go up? We don't know. What I aware is, it is harder to gain profit from the stock market compare to 2009 and 2010. It is a challenging year. Strategy is one thing. Without hard work, it is even more challenging.

Perhaps some would comment that the easier way is to wait for the stock market to correct or slump. But are you able to wait for it, may be after 3 to 5 years from now while seeing other making handsome profit? Think about it.

It's IPO War. Play or Quit?

2011-06-30T22:34:00.001+08:00

Are you kidding me? 6 IPO within 3 days and 9 IPO within a month available for the public to subscribe in June alone. Don't you feel there is a little bit too much for such a low volume trading country?

Anyway, perhaps this is the best time for IPO, as no one can predict when is the bull trend going to be ended. But also beware there may be some walls to hit, as everyone also want to grab money from IPO.

I hate MSM, because I did not get any allocaiton from the IPO. It went up so much in the first day offer no chance for us to invest anymore. I did not want to bother SENDAI and OLDTOWN, because I'm waiting for the coming 2 IPO, one of them is Bumi Armada (ARMADA).

I won't hesitate to go for MSM and ARMADA IPOs, because they are those solid fundamental companies with proven business model and record. After studied their prospectus, I even gain better confident on them.

Nonetheless, there is no perfect IPO around. I mean, if there are pros, there are cons as well. I saw some people commented on the drawbacks of MSM future prospect, I also heard people said ARMADA is too expensive by looking at the current PER.

Well, to me, there is no perfect IPO and solution. We are the investors and we are to judge whether it is worth to subscribe or even hold it. Of course, be prepared for the worst because anything can happen in stock market.

Back to ARMADA's value. With 20 over times of PER, it's too expensive for most of the company, including most of the blue chips. Furthermore, ARMADA is an O&G company, which is seriously tagged as cyclical stock. If you notice it's previous years' financial records, the PER gradually turns smaller, because the company seems recovering from the worst cycle. Within a couple of years, the earning should turns the PER cheap enough to invest.

Good thing doesn't come cheap. It is consider very expensive in this case. Smart investor normally doesn't buy something consider expensive in stock market. But why PNB and some fund managers still grabbing 10% of the total shares, if it is really that expensive?

If you subscribe ARMADA today, you are actually buying it's future earning hope in the coming few years. Moreover, this is a giant IPO. You subscribe today doesn't mean you will get it. The chance to allocate is very slim.

Study the prospectus properly, and decide yourself. There are other 5 IPO companies waiting for you, if you are not satisfy with ARMADA. There is no point to let yourself feel uncomfortable, if you have a better option to choose. Remember, you always have a choice.

Well, some times it is quite frustrating when you talk so much, end up you did not get any allocation. Good luck, folks!

2011-06-26T10:41:00.000+08:00

Luck is not being with me since the missing of MPAY, SMARTAG, BOILERM, UOADEV and MSM IPOs. Now it's the turn for OLDTOWN. But guess what.

Oldtown Berhad is pricing its issue/offer price at RM1.25 per share for its initial public offering (IPO) of 96.4 million shares of RM1 each. The company, which owns and operates the Oldtown White Coffee chain, aims to list on Main Market on July 11.

According to its prospectus draft, the company is offering 63.4 million new ordinary shares for application by the Malaysian public, directors, eligible employees and business associates of Oldtown and its subsidiaries.

The IPO price is based on the historical price earnings ratio multiple for the financial year ended Dec 31, 2010 (FY10) of 13 times which is based on the historical net earnings per share of 9.6 sen and enlarged issued and paid-up share capital of 330 million shares upon listing.

Oldtown said the listing exercise would enable the group to gain recognition and enhance its profile through listing status and further augment Oldtown's corporate reputation and assist the group in expanding its customer base locally and overseas. “It will also provide funds for expansion of Oldtown's business and markets, as such increasing the overall capability of the Oldtown group,” it added.

