New KLCI 30 counter (July 2009)
1066 "RHB Capital" FBM30
3786 "Malaysia Airline System" FBM30
4162 "British American Tobacco (Malaysia)" FBM30
6888 "Axiata Group Bhd" FBM30
3182 "Genting" FBM30
2445 "Kuala Lumpur Kepong" FBM30
1155 "Malayan Banking" FBM30
2194 "MMC" FBM30
4065 "PPB Group" FBM30
4197 "Sime Darby Bhd" FBM30
1961 "IOI" FBM30
4715 "Resorts World" FBM30
4863 "Telekom Malaysia" FBM30
5347 "Tenaga Nasional" FBM30
1015 "AMMB Holdings" FBM30
1562 "Berjaya Sports Toto" FBM30
1023 "Bumiputra-Commerce Holdings" FBM30
5819 "Hong Leong Bank" FBM30
2267 "Tanjong" FBM30
4588 "UMW Holdings" FBM30
4677 "YTL Corp" FBM30
6033 "Petronas Gas" FBM30
6742 "YTL Power International" FBM30
6947 "Digi.com" FBM30
5657 "Parkson Holdings" FBM30
5681 "Petronas Dagangan Bhd" FBM30
5052 "Plus Expressways" FBM30
3816 "MISC" FBM30
1295 "Public Bank BHD" FBM30
5076 "Astro All Asia Networks" FBM30
Sunday 25 October 2009
Differences between investment and speculation
Differences between investment and speculation
1. Investment: Investment is rationally based on the knowledge of past share price behaviour. From such knowledge, it is possible to compute the probability of future return.
2. Investment: Investment requires an investor to do some work before hand and decisions are made based on known facts and figure.
3. Investment: Investment is made for the long term (i.e. two years or more) based on the idea that one is much more certain when one is trying to predict the cumulative results of many daily movement. Once invests with the knowledge that over the long run, the real investors will always make a gain.
Speculation: Speculation is usually for the short run (i.e three months or less unless one is caught whence a speculator is then forced to become an investor), based on the idea that certain events may result in a rise in price (bonus, rights, takeovers, and others).
4. Investment: Over a long period of time, true investment tends to produce a positive result. Based on many years of research in the US and Europe, Long Term Investment consistently produced much higher return than fixed deposit or the inflation rate. The Malaysian experience has mirrored the Western experience.
Speculation: Since speculation is not based on anything concrete, its result is not at all predictable. Speculation can occasionally produce very high gains just as it can produce very high losses. Over a long period of time, speculation is most unlikely to produce better return than true investment.
5. Investment: True investors can sleep soundly at night since they have a fairly good idea of the possible extent of their loss and gain before hand. Besides, since they are investing for the long term, they can forget about short term movements and ignore the market most of the time.
Speculation: Speculation is likely to lead to many sleepless nights and anxious days since its result is so uncertain. The speculator will have to be always on the alert to take the necessary quick action to catch the right moment.
1. Investment: Investment is rationally based on the knowledge of past share price behaviour. From such knowledge, it is possible to compute the probability of future return.
- A common method of investment analysis is to study the past range of PER or DY of a particular share or a class of shares.
- From this study of its past price range, we can predict the likelihood of its price being out of this range in the future.
- By comparing its current price with the expected future price range (future price = future PER x future earnings) we know whether the current price is too high or too low and take the necessary action accordingly.
2. Investment: Investment requires an investor to do some work before hand and decisions are made based on known facts and figure.
- Such work typically may consist of estimating future level of Earnings Per Share and computing the past range of the PER.
- By multiplying the future EPS with the likely PER, we have an estimate of the future level of price.
- If the present price is very low compared with the future price, we buy and vice versa.
3. Investment: Investment is made for the long term (i.e. two years or more) based on the idea that one is much more certain when one is trying to predict the cumulative results of many daily movement. Once invests with the knowledge that over the long run, the real investors will always make a gain.
Speculation: Speculation is usually for the short run (i.e three months or less unless one is caught whence a speculator is then forced to become an investor), based on the idea that certain events may result in a rise in price (bonus, rights, takeovers, and others).
4. Investment: Over a long period of time, true investment tends to produce a positive result. Based on many years of research in the US and Europe, Long Term Investment consistently produced much higher return than fixed deposit or the inflation rate. The Malaysian experience has mirrored the Western experience.
Speculation: Since speculation is not based on anything concrete, its result is not at all predictable. Speculation can occasionally produce very high gains just as it can produce very high losses. Over a long period of time, speculation is most unlikely to produce better return than true investment.
5. Investment: True investors can sleep soundly at night since they have a fairly good idea of the possible extent of their loss and gain before hand. Besides, since they are investing for the long term, they can forget about short term movements and ignore the market most of the time.
Speculation: Speculation is likely to lead to many sleepless nights and anxious days since its result is so uncertain. The speculator will have to be always on the alert to take the necessary quick action to catch the right moment.
"Sure lose (gambling)" situations in investment
There is only one real difference between investment and gambling. In investment, one can expect to make a profit over the long run but gambling will always result in a loss over the long run although the gambler may not know it.
There are certain situations in the world of investment which resemble gambling and investors are well advised to keep clear of them.
1. To buy shares when the market is at its "hottest" is definitely gambling because like all bull markets, once everyone interested has been sucked in, there are no more lambs left and the market can only go down.
2. To sell shares which have been held through a long period of decline is also a gamble because the market is cyclical; it will recover after a long period of decline.
These are among the many examples of the "sure lose" situations in investment similar to gambling.
There are certain situations in the world of investment which resemble gambling and investors are well advised to keep clear of them.
1. To buy shares when the market is at its "hottest" is definitely gambling because like all bull markets, once everyone interested has been sucked in, there are no more lambs left and the market can only go down.
2. To sell shares which have been held through a long period of decline is also a gamble because the market is cyclical; it will recover after a long period of decline.
These are among the many examples of the "sure lose" situations in investment similar to gambling.
Probability of Return in Investment, Speculation and Gambling
The main difference between investment, speculation and gambling is the "ex ante probability of obtaining a reasonable return which is known at the time when each of these three activities is carried out".
Ex-Ante Probability of Return
Investment - Good
Speculation - Uncertain
Gambling - Negative
What this means is that we are fairly confident that we can make a reasonable amount of money by making a true investment; we are uncertain as to whether we can make money from speculation but we are sure that we will lose money by gambling.
The sidetracking of investors into speculation and even gambling is the worst enemy of good investment.
We must be ultraconservative and maximise the odds in our favour. If a stock analyst warns you that there is only a 10 percent chance that prices would rise above this level, you should avoid buying shares at that level. On the other hand, if he says that there is a 90 percent chance that share prices would not fall further, we should certainly grasp the opportunity and buy.
Ex-Ante Probability of Return
Investment - Good
Speculation - Uncertain
Gambling - Negative
What this means is that we are fairly confident that we can make a reasonable amount of money by making a true investment; we are uncertain as to whether we can make money from speculation but we are sure that we will lose money by gambling.
The sidetracking of investors into speculation and even gambling is the worst enemy of good investment.
We must be ultraconservative and maximise the odds in our favour. If a stock analyst warns you that there is only a 10 percent chance that prices would rise above this level, you should avoid buying shares at that level. On the other hand, if he says that there is a 90 percent chance that share prices would not fall further, we should certainly grasp the opportunity and buy.
Maxis May Raise Up to 12.4 Billion Ringgit in IPO
Today’s price range for the shares values Maxis at 36 billion ringgit to 41.25 billion ringgit. That compares with Maxis’s 2007 market value of 40 billion ringgit before it was taken private. The 2007 valuation includes the company’s overseas operations, which are now excluded.
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Maxis May Raise Up to 12.4 Billion Ringgit in IPO (Update2)
Share | Email | Print | A A A
By Soraya Permatasari
Oct. 23 (Bloomberg) -- Maxis Communications Bhd., Malaysia’s biggest mobile-phone operator, may raise as much as 12.4 billion ringgit ($3.7 billion) in the country’s largest initial share sale, according to an e-mail sent to investors.
The Kuala Lumpur-based phone operator’s shareholders will sell as many as 2.25 billion shares at 4.8 ringgit to 5.5 ringgit apiece next month, lead arranger CIMB Investment Bank Bhd. said in the e-mail. That would value the company as much as 41.25 billion ringgit.
The sale, more than double Petronas Gas Bhd.’s record 1995 offering, would give billionaire Ananda Krishnan funds to invest in faster-growing markets as wireless demand slows at home, where mobile subscriptions exceed the nation’s population of 28 million. The shares are being offered as equity markets from Malaysia to China to India climb back to levels preceding the bankruptcy of Lehman Brothers Holdings Inc.
“As it will likely be added into the benchmark index, fund managers would have no choice but to look at Maxis and to add it into their portfolio,” said Pankaj Kumar, who manages about $540 million of assets as chief investment officer at Kurnia Insurans Bhd. “It will help boost the market in terms of the depth, being such a big cap stock.”
Institutional Investors
The indicative price range values the stock at 16 to 18 times estimated earnings, making Maxis expensive relative to rivals such as Digi.com Bhd, according to Scott Lim, chief executive officer of MIDF Amanah Asset Management Bhd. in Kuala Lumpur. Stocks on the MSCI Asia Pacific Telecommunication Services Index trade an average of 13 times estimated earnings.
“The offer is also a bit pricey compared with regional valuations,” Lim said. “Foreign fund managers may not be interested and they would rather buy a similar stock somewhere else.”
The stock will be priced on Nov. 10 and start trading on the Malaysian exchange Nov. 19, according to the e-mail.
About 2 billion shares, or 91 percent of the total, are being offered to institutional investors, while about 150 million, or 6.7 percent of the total, will be sold to the public, according to the e-mail. Maxis will start marketing today in Hong Kong, followed by Singapore on Oct. 26 and Oct. 27, and Kuala Lumpur from Oct. 28 to Oct. 30, it said.
Europe, U.S. Presentation
Presentations of the sale in Europe and the U.S. will be from Nov. 2 to Nov. 9. Malaysia’s biggest funds, including the Employees Provident Fund, may take up almost half of the stock offering, a person with knowledge of the matter, told Bloomberg this week.
Lembaga Tabung Haji, which manages about 23 billion ringgit of Islamic pilgrim funds in Malaysia, is considering the offer as long as the price doesn’t exceed 5.20 ringgit a share, Chief Investment Officer Mohd Noor Abdul Rahman said yesterday.
The phone carrier will only include local operations in the sale, potentially discouraging foreign investors because Maxis already controls 40 percent of the Malaysian market, in which handsets outnumber people.
Maxis was among the country’s four biggest companies by market value before billionaire Krishnan, 71, took it private in 2007 in a 16 billion ringgit transaction.
Mobile-phone penetration in Malaysia exceeded 100 percent in March, according to the Malaysian Communications and Multimedia Commission.
Mobile Subscribers
Maxis had 11.4 million mobile-phone subscribers as of June 30, according to the initial prospectus. The company reported 4.24 billion ringgit of revenue in the six months to June 30.
Today’s price range for the shares values Maxis at 36 billion ringgit to 41.25 billion ringgit. That compares with Maxis’s 2007 market value of 40 billion ringgit before it was taken private. The 2007 valuation includes the company’s overseas operations, which are now excluded.
Krishnan is Malaysia’s second-richest person, with an estimated $7 billion of wealth, according to Forbes magazine.
Krishnan, whose family originated from Sri Lanka, was born April 1, 1938 in Brickfields, Kuala Lumpur. He also owns Astro All Asia Networks Plc, Malaysia’s biggest pay television operator, which this month secured a three-year agreement with the FA Premier League for exclusive rights to broadcast Barclays Premier League football matches in the country.
Krishnan took Maxis private in 2007 in a 16 billion ringgit buyout deal in a bid to accelerate expansion in India, where it owns Aircel Ltd., and in Indonesia, hoping to seek growth outside the maturing Malaysian market. He promised to re-list Maxis in there years.
The decision to re-list Maxis this year came after Prime Minister Najib Razak in July said Maxis should re-list to attract investors to the Malaysian stock exchange.
To contact the reporter on this story: Soraya Permatasari in Kuala Lumpur at soraya@bloomberg.net
Last Updated: October 23, 2009 02:42 EDT
http://www.bloomberg.com/apps/news?pid=20601087&sid=aifzm6xbxmlA
-----
Maxis May Raise Up to 12.4 Billion Ringgit in IPO (Update2)
Share | Email | Print | A A A
By Soraya Permatasari
Oct. 23 (Bloomberg) -- Maxis Communications Bhd., Malaysia’s biggest mobile-phone operator, may raise as much as 12.4 billion ringgit ($3.7 billion) in the country’s largest initial share sale, according to an e-mail sent to investors.
The Kuala Lumpur-based phone operator’s shareholders will sell as many as 2.25 billion shares at 4.8 ringgit to 5.5 ringgit apiece next month, lead arranger CIMB Investment Bank Bhd. said in the e-mail. That would value the company as much as 41.25 billion ringgit.
The sale, more than double Petronas Gas Bhd.’s record 1995 offering, would give billionaire Ananda Krishnan funds to invest in faster-growing markets as wireless demand slows at home, where mobile subscriptions exceed the nation’s population of 28 million. The shares are being offered as equity markets from Malaysia to China to India climb back to levels preceding the bankruptcy of Lehman Brothers Holdings Inc.
“As it will likely be added into the benchmark index, fund managers would have no choice but to look at Maxis and to add it into their portfolio,” said Pankaj Kumar, who manages about $540 million of assets as chief investment officer at Kurnia Insurans Bhd. “It will help boost the market in terms of the depth, being such a big cap stock.”
Institutional Investors
The indicative price range values the stock at 16 to 18 times estimated earnings, making Maxis expensive relative to rivals such as Digi.com Bhd, according to Scott Lim, chief executive officer of MIDF Amanah Asset Management Bhd. in Kuala Lumpur. Stocks on the MSCI Asia Pacific Telecommunication Services Index trade an average of 13 times estimated earnings.
“The offer is also a bit pricey compared with regional valuations,” Lim said. “Foreign fund managers may not be interested and they would rather buy a similar stock somewhere else.”
The stock will be priced on Nov. 10 and start trading on the Malaysian exchange Nov. 19, according to the e-mail.
