How to manage a stock portfolio
Thu Jul 30, 2009 1:15pm
Retails investors often trade in stocks without understanding the deeper implications of their buy or sell decisions. When you invest in stocks, you implicitly are building a stock portfolio.
Here is a set of actionable steps that you must keep in mind to help you with building your stock portfolio.
1. Diversify: Just buying stocks in 1 or 2 companies is not enough. You could be taking on too much risk through a concentrated portfolio, akin to putting all your eggs in one basket. Ideally, your portfolio should have no more than 20-25 names to give you the benefits of diversification.
However, this also does not mean that you can have just say 5 shares of one company and 2 shares of another, because that is all you can afford because you can’t create wealth through just purchasing a handful of shares in a company.
Good stockpicking is about knowing how to allocate your capital efficiently across your best ideas in a diverse portfolio.
2. Review Your Exposure Frequently: While one investment strategy is to buy and hold, that does not imply that you do not manage your exposure by ignoring your portfolio. Market prices move, sometimes dramatically.
As a result, you might have too much or too little exposure to one sector or stock. Avoid this by being disciplined about setting aside some time to review your exposure. This will help you understand if you need to trim or add to the exposure to a certain sector or stock in your portfolio and take care of risk management.
3. Create your own set of rules to guide you: Formulate your own rules for when to buy or sell a stock based on an investment philosophy that you can be disciplined about. Don’t just follow the herd or come under peer pressure.
What is good for others might not be suitable for you or your portfolio because your risk, investment criteria, tax situation and entry price might be different. If a stock has met your price target, have some rules that guide you whether you will take money off the table or stay invested.
If a stock is a constant underperformer, will you continue holding on to it because psychologically you are unwilling to admit that you made a poor decision, or will you be unemotional and make the rational decision to cut your losses and sell?
4. Keep some cash available: This is one area where the professional investors stand out. They recognize that good investment opportunities come unannounced, but in order to take advantage of them they need to have cash available to make these investments.
So make sure that you keep some cash available in your portfolio to pounce on these ideas. If you are fully invested, you might miss good opportunities due to lack of liquidity.
If the above sounds challenging and tough for you to follow, then a do-it-yourself portfolio management is not recommended. As an alternative you might be better off investing in the markets through mutual funds, where you can take advantage of the resources and risk management skills of the pros, rather than compete against them.
http://in.reuters.com/article/personalFinance/idINIndia-41405020090730?pageNumber=2&virtualBrandChannel=0&sp=true
Friday, 18 December 2009
Pinewood Shepperton gets Malaysia film studio deal
Pinewood Shepperton gets Malaysia film studio deal
Wed Dec 16, 2009 1:13pm IST
* To get consultancy and brand licence fees
* 2010 fees to be offset by infrastructure set-up
* 2009 trading remains in line with mkt view
Dec 16 (Reuters) - Film studios Pinewood Shepperton Plc (PWS.L: Quote, Profile, Research) said it had entered into an agreement for the development of a new studio facility in southern Malaysia and that its trading for 2009 remained in line with market expectations.
The British firm said it would get consultancy and brand licence fees for sales and marketing services as part of its agreement with Khazanah Nasional Berhad, the investment holding arm of the Government of Malaysia.
The company, whose facilities in south east England were used for the production of Oscar winner Slumdog Millionaire and the Harry Potter films, said the fees due in 2010 would be largely offset by setting up the sales and marketing infrastructure.
Pinewood Shepperton had recently concluded a long-term sales and marketing agreement with Pinewood Toronto Studios. "Following our deal for Pinewood Toronto and now Pinewood Malaysia, we are exploring further opportunities in this new and growing market," the company said in a statement. The company's shares closed at 131.50 pence on Tuesday on the London Stock Exchange. (Reporting by Purwa Naveen Raman in Bangalore; Editing by Deepak Kannan)
Wed Dec 16, 2009 1:13pm IST
* To get consultancy and brand licence fees
* 2010 fees to be offset by infrastructure set-up
* 2009 trading remains in line with mkt view
Dec 16 (Reuters) - Film studios Pinewood Shepperton Plc (PWS.L: Quote, Profile, Research) said it had entered into an agreement for the development of a new studio facility in southern Malaysia and that its trading for 2009 remained in line with market expectations.
