Wednesday 28 March 2012

The Road to Building Wealth




The Four Principles

1 . Invest regularly.
You can begin by investing as little as $25, $50 or $100 a month. As your
resources grow, your monthly investment can grow. The important thing
is to invest on a set schedule over time.

2 . Reinvest earnings, dividends and profits.
If a stock pays dividends, reinvest them to buy more shares. If you sell
a stock, apply the proceeds to another investment.

3 . Invest in quality growth stocks and mutual funds.
With the right growth stocks and equity mutual funds, you can achieve
goals like doubling your money every five years with an acceptable
amount of risk.

4 . D i v e r s i f y.
A balanced portfolio includes companies of various sizes from different
industry segments and mutual funds from various categories. This kind of
diversification helps reduce risk and broaden investment opportunity



Also read:
Searching for Good Quality Growth Companies
http://www.investlah.com/forum/index.php/topic,23855.0.html

Stock Market Scams

As an investor, you must be aware of the stock market scams. The following are two of the most common stock scams.

1. The Pump and Dump
The pump and dump is one of the easiest and most common ways of taking money away from unsuspecting investors. Although it is illegal, the use of the pump and dump has actually increased because the Internet has made it possible to reach millions more people.

Here’s how the pump and dump works:
First, company insiders try to convince outsiders to buy a stock, usually the stock of a small over-the-counter company (Penny stocks). Investors are led to believe that this is a “once-in-a-lifetime” opportunity to make a small fortune. The fraudsters will pump up interest in the stock by sending messages through Internet chat rooms, or posting overly optimistic press releases.

Before the Internet, pump and dumpers used to call people on the telephone (often called Boiler Rooms). The idea is to artificially pump up the price of a stock by spreading false news. The stock price rises because of increased buying and speculation, not because of anything positive happening in the company.

As the stock goes higher, those with inside knowledge are prepared for the “dump.” As more people buy shares of the stock, the insiders sell all their shares for a huge profit. Eventually, the truth comes out, and the stock price falls as more people sell. Guess who is left holding the shares of the now nearly worthless stock? You guessed it – the unsuspecting investors who bought into the hype. They probably thought the price could go higher, so they never sold their shares.




The pump and dump is one of the oldest and most effective scams. Usually, pump and dumps are used on small stocks selling below $1.00 a share because it is easier for pump-and-dumpers to manipulate the stock price with smaller stocks.



2. Insider Trading
There are actually two types of insider trading: legal and illegal.

Legal insider trading is that done by company employees (insiders) who file proper paperwork with the SEC before buying and selling shares in their company. These documents are available for viewing on the SEC Web site.

On the other hand, illegal insider trading occurs when company employees buy and sell stocks based on information that is not known to the public. For example, it’s illegal for the managers of XYZ Company to buy additional shares of stock in the company if they know that a revolutionary new product is about to be released. It’s even illegal for you to buy shares of stock in that situation if company insiders (perhaps your neighbor) tell you about it.

Do you think insider trading is common?
It certainly is. It occurs a lot more often than many people think. Every once in a while the SEC catches a celebrity just to make a point that it’s watching. Nevertheless, it’s my estimate that thousands of insiders are using information gleaned from the companies they work for to make profitable transactions. It’s an open secret that those in the know are trading stocks on inside information.