About 2 billion shares, or 91 percent of the total, are being offered to institutional investors, while about 150 million, or 6.7 percent of the total, will be sold to the public, according to the e-mail. Maxis will start marketing today in Hong Kong, followed by Singapore on Oct. 26 and Oct. 27, and Kuala Lumpur from Oct. 28 to Oct. 30, it said.
Europe, U.S. Presentation
Presentations of the sale in Europe and the U.S. will be from Nov. 2 to Nov. 9. Malaysia’s biggest funds, including the Employees Provident Fund, may take up almost half of the stock offering, a person with knowledge of the matter, told Bloomberg this week.
Lembaga Tabung Haji, which manages about 23 billion ringgit of Islamic pilgrim funds in Malaysia, is considering the offer as long as the price doesn’t exceed 5.20 ringgit a share, Chief Investment Officer Mohd Noor Abdul Rahman said yesterday.
The phone carrier will only include local operations in the sale, potentially discouraging foreign investors because Maxis already controls 40 percent of the Malaysian market, in which handsets outnumber people.
Maxis was among the country’s four biggest companies by market value before billionaire Krishnan, 71, took it private in 2007 in a 16 billion ringgit transaction.
Mobile-phone penetration in Malaysia exceeded 100 percent in March, according to the Malaysian Communications and Multimedia Commission.
Mobile Subscribers
Maxis had 11.4 million mobile-phone subscribers as of June 30, according to the initial prospectus. The company reported 4.24 billion ringgit of revenue in the six months to June 30.
Today’s price range for the shares values Maxis at 36 billion ringgit to 41.25 billion ringgit. That compares with Maxis’s 2007 market value of 40 billion ringgit before it was taken private. The 2007 valuation includes the company’s overseas operations, which are now excluded.
Krishnan is Malaysia’s second-richest person, with an estimated $7 billion of wealth, according to Forbes magazine.
Krishnan, whose family originated from Sri Lanka, was born April 1, 1938 in Brickfields, Kuala Lumpur. He also owns Astro All Asia Networks Plc, Malaysia’s biggest pay television operator, which this month secured a three-year agreement with the FA Premier League for exclusive rights to broadcast Barclays Premier League football matches in the country.
Krishnan took Maxis private in 2007 in a 16 billion ringgit buyout deal in a bid to accelerate expansion in India, where it owns Aircel Ltd., and in Indonesia, hoping to seek growth outside the maturing Malaysian market. He promised to re-list Maxis in there years.
The decision to re-list Maxis this year came after Prime Minister Najib Razak in July said Maxis should re-list to attract investors to the Malaysian stock exchange.
To contact the reporter on this story: Soraya Permatasari in Kuala Lumpur at soraya@bloomberg.net
Last Updated: October 23, 2009 02:42 EDT
http://www.bloomberg.com/apps/news?pid=20601087&sid=aifzm6xbxmlA
SOUTHEAST ASIAN STOCK MARKETS
SOUTHEAST ASIAN STOCK MARKETS
Change on the day
Market Current Prev Close Pct Move
Singapore 2715.34 2681.97 1.24
Kuala Lumpur 1267.10 1260.02 0.56
Bangkok 708.76 716.35 (closed)
Jakarta 2467.95 2433.18 1.43
Manila 2932.99 2888.72 1.53
Ho Chi Minh 615.68 624.10 -1.35
Change on year
Market Current End prev yr Pct Move
Singapore 2715.34 1761.56 +54.14
Kuala Lumpur 1267.10 876.75 +44.52
Bangkok 708.76 449.96 +57.52
(closed)
Jakarta 2467.95 1355.40 +82.08
Manila 2932.99 1872.85 +56.61
Ho Chi Minh 615.68 315.62 +95.07
Stock Market Volume (shares)
Market Current Volume ... Average Volume 90 days
Singapore 273,457,500 ... 370,578,304
Kuala Lumpur 110,653,800 ... 156,325,598
Bangkok 2,982,748 ... 4,575,457
Jakarta 4,462,989,500 ... 5,809,227,300
Ho Chi Minh 137,061 ... 56,606
Change on the day
Market Current Prev Close Pct Move
Singapore 2715.34 2681.97 1.24
Kuala Lumpur 1267.10 1260.02 0.56
Bangkok 708.76 716.35 (closed)
Jakarta 2467.95 2433.18 1.43
Manila 2932.99 2888.72 1.53
Ho Chi Minh 615.68 624.10 -1.35
Change on year
Market Current End prev yr Pct Move
Singapore 2715.34 1761.56 +54.14
Kuala Lumpur 1267.10 876.75 +44.52
Bangkok 708.76 449.96 +57.52
(closed)
Jakarta 2467.95 1355.40 +82.08
Manila 2932.99 1872.85 +56.61
Ho Chi Minh 615.68 315.62 +95.07
Stock Market Volume (shares)
Market Current Volume ... Average Volume 90 days
Singapore 273,457,500 ... 370,578,304
Kuala Lumpur 110,653,800 ... 156,325,598
Bangkok 2,982,748 ... 4,575,457
Jakarta 4,462,989,500 ... 5,809,227,300
Ho Chi Minh 137,061 ... 56,606
"Warren Buffett" of Malaysia
http://spreadsheets.google.com/pub?key=tkb0enVog-PjOHzgbMUXi_w&output=html
The returns from iCap's winning transactions were truly fantastic.
Are we looking at a budding "Warren Buffett" equivalent?
Wonder the 'cow' will jump over the moon?
The returns from iCap's winning transactions were truly fantastic.
Are we looking at a budding "Warren Buffett" equivalent?
Wonder the 'cow' will jump over the moon?
Saturday 24 October 2009
iCap completed transactions - The Winners
http://spreadsheets.google.com/pub?key=tvUBvGFsmHcpydgvtogKM9Q&output=html
Analysing the Winners:
Total = 140 transactions
Holding Periods
less than 1 year
64 transactions
Holding Period Return less than 15% = 14
Holding Period Return more than 15% = 50
exceeding 1 year
29 transactions
CAGR less than 15% = 5
CAGR more than 15% = 24
exceeding 2 year
17 transactions
CAGR less than 15% = 8
CAGR more than 15% = 9
exceeding 3 year
5 transactions
CAGR less than 15% = 3
CAGR more than 15% = 2
exceeding 4 year
8 transactions
CAGR less than 15% = 8
CAGR more than 15% = 0
exceeding 5 year
3 transactions
CAGR less than 15% = 1
CAGR more than 15% = 2
exceeding 6 year
3 transactions
CAGR less than 15% = 3
CAGR more than 15% = 0
exceeding 7 year
4 transactions
CAGR less than 15% = 4
CAGR more than 15% = 0
exceeding 8 year
3 transactions
CAGR less than 15% = 3
CAGR more than 15% = 0
exceeding 9 year
2 transactions
CAGR less than 15% = 2
CAGR more than 15% = 0
exceeding 10 year
0 transactions
CAGR less than 15% = 0
CAGR more than 15% = 0
exceeding 11 year
2 transactions
CAGR less than 15% = 0
CAGR more than 15% = 2
Findings:
Of the 140 transactions:
Of those transactions giving more than 15% HPR or CAGR, 93% ( 83/89) were stocks held for less than 3 years:
Take Home Message:
1. Of 4 stocks selected, 3 were winners and 1 was a loser.
64 transactions
Holding Period Return less than 15% = 14
Holding Period Return more than 15% = 50
29 transactions
CAGR less than 15% = 5
CAGR more than 15% = 24
17 transactions
CAGR less than 15% = 8
CAGR more than 15% = 9
5 transactions
CAGR less than 15% = 3
CAGR more than 15% = 2
8 transactions
CAGR less than 15% = 8
CAGR more than 15% = 0
3 transactions
CAGR less than 15% = 1
CAGR more than 15% = 2
3 transactions
CAGR less than 15% = 3
CAGR more than 15% = 0
4 transactions
CAGR less than 15% = 4
CAGR more than 15% = 0
3 transactions
CAGR less than 15% = 3
CAGR more than 15% = 0
2 transactions
CAGR less than 15% = 2
CAGR more than 15% = 0
0 transactions
CAGR less than 15% = 0
CAGR more than 15% = 0
2 transactions
CAGR less than 15% = 0
CAGR more than 15% = 2
- 51 (36%) have a return (HPR or CAGR) of less than 15% and
- an amazing 89 (64%) have a return (HPR or CAGR) of more than 15%
- 50 of the stocks were held for less than 1 year
- 24 of the stocks were held for more than 1 year but less than 2 years
- 9 stock were held for more than 2 years but less than 3 years.
2. Of the 3 winners:
- 1 gives a CAGR of less than 15% and
- an amazing 2 give a CAGR of greater than 15%.
- 1 faltered,
- 1 did fairly alright and
- 2 did exceptionally well.
Completed Transactions of iCap (1989 to 9.7.2009)
http://spreadsheets.google.com/pub?key=tQvTWgP7osgpwBxXVtVyy_g&output=html
There were 192 completed transactions over the period 1989 to 9th July, 2009.
There were 140 winners (73%) and 52 losers (27%).
The ratio of winners to losers is 2.7 to 1.
Therefore, we can infer that for every 4 stocks picked by iCap (also known as ttb), 3 will be winners and 1 will be a loser. :- )) or :- ((
Of these 192 transactions:
80 (42%) were sold within the 12 months holding period.
112 (58%) were sold after a holding period of more than 12 months.
Of the 140 winners:
64 (46%) were sold within the 12 months holding period.
76 (54%) were sold after a holding period of more than 12 months.
Of the 52 losers:
16 (31%) were sold within the 12 months holding period.
36 (69%) were sold after a holding period of more than 12 months.
Ref: http://icapital.biz/icapital2/other/completedtranx_en.pdf
There were 192 completed transactions over the period 1989 to 9th July, 2009.
There were 140 winners (73%) and 52 losers (27%).
The ratio of winners to losers is 2.7 to 1.
Therefore, we can infer that for every 4 stocks picked by iCap (also known as ttb), 3 will be winners and 1 will be a loser. :- )) or :- ((
Of these 192 transactions:
80 (42%) were sold within the 12 months holding period.
112 (58%) were sold after a holding period of more than 12 months.
Of the 140 winners:
64 (46%) were sold within the 12 months holding period.
76 (54%) were sold after a holding period of more than 12 months.
Of the 52 losers:
16 (31%) were sold within the 12 months holding period.
36 (69%) were sold after a holding period of more than 12 months.
Ref: http://icapital.biz/icapital2/other/completedtranx_en.pdf
Friday 23 October 2009
Past Stock Selections in i Capital
Past Stock Selections in i Capital
Completed Transactions from 1989 to 9 Jul 2009
http://icapital.biz/icapital2/other/completedtranx_en.pdf
How to convert this pdf file into Microsoft Office Excel format to facilitate the calculation of the CAGR for each of the completed transactions? TQ
Completed Transactions from 1989 to 9 Jul 2009
http://icapital.biz/icapital2/other/completedtranx_en.pdf
How to convert this pdf file into Microsoft Office Excel format to facilitate the calculation of the CAGR for each of the completed transactions? TQ
The stock market requires an endless supply of losers
Perhaps the most forceful statement on the need to act in the contrary mode appears Confessions of a Wall Street Insider by the self-named C.C. Hazard:
"The stock market is built on a necessary foundation of error. You make money on the market mainly by living off the errors of other players. You become a predator, in fact, a carnivore, a beast of prey. Others must die that you must live... The stock market requires an endless supply of losers."
By refusing to act like and with the crowd in either its manic or panic phases, an investor immensely raises his or her chance of not being part of that pool of losers.
"Never follow the crowd!"
"The stock market is built on a necessary foundation of error. You make money on the market mainly by living off the errors of other players. You become a predator, in fact, a carnivore, a beast of prey. Others must die that you must live... The stock market requires an endless supply of losers."
By refusing to act like and with the crowd in either its manic or panic phases, an investor immensely raises his or her chance of not being part of that pool of losers.
"Never follow the crowd!"
Leaning against that powerful tide
The crowd can be correct during much of a long trend, but always overstays and proves itself wrong at turning points. When the feeling of bullish rightness becomes universal and powerful, a top is immediately at hand.
Being successful in investing or trading means leaning against that powerful tide, which then creates psychological, financial and social stresses and strains not everyone can handle.
If by nature an investor is passive, a follower, he may lack sufficient courage to do what is required for investing or trading success. But if one can stick to contrarian principles despite probable early suboptimization of profits, he acquires a bucketful of cash near the top (plus some interest) for use later when the panic phase arrives.
Being successful in investing or trading means leaning against that powerful tide, which then creates psychological, financial and social stresses and strains not everyone can handle.
If by nature an investor is passive, a follower, he may lack sufficient courage to do what is required for investing or trading success. But if one can stick to contrarian principles despite probable early suboptimization of profits, he acquires a bucketful of cash near the top (plus some interest) for use later when the panic phase arrives.
The key to success is to do what is not easy.
The key to success is to do what is not easy. What seems very easy will probably prove a mistake. Almost invariably when a buy looks compelling and overwhelmingly obvious, the investor actually is getting in too late.
The best bargains are purchased when the investor has to struggle and debate, afraid even to tell his broker about an idea under consideration.
When he loves the stock because it has treated him so well and wants to stay on board longer to maintain that highly comfortable association, he has overstayed the market.
"We buy (on) wars, earthquakes, coups, assassinations and devaluations. We sell on peace, free-trade agreements and all that other good stuff."
Buying and selling that way is how to succeed, but it always feels like facing into a 100-mph head wind at the time.
The best bargains are purchased when the investor has to struggle and debate, afraid even to tell his broker about an idea under consideration.
When he loves the stock because it has treated him so well and wants to stay on board longer to maintain that highly comfortable association, he has overstayed the market.
"We buy (on) wars, earthquakes, coups, assassinations and devaluations. We sell on peace, free-trade agreements and all that other good stuff."
Buying and selling that way is how to succeed, but it always feels like facing into a 100-mph head wind at the time.
KNM upgraded to 'buy'
KNM upgraded to 'buy'
Published: 2009/10/23
KNM Group Bhd. was upgraded to “buy” from “sell” at Maybank Investment Bank Bhd on expectations of higher orders for the oil and gas services provider.
The company’s target price was raised to RM1.02 from 69 sen, Maybank said in a report today. -- Bloomberg
Published: 2009/10/23
KNM Group Bhd. was upgraded to “buy” from “sell” at Maybank Investment Bank Bhd on expectations of higher orders for the oil and gas services provider.