The British firm said it would get consultancy and brand licence fees for sales and marketing services as part of its agreement with Khazanah Nasional Berhad, the investment holding arm of the Government of Malaysia.
The company, whose facilities in south east England were used for the production of Oscar winner Slumdog Millionaire and the Harry Potter films, said the fees due in 2010 would be largely offset by setting up the sales and marketing infrastructure.
Pinewood Shepperton had recently concluded a long-term sales and marketing agreement with Pinewood Toronto Studios. "Following our deal for Pinewood Toronto and now Pinewood Malaysia, we are exploring further opportunities in this new and growing market," the company said in a statement. The company's shares closed at 131.50 pence on Tuesday on the London Stock Exchange. (Reporting by Purwa Naveen Raman in Bangalore; Editing by Deepak Kannan)
Thursday, 17 December 2009
Glove sector on heat today!
Top Gainers
HAIO
1750 7.490 0.300 4.17%
ADVENTA
64836 2.910 0.230 8.58%
HLFG
5638 7.790 0.220 2.91%
LATEXX-WA
3440 2.330 0.160 7.37%
KOSSAN
4593 5.160 0.160 3.20%
TOPGLOV
13096 9.650 0.150 1.58%
EONCAP
10089 6.540 0.140 2.19%
LATEXX
24384 2.850 0.120 4.40%
AIRPORT
1194 3.920 0.120 3.16%
AFG
31268 2.750 0.120 4.56%
HAIO
1750 7.490 0.300 4.17%
ADVENTA
64836 2.910 0.230 8.58%
HLFG
5638 7.790 0.220 2.91%
LATEXX-WA
3440 2.330 0.160 7.37%
KOSSAN
4593 5.160 0.160 3.20%
TOPGLOV
13096 9.650 0.150 1.58%
EONCAP
10089 6.540 0.140 2.19%
LATEXX
24384 2.850 0.120 4.40%
AIRPORT
1194 3.920 0.120 3.16%
AFG
31268 2.750 0.120 4.56%
Bracing for sea-change in taxation
Bracing for sea-change in taxation
Tags: Chew Theam Hock | CIMB | Deloitte Malaysia | Dewan Rakyat | goods and services tax | GST | GST Bill 2009 | Income Tax Act 1967 | Khoo Chin Guan | KPMG Tax Services Sdn Bhd | Lee Heng Guie | OSK Research | Tan Eng Yew | Tan Theng Hooi
Written by Ellina Badri & Isabelle Francis
Wednesday, 16 December 2009 22:46
KUALA LUMPUR: Professional consultancies have cautioned about "grey areas" in the implementation of the government's proposed 4% goods and services tax (GST), while other corresponding measures, such as lowering of income tax, may need to be taken.
They also said companies must prepare for the new tax regime early to estimate its potential impact on their businesses and how they could manage it.
Deloitte Malaysia country managing partner Tan Theng Hooi said GST would help the government address the drop in tax revenue in line with lower revenue from petroleum as well as broadening the tax base.
"However, there must be sufficient time given for businesses and the general public to get ready for the system rollout," Tan told The Edge Financial Daily today.
"The level of acceptance by businesses and the public on the implementation of the GST will be higher if there is a corresponding decrease in the income tax rates."
The government tabled the GST Bill 2009 for the first reading in the Dewan Rakyat today, projecting implementation in mid-2011. Though not specified in the bill, the government has said the rate would be fixed at 4%.
Based on the bill, the tax would be charged and levied on any supply of goods or services made in Malaysia, including anything treated as a supply under the act, and any importation of goods into Malaysia.
Businesses that are taxable include any trade, commerce, profession, vocation, or any other similar activity, whether or not it is for a pecuniary profit.
