Saturday, 22 August 2015
Saturday, 15 August 2015
"I'm in prison, but I'm on just the same playing field as Warren Buffett,"
Curtis Carroll discovered the stock market in prison. Through friends and family on the outside, he invests from San Quentin State Prison in Northern California, and he's also an informal financial adviser to fellow inmates and correctional officers. Everyone in prison calls him Wall Street.
Read more here.
"I couldn't believe that this kind of access to this type of money could be accessible to anybody. Everybody should do it. And it's legal!" he says.
He pores over financial news: the Wall Street Journal, USA Today, Forbes. Business is like a soap opera, he says, and he's always trying to anticipate what will happen next. "I like to know what the CEO's doing," he says. "I like to know who's in trouble."
Read more here.
Wednesday, 12 August 2015
Chinese central bank under pressure to weaken yuan further
Sources say China's move to devalue its currency reflects a growing clamour within government circles for a weaker yuan to help struggling exporters, ensuring the central bank remains under pressure to drag it down further in the months ahead. – Reuters pic, August 12, 2015.
China's move to devalue its currency reflects a growing clamour within government circles for a weaker yuan to help struggling exporters, ensuring the central bank remains under pressure to drag it down further in the months ahead, sources said.
The yuan has fallen almost 4% in two days since the central bank announced the devaluation yesterday, but sources involved in the policy-making process said powerful voices inside the government were pushing for it to go still lower.
Their comments, which offer a rare insight into the argument going on behind the scenes in Beijing, suggest there is pressure for an overall devaluation of almost 10%.
"There have been internal calls for the exchange rate to be more flexible, or depreciated appropriately, to help stabilise external demand and growth," said a senior economist at a government think-tank that advises policy-makers in Beijing.
"I think yuan deprecation within 10% will be manageable. There should be enough depreciation, otherwise it won't be able to stimulate exports."
The Commerce Ministry, which today publicly welcomed the devaluation as an export stimulus, had led the push for Beijing to abandon its previous strong-yuan policy.
Reuters could not verify how much influence Commerce Ministry officials had wielded in the decision to drive the yuan lower, but the sources said its officials were claiming victory after a long lobbying campaign against what some of them regarded as over-zealous reform led by the central bank.
The People's bank of China (PBOC) had been keeping the yuan strong to support the ruling Communist Party's goal of shifting the economy's main engine from exports to domestic demand.
A stronger yuan boosts domestic buying power, helps Chinese firms to borrow and invest abroad, and encourages foreign firms and governments to increase their use of the currency.
Until the devaluation, the currency had appreciated overall by 14% over the past 12 months on a trade-weighted basis, according to data from the Bank for International Settlements.
Premier Li Keqiang had repeatedly ruled out devaluation, but increased risks to economic growth, exacerbated by recent stock market turmoil, increased pressure to reverse course, the sources said.
At the weekend, China posted a shock 8.3% slump in July exports.
"Exporters face very big pressure, and China's economy also faces very big downward pressure," said a researcher at the commerce ministry's own think-tank, which recommended earlier this year that the government should unshackle the yuan.
"The yuan depreciated only slightly versus the dollar, but it has gained sharply against other currencies. China's economy and trade are no longer strong; why should the yuan be strong?"
He said he believed the yuan could fall to 6.7 by year-end, which would represent a near 9% decline since the eve of the devaluation. It traded around 6.43 against the dollar today, its lowest since August 2011.
The PBOC described its devaluation as a one-off move designed to make the currency more responsive to market forces.
The central bank guides the market daily by setting a reference rate for the yuan, from which trade may vary only 2%. Yesterday, it said it was setting the midpoint based on market forces, which have been willing the yuan lower.
Beijing is determined to achieve its economic growth target of 7% for this year. Top leaders will chart the course for the next five years at a meeting in October, and they are likely to continue targeting annual growth of around 7%.
"They (top leaders) are determined to hit 7% target. The downward pressure is big (but) so is the determination," said an economist inside the cabinet's think-tank.
Beijing prefers a gradual devaluation because a single, big move could spark capital flight and undermine its goal of fostering global use of the yuan in trade and finance, sources said.