The company’s target price was raised to RM1.02 from 69 sen, Maybank said in a report today. -- Bloomberg
Undertand both fundamentals and psychology of the market
Market moves are driven by an ever-shifting combination of fundamentals and psychology; to be successful, investors need to seek to understand both rather than ignore them.
Mere identification of an extreme trend will not guarantee selling at an exact top or buying at precise bottoms.
But selling above the long-term trend when markets are buoyant will produce returns above those from selling on average at the long-term trendline.
Buying well, namely when fear pervades, gives another advantage.
Mere identification of an extreme trend will not guarantee selling at an exact top or buying at precise bottoms.
But selling above the long-term trend when markets are buoyant will produce returns above those from selling on average at the long-term trendline.
Buying well, namely when fear pervades, gives another advantage.
What is the annual turnover of stocks in iCap?
In their continuing efforts to stay atop the best, many mutual funds engage in 50% to 100% or faster annual turnover (rather than buying and holding.)
Just wondering, what is the annual turnover of stocks in iCap?
Just wondering, what is the annual turnover of stocks in iCap?
The price of investment success is constant vigilance.
Buying and holding for the long term assumes that one is willing to settle for whatever long-term average return is generated.
Buying and holding for the long term also assumes that one can successfully select a stock, or group of stocks, whose fundamentals will continue intact.
Technology is moving ever more rapidly and for most corporations the relevant competitive context has become worldwide, whether or not they wish it were so. These facts imply that selections of companies likely will not remain valid as long as they could in the past.
In a dynamic world, a static portfolio is by definition a fatally flawed strategy.
Bottom line: One year's favourable and seemingly stable fundamentals are not a given that can be assumed in perpetuity, much as we might wish they could. The price of investment success is constant vigilance.
The advice to buy and hold long term begs a critical question: buy and hold what?
Buying and holding for the long term also assumes that one can successfully select a stock, or group of stocks, whose fundamentals will continue intact.
Technology is moving ever more rapidly and for most corporations the relevant competitive context has become worldwide, whether or not they wish it were so. These facts imply that selections of companies likely will not remain valid as long as they could in the past.
In a dynamic world, a static portfolio is by definition a fatally flawed strategy.
Bottom line: One year's favourable and seemingly stable fundamentals are not a given that can be assumed in perpetuity, much as we might wish they could. The price of investment success is constant vigilance.
The advice to buy and hold long term begs a critical question: buy and hold what?
Just 4.5pc of finance professional opted for a V-shape recovery from current slump
Recession: 95pc of finance professionals expect downturn to continue
Just one in 20 money professionals believes that the economy will stage a sharp “V-shaped” recovery from the current slump, according to a survey by Barclays Capital.
By Richard Evans
Published: 9:09PM BST 02 Jun 2009
Photo: PA When the investment bank asked experts what they expected the trajectory of the global economy to be this year and next, 37.5pc predicted a W-shape – temporary recovery, before renewed weakness – and 31.5pc a U-shape, representing weak growth for some time before gradual recovery. Another 26.5pc favoured the L-shape: growth remaining weak for a protracted period.
Just 4.5pc opted for a V-shape – weakness and then sharp recovery – according to the survey of 605 professionals, who worked for a broad range of foreign exchange investors including hedge funds, real money managers, proprietary trading desks and corporates.
The pessimism about the economy was reflected in experts' opinions about the recent rally in "risky assets" such as shares.
Thirty-seven per cent said they thought we were in a bear market rally close to ending, while 23.5pc said it was a bear market rally with further to go, a bearish total of over 60pc; 22pc thought it sustainable but that further gains were unlikely, and 17.5pc said risky assets had further to rally.
“The recent strong performance of risky assets is seen by investors as a ‘bear market rally’ that is close to ending,” the bank said. “This is consistent with the general view that any global economic recovery over the next year will be shallow or temporary – U or W-shaped.”
Barclays also asked the finance professionals to select the currencies most likely to rise and fall. As favourite to rise, the pound was narrowly beaten by the Australian dollar, while the American dollar was seen as most likely to weaken.
"The choice of the most attractive long currency trading position was a close-run contest between sterling and the American dollar, with the latter eventually winning," Barclays said. "The US dollar was seen as the most attractive short currency position."
http://www.telegraph.co.uk/finance/personalfinance/investing/5431622/Recession-95pc-of-finance-professionals-expect-downturn-to-continue.html
Just one in 20 money professionals believes that the economy will stage a sharp “V-shaped” recovery from the current slump, according to a survey by Barclays Capital.
By Richard Evans
Published: 9:09PM BST 02 Jun 2009
Photo: PA When the investment bank asked experts what they expected the trajectory of the global economy to be this year and next, 37.5pc predicted a W-shape – temporary recovery, before renewed weakness – and 31.5pc a U-shape, representing weak growth for some time before gradual recovery. Another 26.5pc favoured the L-shape: growth remaining weak for a protracted period.
Just 4.5pc opted for a V-shape – weakness and then sharp recovery – according to the survey of 605 professionals, who worked for a broad range of foreign exchange investors including hedge funds, real money managers, proprietary trading desks and corporates.
The pessimism about the economy was reflected in experts' opinions about the recent rally in "risky assets" such as shares.
Thirty-seven per cent said they thought we were in a bear market rally close to ending, while 23.5pc said it was a bear market rally with further to go, a bearish total of over 60pc; 22pc thought it sustainable but that further gains were unlikely, and 17.5pc said risky assets had further to rally.
“The recent strong performance of risky assets is seen by investors as a ‘bear market rally’ that is close to ending,” the bank said. “This is consistent with the general view that any global economic recovery over the next year will be shallow or temporary – U or W-shaped.”
Barclays also asked the finance professionals to select the currencies most likely to rise and fall. As favourite to rise, the pound was narrowly beaten by the Australian dollar, while the American dollar was seen as most likely to weaken.
"The choice of the most attractive long currency trading position was a close-run contest between sterling and the American dollar, with the latter eventually winning," Barclays said. "The US dollar was seen as the most attractive short currency position."
http://www.telegraph.co.uk/finance/personalfinance/investing/5431622/Recession-95pc-of-finance-professionals-expect-downturn-to-continue.html
A rally from extreme cheapness to excellent value
So what happens next? If that was a rally from extreme cheapness, what does the market do when it is merely excellent value?
Overpriced = price at more than 120% of Intrinsic Value
Fair price = price at more than 80% but less than 120% of Intrinsic Value
Bargains = price at less than 80% of Intrinsic Value
Bargains:
Good value = 20% lower than intrinsic value
Excellent value = 30% lower than intrinsic value
Extreme cheapness = 50% lower than intrinsic value
Overpriced = price at more than 120% of Intrinsic Value
Fair price = price at more than 80% but less than 120% of Intrinsic Value
Bargains = price at less than 80% of Intrinsic Value
Overpriced:
Extremely overpriced = more than 50% above intrinsic value
Overpriced = more than 20% above intrinsic value
Fair price:
Fair value = +/- 20% of intrinsic value
Bargains:
Good value = 20% lower than intrinsic value
Excellent value = 30% lower than intrinsic value
Extreme cheapness = 50% lower than intrinsic value
This bull market is not over. The bargain phase is over.
Anthony Bolton: this bull market is not over
Financials such as banks, property and insurance remain Bolton's top picks.
By Reuters staff
Published: 10:05AM BST 21 Oct 2009
Anthony Bolton: the bull market is not over Fidelity's Anthony Bolton said global stocks were still in a bull market and it was not too late to invest now, with technology and consumer sectors expected to lead the next phase of the bull run.
Bolton, whose contrarian bets made him a top UK fund manager for over two decades, told a news conference on Wednesday that growth stocks would be in the limelight, while commodities and industrial companies were running out of steam after their rally.
"The bargain phase is over. But despite the fact the market is well off lows, we expect the bull market to go on. It's a multiyear bull market," Bolton said in Seoul on a trip to mentor young Fidelity portfolio managers in Asia. Bolton is president for investments at Fidelity International, an affiliate of Boston-based Fidelity Investments, the world's biggest mutual fund firm.
He said the first phase of the bull market was ending this year or by the first quarter of next year, but long-term valuations were still attractive.
Bolton, who does not give much weight to economic forecasts for making stock market assessments, views the global economy as being in a recovery phase and unlikely to fall into a recession, although the pace of the recovery would lose steam next year.
Financials such as banks, property and insurance remain his top picks, based on their pre-provisioning valuations, but regulation would be a key risk to the sector.
"I still think it is right to own financials ... I generally found after financial crisis that you can own financials [for] two to three years," Bolton said, citing "six banking crises" he has seen in his investment career.
The London-based executive said inflation would not be a threat to stocks in the next couple of years because of low growth in Western markets, and the current environment of low economic growth and low interest rates was positive for stock markets.
http://www.telegraph.co.uk/finance/personalfinance/investing/6395393/Anthony-Bolton-this-bull-market-is-not-over.html
Financials such as banks, property and insurance remain Bolton's top picks.
By Reuters staff
Published: 10:05AM BST 21 Oct 2009
Anthony Bolton: the bull market is not over Fidelity's Anthony Bolton said global stocks were still in a bull market and it was not too late to invest now, with technology and consumer sectors expected to lead the next phase of the bull run.
Bolton, whose contrarian bets made him a top UK fund manager for over two decades, told a news conference on Wednesday that growth stocks would be in the limelight, while commodities and industrial companies were running out of steam after their rally.
"The bargain phase is over. But despite the fact the market is well off lows, we expect the bull market to go on. It's a multiyear bull market," Bolton said in Seoul on a trip to mentor young Fidelity portfolio managers in Asia. Bolton is president for investments at Fidelity International, an affiliate of Boston-based Fidelity Investments, the world's biggest mutual fund firm.
He said the first phase of the bull market was ending this year or by the first quarter of next year, but long-term valuations were still attractive.
Bolton, who does not give much weight to economic forecasts for making stock market assessments, views the global economy as being in a recovery phase and unlikely to fall into a recession, although the pace of the recovery would lose steam next year.
Financials such as banks, property and insurance remain his top picks, based on their pre-provisioning valuations, but regulation would be a key risk to the sector.
"I still think it is right to own financials ... I generally found after financial crisis that you can own financials [for] two to three years," Bolton said, citing "six banking crises" he has seen in his investment career.
The London-based executive said inflation would not be a threat to stocks in the next couple of years because of low growth in Western markets, and the current environment of low economic growth and low interest rates was positive for stock markets.
http://www.telegraph.co.uk/finance/personalfinance/investing/6395393/Anthony-Bolton-this-bull-market-is-not-over.html
Thursday 22 October 2009
Banks top gainers on Bursa
Banks top gainers on Bursa
Tags: AMMB Holdings Bhd | Banking deals | banking stocks | CIMB Group Holdings Bhd | FBM KLCI | HLBB | Macquarie Research | Malayan Banking Bhd | PBB | RHB Capital Bhd | Wong Chew Hann
Written by Yong Yen Nie
Thursday, 22 October 2009 11:41
KUALA LUMPUR: Banking stocks, led by CIMB Group Holdings Bhd and HONG LEONG BANK BHD [] (HLBB), have emerged as top gainers on the FTSE Bursa Malaysia KUALA LUMPUR COMPOSITE INDEX [] (FBM KLCI) since Sept 30.
Analysts said the rise in the prices of banking shares was an indication of the market’s confidence in the performance of banks. It could also point to the absence of near-term downside surprises.
HLBB was ranked first among the top 10 gainers on the FBM KLCI after advancing 14.16% since Sept 30, while CIMB ranked second with a gain of 13.7%, according to Bloom-berg data.
Six of the top 10 gainers on the benchmark index were financial institutions. AMMB HOLDINGS BHD [] came in fourth with a gain of 11.03%, RHB CAPITAL BHD [] sixth (7.1%), PUBLIC BANK BHD [] (PBB) eighth (4.9%) and MALAYAN BANKING BHD [] ninth (3.76%).
The Kuala Lumpur Financial Index has outperformed the FBM KLCI by 2.9 percentage points since Sept 30. As of yesterday, it had risen 7.7% to 10,712 points compared with a 4.8% gain to 1,260.06 points for the FBM KLCI.
Analysts said banking stocks had been “running” since August, following improved results in the second quarter of calendar year 2009, which acted as catalysts for more earnings upgrades in the banking sector.
Maybank Investment Bank Research banking analyst Wong Chew Hann said most banking stocks might have soared mainly due to market confidence that banks would not be hit by any significant charges over the near term.
“Investors are also keen on CIMB, as they believe the banking group will clinch more lucrative investment banking deals in the future, as the global economic and market outlook improves,” she told The Edge Financial Daily yesterday.
Commenting on HLBB’s performance, a banking analyst with a foreign research house said the counter might be playing catch-up, given that the valuation of the bank was one of the lowest among local financial institutions.
Given that the reporting season for banks was near, investing interest in financial institutions might have heightened, especially as the lenders were expected to show positive results in the third quarter of calendar year 2009.
Together with positive news of the economy recovering, financial institutions, being proxies of the economy, were also bound to be beneficiaries, the analyst said.
PBB had already given investors a “feel” of what to expect from the other banks after its net profit in the third quarter of the financial year ending Dec 31, 2009 (3QFY09) rose 3.68% year-on-year to RM639.05 million on the back of strong loans and deposit growth and stable asset quality.
PBB’s net profit had come in slightly above analysts’ expectations of a 2%-3% growth. Revenue, however, fell 12.5% to RM2.44 billion in 3QFY09 from a year earlier, while earnings per share grew to 18.52 sen from 18.37 sen.
Nevertheless, Macquarie Research believed that the group’s ability to outperform its peers in loan growth, as well as maintain its pristine asset quality would remain its key strengths.
In a research report, Nomura Securities Malaysia Sdn Bhd said it was bullish on banks, with positive catalysts of better loan growth and falling bad debt provisions going forward.
It said CIMB was the preferred banking pick, given that its return on equity, as guided by management, was on positive trajectory to reach 18% over the next two to three years.
Its corporate and investment banking business was also expected to benefit from the government’s move to raise the profile of domestic capital markets with foreign investors, Nomura said.
Meanwhile, in the mid- to small-cap segment, investors were largely positive on AMMB, underpinned by vastly improved asset quality and undemanding valuations at 1.5 times price-to-book.