Businesses to be taxed under the GST were liable to register at the end of any month, and those who failed to register would be liable to a fine not exceeding RM50,000 or to an imprisonment for a term not exceeding three years, or both.
Tan said while there would be price increases in some items, there could also be lower prices for others, where savings from taxes on intermediate inputs would be passed by producers to the consumers.
He said under the GST, the tax would be collected at value-added points from production to the final point of sales, as opposed to the current system where the sales tax was only collected at the point of import, or when the local manufacturer sold the goods for the first time, while the service tax was only imposed on taxable services.
"The tax imposes additional compliance costs for businesses. These come in the form of additional work to account for the tax, tracking of input taxes paid, undertaking reconciliations and filings of GST returns.
"There is also a need to review and change the IT systems to accommodate the implementation of the GST," Tan said.
In a statement, KPMG Tax Services Sdn Bhd executive director Khoo Chin Guan said businesses would need to be pro-active in ensuring their transition to the new system was smooth and successful.
"The GST rate is lower than the existing service tax rate (5%) and significantly lower than the existing sales tax rate (10%). However, the impact on the revenue collection of the government of the drop in rates should be offset by the wider footprint of GST as well as its collection along the supply chain as opposed to only at the manufacturing or importation stage," Khoo said.
Chew Theam Hock, also an ED at KPMG, said the GST Bill followed the approach of tax rates adopted by a number of other countries, although overseas experience had shown there could be grounds for dispute where the provision of combined services fell in a "grey area", whether it was zero-rated, exempt, standard rated or a combination of those rates.
He said with the revenue floor at RM500,000, a number of small businesses would be outside the scope of the GST, although those businesses could voluntarily register for it to claim input tax credits, and they could also be compelled to be licensed by their business customers who wanted to ensure input credits along the supply chain were fully reclaimed.
KPMG's other ED Tan Eng Yew said businesses had to start reviewing their operations at a strategic and functional level so decisions could be made, while additional obligations imposed by law could be dealt with in order for the business to be GST-compliant.
"Although there is expected to be an 18 month-window before the GST becomes chargeable, businesses must address the additional challenges imposed by GST now.
"For example, where businesses make both taxable and non-taxable supplies (also known as mixed supplies), this is an opportune time to identify potential GST costs and how the supply chain should be structured in the light of the GST Bill," he said.
Khoo added that with the GST viewed internationally as a self-policing tax system, given the claim for input tax credits required registration and compliance through the submission of GST returns, the registration and compliance requirements could in turn lead to increased compliance with obligations under the Income Tax Act 1967.
As for the impact of the GST on consumers, CIMB chief economist Lee Heng Guie had in a recent note said the proposed rate of 4%, which was lower than the current SST of between 5% and 10%, was deemed appropriate to avoid dampening consumer spending and its impact on inflation.
"There will never be a good time to implement a new tax reform. When the economic environment is more conducive with stable revenue growth, we can have a virtually neutral and relatively low-rate GST introduction. More critically, there must be a strong political will to implement the unpopular consumption-based tax," he said.
He said it could result in higher private consumption expenditure initially, as households brought forward consumption expenditure prior to the tax's implementation, although this would be followed by a significant unwinding immediately following its rollout.
He added the resulting increase in inflation would likely be small in the medium term, causing a one-time price "blip".
"Businesses can expect GST implications for each transaction they make, regardless of the profits or losses. However, a better management of GST processes can improve cashflow of businesses, which in turn can translate to cost savings," he said.
He also said a comprehensive tax reform must be accompanied by lower personal and corporate income taxes, a stronger household safety net and other targeted assistance programmes for the need groups.
"Stated simply, create a simpler, fairer and more efficient tax system to facilitate greater private sector initiatives as well as drive higher economic growth and foreign investments," he said.
Meanwhile, OSK Research wrote recently that while some essential items and services were GST-exempt and despite the rate being lower than those in other Asia, it believed the tax would dampen consumer purchasing power to a certain extent.