China has been lobbying the IMF to include the yuan in its basket of reserve currencies, known as Special Drawing Rights, which it uses to lend to sovereign borrowers. This would mark a major step in terms of international use of the yuan.
The IMF said today that the central bank's new way of managing the exchange rate appeared to be a welcome step.
"There is definitely downward pressure on the economy, but we cannot rely (alone) on currency depreciation," said Zhu Baoliang, chief economist at the State Information Centre, a top government think-tank. – Reuters, August 12, 2015.
- See more at: http://www.themalaysianinsider.com/business/article/chinese-central-bank-under-pressure-to-weaken-yuan-further#sthash.dx7bFam1.dpuf
Monday, 10 August 2015
My Check Lists
Here is a Ben Graham Checklist for Finding Undervalued Stocks
Criterias
Valuation
Risk
1. Earnings to price (the inverse of P/E) is double the high-grade corporate bond yield. If the high-grade bond yields 7%, then earnings to price should be 14%.
2. P/E ratio that is 0.4 times the highest average P/E achieved in the last 5 years.
3. Dividend yield is 2/3 the high-grade bond yield.
4. Stock price of 2/3 the tangible book value per share.
5. Stock price of 2/3 the net current asset value.
Quality of Balance Sheet and Management
Financial strength
6. Total debt is lower than tangible book value.
7. Current ratio (current assets/current liabilities) is greater than 2.
8. Total debt is no more than liquidation value.
Quality of Growth
Earnings stability
9. Earnings have doubled in most recent 10 years.
10. Earnings have declined no more than 5% in 2 of the past 10 years.
If a stock meets 7 of the 10 criteria, it is probably a good value, according to Graham
Criterias
Valuation
Risk
1. Earnings to price (the inverse of P/E) is double the high-grade corporate bond yield. If the high-grade bond yields 7%, then earnings to price should be 14%.
2. P/E ratio that is 0.4 times the highest average P/E achieved in the last 5 years.
3. Dividend yield is 2/3 the high-grade bond yield.
4. Stock price of 2/3 the tangible book value per share.
5. Stock price of 2/3 the net current asset value.
Quality of Balance Sheet and Management
Financial strength
6. Total debt is lower than tangible book value.
7. Current ratio (current assets/current liabilities) is greater than 2.
8. Total debt is no more than liquidation value.
Quality of Growth
Earnings stability
9. Earnings have doubled in most recent 10 years.
10. Earnings have declined no more than 5% in 2 of the past 10 years.
If a stock meets 7 of the 10 criteria, it is probably a good value, according to Graham
If you're income oriented, Graham recommended paying special attention to items 1 through 7.
If you're concerned about growth and safety, items 1 through 5 and 9 and 10 are important.
If you're concerned with aggressive growth, ignore item 3, reduce the emphasis on 4 through 6, and weigh 9 and 10 heavily.
Again, these checklists are a guideline and example, not a cookbook recipe you should follow precisely. They are a way of thinking and an example of how you may construct your own value investing system.
The criteria mentioned above are probably more focussed on dividends and safety than even today's value investors choose to be. But today's value investing practice owes an immense debt to this type of financial and investment analysis.
Spreadsheet for finding Undervalue Stocks
http://spreadsheets.google.com/pub?key=tZGNWHLD2d2nTgCcxSKyoCA&output=html
If you're concerned about growth and safety, items 1 through 5 and 9 and 10 are important.
If you're concerned with aggressive growth, ignore item 3, reduce the emphasis on 4 through 6, and weigh 9 and 10 heavily.
Again, these checklists are a guideline and example, not a cookbook recipe you should follow precisely. They are a way of thinking and an example of how you may construct your own value investing system.
The criteria mentioned above are probably more focussed on dividends and safety than even today's value investors choose to be. But today's value investing practice owes an immense debt to this type of financial and investment analysis.
Spreadsheet for finding Undervalue Stocks
http://spreadsheets.google.com/pub?key=tZGNWHLD2d2nTgCcxSKyoCA&output=html
If you're income oriented, Graham recommended paying special attention to items 1 through 7.