Several banking counters had closed at their 52-week highs in the past two days.
HLBB and PBB closed at a 52-week high yesterday, with HLBB rising 12 sen to RM7.50 with 2.51 million shares done and PBB adding four sen to RM10.70 on a turnover of 2.21 million shares.
CIMB, AMMB and Maybank had achieved the same feat on Tuesday. CIMB closed unchanged yesterday at RM12.62 while AMMB slipped two sen to RM4.73 from its 52-week high of RM4.76 with 11.58 million shares done.
Maybank closed at RM6.98 on Tuesday and gave up eight sen yesterday with 5.6 million shares changing hands.
This article appeared in The Edge Financial Daily, October 22, 2009.
Tags: AMMB Holdings Bhd | Banking deals | banking stocks | CIMB Group Holdings Bhd | FBM KLCI | HLBB | Macquarie Research | Malayan Banking Bhd | PBB | RHB Capital Bhd | Wong Chew Hann
Written by Yong Yen Nie
Thursday, 22 October 2009 11:41
KUALA LUMPUR: Banking stocks, led by CIMB Group Holdings Bhd and HONG LEONG BANK BHD [] (HLBB), have emerged as top gainers on the FTSE Bursa Malaysia KUALA LUMPUR COMPOSITE INDEX [] (FBM KLCI) since Sept 30.
Analysts said the rise in the prices of banking shares was an indication of the market’s confidence in the performance of banks. It could also point to the absence of near-term downside surprises.
HLBB was ranked first among the top 10 gainers on the FBM KLCI after advancing 14.16% since Sept 30, while CIMB ranked second with a gain of 13.7%, according to Bloom-berg data.
Six of the top 10 gainers on the benchmark index were financial institutions. AMMB HOLDINGS BHD [] came in fourth with a gain of 11.03%, RHB CAPITAL BHD [] sixth (7.1%), PUBLIC BANK BHD [] (PBB) eighth (4.9%) and MALAYAN BANKING BHD [] ninth (3.76%).
The Kuala Lumpur Financial Index has outperformed the FBM KLCI by 2.9 percentage points since Sept 30. As of yesterday, it had risen 7.7% to 10,712 points compared with a 4.8% gain to 1,260.06 points for the FBM KLCI.
Analysts said banking stocks had been “running” since August, following improved results in the second quarter of calendar year 2009, which acted as catalysts for more earnings upgrades in the banking sector.
Maybank Investment Bank Research banking analyst Wong Chew Hann said most banking stocks might have soared mainly due to market confidence that banks would not be hit by any significant charges over the near term.
“Investors are also keen on CIMB, as they believe the banking group will clinch more lucrative investment banking deals in the future, as the global economic and market outlook improves,” she told The Edge Financial Daily yesterday.
Commenting on HLBB’s performance, a banking analyst with a foreign research house said the counter might be playing catch-up, given that the valuation of the bank was one of the lowest among local financial institutions.
Given that the reporting season for banks was near, investing interest in financial institutions might have heightened, especially as the lenders were expected to show positive results in the third quarter of calendar year 2009.
Together with positive news of the economy recovering, financial institutions, being proxies of the economy, were also bound to be beneficiaries, the analyst said.
PBB had already given investors a “feel” of what to expect from the other banks after its net profit in the third quarter of the financial year ending Dec 31, 2009 (3QFY09) rose 3.68% year-on-year to RM639.05 million on the back of strong loans and deposit growth and stable asset quality.
PBB’s net profit had come in slightly above analysts’ expectations of a 2%-3% growth. Revenue, however, fell 12.5% to RM2.44 billion in 3QFY09 from a year earlier, while earnings per share grew to 18.52 sen from 18.37 sen.
Nevertheless, Macquarie Research believed that the group’s ability to outperform its peers in loan growth, as well as maintain its pristine asset quality would remain its key strengths.
In a research report, Nomura Securities Malaysia Sdn Bhd said it was bullish on banks, with positive catalysts of better loan growth and falling bad debt provisions going forward.
It said CIMB was the preferred banking pick, given that its return on equity, as guided by management, was on positive trajectory to reach 18% over the next two to three years.
Its corporate and investment banking business was also expected to benefit from the government’s move to raise the profile of domestic capital markets with foreign investors, Nomura said.
Meanwhile, in the mid- to small-cap segment, investors were largely positive on AMMB, underpinned by vastly improved asset quality and undemanding valuations at 1.5 times price-to-book.
Several banking counters had closed at their 52-week highs in the past two days.
HLBB and PBB closed at a 52-week high yesterday, with HLBB rising 12 sen to RM7.50 with 2.51 million shares done and PBB adding four sen to RM10.70 on a turnover of 2.21 million shares.
CIMB, AMMB and Maybank had achieved the same feat on Tuesday. CIMB closed unchanged yesterday at RM12.62 while AMMB slipped two sen to RM4.73 from its 52-week high of RM4.76 with 11.58 million shares done.
Maybank closed at RM6.98 on Tuesday and gave up eight sen yesterday with 5.6 million shares changing hands.
This article appeared in The Edge Financial Daily, October 22, 2009.
Maybulk served claim
Maybulk served claim
Published: 2009/10/22
MALAYSIAN Bulk Carriers Bhd (Maybulk) said its unit Everspeed Enterprises Ltd received an arbitration claim from Raffles Shipping & Investment Pte Ltd.
Everspeed had chartered the Bunga Saga 9 vessel from Raffles and it cancelled the deal in accordance with the terms, Maybulk said.
Raffles did not say how much it is claiming but the total in dispute is US$28.5 million (RM96.61 million) less any sum that Raffles can recover by re-chartering the vessel to another party.
Lawyers have told Everspeed that it has reasonable prospects to win the dispute, Maybulk said in a statement to Bursa Malaysia.
http://www.btimes.com.my/Current_News/BTIMES/articles/20091022004519/Article/
Comment: This is a very tough sector at least for the next 2 years.
Published: 2009/10/22
MALAYSIAN Bulk Carriers Bhd (Maybulk) said its unit Everspeed Enterprises Ltd received an arbitration claim from Raffles Shipping & Investment Pte Ltd.
Everspeed had chartered the Bunga Saga 9 vessel from Raffles and it cancelled the deal in accordance with the terms, Maybulk said.
Raffles did not say how much it is claiming but the total in dispute is US$28.5 million (RM96.61 million) less any sum that Raffles can recover by re-chartering the vessel to another party.
Lawyers have told Everspeed that it has reasonable prospects to win the dispute, Maybulk said in a statement to Bursa Malaysia.
http://www.btimes.com.my/Current_News/BTIMES/articles/20091022004519/Article/
Comment: This is a very tough sector at least for the next 2 years.
Successful Investing-Not Magic
Successful Investing-Not Magic
This is a guest article by Ray, the owner and primary author of Financial Highway, where he discusses investing, saving and practical money management concepts. You can check subscribe to his RSS feed or follow him on Twitter.
The past year and a half has been rough for investors, although many investors have grown tired for the financial advisers and have become DIY investors, others who have lost money are too frightened to do it themselves and have turned to financial advisors. Although nothing is wrong with having a good financial adviser, you have to understand that there is no magic to investing, the financial advisor doesn’t do anything you would be able to do yourself so why pay those hefty fees? A little while ago I provided some investing tips for successful investing, if you follow most of those tips you should be fine.
How to Become a Successful Investor?
There is no magic to investing, although the investment industry tries to confuse investors and make things look complicated, there is no reason to be worried. First step to becoming a successful investor is to keep things simple! I am a big fan of simplifying finances and investing, there are too many investment options available and too many contradictory opinions, the best thing you can do is keep your investment portfolio simple, here is how.
How to Simplify Your Investment Portfolio?
1. First find a good online discount broker, you can follow these tips to find the best discount broker for you. Discount brokers can save you a lot of transactions costs when it comes to investing.
2. Establish your asset allocation and investment policy statement. Asset allocation will help you determine how to allocated your assets between different asset classes. When you have your written investment policy statement ensure that you stick to it, only this way can you keep your emotions out of your investment and simplify your investing. You can download a sample investment policy statement from our site.
3. Purchase Index funds or ETFs, often investors purchase expensive mutual funds thinking active manager will perform better. The fact is that active managers lose to index funds, there is no point in paying hefty fees to mutual fund mangers when you can get better performs by investing in index funds and ETFs.
4. Ignore the Noise. Don’t pay attention to the media and so called experts, the media is known to exaggerate the reality and the so-called experts will only confuse you since most of them don’t agree with each other. Keep your focus on your long-term goal and ignore the noise.
5. Rebalance. Although I like passive investing, passive investing does not mean just leave things. Markets will fluctuate and your portfolio asset allocation will change you need to rebalance your portfolio along with market changes, this will ensure you are staying within your determined asset allocation.
Just following those five steps you will be able to dramatically simplify your investment portfolio, as I mentioned at the beginning there is no magic to investing, just keep things simple and follow some investing rules of thumb.
http://frugaldad.com/2009/10/13/successful-investing-not-magic/
This is a guest article by Ray, the owner and primary author of Financial Highway, where he discusses investing, saving and practical money management concepts. You can check subscribe to his RSS feed or follow him on Twitter.
The past year and a half has been rough for investors, although many investors have grown tired for the financial advisers and have become DIY investors, others who have lost money are too frightened to do it themselves and have turned to financial advisors. Although nothing is wrong with having a good financial adviser, you have to understand that there is no magic to investing, the financial advisor doesn’t do anything you would be able to do yourself so why pay those hefty fees? A little while ago I provided some investing tips for successful investing, if you follow most of those tips you should be fine.
How to Become a Successful Investor?
There is no magic to investing, although the investment industry tries to confuse investors and make things look complicated, there is no reason to be worried. First step to becoming a successful investor is to keep things simple! I am a big fan of simplifying finances and investing, there are too many investment options available and too many contradictory opinions, the best thing you can do is keep your investment portfolio simple, here is how.
How to Simplify Your Investment Portfolio?
1. First find a good online discount broker, you can follow these tips to find the best discount broker for you. Discount brokers can save you a lot of transactions costs when it comes to investing.
2. Establish your asset allocation and investment policy statement. Asset allocation will help you determine how to allocated your assets between different asset classes. When you have your written investment policy statement ensure that you stick to it, only this way can you keep your emotions out of your investment and simplify your investing. You can download a sample investment policy statement from our site.
3. Purchase Index funds or ETFs, often investors purchase expensive mutual funds thinking active manager will perform better. The fact is that active managers lose to index funds, there is no point in paying hefty fees to mutual fund mangers when you can get better performs by investing in index funds and ETFs.
4. Ignore the Noise. Don’t pay attention to the media and so called experts, the media is known to exaggerate the reality and the so-called experts will only confuse you since most of them don’t agree with each other. Keep your focus on your long-term goal and ignore the noise.
5. Rebalance. Although I like passive investing, passive investing does not mean just leave things. Markets will fluctuate and your portfolio asset allocation will change you need to rebalance your portfolio along with market changes, this will ensure you are staying within your determined asset allocation.
Just following those five steps you will be able to dramatically simplify your investment portfolio, as I mentioned at the beginning there is no magic to investing, just keep things simple and follow some investing rules of thumb.
http://frugaldad.com/2009/10/13/successful-investing-not-magic/
Seven Ways to Ruin Your Financial Future
Seven Ways to Ruin Your Financial Future
Often times the best way to learn a lesson is for someone to tell you what not to do. While there are many people willing to tell you all the smart moves to make with your money, only a few are willing to share their own screw-ups. Well, if you’ve been reading this site for any length of time, you know two things about me: I’ve made my share of screw-ups, and I don’t mind sharing them if it will help someone else from making the same mistake. So with that in mind, I offer up the following seven mistakes we made along the way.
1.Lease a new car. I was young and dumb, and actually believed that the car dealership didn’t care whether or not I leased the car from the them or financed it. I mean, that is what the salesman said and he seemed genuine. Wrong! They saw me coming a mile away! I had just landed my first professional job and had been eying a new SUV for a long time. It never occurred to me to buy a used car, save and pay cash, or shop for an auto loan with better terms. I would just lease it and turn it back in for a newer one a couple years later. Well, in a couple years I had made virtually no dent in the residual payoff balance leaving me with an upside car loan, or lease in this case. I had exceeded the maximum allowed mileage and sustained the usual dings you get from driving a car for a few years. There was no way I could simply “turn it back in.” So, I kept it, and paid for it for a few more years until I finally sold the thing for what I owed and got out. What a miserable experience!
2.Take out student loans. I was raised by a single mom, and while we lived comfortably, there wasn’t much left over for a significant college savings fund. However, when I graduated high school I wanted so badly to go off to school that I financed my tuition for the first two and a half years. Big mistake. I wound up transferring schools to return to my hometown, changed majors, and was stuck with a pile of student loan debt as my souvenir. I should have worked a year to save up the money for the first year of school, and then worked my way through the remaining time, which I wound up doing for those final three years or so.
3.Sign up for a credit card in college. While I was in school I fell for the college credit card application trick. It was at a football game, and those Discover people had drawn quite a crowd. What started out as a way to get a free t-shirt wound up being a way to finance my lifestyle at college. By no means did I live an extravagant life, but the occasional CD, grocery trip or late night pizza order went on the credit card and soon I was charging more than I could afford to pay off at the end of the month.
4.Charge furniture on a credit card. For the first few years my wife and I were married we had a mismatched collection of bedroom furniture handed down from family members, or left over from our own single days at college. We were content to live with it in the short term, but eventually fell for a Veteran’s Day sale at a local furniture store. Of course we didn’t have the cash for a new bedroom set, so I charged it and paid on the balance for months. We did eventually pay off the new furniture, but we have agreed that in the future we will pay cash for furniture.
5.Borrow money to invest. It was the late 1990’s and everyone was making a killing in the market. I had no money, but I heard of this little thing called margin, where you could borrow money to invest and hopefully pay it back with your earnings. I even heard a radio host say that the times were so good that he would borrow money to invest if he didn’t have any. Sounded good to me. I borrowed a little money, made a little money, and lost a lot of money when things headed south. In the end I wasn’t hurt as badly as some, but I didn’t gain any ground, financially. Had I been more patient and saved up the money to invest I would have made smarter decisions, and put in place the proper controls to minimize my losses. Playing with your own money has a way of making you more conservative.