It said based on its simple calculations from the Household Expenditure Survey 2005 data, the most affected group of consumers comprised the hardcore poor with monthly income of below RM430, poor households with monthly income below RM720 and the vulnerable poor with monthly income below RM1,500 in Peninsular Malaysia.
It added these groups could see a significant increase in their cost of living should the government impose the tax in the usage of utilities, basic communication consumption and clothing and footwear, given the possibility of inefficient delivery of new subsidy schemes for those groups.
Today's tabling of the tax bill showed that its exemptions included paddy, vegetables, rice, sugar, flour, cooking oil and meats.
"Apart from consumers, businessmen and retailers may also encounter some difficulties in the short-term, considering that these groups will act as tax collectors of the new tax on behalf of the government.
"Needless to say, the businesses would need to revamp their accounting systems accordingly and submit the collection to the related government agencies on time," OSK also said. It added those still using traditional accounting or payment systems would be forced to upgrade and attend training.
"Nonetheless, retailers of luxury goods, such as luxury cars and jewellery, or privileged services would probably be hardest hit in the short-term as the 4% GST would result in a price increase for the end-user," it said.
http://www.theedgemalaysia.com/business-news/155865-bracing-for-sea-change-in-taxation.html
Tags: Chew Theam Hock | CIMB | Deloitte Malaysia | Dewan Rakyat | goods and services tax | GST | GST Bill 2009 | Income Tax Act 1967 | Khoo Chin Guan | KPMG Tax Services Sdn Bhd | Lee Heng Guie | OSK Research | Tan Eng Yew | Tan Theng Hooi
Written by Ellina Badri & Isabelle Francis
Wednesday, 16 December 2009 22:46
KUALA LUMPUR: Professional consultancies have cautioned about "grey areas" in the implementation of the government's proposed 4% goods and services tax (GST), while other corresponding measures, such as lowering of income tax, may need to be taken.
They also said companies must prepare for the new tax regime early to estimate its potential impact on their businesses and how they could manage it.
Deloitte Malaysia country managing partner Tan Theng Hooi said GST would help the government address the drop in tax revenue in line with lower revenue from petroleum as well as broadening the tax base.
"However, there must be sufficient time given for businesses and the general public to get ready for the system rollout," Tan told The Edge Financial Daily today.
"The level of acceptance by businesses and the public on the implementation of the GST will be higher if there is a corresponding decrease in the income tax rates."
The government tabled the GST Bill 2009 for the first reading in the Dewan Rakyat today, projecting implementation in mid-2011. Though not specified in the bill, the government has said the rate would be fixed at 4%.
Based on the bill, the tax would be charged and levied on any supply of goods or services made in Malaysia, including anything treated as a supply under the act, and any importation of goods into Malaysia.
Businesses that are taxable include any trade, commerce, profession, vocation, or any other similar activity, whether or not it is for a pecuniary profit.
Businesses to be taxed under the GST were liable to register at the end of any month, and those who failed to register would be liable to a fine not exceeding RM50,000 or to an imprisonment for a term not exceeding three years, or both.
Tan said while there would be price increases in some items, there could also be lower prices for others, where savings from taxes on intermediate inputs would be passed by producers to the consumers.
He said under the GST, the tax would be collected at value-added points from production to the final point of sales, as opposed to the current system where the sales tax was only collected at the point of import, or when the local manufacturer sold the goods for the first time, while the service tax was only imposed on taxable services.
"The tax imposes additional compliance costs for businesses. These come in the form of additional work to account for the tax, tracking of input taxes paid, undertaking reconciliations and filings of GST returns.
"There is also a need to review and change the IT systems to accommodate the implementation of the GST," Tan said.
In a statement, KPMG Tax Services Sdn Bhd executive director Khoo Chin Guan said businesses would need to be pro-active in ensuring their transition to the new system was smooth and successful.
"The GST rate is lower than the existing service tax rate (5%) and significantly lower than the existing sales tax rate (10%). However, the impact on the revenue collection of the government of the drop in rates should be offset by the wider footprint of GST as well as its collection along the supply chain as opposed to only at the manufacturing or importation stage," Khoo said.