According to its proforma consolidated statements, Oldtown registered a net profit of RM31.9mil with revenue of RM255.1mil for the financial year ended Dec 31, 2010. The company plans to raise RM79.2mil gross proceed from its IPO, of which it will utilise RM38.1mil for capital expenditure, RM10.5mil for working capital and RM5.9mil for repayment of bank borrowings.

The company's market capitalisation upon listing amounts to RM412.5mil, based on the IPO price and the enlarged issued and paid-up share capital of 330 million shares.

Based on the past 4 years earnings, it seems the revenue and profit growth are shrinking. It may due to limited fund injected to the business. Oldtown also targeting to open another 116 outlets in the mentioned 3 countries within 3 years.

If it is fulfilled, the revenue and profit definitely will looks better on top of it's existing coffee products. However, I think Oldtown has mature enough in Malaysia & Singapore, I'm not sure about Indonesia. Those place with small population and low income may not benefits the outlet.

By looking at it's limited future outlook and the IPO price is based on PER 13 times of 2010 EPS, I would say the IPO price is too expensive to me. 96 cents or below would be just okay. This IPO is no go for me.

Anyway, for IPO speculation purpose, perhaps it is a good try.

Good luck, folks.

Warren Buffet's Strategy on Technical Analysis

2011-06-19T19:18:00.004+08:00

After much research and experience in investing I've discovered a simple strategy which works very well for profitable investing. It's a composite of Charles Schwab's and Warren Buffet's strategy.

As you may know, Warren Buffet started with a little investment decades ago and now he's the third richest man in the world with over $30,000,000,000 in stock in the company he built. Charles Schwab is the genius who began the most successful off-price brokerage in the world. Here's what they say about investing and technical analysis:

Rule #1: Buy a company you'd be willing to hold for a lifetime

When you put your money in a stock, you become an owner of that firm. You're essentially buying part of it and you reap the profit from the shares you buy in terms of earnings per share. Then the company may pay out those earnings per share in dividends or invest back into the company for growth. Make sure that you're buying a firm that you can depend on, even when the market is down. Investing isn't about the quick in-and-out schemes that lose most day-traders money. That's called gambling. Investing is putting your trust and your resources into a firm which you're willing to commit your hard-earned money to. This leads to my next point.

Rule #2: Ignore technical analysis

Technical analysis is used to predict whether or not a stock will go up or down in the short term. Some people think that they can ignore the fundamentals of the companies they buy based on technical analysis and end up losing large amounts of money. Yet, no responsible financial advisor would recommend or practice buying based solely or largely on technical analysis. That practice is used for what I defined to be gambling. Essentially relying on technical analysis involves looking at the volume of trading, advances/declines in the share price, and trying to determine whether or not the price will continue upward or reverse. For example, a lot of people buy or sell based on momentum. They jump on the bandwagon or abandon ship with the rest of the crowd. Yet, these fluctuations based on the herd mentality do less for those playing on technical analysis and more for the investor who looks for good value in shares. For, often people selling on technical analysis overshoot and cause a stock's value to be worth less than its fair value. Thanks to people who get burned on these losses, investors find unique opportunities to snatch up great comanies at bargain-basement prices.

Rule #3: Focus on the Fundamentals

You cannot accurately predict the short term price fluctuations of stocks. Let me repeat myself: You CANNOT accurately predict the short term price fluctuations of stocks. If you could, those stock experts working at Merrill Lynch and Goldman Sachs wouldn't be working. Believe me: they've got a lot more experience than you or I do, and they're not gambling. So, instead of "investing on luck" or momentum, take control and do your research. Find out whether the company is consistantly outpacing the industry. See what the price to earnings ratio is and whether it's being undervalued. Find out whether earnings per share has been increasing or decreasing. See what the financial community thinks by examining analyst opinions covering the firm. All this information is easily accessable over the internet and free of charge. IF you do your homework your gains will be all but certain OVER TIME and you'll feel satisfied and proud with your investment choices. You may even become attached to your company and become well acquainted with it.