--------------------------
If you're concerned about growth and safety, items 1 through 5 and 9 and 10 are important.
---------------------------
If you're concerned with aggressive growth, ignore item 3, reduce the emphasis on 4 through 6, and weigh 9 and 10 heavily.
Quote
Criterias
Valuation
Risk
1. Earnings to price (the inverse of P/E) is double the high-grade corporate bond yield. If the high-grade bond yields 7%, then earnings to price should be 14%.
2. P/E ratio that is 0.4 times the highest average P/E achieved in the last 5 years.
3. Dividend yield is 2/3 the high-grade bond yield.
4. Stock price of 2/3 the tangible book value per share.
5. Stock price of 2/3 the net current asset value.
Quality of Balance Sheet and Management
Financial strength
6. Total debt is lower than tangible book value.
7. Current ratio (current assets/current liabilities) is greater than 2.
8. Total debt is no more than liquidation value.
Quality of Growth
Earnings stability
9. Earnings have doubled in most recent 10 years.
10. Earnings have declined no more than 5% in 2 of the past 10 years.
--------------------------
If you're concerned about growth and safety, items 1 through 5 and 9 and 10 are important.
Quote
Criterias
Valuation
Risk
1. Earnings to price (the inverse of P/E) is double the high-grade corporate bond yield. If the high-grade bond yields 7%, then earnings to price should be 14%.
2. P/E ratio that is 0.4 times the highest average P/E achieved in the last 5 years.
3. Dividend yield is 2/3 the high-grade bond yield.
4. Stock price of 2/3 the tangible book value per share.
5. Stock price of 2/3 the net current asset value.
Quality of Balance Sheet and Management
Financial strength
6. Total debt is lower than tangible book value.
7. Current ratio (current assets/current liabilities) is greater than 2.
8. Total debt is no more than liquidation value.
Quality of Growth
Earnings stability
9. Earnings have doubled in most recent 10 years.
10. Earnings have declined no more than 5% in 2 of the past 10 years.
---------------------------
If you're concerned with aggressive growth, ignore item 3, reduce the emphasis on 4 through 6, and weigh 9 and 10 heavily.
Quote
Criterias
Valuation
Risk
1. Earnings to price (the inverse of P/E) is double the high-grade corporate bond yield. If the high-grade bond yields 7%, then earnings to price should be 14%.
2. P/E ratio that is 0.4 times the highest average P/E achieved in the last 5 years.
3. Dividend yield is 2/3 the high-grade bond yield.
4. Stock price of 2/3 the tangible book value per share.
5. Stock price of 2/3 the net current asset value.
Quality of Balance Sheet and Management
Financial strength
6. Total debt is lower than tangible book value.
7. Current ratio (current assets/current liabilities) is greater than 2.
8. Total debt is no more than liquidation value.
Quality of Growth
Earnings stability
9. Earnings have doubled in most recent 10 years.
10. Earnings have declined no more than 5% in 2 of the past 10 years.
Risk-reward Does Not Make Sense At The Moment
Stan Druckenmiller: Bloomberg Encore (04/24)
8:01 AM MYT
April 25, 2015
April 24 -- Legendary money manager Stan Druckenmiller speaks to Bloomberg's Stephanie Ruhle. The exclusive interview covers topics including Federal Reserve policy, oil prices, the Greek debt crisis and much more. The founder of Duquesne Capital Management shares insights, predictions and in-depth analysis of global markets and the U.S. economy in 2015.
http://www.bloomberg.com/news/videos/2015-04-25/stan-druckenmiller-bloomberg-encore-04-24-
8:01 AM MYT
April 25, 2015
April 24 -- Legendary money manager Stan Druckenmiller speaks to Bloomberg's Stephanie Ruhle. The exclusive interview covers topics including Federal Reserve policy, oil prices, the Greek debt crisis and much more. The founder of Duquesne Capital Management shares insights, predictions and in-depth analysis of global markets and the U.S. economy in 2015.
http://www.bloomberg.com/news/videos/2015-04-25/stan-druckenmiller-bloomberg-encore-04-24-