Chew Theam Hock, also an ED at KPMG, said the GST Bill followed the approach of tax rates adopted by a number of other countries, although overseas experience had shown there could be grounds for dispute where the provision of combined services fell in a "grey area", whether it was zero-rated, exempt, standard rated or a combination of those rates.
He said with the revenue floor at RM500,000, a number of small businesses would be outside the scope of the GST, although those businesses could voluntarily register for it to claim input tax credits, and they could also be compelled to be licensed by their business customers who wanted to ensure input credits along the supply chain were fully reclaimed.
KPMG's other ED Tan Eng Yew said businesses had to start reviewing their operations at a strategic and functional level so decisions could be made, while additional obligations imposed by law could be dealt with in order for the business to be GST-compliant.
"Although there is expected to be an 18 month-window before the GST becomes chargeable, businesses must address the additional challenges imposed by GST now.
"For example, where businesses make both taxable and non-taxable supplies (also known as mixed supplies), this is an opportune time to identify potential GST costs and how the supply chain should be structured in the light of the GST Bill," he said.
Khoo added that with the GST viewed internationally as a self-policing tax system, given the claim for input tax credits required registration and compliance through the submission of GST returns, the registration and compliance requirements could in turn lead to increased compliance with obligations under the Income Tax Act 1967.
As for the impact of the GST on consumers, CIMB chief economist Lee Heng Guie had in a recent note said the proposed rate of 4%, which was lower than the current SST of between 5% and 10%, was deemed appropriate to avoid dampening consumer spending and its impact on inflation.
"There will never be a good time to implement a new tax reform. When the economic environment is more conducive with stable revenue growth, we can have a virtually neutral and relatively low-rate GST introduction. More critically, there must be a strong political will to implement the unpopular consumption-based tax," he said.
He said it could result in higher private consumption expenditure initially, as households brought forward consumption expenditure prior to the tax's implementation, although this would be followed by a significant unwinding immediately following its rollout.
He added the resulting increase in inflation would likely be small in the medium term, causing a one-time price "blip".
"Businesses can expect GST implications for each transaction they make, regardless of the profits or losses. However, a better management of GST processes can improve cashflow of businesses, which in turn can translate to cost savings," he said.
He also said a comprehensive tax reform must be accompanied by lower personal and corporate income taxes, a stronger household safety net and other targeted assistance programmes for the need groups.
"Stated simply, create a simpler, fairer and more efficient tax system to facilitate greater private sector initiatives as well as drive higher economic growth and foreign investments," he said.
Meanwhile, OSK Research wrote recently that while some essential items and services were GST-exempt and despite the rate being lower than those in other Asia, it believed the tax would dampen consumer purchasing power to a certain extent.
It said based on its simple calculations from the Household Expenditure Survey 2005 data, the most affected group of consumers comprised the hardcore poor with monthly income of below RM430, poor households with monthly income below RM720 and the vulnerable poor with monthly income below RM1,500 in Peninsular Malaysia.
It added these groups could see a significant increase in their cost of living should the government impose the tax in the usage of utilities, basic communication consumption and clothing and footwear, given the possibility of inefficient delivery of new subsidy schemes for those groups.
Today's tabling of the tax bill showed that its exemptions included paddy, vegetables, rice, sugar, flour, cooking oil and meats.
"Apart from consumers, businessmen and retailers may also encounter some difficulties in the short-term, considering that these groups will act as tax collectors of the new tax on behalf of the government.
"Needless to say, the businesses would need to revamp their accounting systems accordingly and submit the collection to the related government agencies on time," OSK also said. It added those still using traditional accounting or payment systems would be forced to upgrade and attend training.
"Nonetheless, retailers of luxury goods, such as luxury cars and jewellery, or privileged services would probably be hardest hit in the short-term as the 4% GST would result in a price increase for the end-user," it said.
http://www.theedgemalaysia.com/business-news/155865-bracing-for-sea-change-in-taxation.html
Wall Street Struggles After Fed Statement
Wall Street Struggles After Fed Statement
By THE ASSOCIATED PRESS
Published: December 16, 2009
Shares struggled Wednesday — ending the day mixed — after the Federal Reserve reminded investors that it would end several of its extraordinary supports for the economy in the coming year.