Rule #4: Buy long term

Besides your liklihood of making money going up, there are tax advantages to holding stocks long term. For one thing, if you simply hold onto your stock, you won't be taxed until you pull out and your investment can continue to compound, without erosion, until you sell. But, if you constantly buy and sell, then you're taxed on all your gains and you don't get to pay the lower capital gains tax. Instead, it's taxed as regular income, which is a higher tax rate. For most daytraders, tax erosion is one of the biggest problems with making any profit. But, if you do sell make sure it's because your company has been consistently underperforming. This leads to the next point:

Rule #5: Buy low sell high

Lots of people buy stocks and when the price dips they get scared and sell. Other people see the price of their stock go up and buy more. But, this seems like reverse logic, right? If you own a good company, short-cited investors can drive down a stock price temporarily because of one below-expected earnings report or a bit of bad news. Let these be times for you to take advantage of other people's hysteria and buy at an attractive price.

Be smart in your investment decisions. Warren Buffet didn't find himself where he is today by buying on momentum or following technical analysis. Instead, it took research, patience, and commitment. If you can commit yourself to these same principles, you too will enjoy financial success.

A Gem under the Drain?

2011-06-10T21:22:00.000+08:00

Are you still hunting a gem under the drain?

Recently, I noticed one of the 50 cents penny stock with the following information:

1) PER 3.75

2) NTA 0.57

3) D/Y 3.5%

4) ROE 23.4

5) EPS 0.133

6) Consistent profit and never make a quarter loss in the past 5 years

How does it sounds? Does it sounds like a gem? Will you buy if it is too good to be true?

May be you know which company it is, RCE Capital Berhad (RCECAP). RCECAP is engaged in the provision of general loan financing, including consumer financing and commercial financing. The investment holding and management services and others segment is engaged in investment activities and provision of management services. The factoring and confirming segment is engaged in the provision of confirming and factoring businesses.

Well, every gem has a story behind. RCECAP share price has been falling more than 25% since Dec last year, due to KOWAJA unable to make any further loan disbursement to RCECAP from 1st Dec onwards. KOWAJA is the latest borrower for RCE Marketing Sdn Bhd (RCEM), which provides personal loans to its member who are primarily in the civil service via an on-lending arrangement for funds borrowed from RCEM.

On yesterday evening, RCECAP announced that KOWAJA has received approval from SKM to obtain funding from RCEM, subject to a limit of RM200m. If this is the case, we would expect RCECAP earning to shoot up, follow by it's share price.

After this news announcement, I saw that RCECAP share price has grew 8%. If compared to it's peer like MBSB and after considered the possible risks, RCECAP should worth at least RM0.90.

What do you think?

It's Time To Do 1st Quarter Review

2011-05-24T23:23:00.001+08:00

My apology for not updating this blog for more than 2 weeks. My new job is really consuming a lot of my time and effort. It impacts a lot of my time put on stock market. Nonetheless, I hope my new job would not affect my great passion with the local stock market.

Anyway, most of the companies are releasing latest quarter results by these few days. I always believe hard work will brings reward. No doubt, I have to spend my free time, which is during the midnight to go through the companies financial reports which I'm interested.

UCHITEC is doing good this quarter, but the following quarter is going to be a challenge due to weakening US dollar. As we all know, most of the local manufacturing or export companies trading in USD will continue to suffer badly if RM is continues to strengthen against USD. Apart from USD weakening, tremendous rising raw material cost is another serious issue. You will know by just looking at EVERGRN and HEVEA latest financial result. It's terrible. I'm considering to give up UCHITEC amid

On the other hand, MEGB seems not doing so well in 1Q2011, because they postponed the 2nd intake to next quarter due to the late announcement of SPM result. Well, if this is the case, I assumed next quarter should see a terrific earning. Anyway, I don't see any problem with MEGB yet and the management is giving full confident to the investors about it's future prospect. I decided to continue to keep it.

AMEDIA also just released it's Q1 financial result today. I just love it, it is doing very well. It is almost achieving RM10 millions revenue in this quarter.

Anyway, I just subscribed UOA Development IPO an hour ago. Tomorrow is the deadline. Since it is a well established developer in Malaysia, I guess I should apply few lots and try my luck.