6.Start up home businesses with virtually no cash. First it was Avon, then a company that produced personalized children’s books. Toss in a couple technology-related endeavors and we have probably spent twice what we earned from all side businesses combined. The problem with most of these opportunities is that they require some type of up-front investment, or the purchase of sample products or brochures, etc. If you need a “side hustle,” look for an opportunity that doesn’t have a lot of downside risk, and doesn’t require an up-front investment. That way if things totally bomb you will have only lost a bit of time and energy.
7.Stay in a dead end job too long. My first professional job was in a third-party customer service call center answering calls from banking and credit card customers. I took the job to get my foot in the door, and while I did move up eventually, the company made a concerted effort to keep salaries low and promotions slow. I lost a few years of opportunity to earn a higher salary had I simply moved on, but I did make some lasting friendships and learn a little about how not to run a business.
Remember, sometimes the examples of how not to do things make more of a lasting impact. Hopefully, these seven examples from my own past will help you avoid some of the same mistakes in the future.
http://frugaldad.com/2008/09/23/seven-ways-to-ruin-your-financial-future/
Often times the best way to learn a lesson is for someone to tell you what not to do. While there are many people willing to tell you all the smart moves to make with your money, only a few are willing to share their own screw-ups. Well, if you’ve been reading this site for any length of time, you know two things about me: I’ve made my share of screw-ups, and I don’t mind sharing them if it will help someone else from making the same mistake. So with that in mind, I offer up the following seven mistakes we made along the way.
1.Lease a new car. I was young and dumb, and actually believed that the car dealership didn’t care whether or not I leased the car from the them or financed it. I mean, that is what the salesman said and he seemed genuine. Wrong! They saw me coming a mile away! I had just landed my first professional job and had been eying a new SUV for a long time. It never occurred to me to buy a used car, save and pay cash, or shop for an auto loan with better terms. I would just lease it and turn it back in for a newer one a couple years later. Well, in a couple years I had made virtually no dent in the residual payoff balance leaving me with an upside car loan, or lease in this case. I had exceeded the maximum allowed mileage and sustained the usual dings you get from driving a car for a few years. There was no way I could simply “turn it back in.” So, I kept it, and paid for it for a few more years until I finally sold the thing for what I owed and got out. What a miserable experience!
2.Take out student loans. I was raised by a single mom, and while we lived comfortably, there wasn’t much left over for a significant college savings fund. However, when I graduated high school I wanted so badly to go off to school that I financed my tuition for the first two and a half years. Big mistake. I wound up transferring schools to return to my hometown, changed majors, and was stuck with a pile of student loan debt as my souvenir. I should have worked a year to save up the money for the first year of school, and then worked my way through the remaining time, which I wound up doing for those final three years or so.
3.Sign up for a credit card in college. While I was in school I fell for the college credit card application trick. It was at a football game, and those Discover people had drawn quite a crowd. What started out as a way to get a free t-shirt wound up being a way to finance my lifestyle at college. By no means did I live an extravagant life, but the occasional CD, grocery trip or late night pizza order went on the credit card and soon I was charging more than I could afford to pay off at the end of the month.
4.Charge furniture on a credit card. For the first few years my wife and I were married we had a mismatched collection of bedroom furniture handed down from family members, or left over from our own single days at college. We were content to live with it in the short term, but eventually fell for a Veteran’s Day sale at a local furniture store. Of course we didn’t have the cash for a new bedroom set, so I charged it and paid on the balance for months. We did eventually pay off the new furniture, but we have agreed that in the future we will pay cash for furniture.
5.Borrow money to invest. It was the late 1990’s and everyone was making a killing in the market. I had no money, but I heard of this little thing called margin, where you could borrow money to invest and hopefully pay it back with your earnings. I even heard a radio host say that the times were so good that he would borrow money to invest if he didn’t have any. Sounded good to me. I borrowed a little money, made a little money, and lost a lot of money when things headed south. In the end I wasn’t hurt as badly as some, but I didn’t gain any ground, financially. Had I been more patient and saved up the money to invest I would have made smarter decisions, and put in place the proper controls to minimize my losses. Playing with your own money has a way of making you more conservative.
6.Start up home businesses with virtually no cash. First it was Avon, then a company that produced personalized children’s books. Toss in a couple technology-related endeavors and we have probably spent twice what we earned from all side businesses combined. The problem with most of these opportunities is that they require some type of up-front investment, or the purchase of sample products or brochures, etc. If you need a “side hustle,” look for an opportunity that doesn’t have a lot of downside risk, and doesn’t require an up-front investment. That way if things totally bomb you will have only lost a bit of time and energy.
7.Stay in a dead end job too long. My first professional job was in a third-party customer service call center answering calls from banking and credit card customers. I took the job to get my foot in the door, and while I did move up eventually, the company made a concerted effort to keep salaries low and promotions slow. I lost a few years of opportunity to earn a higher salary had I simply moved on, but I did make some lasting friendships and learn a little about how not to run a business.
Remember, sometimes the examples of how not to do things make more of a lasting impact. Hopefully, these seven examples from my own past will help you avoid some of the same mistakes in the future.
http://frugaldad.com/2008/09/23/seven-ways-to-ruin-your-financial-future/
“They did not plan to fail – they just failed to plan.”
Why Don’t Most Financial Planners Plan Finances?
Written by Ed Rempel on Oct 20, 2009
filed under General Finance
“If you don’t know where you are going, you will wind up somewhere else.” – Yogi Berra
We went to a fascinating conference a couple weeks back that showed the inner workings of the financial planning industry in Canada. It was the first annual Financial Planning Week in Canada, so all the “experts” met for a day to discuss how the industry is misunderstood. “Financial planning is still about selling” is the title to Jonathan Chevreau’s article.
While many financial planners claim to do financial planning and provide holistic advice, very few actually provide comprehensive planning with written financial plans, as taught in the CFP courses.
The issue is best highlighted by Alan Goldhar, Professor of Financial Planning at York University and Manager for the Ontario Public Trustee. The Public Trustee takes over the finances for people that are mentally unable to make financial decisions. They have taken over more than $500 million in investments for 10,000 clients, most of which had a financial planner, broker or bank advisor. They interview the client and the family and then send in a team to obtain all financial documents.
The shocking fact is that, of the 10,000 clients they took over, none had a financial plan! Not one!
We have reviewed the finances for about 2,000 families and found the same result – none of them had a proper written financial plan prepared in Canada.
Alan Goldhar also teaches Finance at York University, where he says most financial planning students don’t bother completing the CFP designation, because “the industry has jobs for salespeople, not for professional financial planners. It’s like graduating from medical school and then being allowed only to check temperatures and change band aids.”
Cary List, CEO of the Financial Planners Standards Council (FPSC), says: “The single most common misunderstanding about financial planning is that it is all about investing.”
First, to make the issue clear, a financial plan, as defined by the FPSC, is a written document customized for you that gives you complete advice on all areas of your finances, including:
1.Cash Flow- Helping you understand how you spend your money.
2.Debt/Asset Management – Structuring your debts and your assets in the most effective way.
3.Life Goals, including Retirement Plan – Identify your financial goals in detail and strategies to help you achieve them.
4.Income Tax Planning- Determine most effective strategies to minimize tax over your lifetime.
5.Estate Planning- Determining the most effective way to transfer your assets to your beneficiaries.
6.Risk Management- Determine your needs for insurance and which type is the cheapest/most effective for you.
7.Investment Management- Recommending the strategies and investments appropriate for your plan and keeping you focused on your goals.
In short, it is a complete “road map” to the life you want that allows you to make decisions with your overall plan in mind, instead of making each decision on its own. A plan is not an investment projection, a questionnaire, a goal based on a rule of thumb, or a document with nice graphs printed out in 15 minutes or less.
From experience, we find that the benefits of having and following a plan are far more significant than people realize – and far more significant than Investment A vs. Investment B. For example, the main reason most Canadians will retire at a much lower standard of living than they want is because they never figured out how much they need to invest or what kind of strategies/investments they need to reach their goal.
Just keeping you focused on your goals alone can be the most obvious benefit of a plan. Anyone that lost focus and sold investments since last fall has wiped out years of gains.
“They did not plan to fail – they just failed to plan.”
Why is the industry focused on sales, instead of financial planning? What needs to happen so that Canadians will get real professional plans from their financial planners?
Here are the main suggestions at the conference for why most financial planners don’t plan finances:
1.Blame the public – Financial planning is misunderstood by the public. Most people think short term and do not understand why they need a financial plan. Canadians do not ask that their advisor to do a comprehensive, written plan for them.
2.Blame the schools – Financial education is not taught in schools, even though it is a basic life skill.
3.Blame the industry organizations – They have not effectively educated the public on the need for a plan. They also have a confusing list of degrees, instead of focusing on the CFP designation.
4.Blame “financial planners” – Most advisors focus on the investments or insurance that make them money and consider financial planning to be unpaid service work.
5.Blame the banks, insurance companies and planning firms – They have not been able to figure out a good business model that includes financial planning.
6.Blame the regulators – They focus regulation on products and disclosure related to products, and do not make allowances for advice that is part of a comprehensive plan.
7.Blame the government – There are no national restrictions on who can call themselves a “financial planner” or “financial advisor”. Those that do not write professional financial plans and have the qualifications should have to call themselves what they are: “mutual fund salesperson” or “insurance rep”.
8.Blame the industry –The industry has effectively taught the public that most “financial planners” are just salespeople. Most people have met with or know a “financial planner” and the planner did not do a plan, but mainly just tried to sell them a mutual fund or insurance.
What do you think? Why don’t most financial planners plan finances?
Ed Rempel is a Certified Financial Planner (CFP) and Certified Management Accountant (CMA) who built his practice by providing his clients solid, comprehensive financial plans and personal coaching.
http://www.milliondollarjourney.com/why-don%E2%80%99t-most-financial-planners-plan-finances.htm
Written by Ed Rempel on Oct 20, 2009
filed under General Finance
“If you don’t know where you are going, you will wind up somewhere else.” – Yogi Berra
We went to a fascinating conference a couple weeks back that showed the inner workings of the financial planning industry in Canada. It was the first annual Financial Planning Week in Canada, so all the “experts” met for a day to discuss how the industry is misunderstood. “Financial planning is still about selling” is the title to Jonathan Chevreau’s article.
While many financial planners claim to do financial planning and provide holistic advice, very few actually provide comprehensive planning with written financial plans, as taught in the CFP courses.
The issue is best highlighted by Alan Goldhar, Professor of Financial Planning at York University and Manager for the Ontario Public Trustee. The Public Trustee takes over the finances for people that are mentally unable to make financial decisions. They have taken over more than $500 million in investments for 10,000 clients, most of which had a financial planner, broker or bank advisor. They interview the client and the family and then send in a team to obtain all financial documents.
The shocking fact is that, of the 10,000 clients they took over, none had a financial plan! Not one!
We have reviewed the finances for about 2,000 families and found the same result – none of them had a proper written financial plan prepared in Canada.
Alan Goldhar also teaches Finance at York University, where he says most financial planning students don’t bother completing the CFP designation, because “the industry has jobs for salespeople, not for professional financial planners. It’s like graduating from medical school and then being allowed only to check temperatures and change band aids.”
Cary List, CEO of the Financial Planners Standards Council (FPSC), says: “The single most common misunderstanding about financial planning is that it is all about investing.”
First, to make the issue clear, a financial plan, as defined by the FPSC, is a written document customized for you that gives you complete advice on all areas of your finances, including:
1.Cash Flow- Helping you understand how you spend your money.
2.Debt/Asset Management – Structuring your debts and your assets in the most effective way.
3.Life Goals, including Retirement Plan – Identify your financial goals in detail and strategies to help you achieve them.
4.Income Tax Planning- Determine most effective strategies to minimize tax over your lifetime.
5.Estate Planning- Determining the most effective way to transfer your assets to your beneficiaries.
6.Risk Management- Determine your needs for insurance and which type is the cheapest/most effective for you.
7.Investment Management- Recommending the strategies and investments appropriate for your plan and keeping you focused on your goals.
In short, it is a complete “road map” to the life you want that allows you to make decisions with your overall plan in mind, instead of making each decision on its own. A plan is not an investment projection, a questionnaire, a goal based on a rule of thumb, or a document with nice graphs printed out in 15 minutes or less.
From experience, we find that the benefits of having and following a plan are far more significant than people realize – and far more significant than Investment A vs. Investment B. For example, the main reason most Canadians will retire at a much lower standard of living than they want is because they never figured out how much they need to invest or what kind of strategies/investments they need to reach their goal.
Just keeping you focused on your goals alone can be the most obvious benefit of a plan. Anyone that lost focus and sold investments since last fall has wiped out years of gains.
“They did not plan to fail – they just failed to plan.”
Why is the industry focused on sales, instead of financial planning? What needs to happen so that Canadians will get real professional plans from their financial planners?
Here are the main suggestions at the conference for why most financial planners don’t plan finances:
1.Blame the public – Financial planning is misunderstood by the public. Most people think short term and do not understand why they need a financial plan. Canadians do not ask that their advisor to do a comprehensive, written plan for them.
2.Blame the schools – Financial education is not taught in schools, even though it is a basic life skill.
3.Blame the industry organizations – They have not effectively educated the public on the need for a plan. They also have a confusing list of degrees, instead of focusing on the CFP designation.
4.Blame “financial planners” – Most advisors focus on the investments or insurance that make them money and consider financial planning to be unpaid service work.
5.Blame the banks, insurance companies and planning firms – They have not been able to figure out a good business model that includes financial planning.
6.Blame the regulators – They focus regulation on products and disclosure related to products, and do not make allowances for advice that is part of a comprehensive plan.
7.Blame the government – There are no national restrictions on who can call themselves a “financial planner” or “financial advisor”. Those that do not write professional financial plans and have the qualifications should have to call themselves what they are: “mutual fund salesperson” or “insurance rep”.
8.Blame the industry –The industry has effectively taught the public that most “financial planners” are just salespeople. Most people have met with or know a “financial planner” and the planner did not do a plan, but mainly just tried to sell them a mutual fund or insurance.
What do you think? Why don’t most financial planners plan finances?
Ed Rempel is a Certified Financial Planner (CFP) and Certified Management Accountant (CMA) who built his practice by providing his clients solid, comprehensive financial plans and personal coaching.
http://www.milliondollarjourney.com/why-don%E2%80%99t-most-financial-planners-plan-finances.htm
How to Destroy Your Investment Portfolio
How to Destroy Your Investment Portfolio
This is a guest article by Ray, the owner and primary author of Financial Highway, where he discusses investing, saving and practical money management concepts. You can check subscribe to his RSS feed or follow him on Twitter.