Investors had anticipated that several programs would be wound down as expected next year, but policy makers had not confirmed the precise timing.
The Fed said it would leave interest rates near zero, as the market had expected, but policy makers also noted that weakness in the job market is “abating.” Fed governors made the assessment in a statement following a two-day meeting to discuss interest rate policy.
Investors parse those statements closely to see how the Fed is viewing the state of the economy and for clues about when it might raise interest above their historic lows. .Ultra-low borrowing costs have been a factor behind a massive rally in stocks this year, as well as a weakening of the dollar against other currencies.
Money managers are seeking any and all clues about when the Fed may feel the economy is strong enough to tolerate higher interest rates, which will help keep inflation in check.
Stocks had been higher ahead of the Fed’s announcement after a benign reading on consumer price inflation eased concerns that the Fed would be forced to raise interest rates any time soon. The statement from the central bank reinforced that notion. Policymakers repeated that inflation is likely to remain under control and that interest rates would remain low for “an extended period.”
Earlier Wednesday the government reported that consumer prices excluding food and energy were flat in November, signaling that inflation isn’t working its way into the economy. It was the first time that “core” inflation was unchanged after 10 monthly increases.
On Tuesday, stocks fell for the first time in five days and Treasurys slipped after a jump in wholesale prices led to speculation that the Fed would have to raise interest rates sooner than expected.
At the close, the Dow Jones industrial average was down 10.88 points, or 0.10 percent, at 10,441.12.
The broader Standard & Poor’s 500-stock index rose 1.25 points, to 1,109.18, and the Nasdaq rose 5.86 points, or 0.27 percent, to 2,206.91.
Bond prices mostly fell, pushing yields higher, following the Fed’s more upbeat assessment of the economy. The yield on the benchmark 10-year Treasury note rose to 3.61 percent from 3.60 percent late Tuesday. Prices had been higher ahead of the Fed’s announcement.
A drop in the dollar from a two-month high boosted commodity prices. Gold climbed, while crude oil rose $2.45 to $73.14 per barrel on the New York Mercantile Exchange.
http://www.nytimes.com/2009/12/17/business/17markets.html?ref=business
By THE ASSOCIATED PRESS
Published: December 16, 2009
Shares struggled Wednesday — ending the day mixed — after the Federal Reserve reminded investors that it would end several of its extraordinary supports for the economy in the coming year.
Investors had anticipated that several programs would be wound down as expected next year, but policy makers had not confirmed the precise timing.
The Fed said it would leave interest rates near zero, as the market had expected, but policy makers also noted that weakness in the job market is “abating.” Fed governors made the assessment in a statement following a two-day meeting to discuss interest rate policy.
Investors parse those statements closely to see how the Fed is viewing the state of the economy and for clues about when it might raise interest above their historic lows. .Ultra-low borrowing costs have been a factor behind a massive rally in stocks this year, as well as a weakening of the dollar against other currencies.
Money managers are seeking any and all clues about when the Fed may feel the economy is strong enough to tolerate higher interest rates, which will help keep inflation in check.
Stocks had been higher ahead of the Fed’s announcement after a benign reading on consumer price inflation eased concerns that the Fed would be forced to raise interest rates any time soon. The statement from the central bank reinforced that notion. Policymakers repeated that inflation is likely to remain under control and that interest rates would remain low for “an extended period.”
Earlier Wednesday the government reported that consumer prices excluding food and energy were flat in November, signaling that inflation isn’t working its way into the economy. It was the first time that “core” inflation was unchanged after 10 monthly increases.
On Tuesday, stocks fell for the first time in five days and Treasurys slipped after a jump in wholesale prices led to speculation that the Fed would have to raise interest rates sooner than expected.
At the close, the Dow Jones industrial average was down 10.88 points, or 0.10 percent, at 10,441.12.