Monday 26 March 2012

Shortage of School Teachers


50 years of Chinese school problems fuels anger at rally

March 25, 2012

An angry crowd jeer at Datuk Wee Ka Siong at a rally in Kajang today. - Picture by Choo Choy May
KAJANG, March 25 — The angry reaction to Datuk Wee Ka Siong at a rally opposing the shortage of Chinese school teachers here is the result of 50 years of frustration, say protestors.
The deputy education minister was greeted with loud jeers calling for him and MCA to step down when he arrived, and someone in the crowd had allegedly tried to punch him as he was being chased out by the crowd when the rally ended. 
Dr Wong Fort Pin (picture) from Malacca said he made the two-hour drive to lend his voice to the anger over the government’s track record over the hot button issue of Chinese language education. 
“This is a 50-year-old problem,” the father of five told The Malaysian Insider. “This problem has been here all along. It feels engineered (by the government) and a calculated move.” 
He said that he was not politicising the issue but felt “fed-up” and frustrated. 
“You think I have no better things to do than to come here?” he said. “For 50 years the issue has been going on, but now the government cannot hide.” 
Chinese schools and issues that plague them are key to the hearts of many Chinese-educated Malaysians. 
The issue is also a thorny one for Umno, MCA’s senior partner in Barisan Nasional, as it has to be seen as championing the Malay language and national government schools. 
For Serdang resident Tan, the issue was that a new Chinese school had been promised for Serdang in 2008 but had yet to materialise. 
“Until now there is still no news of the location,” he said. 
Tan claimed that he had emailed Wee on the matter but had not received a reply to date. 
“I am so sad there was no reply,” he said but added that he was glad that Wee made the effort to attend the rally. 
Later at a press conference at a hotel away from the crowd, Wee said that he was “shocked” and “saddened” by the hostile reaction. 
Wee acknowledged that the shortage of teachers was a problem and said that the government was giving it immediate attention. 
“Of course we know this needs immediate attention, that’s why the cabinet formed a committee (to look into it)”, he said. 
“We will study each of their (Dong Zong’s) resolutions and demands and consider it. We have come up with strategies.” 
He urged patience as the solution needed to be a holistic one. 
“We need to identify the root of the problem. If we don’t know the root, how are we going to solve it? We cannot concentrate on one side and ignore the other side.”

Friday 23 March 2012

Warren Buffett's approach to Growth. Growth on its own is not a valuable thing as a rule.

Benjamin Graham's approach.

Look first at Assets.
Then look at Earnings Power - making sure that they are protected by the assets.


Warren Buffett's approach.


Look at Assets and Earnings Power.
Only then, look to pay something for Growth.
Growth is only valuable if the return on investment in growth is greater than the cost of capital.
If not, growth can destroy value.
Growth on its own is not a valuable thing as a rule.
If you are going to buy growth, you better be sure of the franchise value.

Value Investing Process

1. Search
Cheap
Ugly
Obscene
Otherwise ignored

2. Valuation
Assets
Earnings Power
Franchise

3. Review
Key Issues
Collateral Evidence
Personal Biases

4. Risk Management
Margin of Safety
Some Diversification
Patience - Default Strategy


Important Points


- Market Irrationality creates Opportunity

- Know what you Know
  • Inherent quality of information
  • Circle of Competence
- Look for Margin of Safety

The Best of Value Investing






Thursday 22 March 2012

Value Investing Conference 2010 (videos)















Learning Value Investing




Simply Investing Course Outline
Module 1 - Introduction (14 minutes). Watch this module for free, here.

What Will You Learn In This Course?
My Story
Investing Myths
What is a Stock?
What is a Dividend?
What is the Stock Market?
What is Value Investing?
Module 2 – Rules of Simply Investing (65 minutes)

12 Rules of Simply Investing

Module 3 – Plan A: Do-it-Yourself, Applying the 12 Rules (27 minutes)

Plan A versus Plan B
Plan A (hands-on exercise)
Module 4 – Plan B: Do-it-Yourself With Help, Saving Time (20 minutes)

Plan B

Quality resources available to save you time and money
Module 5 – Buying, Selling, Portfolio, Risk (38 minutes)

When Should You Sell a Stock?
How Do You Buy Stocks?
5 Reasons Why Mutual Funds Fail
Building a Portfolio
Tracking a Portfolio
Managing Risk
Getting Started Right Away
Investing Myths
Investing Facts

The Fabulous Life of Billion Dollar Wall Street Ballers

The Rockefellers (Full)

Super Rich The Greed Game

Excellent Quotes by Warren Buffett


Wednesday 21 March 2012

How to Pick Managed Investments


[PPT] 

How to Pick Managed Investments

www.travismorien.com/investment.ppt

The average American mutual fund investor only managed to earn 2.57%pa ..... 

How can Behavioural Economics Increase the Effectiveness of Financial Education?

Evaluate Investment Strategies under various Yield Curve Scenarios PPT

Strategies and Systems for Managing Investment Risk

Basics of Wealth Management PPT

DOCUMENTRY- WARREN BUFFETT THE WORLDS GREATEST MONEY MAKER

A Conversation with Charlie Munger (2 hour)