The past 18 months have been difficult for most investors, the stock market has seen the biggest “correction” since the great depression, “blue chip” companies have cut dividends, had massive layoffs and even begged the fed to bail them up. Not to mention the investment frauds of Bernard Madoff and Ed Earl Jones costing investors their lifetime of savings. More and more investors have decided to become “Do it Yourself” (DIY) investors and often rightly so. There really is no magic to investing; anyone can do it as long as you follow simple rules. Previously we published 10 investing tips to become a successful investor to help DIY investors. Although there is no magic to investing if you are a new DIY investor you can easily fall into the common investing traps and ruin your portfolio – detailed below.
5 Fastest ways to destroy your investment portfolio
1. Short Term Trading
This is one of the best ways to destroy your investment portfolio. With online discount brokers it is very simple to just buy and sell securities with the click of a mouse, sit in front of your monitor and constantly watch your stock price. Of course when you see your stock take a little hit just click sell and it’s sold. Thank god you acted fast and only took a 2% loss; you do that a few times a month and got your self a 10% loss. We are not even talking about fees. Statistics show that short term trading fails over the long term in overwhelmingly majority of cases. Very few people can be profitable day traders. So if you want to destroy your investment portfolio, start with short term trading.
2. Buy the “HOT” stock – Get Rich Quick
A few weeks ago a friend of mine called and said a co-worker had given him a good tip on a stock and he should buy some, he was considering a $10,000 purchase. So I asked him some basic questions: “What does the company do”, “What do analysts say”, “What’s the management’s history?”… He did not know the answer to any of these, and decided to ask the person who tipped him…he had no clue either but was sure it’s a good investment his brother-in-law’s friend had said so. I advised him against the purchase and his colleague is now down 35% in 2 weeks …OUCH! There is almost no better way to demolish your portfolio than to follow the “hot” stock tips or the get rich quick stocks. Purchasing strong, stable companies is boring!
3. Buy Exotic Investments
The investment industry loves creating new investment products, every few months some new exotic investment is brought to the market. Investors jump at these investment vehicles without understanding the risks associated with them. A great way to destroy your investment portfolio: put a large chunk of your retirement fund into these exotic investments and watch them disappear.
4. Do not have an Asset Allocation
One of the first things any investor should do before investing is have an asset allocation and stick to it, well that is for anyone who wants to see their investment portfolio grow. Asset allocation ensures you are diversified among all asset classes (stocks, bonds, cash etc). Studies show that over 90% of your portfolios variability is due to your asset allocation – not sticking to your asset allocation is crucial to the destruction of your investment portfolio.
5. Ignore Diversification
Every investor knows or has at least heard of diversification, it’s the cornerstone of every good investment portfolio. Simple concept: don’t put all your eggs in one basket. Diversifying your investment portfolio will ensure that your investments are spread out and you are not taking more risk than you need to. Just ignore this important concept and your investment portfolio will surely vanish.
You combine these five tips and you are guaranteed to lose more money in the stock market than you have ever dreamed of.
What tips do you have for those who want to demolish their investment portfolios? Any bad investment decisions you have made in the past?
http://frugaldad.com/2009/09/15/how-to-destroy-your-investment-portfolio/
This is a guest article by Ray, the owner and primary author of Financial Highway, where he discusses investing, saving and practical money management concepts. You can check subscribe to his RSS feed or follow him on Twitter.
The past 18 months have been difficult for most investors, the stock market has seen the biggest “correction” since the great depression, “blue chip” companies have cut dividends, had massive layoffs and even begged the fed to bail them up. Not to mention the investment frauds of Bernard Madoff and Ed Earl Jones costing investors their lifetime of savings. More and more investors have decided to become “Do it Yourself” (DIY) investors and often rightly so. There really is no magic to investing; anyone can do it as long as you follow simple rules. Previously we published 10 investing tips to become a successful investor to help DIY investors. Although there is no magic to investing if you are a new DIY investor you can easily fall into the common investing traps and ruin your portfolio – detailed below.
5 Fastest ways to destroy your investment portfolio
1. Short Term Trading
This is one of the best ways to destroy your investment portfolio. With online discount brokers it is very simple to just buy and sell securities with the click of a mouse, sit in front of your monitor and constantly watch your stock price. Of course when you see your stock take a little hit just click sell and it’s sold. Thank god you acted fast and only took a 2% loss; you do that a few times a month and got your self a 10% loss. We are not even talking about fees. Statistics show that short term trading fails over the long term in overwhelmingly majority of cases. Very few people can be profitable day traders. So if you want to destroy your investment portfolio, start with short term trading.
2. Buy the “HOT” stock – Get Rich Quick
A few weeks ago a friend of mine called and said a co-worker had given him a good tip on a stock and he should buy some, he was considering a $10,000 purchase. So I asked him some basic questions: “What does the company do”, “What do analysts say”, “What’s the management’s history?”… He did not know the answer to any of these, and decided to ask the person who tipped him…he had no clue either but was sure it’s a good investment his brother-in-law’s friend had said so. I advised him against the purchase and his colleague is now down 35% in 2 weeks …OUCH! There is almost no better way to demolish your portfolio than to follow the “hot” stock tips or the get rich quick stocks. Purchasing strong, stable companies is boring!
3. Buy Exotic Investments
The investment industry loves creating new investment products, every few months some new exotic investment is brought to the market. Investors jump at these investment vehicles without understanding the risks associated with them. A great way to destroy your investment portfolio: put a large chunk of your retirement fund into these exotic investments and watch them disappear.
4. Do not have an Asset Allocation
One of the first things any investor should do before investing is have an asset allocation and stick to it, well that is for anyone who wants to see their investment portfolio grow. Asset allocation ensures you are diversified among all asset classes (stocks, bonds, cash etc). Studies show that over 90% of your portfolios variability is due to your asset allocation – not sticking to your asset allocation is crucial to the destruction of your investment portfolio.
5. Ignore Diversification
Every investor knows or has at least heard of diversification, it’s the cornerstone of every good investment portfolio. Simple concept: don’t put all your eggs in one basket. Diversifying your investment portfolio will ensure that your investments are spread out and you are not taking more risk than you need to. Just ignore this important concept and your investment portfolio will surely vanish.
You combine these five tips and you are guaranteed to lose more money in the stock market than you have ever dreamed of.
What tips do you have for those who want to demolish their investment portfolios? Any bad investment decisions you have made in the past?
http://frugaldad.com/2009/09/15/how-to-destroy-your-investment-portfolio/
Investment Mistakes in a Bear Market
Investment Mistakes in a Bear Market
This is a guest article by Ray, the owner and primary author of Financial Highway, where he discusses investing, saving and practical money management concepts.
Investing seems scary, and investing during a bear market is even scarier. Believe it or not bear markets are an important part of a healthy business cycle, corrections are needed to ensure prices are not overly inflated. It is true that market corrections put a little dent in our portfolios, however the big losses are due to our emotions and investment mistakes in a bear market where we try to reduce losses but actually are losing more. What are some of these mistakes?
Sell, Sell, Sell…
When markets tumble everyone gets freaked out and starts selling without any logical reasoning or attention to long-term goals. As the sell-off continues more investors jump on the train and sell their investments, often they all miss the fact that they are selling at the bottom to only repurchase them back at the top. Stop selling without a reason, only sell if the fundamentals have changed for the long term or the investment does not fit in your plan, not because everyone else is selling in the market.
Stop Investing
The only worse thing one can do than selling out in a bear market is stop investing during the bear market. People get scared and think the markets are falling apart and believe there is no point in investing. Would you stop shopping if retail prices dropped 30%? No. You would probably buy even more because everything is on sell now so you’ll take advantage of the good prices, same concept applies to investing. There is a huge sell going on in the financial markets during bear markets and you should take advantage of it and not hide from it. When you stop investing during a bear market you will miss out on many undervalued investment opportunities which can have great returns in the long run.
Look at Alternative Investment
Some investors start to look at alternative investments because they believe somehow these will perform better than the equity markets. In this recession the focus has been gold investment, gold is reaching all time highs and investors believe gold is a great place to invest. Frugal Dad recently answered a readers question regarding gold, here are my reasons why gold is a bad investment. Although alternative investments have their place in a portfolio the excessive focus during bear markets makes them dangerous.
Timing the Market
Unless you have a crystal ball or have some psychic abilities just stop wasting your time and money trying to time the markets. Investors are more likely to time the markets during a bear market, as there are often big swings, which are seen as opportunities by investors, this strategy will only hurt your portfolio.
I know bear markets hurt, but you trying to “improve” things will only make things worse. Successful investing is not magic, just keep things simple and maybe follow few investing and money rules of thumb and you’ll be fine in the long run.
What were your investment mistakes during this bear market? What have you learned from them? You know anyone who made these mistakes?
http://frugaldad.com/2009/10/20/investment-mistakes-bear-market/
This is a guest article by Ray, the owner and primary author of Financial Highway, where he discusses investing, saving and practical money management concepts.
Investing seems scary, and investing during a bear market is even scarier. Believe it or not bear markets are an important part of a healthy business cycle, corrections are needed to ensure prices are not overly inflated. It is true that market corrections put a little dent in our portfolios, however the big losses are due to our emotions and investment mistakes in a bear market where we try to reduce losses but actually are losing more. What are some of these mistakes?
Sell, Sell, Sell…
When markets tumble everyone gets freaked out and starts selling without any logical reasoning or attention to long-term goals. As the sell-off continues more investors jump on the train and sell their investments, often they all miss the fact that they are selling at the bottom to only repurchase them back at the top. Stop selling without a reason, only sell if the fundamentals have changed for the long term or the investment does not fit in your plan, not because everyone else is selling in the market.
Stop Investing
The only worse thing one can do than selling out in a bear market is stop investing during the bear market. People get scared and think the markets are falling apart and believe there is no point in investing. Would you stop shopping if retail prices dropped 30%? No. You would probably buy even more because everything is on sell now so you’ll take advantage of the good prices, same concept applies to investing. There is a huge sell going on in the financial markets during bear markets and you should take advantage of it and not hide from it. When you stop investing during a bear market you will miss out on many undervalued investment opportunities which can have great returns in the long run.
Look at Alternative Investment
Some investors start to look at alternative investments because they believe somehow these will perform better than the equity markets. In this recession the focus has been gold investment, gold is reaching all time highs and investors believe gold is a great place to invest. Frugal Dad recently answered a readers question regarding gold, here are my reasons why gold is a bad investment. Although alternative investments have their place in a portfolio the excessive focus during bear markets makes them dangerous.
Timing the Market
Unless you have a crystal ball or have some psychic abilities just stop wasting your time and money trying to time the markets. Investors are more likely to time the markets during a bear market, as there are often big swings, which are seen as opportunities by investors, this strategy will only hurt your portfolio.
I know bear markets hurt, but you trying to “improve” things will only make things worse. Successful investing is not magic, just keep things simple and maybe follow few investing and money rules of thumb and you’ll be fine in the long run.
What were your investment mistakes during this bear market? What have you learned from them? You know anyone who made these mistakes?
http://frugaldad.com/2009/10/20/investment-mistakes-bear-market/
The Professionals' Trade Secrets or What Methods do They Use?
In order to make a profit in the stock market, an investor must have some ideas regarding how the prices of stocks behave. If he knows the behaviour patterns of stock prices, he may be able to forecast correctly what the price of a stock will be in the future.
If his forecasted price is higher than the present market price of a particular stock, he ought to buy and reap the profit when the price rises to his forecasted level. The reverse also applies in that if he thinks the price of a stock he is holding will decline in the future, he ought to sell it now and buy it back later on when the price will be lower.
Stock market investment has become a very sophisticated, very scientific pursuit in the West and several schools of thought, that is, ways of thinking regarding how the stock prices behave, have been developed. Each school is different from the other and may even be totally opposite; each attracting different supporters.
There are what may be termed THREE 'legitimate ' schools of thought and AN 'unofficial' one.
The unofficial school of thought is generally called
while the three legitimate schools are as follows:
Which of these four schools of thought is/are applicable to the local Malaysian market? I am of the bias opinion that the fundamentalist school of thought is the one most applicable here. It is most likely that many do not agree.
No expert agrees exactly with another regarding stock values.
"There is no such thing as a final answer to stock values. A dozen experts will arrive at twelve different conclusions" - Gerald Loeb
Ref: Stock Market Investment in Malaysia and Singapore by Neoh Soon Kean
If his forecasted price is higher than the present market price of a particular stock, he ought to buy and reap the profit when the price rises to his forecasted level. The reverse also applies in that if he thinks the price of a stock he is holding will decline in the future, he ought to sell it now and buy it back later on when the price will be lower.
Stock market investment has become a very sophisticated, very scientific pursuit in the West and several schools of thought, that is, ways of thinking regarding how the stock prices behave, have been developed. Each school is different from the other and may even be totally opposite; each attracting different supporters.
There are what may be termed THREE 'legitimate ' schools of thought and AN 'unofficial' one.
The unofficial school of thought is generally called
- 'The Greater Fool Theory' or'Buy from a Sucker and Sell to a Sucker'
while the three legitimate schools are as follows:
- (1) Random Walk / Efficient Market Theory (Hypothesis)
- (2) Technical/Chartist School; and
- (3) Fundamentalist School.
Which of these four schools of thought is/are applicable to the local Malaysian market? I am of the bias opinion that the fundamentalist school of thought is the one most applicable here. It is most likely that many do not agree.
No expert agrees exactly with another regarding stock values.
"There is no such thing as a final answer to stock values. A dozen experts will arrive at twelve different conclusions" - Gerald Loeb
Ref: Stock Market Investment in Malaysia and Singapore by Neoh Soon Kean
Comparing Investing And Gambling
Going All-In: Comparing Investing And Gambling
by Stephan Abraham (Contact Author | Biography)
How many times during a discussion with friends about investing have you heard someone utter: "Investing in the stock market is just like gambling at a casino"? Is this adage really true? Let's examine these two activities more closely and see if we can point out some of the key differences and also some surprising similarities.