The broader Standard & Poor’s 500-stock index rose 1.25 points, to 1,109.18, and the Nasdaq rose 5.86 points, or 0.27 percent, to 2,206.91.
Bond prices mostly fell, pushing yields higher, following the Fed’s more upbeat assessment of the economy. The yield on the benchmark 10-year Treasury note rose to 3.61 percent from 3.60 percent late Tuesday. Prices had been higher ahead of the Fed’s announcement.
A drop in the dollar from a two-month high boosted commodity prices. Gold climbed, while crude oil rose $2.45 to $73.14 per barrel on the New York Mercantile Exchange.
http://www.nytimes.com/2009/12/17/business/17markets.html?ref=business
When Good Customers Become Bad Bill Payers
When Good Customers Become Bad Bill Payers
By CAITLIN KELLY
Published: December 16, 2009
When credit markets seized up more than a year ago, many small businesses were caught flat-footed. Their clients were not paying, or were paying more slowly, and the owners were left emotionally stressed and financially damaged.
Cindy White, whose ribbon knitted jackets sell for upward of $800 in fashion boutiques, says she’s reluctant to press nonpayers too hard. “They’re my bread and butter,” she said.
But after the initial shock wore off, those owners have come up with a variety of ways to make sure they do get paid.
The National Federation of Independent Business, which has 350,000 members, signed up 200 members for a Web seminar on collections, said Karen Harned, executive director for the organization’s small-business legal center. “This is always a big issue for small-business owners.”
Arne Salkin, an account executive with Transworld Systems, a 39-year-old national collections agency, said the problem was felt by owners in an array of businesses. “Our clients include cigarette wholesalers, pest management companies, nursing homes and private day schools,” he said
With 150 offices and 75,000 customers across the United States, Transworld sends out customized demand letters, he said. Its customers, most of them small businesses, pay $750 for a series of five letters asking for payment, each escalating in intensity. Typically, they are sent out every two weeks, matching a standard pay period.
This system worked, in one instance, for David Neal, assistant corporate controller for Hoover Treated Wood Products, a lumber wholesaler in Thomson, Ga., when a client owing $15,000 paid the entire amount after receiving two letters. “I was shocked,” Mr. Neal said. “We were very surprised that it worked.”
But another client — a longtime customer, Mr. Neal said — was in arrears for $45,000, ignored all five letters and then went out of business in late October. “It will have to be written off,” he said.
That is painful for a low-margin industry like his, which typically bills within 15 days and in which 95 percent of clients pay promptly, Mr. Neal said. His firm typically has $4.5 million a week in receivables, he said, and payments started slowing in November 2008.
Geoffrey Wilson, owner of 352 Media, a 10-year-old Web development firm in Gainesville, Fla., lost $165,000 in early 2008 when three clients did not pay. The three firms were start-ups, he said, two in Florida, one in Michigan.
“It was devastating,” he said. “It damaged our cash flow and really hurt us.” The company, with major companies like Microsoft and American Express, did not have to lay off any of its 40 employees, but the experience left scars, Mr. Wilson said.
“It makes you really angry,” he said. “These were clients we had extensive interactions with over several months, sometimes with as many as 50 meetings. It felt very personal. Suddenly you have to threaten them, sue them.”
Today, Mr. Wilson is much more cautious about accepting new clients and is clear from the outset about payment terms — 33 percent upfront, raised from 25 percent in August 2008. Clients are now classified as standard or preferred, the latter being firms with 15 employees and at least two years in business. Standard clients must pay in full before material is delivered, and the business owner will be asked for a personal guarantee, he said.
Some customers are newly candid about their own financial woes, “which we’d never seen before,” he said. “They’ve become very truthful. As a business owner, I really appreciate their honesty. It allows us to better plan our situation. I need an accurate understanding of what’s coming in instead of having a client simply go silent.”