As for XOX, after reading it's prospectus, I think I better forget about it.

Asia Media Group Bhd

2011-05-04T23:14:00.002+08:00

What is wrong with AMEDIA these few days? It's share price dropping from the highest point of 32.5 cents since last week till 22.5 cents today, more than 30% within 2 weeks.

By looking at the active and weird volumes for the past 2 weeks, it seems like someone is manipulating the price of AMEDIA.

On the other hand, AMEDIA's fundamental seems all right and the management plans and strategies are still intact. The company is currently expanding the coverage within Malaysia and rolling out the ETP plan. AMEDIA also has the intention to do overseas expansion and do dual-listing in Singapore Exchange.

To me, it's hard to believe that the price has been fallen below the IPO price of 22.5 cents today. If it is nothing wrong with the fundamental and management of the company, it is too good to be true.

With the PER of below 4 and potential of exceeding 6.5 cents EPS this year, I did not hesitate to queue and buy 18 lots at IPO price this morning. Even though it closed below my buying price or it will continue to drop further on tomorrow, I think I'm okay with it, at least for the time being.

Anyway, investors always complained that ACE listed companies are lack of quality and most of them are rubbish. Perhaps they are right. They are riskier as they are volatile due to the low price. Drop 10 cents can means drop 50% of our investment.

If looking from the fundamental view of AMEDIA, I think I would like to give it a try.

What do you think?

MClean Technologies Bhd

2011-04-26T22:24:00.000+08:00

MClean Technologies Bhd expects its business to grow by double digits this year as rising global demand for computers would boost the hard disk drive (HDD) industry.

Chief executive officer Bert Chow said based on market research, the HDD industry grows by about 10 to 20 per cent every year. "We expect our business to grow in tandem with the high demand in hard disk drive," he said after the launch of its prospectus here yesterday.

The company, which provides clean-room facilities for HDD main component suppliers and manufacturers, is the second largest player in China with about 26 per cent of the market. "Currently, we have about 37 per cent of the industry's market share in Singapore which put us as the leader there," Chow said. It counts firms like Seagate and Western Digital as clients.

The company aims to raise RM8 million from its initial public offering (IPO), involving the public issue of 15.4 million new shares of 25 sen each, priced at 52 sen each. Some 41 per cent of the money will be used for working capital, 30 per cent for capital expenditure and the rest for listing expenses.

For the 10 months ended October 31 2010, the company made a net profit of RM5.9 million, much better than a loss in the same period in 2009. MClean, which also provides plastic injection moulding components for other industries, like automotive and electronics, is looking at opportunities to expand its business in Malaysia and Thailand.

It's IPO application closes on April 28. You still have 2 more days to subscribe. It is expected to be listed on Bursa Malaysia's ACE Market on May 10.

The business seems straight forward. So are you subscribing?

In view of the hot demand of IPO subscription, perhaps this is just another hot cake to be oversubscribed by the public. By looking at it's past year result and IPO price, I'm not comfortable to subscribe it. I would let it goes this time. I'm looking forward the coming of XoX IPO.

Boilermech Holdings Bhd

2011-04-20T22:10:00.000+08:00

I've totally no luck recently, as I did not hit any IPO share from SMARTAG and FLBHD.

That's very okay, if compared to a lucky fellow from my hometown who won close to RM48 millions from Sports TOTO Supreme on last weekend. I used to invest some TOTO Supreme from there. Too bad.

When I have a quick check at the IPO list just now, I came to Boilermech Holdings Berhad is calling for IPO at 33 cents per unit price. After have a quick look at it's prospectus, I think the company performance is absolutely outstanding and it has a bright prospect for the coming 2 years. The competition is high but BOILERM is one of the leader of this industry.

I think I'm confident on BOILERM, by considering it's future prospect, low PER and it's business nature. So I've subscribed 50 lots with all the remaining cash I've in the bank.

Apparently the shares open to public is very limited. Even though I'm not the lucky ass who hit RM48 millions jackpot, I hope I'm the lucky ass who can hit some lots from IPO.

How about you?