Investing and gambling both involve risk and choice. Interestingly, both the gambler and the investor must decide how much they want to risk. Some traders typically risk 2-5% of their capital base on any particular trade. Longer-term investors constantly hear the virtues of diversification across different asset classes. This, in essence, is a risk management strategy, and spreading your dollars across different investments will likely help minimize potential losses.
Gamblers must also carefully weigh the amount of capital they want to put "in play." Pot odds are a way of assessing your risk capital versus your risk reward: the amount of money to call a bet compared to what is already in the pot. If the odds are favorable, the player is more likely to "call" the bet. Most professional gamblers are quite proficient at risk management. In both gambling and investing, a key principle is to minimize risk while maximizing profits. (To learn more, see Measuring And Managing Investment Risk.)
Throwing It in the Pot
Sports betting is probably one of the most common "gambling" activities in which the average person engages. From the weekly football office pool to the Final Four, sport betting is an American tradition. Only by thinking about your betting habits will you realize that you have no way to limit your losses. If you pony up $10 a week for the NFL office pool and you don't win, you lose all of your capital. When betting on sports (or really any other pure gambling activity), there are no loss-mitigation strategies.
This is a key difference between investing and gambling. Stock investors and traders have a variety of options to prevent total loss of risked capital. Setting stop losses on your stock investment is a simple way to avoid undue risk. If your stock drops 10% below its purchase price, you have the opportunity to sell that stock to someone else and still retain 90% of your risk capital. However, if you bet $100 that the Jacksonville Jaguars will win the Super Bowl this year, you cannot get part of your money back if they just make it to the Super Bowl. Betting on sports is truly a speculative activity which prevents individuals from minimizing losses.
Another key difference between the two activities has to do with the concept of time. Gambling is a time-bound event while an investment in a company can last several years. With gambling, once the game or hand is over, your opportunity to profit from your wager has come and gone. You either have won or lost your capital. Stock investing, on the other hand, can be time-rewarding. Investors who purchase shares in companies that pay dividends are actually rewarded for their risked dollars. Companies pay you money regardless of what happens to your risk capital, as long as you hold on to their stock. Savvy investors realize that returns from dividends are a key component to making money in stocks over the long term. (For more, see Dividend Facts You May Not Know.)
Playing the Odds
Both stock investors and gamblers look for an edge in order to help enhance their performance. Good gamblers and great stock investors study behavior in some form or another. Gamblers playing poker typically look for cues from the other players at the table, and great poker players can remember what their opponents wagered 20 hands back. They also study the mannerisms and betting patterns of their opponents with the hope of gaining useful information. This information may be just enough to help predict future behavior. Similarly, some stock traders study trading patterns by interpreting stock charts. Stock market technicians try to leverage the charts to glean where the stock is going in the future. This area of study dedicated to analyzing charts is commonly referred to as technical analysis. (To learn more, see our Technical Analysis Tutorial.)
Another difference between investing and gambling is the availability of information. Information is a valuable commodity in the world of poker as well as stock investing. Stock and company information is readily available for public use. Company earnings, financial ratios and management teams can be studied before committing capital. Stock traders who make hundreds of transactions a day can use the day's activities to help with future decisions. Nonetheless, stock information is far from perfect, otherwise, there would not be insider trading or the Securities and Exchange Commission (SEC).
If you sit down at a Blackjack table in Las Vegas, you have no information about what happened an hour, a day or a week ago at that particular table. You may hear that the table is either hot or cold, but that information is not quantifiable.
Conclusion
The next time you hear someone say that stock investing is the same as playing in a casino, remind them that in fact there are some similarities and some major differences.
(To learn more, check out our Investopedia Special Feature: Investing 101.)
by Stephan Abraham, (Contact Author | Biography)
Stephan Abraham graduated from University of Florida with a degree in economics. He has traded part time for about eight years with an emphasis on technicals. In his spare time, Abraham enjoys golfing, outdoor sports, photography and reading.
http://www.investopedia.com/articles/basics/09/compare-investing-gambling.asp?partner=ntu10
Sports betting is probably one of the most common "gambling" activities in which the average person engages. From the weekly football office pool to the Final Four, sport betting is an American tradition. Only by thinking about your betting habits will you realize that you have no way to limit your losses. If you pony up $10 a week for the NFL office pool and you don't win, you lose all of your capital. When betting on sports (or really any other pure gambling activity), there are no loss-mitigation strategies.
Both stock investors and gamblers look for an edge in order to help enhance their performance. Good gamblers and great stock investors study behavior in some form or another. Gamblers playing poker typically look for cues from the other players at the table, and great poker players can remember what their opponents wagered 20 hands back. They also study the mannerisms and betting patterns of their opponents with the hope of gaining useful information. This information may be just enough to help predict future behavior. Similarly, some stock traders study trading patterns by interpreting stock charts. Stock market technicians try to leverage the charts to glean where the stock is going in the future. This area of study dedicated to analyzing charts is commonly referred to as technical analysis. (To learn more, see our Technical Analysis Tutorial.)
The next time you hear someone say that stock investing is the same as playing in a casino, remind them that in fact there are some similarities and some major differences.
- Both activities involve risk of capital with hopes of future profit.
- Gambling is typically a short-lived activity, while stock investing can last a lifetime.
- Some companies actually pay you money in the form of dividends to go along with an ownership stake.
- In general, most average investors will do better investing in stocks over a lifetime than trying to win the World Series of Poker.
(To learn more, check out our Investopedia Special Feature: Investing 101.)
by Stephan Abraham, (Contact Author | Biography)
10 Jobs With High Pay, Low Education Requirements
10 Jobs With High Pay, Low Education Requirements
Posted: October 21, 2009 9:27AM by Michael Kling
Email Article Buzz up!Filed Under: Careers, Economy, Personal Finance
You don't have to go to college earn a decent living. Some professions pay good salaries without requiring post-secondary schooling.
A college degree can be a great path towards a well-paying, satisfying profession, but a bachelor's degree isn't for everyone. In fact, some see advanced education as overrated. A surge in the number of college graduates have dampened the value of a college education. College comes intact with high tuition, room and board, and supplies fees - and that's not even factoring in debt payments that usually last for years, if not decades. (Are old debts coming back to haunt you? We'll show you how to keep these zombies from eating you alive, in Dawn Of The Zombie Debt.)
Trusting the 'Net
Beware of online lists of top-paying professions with little schooling. Some lists cite obscure professions or ones requiring long-term on-the-job training. Just because a profession doesn't officially require a degree is no indicator that and education wouldn't be advantageous, especially for inexperienced applicants in today's competitive job market.
Your New Career
Here's a list of top-paying jobs requiring little schooling, and their median annual earnings as of 2006, using the latest data available from the Bureau of Labor Statistics. Keep in mind that these jobs have their own challenges and often require some type of specialized schooling - sometimes on-the-job training.
1.Air Traffic Controllers: $117,200
◦These workers make sure airplanes land and take off safely, and they typically top lists of this nature. The median 50% earned between $86,860-142,210, with good benefits. Air traffic controllers are eligible to retire at age 50 with 20 years of service, or after 25 years at any age.
Watching blinking dots on a radar screen that control the lives of hundreds can be stressful, and the job require specialized FAA schooling and on-the-job training. Typically, two to four years of training are needed in order to become fully certified, although previous military experience can cut that time down significantly.
2.Industrial Production Managers: $77,670
◦They oversee manufacturing activities. A college degree is preferred, but not necessarily mandatory. They often work in industries such as aviation and automobiles.
3.First-Line Police and Detective Supervisors: $69,300
◦Police officers can advance through the ranks to become supervisors by passing exams and achieving good performance reviews, and advanced training can help win promotions.
4.Funeral Director: $49,620
◦College programs in mortuary science usually last from two to four years. You typically must also serve a one-year apprenticeship, pass an exam and obtain a state license. Hours can be long and irregular. Dealing with dead bodies and crying relatives isn't for everyone.
5.Police and Sheriff Patrol Officers: $47,460
◦Police corporals had an average minimum annual base salary of $44,160, according to the International City-County Management Association. But total income can significantly exceed base salary because of overtime pay. And police officers can often retire at half-pay after 25-30 years of service.
Applicants usually must have at least a high school education, and some departments require a year or two of college or even a degree. Rookies are trained at police academies.
6.Advertising Sales Agents: $42,750
◦20% have a high school degree or less, and 10% have an Associate's degree.
7.Real Estate Brokers and Sales Agents: $39,760
◦Don't let that figure fool you; the highest 10% earned more than $111,500. While advanced coursework is not necessarily required, new entrants must pass an exam and get a state license. Connections in the community and a willingness to work hard are what really count, but experience and a good housing market also help.
8.Occupational Therapist Assistants: $42,060
◦These workers usually need an associate degree or a certificate. They work with occupational therapists, helping injured patients recover from, or compensate for, lost motor skills. Job prospects are good in the growing health care field, especially for those with some post-secondary education.
9.Occupational Therapist Aides: $25,000
◦These employees receive most training on the job. Under supervision of occupational therapists, they also work with injured people. Competition for jobs is tougher for those with only a high school diploma.
10.Physical Therapist Assistants: $41,360
◦These workers deal with physical therapists, helping patents improve mobility, relieve pain or overcome injuries or disabilities. Those working in home health care services tend to make more on average. Aides, earning an average of $22,000, are trained on the job. Assistants, who have greater responsibilities, typically need an associate's degree.
The Bottom Line
Despite a recession, plenty of career paths can lead to well-paying professions without spending four years or more hitting the books, including opportunities in law enforcement, health care and sales. The goal is to find a job that matches your own particular talents and preferences in addition to supporting your lifestyle. (Make your dream a reality. Find out what you can do to reach this financial goal, in How To Make A Million In Your Small Business.)
http://financialedge.investopedia.com/financial-edge/1009/10-Jobs-With-High-Pay-Low-Education-Requirements.aspx?partner=ntu10
Posted: October 21, 2009 9:27AM by Michael Kling
Email Article Buzz up!Filed Under: Careers, Economy, Personal Finance
You don't have to go to college earn a decent living. Some professions pay good salaries without requiring post-secondary schooling.
A college degree can be a great path towards a well-paying, satisfying profession, but a bachelor's degree isn't for everyone. In fact, some see advanced education as overrated. A surge in the number of college graduates have dampened the value of a college education. College comes intact with high tuition, room and board, and supplies fees - and that's not even factoring in debt payments that usually last for years, if not decades. (Are old debts coming back to haunt you? We'll show you how to keep these zombies from eating you alive, in Dawn Of The Zombie Debt.)
Trusting the 'Net
Beware of online lists of top-paying professions with little schooling. Some lists cite obscure professions or ones requiring long-term on-the-job training. Just because a profession doesn't officially require a degree is no indicator that and education wouldn't be advantageous, especially for inexperienced applicants in today's competitive job market.
Your New Career
Here's a list of top-paying jobs requiring little schooling, and their median annual earnings as of 2006, using the latest data available from the Bureau of Labor Statistics. Keep in mind that these jobs have their own challenges and often require some type of specialized schooling - sometimes on-the-job training.
1.Air Traffic Controllers: $117,200
◦These workers make sure airplanes land and take off safely, and they typically top lists of this nature. The median 50% earned between $86,860-142,210, with good benefits. Air traffic controllers are eligible to retire at age 50 with 20 years of service, or after 25 years at any age.
Watching blinking dots on a radar screen that control the lives of hundreds can be stressful, and the job require specialized FAA schooling and on-the-job training. Typically, two to four years of training are needed in order to become fully certified, although previous military experience can cut that time down significantly.
2.Industrial Production Managers: $77,670
◦They oversee manufacturing activities. A college degree is preferred, but not necessarily mandatory. They often work in industries such as aviation and automobiles.
3.First-Line Police and Detective Supervisors: $69,300
◦Police officers can advance through the ranks to become supervisors by passing exams and achieving good performance reviews, and advanced training can help win promotions.
4.Funeral Director: $49,620
◦College programs in mortuary science usually last from two to four years. You typically must also serve a one-year apprenticeship, pass an exam and obtain a state license. Hours can be long and irregular. Dealing with dead bodies and crying relatives isn't for everyone.
5.Police and Sheriff Patrol Officers: $47,460
◦Police corporals had an average minimum annual base salary of $44,160, according to the International City-County Management Association. But total income can significantly exceed base salary because of overtime pay. And police officers can often retire at half-pay after 25-30 years of service.
Applicants usually must have at least a high school education, and some departments require a year or two of college or even a degree. Rookies are trained at police academies.
6.Advertising Sales Agents: $42,750
◦20% have a high school degree or less, and 10% have an Associate's degree.
7.Real Estate Brokers and Sales Agents: $39,760
◦Don't let that figure fool you; the highest 10% earned more than $111,500. While advanced coursework is not necessarily required, new entrants must pass an exam and get a state license. Connections in the community and a willingness to work hard are what really count, but experience and a good housing market also help.
8.Occupational Therapist Assistants: $42,060
◦These workers usually need an associate degree or a certificate. They work with occupational therapists, helping injured patients recover from, or compensate for, lost motor skills. Job prospects are good in the growing health care field, especially for those with some post-secondary education.
9.Occupational Therapist Aides: $25,000
◦These employees receive most training on the job. Under supervision of occupational therapists, they also work with injured people. Competition for jobs is tougher for those with only a high school diploma.
10.Physical Therapist Assistants: $41,360
◦These workers deal with physical therapists, helping patents improve mobility, relieve pain or overcome injuries or disabilities. Those working in home health care services tend to make more on average. Aides, earning an average of $22,000, are trained on the job. Assistants, who have greater responsibilities, typically need an associate's degree.
The Bottom Line
Despite a recession, plenty of career paths can lead to well-paying professions without spending four years or more hitting the books, including opportunities in law enforcement, health care and sales. The goal is to find a job that matches your own particular talents and preferences in addition to supporting your lifestyle. (Make your dream a reality. Find out what you can do to reach this financial goal, in How To Make A Million In Your Small Business.)
http://financialedge.investopedia.com/financial-edge/1009/10-Jobs-With-High-Pay-Low-Education-Requirements.aspx?partner=ntu10
Returns on share investment in Malaysia
Over the long run, the return on an investment of shares is very much higher than the return on fixed deposits.
Historically, in Malaysia/Singapore, the return on share investment had been about twice as high than that obtainable on fixed deposit (based on past ten years' record).
However, since one can never get something for nothing, the much higher return has been accompanied by much greater riskiness of an investment in shares because much of the return from share investment has been in the form of capital gain which is highly unpredictable.
Historically, about three quarters of the total return obtainable from share investment has been obtained by a combination of good years when the return may be higher than 100 percent as well as bad years when the loss may exceed 50 percent.
The changes in the price of share have been so large that they totally swamp the small regular income one can get from shares (in the region of 2-4% on the value of the initial investment).
Historically, in Malaysia/Singapore, the return on share investment had been about twice as high than that obtainable on fixed deposit (based on past ten years' record).
However, since one can never get something for nothing, the much higher return has been accompanied by much greater riskiness of an investment in shares because much of the return from share investment has been in the form of capital gain which is highly unpredictable.
Historically, about three quarters of the total return obtainable from share investment has been obtained by a combination of good years when the return may be higher than 100 percent as well as bad years when the loss may exceed 50 percent.
The changes in the price of share have been so large that they totally swamp the small regular income one can get from shares (in the region of 2-4% on the value of the initial investment).
Regular Income versus Capital Gain
An investment usually produces a combination of regular income and a capital gain.
Different types of investment produce different combinations of these two types of return to the investor.
Some investments produce only a regular income without any capital gains; for example, fixed deposits. While at the other extreme, some investments produce no regular income but promise the possibility of high capital gain; for example, investment in gold or diamonds.
An investment which relies on capital gains alone is a much more risky investment than one which provideds a regular income.
An investment which relies on capital gains alone to reward its investors is less attractive than one which provides the investors with regular income because the former is much less certain than the latter. Furthermore, it is only received right at the end of the period of investment.
An investment which relies on capital gains to reward its investor usually (but not always) produces much higher return than one which relies on regular income.
The above principles are similarly applicable to share investment and putting money in long term fixed deposits. Over the long run, the return on an investment of shares is very much higher than the return on fixed deposits. Historically, in Malaysia/Singapore, the return on share investment had been about twice as high than that obtainable on fixed deposit (based on past ten years' record}.
Different types of investment produce different combinations of these two types of return to the investor.
Some investments produce only a regular income without any capital gains; for example, fixed deposits. While at the other extreme, some investments produce no regular income but promise the possibility of high capital gain; for example, investment in gold or diamonds.
An investment which relies on capital gains alone is a much more risky investment than one which provideds a regular income.
An investment which relies on capital gains alone to reward its investors is less attractive than one which provides the investors with regular income because the former is much less certain than the latter. Furthermore, it is only received right at the end of the period of investment.
An investment which relies on capital gains to reward its investor usually (but not always) produces much higher return than one which relies on regular income.
The above principles are similarly applicable to share investment and putting money in long term fixed deposits. Over the long run, the return on an investment of shares is very much higher than the return on fixed deposits. Historically, in Malaysia/Singapore, the return on share investment had been about twice as high than that obtainable on fixed deposit (based on past ten years' record}.
I always knew I was going to be rich. I don't think I doubted it for a minute.
In Buffett's own words:
"I always knew I was going to be rich. I don't think I doubted it for a minute. There was Western Insurance earning $16 a shae, and selling at $16. There was National Insurance selling at one time's earnings. How could it miss?"
Buffett worked from published information available to everyone by subscribing to all the financial and business journals and by writing to companies for their annual reports. He kept away from Wall Street on purpose so as not to be influenced by the crowd's market talks. He did his research work diligently and thought deeply about his investment. His purchases were never made in haste and were all based on the sound principle of high intrinsic value. Throughout the 1960s, when Wall Street was going mad over conglomerates and high technology stocks, Buffett stuck to smaller companies untouched by headlines and excitement. Of course, before the use of computers became widespread in the 1960's, it was relatively easy to pick undervalued stocks.
-----
This chap emulated Warren Buffett. He has done well.
http://www.dnaindia.com/money/interview_we-will-never-see-another-warren-buffett_1301088
'We will never see another Warren Buffett'
How did you get into investing business from information technology?
Around 1994 I heard about Warren Buffett for the first time accidentally. The first couple of biographies about him had just been published a year or two before that. I read those books and I was quite blown away by some data points that were coming out about him and the industry and so on. I didn't have any experience or even education in the investment business. But I was very intrigued by it.
I started to invest in the public equity markets using Buffett's model in 1994 and basically did extremely well, north of 70% a year, till about 1999. I was getting more and more interested in investment research and securities analysis and made a decision to leave my company. I brought in an outside CEO and decided that I would spend more time on investing and at the same time some friends of mine wanted me to manage their money for them. It started as a hobby in 1999 with about a million dollars from eight people. About a year later the business (TransTech) actually got sold, I wasn't running it anyway, but I was completely cashed out. And then I thought that let's make my hobby a real business, try to scale it up and get investors. We now manage about $500 million -- ten years later.
"I always knew I was going to be rich. I don't think I doubted it for a minute. There was Western Insurance earning $16 a shae, and selling at $16. There was National Insurance selling at one time's earnings. How could it miss?"
Buffett worked from published information available to everyone by subscribing to all the financial and business journals and by writing to companies for their annual reports. He kept away from Wall Street on purpose so as not to be influenced by the crowd's market talks. He did his research work diligently and thought deeply about his investment. His purchases were never made in haste and were all based on the sound principle of high intrinsic value. Throughout the 1960s, when Wall Street was going mad over conglomerates and high technology stocks, Buffett stuck to smaller companies untouched by headlines and excitement. Of course, before the use of computers became widespread in the 1960's, it was relatively easy to pick undervalued stocks.
-----
This chap emulated Warren Buffett. He has done well.
http://www.dnaindia.com/money/interview_we-will-never-see-another-warren-buffett_1301088
'We will never see another Warren Buffett'
How did you get into investing business from information technology?
Around 1994 I heard about Warren Buffett for the first time accidentally. The first couple of biographies about him had just been published a year or two before that. I read those books and I was quite blown away by some data points that were coming out about him and the industry and so on. I didn't have any experience or even education in the investment business. But I was very intrigued by it.
I started to invest in the public equity markets using Buffett's model in 1994 and basically did extremely well, north of 70% a year, till about 1999. I was getting more and more interested in investment research and securities analysis and made a decision to leave my company. I brought in an outside CEO and decided that I would spend more time on investing and at the same time some friends of mine wanted me to manage their money for them. It started as a hobby in 1999 with about a million dollars from eight people. About a year later the business (TransTech) actually got sold, I wasn't running it anyway, but I was completely cashed out. And then I thought that let's make my hobby a real business, try to scale it up and get investors. We now manage about $500 million -- ten years later.
Wednesday 21 October 2009
3A: More details needed on potential JV
3A: More details needed on potential JV
Tags: InsiderAsia | Three-A Resources
Written by InsiderAsia
Tuesday, 20 October 2009 16:12
FOOD ingredient products manufacturer, Three-A Resources (3A, RM1.58) has hogged more than its fair share of the limelight over the past few weeks. Its share price has risen by more than five-fold in the year to date, most of its gains coming in the past month, on the back of high trading volumes.
The primarily catalyst was news that Singapore-listed Wilmar International Ltd will invest in the company via a private placement of 61.6 million shares. The shares were priced at 75 sen per share, which will raise RM46.2 million cash proceeds for 3A. Upon completion, Wilmar will hold a 16.67% equity stake in the company.
More importantly, the placement exercise is widely seen as the precursor to a closer business partnership in the future. 3A has suggested the possibility of the two companies setting up manufacturing facilities for food ingredient products in neighbouring countries, such as China.
Private placement a precursor to future JV?
Wilmar is one of the world's largest refiners and traders for crude palm oil. It is also a leading distributor of staple food, such as cooking oil, flour, rice and bottled mineral water, in China. Its extensive network, both upstream and downstream, is expected to work just as well for food ingredient products.
3A is already the leading ingredient products manufacturer in Malaysia. Its main products include caramel colour, glucose and maltose syrup as well as owning our country's only maltodextrin plant. Business has been growing at a rapid pace. The company's sales expanded at a compounded rate of 30% per annum between 2003-2008. Plans for the next few years will further underpin growth, forecast to be in the double-digit range annually.
Success in the overseas markets is another acknowledgement of the company's product quality. Its ingredient products are sold to countries such as Korea, Taiwan, Singapore, Australia and the Philippines. Exports currently account for about one-third of the company's sales.
In short, 3A has established a good reputation and track record after being in the business for more than three decades.
Partnership with Wilmar will help 3A penetrate the world's most populous market more effectively and significantly expand its business operations beyond the local shore.
Devil is in the details
Nonetheless, discussions on any overseas joint ventures are believed to be in very preliminary stages. It is certainly too early to quantify future earnings stream. While Wilmar will undoubtedly give 3A a leg up in the Chinese market, we expect it will take time to convince manufacturers of end consumer products — such as soya sauce, confectionery and dairy products manufacturers — to switch from their existing supply source. Customers will require assurances on consistency of quality, production and delivery. For instance, new plants often encounter teething problems.
In other words, the process is not as simple as getting products on the shelves. In this sense, the steep rise in 3A's share price may have been a little premature.
Good longer-term growth prospects
To be sure, 3A's earnings are set to expand going forward. Its new 7,000-tonne per month glucose plant, completed in the fourth quarter of 2008 (4Q08), is registering rising utilisation. The 1,200-tonne per month maltodextrin plant is almost running at full capacity, thanks to the availability of glucose feedstock.
It is planning for a second maltodextrin plant with up to 2,000 tonnes per month capacity. If all goes to plan, the new plant will be operational by 4Q2010. Additional feedstock requirement for the new maltodextrin plant was already taken into account when 3A was building its glucose plant last year. The glucose plant can easily be upgraded to produce up to 12,000 tonnes per month with the incurrence of just a small additional capex.
3A's net profit is forecast to grow by 34% to RM16.2 million this year and a further 25% to RM20.2 million in 2010. That translates into earnings per share of 4.4 sen and 5.5 sen for 2009-2010 (after adjusting for the additional shares issued).
But valuations-rich pending further information
However, following the strong price rally, the stock is now trading at a relatively rich price-to-earnings (P/E) of 36 times and 28.9 times our estimated earnings for the two years.
Our forecast has not taken into account earnings from any future partnership ventures with Wilmar, which may or may not materialise. Hence, pending more concrete details, we are inclined to downgrade our recommendation from buy to hold, at least for now.
Note: This report is brought to you by Asia Analytica Sdn Bhd, a licensed investment adviser. Please exercise your own judgment or seek professional advice for your specific investment needs. We are not responsible for your investment decisions. Our shareholders, directors and employees may have positions in any of the stocks mentioned.
http://www.theedgemalaysia.com/business-news/151748-3a-more-details-needed-on-potential-jv.html
Tags: InsiderAsia | Three-A Resources
Written by InsiderAsia
Tuesday, 20 October 2009 16:12
FOOD ingredient products manufacturer, Three-A Resources (3A, RM1.58) has hogged more than its fair share of the limelight over the past few weeks. Its share price has risen by more than five-fold in the year to date, most of its gains coming in the past month, on the back of high trading volumes.
The primarily catalyst was news that Singapore-listed Wilmar International Ltd will invest in the company via a private placement of 61.6 million shares. The shares were priced at 75 sen per share, which will raise RM46.2 million cash proceeds for 3A. Upon completion, Wilmar will hold a 16.67% equity stake in the company.
More importantly, the placement exercise is widely seen as the precursor to a closer business partnership in the future. 3A has suggested the possibility of the two companies setting up manufacturing facilities for food ingredient products in neighbouring countries, such as China.
Wilmar is one of the world's largest refiners and traders for crude palm oil. It is also a leading distributor of staple food, such as cooking oil, flour, rice and bottled mineral water, in China. Its extensive network, both upstream and downstream, is expected to work just as well for food ingredient products.
3A is already the leading ingredient products manufacturer in Malaysia. Its main products include caramel colour, glucose and maltose syrup as well as owning our country's only maltodextrin plant. Business has been growing at a rapid pace. The company's sales expanded at a compounded rate of 30% per annum between 2003-2008. Plans for the next few years will further underpin growth, forecast to be in the double-digit range annually.
Success in the overseas markets is another acknowledgement of the company's product quality. Its ingredient products are sold to countries such as Korea, Taiwan, Singapore, Australia and the Philippines. Exports currently account for about one-third of the company's sales.
In short, 3A has established a good reputation and track record after being in the business for more than three decades.
Partnership with Wilmar will help 3A penetrate the world's most populous market more effectively and significantly expand its business operations beyond the local shore.
Devil is in the details
Nonetheless, discussions on any overseas joint ventures are believed to be in very preliminary stages. It is certainly too early to quantify future earnings stream. While Wilmar will undoubtedly give 3A a leg up in the Chinese market, we expect it will take time to convince manufacturers of end consumer products — such as soya sauce, confectionery and dairy products manufacturers — to switch from their existing supply source. Customers will require assurances on consistency of quality, production and delivery. For instance, new plants often encounter teething problems.
In other words, the process is not as simple as getting products on the shelves. In this sense, the steep rise in 3A's share price may have been a little premature.
Good longer-term growth prospects
It is planning for a second maltodextrin plant with up to 2,000 tonnes per month capacity. If all goes to plan, the new plant will be operational by 4Q2010. Additional feedstock requirement for the new maltodextrin plant was already taken into account when 3A was building its glucose plant last year. The glucose plant can easily be upgraded to produce up to 12,000 tonnes per month with the incurrence of just a small additional capex.
3A's net profit is forecast to grow by 34% to RM16.2 million this year and a further 25% to RM20.2 million in 2010. That translates into earnings per share of 4.4 sen and 5.5 sen for 2009-2010 (after adjusting for the additional shares issued).
But valuations-rich pending further information
However, following the strong price rally, the stock is now trading at a relatively rich price-to-earnings (P/E) of 36 times and 28.9 times our estimated earnings for the two years.
Our forecast has not taken into account earnings from any future partnership ventures with Wilmar, which may or may not materialise. Hence, pending more concrete details, we are inclined to downgrade our recommendation from buy to hold, at least for now.
Note: This report is brought to you by Asia Analytica Sdn Bhd, a licensed investment adviser. Please exercise your own judgment or seek professional advice for your specific investment needs. We are not responsible for your investment decisions. Our shareholders, directors and employees may have positions in any of the stocks mentioned.
http://www.theedgemalaysia.com/business-news/151748-3a-more-details-needed-on-potential-jv.html
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