Lisa Brock, head of Brock Communications in Tampa, Fla., is taking a personal approach to managing late payers, recently visiting the chief executives of two local clients to negotiate payment. Now, more than ever, Ms. Brock said, she wants to know whom she is dealing with before entering into any business deal. A free consultation allows her to decide if a client’s values match hers. If so, she delves deeply into their references. “We’ve done more of this recently than in the 14 years we’ve been in business,” she said. “There are a number of ways to check people out: annual reports, a Dun & Bradstreet report, ask for personal and professional references.”
Cindy White, whose 11-year-old company manufactures knitted ribbon jackets that are sold in 40 high-end boutiques nationwide for $800 to $1,000, has been owed $5,000 for six months from several clients, forcing her to lay off employees. She has also fallen behind in the rent on her Phoenix design studio. “I have a lot of stores out there who owe me money, but they’re my bread and butter. You don’t want to upset them by suing or sending out collection letters.”
The decision whether to hold back or escalate demands for payment was made for her recently after a seven-year client, a store that closed, refused to communicate with her and did not pay for the jackets she had shipped. “I was furious,” Ms. White said. “This was a store I had a longstanding relationship with.”
Ever since, she said, “I have been on the phone every few days with all the stores that owe me money, just keeping tabs and making sure they are still viable.” She said she is hopeful that the economy will come back, and “I am willing to work with them because they are my lifeblood.”
Such attentiveness is necessary, agreed Ms. Brock. “I look at our profit and loss statements biweekly.” She advises scrutinizing client lists to predict potential trouble spots. “Even having two slow payers is significant.”
When a client refuses to pay, last-ditch options include
“Sometimes people can’t pay. Sometimes it’s a matter of straight-out fraud, where buyers are not doing enough due diligence. People are desperate to do the deal,” he said. Mr. Friedman takes on only cases worth more than $10,000.
“I try to resolve everything without filing a suit,” he said. His success rate is still only 20 percent, he warned. “My clients know better than I do if the client is really likely to settle.”
http://www.nytimes.com/2009/12/17/business/17markets.html?ref=business
By CAITLIN KELLY
Published: December 16, 2009
When credit markets seized up more than a year ago, many small businesses were caught flat-footed. Their clients were not paying, or were paying more slowly, and the owners were left emotionally stressed and financially damaged.
But after the initial shock wore off, those owners have come up with a variety of ways to make sure they do get paid.
- hiring a collections agency — which typically recoup in full only 11 percent of the time —
- hiring a collections lawyer, who may claim one-third of what they recover, or
- filing a case in small-claims court. Joshua Friedman, a collections lawyer in Beverly Hills, Calif., said his business had been booming since last fall, with clients coming to him “in every field you can imagine.”
Wednesday, 16 December 2009
Outlook 2010: Emerging Markets to lead the recovery
Outlook 2010: Emerging Markets to lead the recovery
Investors who held their nerve have seen great returns as emerging economies continue to out-perform their developed counterparts. We ask those in the know whether 2010 offers the same investment opportunties?
Compiled by Emma Wall
Published: 3:58PM GMT 15 Dec 2009
India's vibrant economy has produced a 250m-strong middle class Photo: HEATHCLIFF O'MALLEY
When The Association of Investment Companies (AIC) asked investment company fund managers to tip their top performing region for 2010, emerging markets came top with 35pc of the vote. Second and third were also sectors that can be included in the emerging markets umbrella- Latin America and the Far East excluding Japan respectively with 22pc and 18pc of the vote.
Dr Slim Feriani, chief executive of Advance Emerging Capital and manager of Advance Developing Markets said: “The performance of emerging market equities has handsomely outpaced that of developing markets in the past five years and we expect that outperformance to continue over the next five years.
Emerging countries have emerged as the “relative winners” from the subprime crisis and resulting recession for two prime reasons: the quality of their sovereign and household balance sheets has never looked so strong compared with developed countries as it does currently; and their economic and corporate earnings growth is and will continue to easily outstrip that of the developed world in both real and nominal terms for the foreseeable future."
Following Schroders’ annual outlook for 2010 media presentation, Alan Brown and Keith Wade predicted that the current global rally is likely to continue into 2010 with emerging markets leading the economic recovery. However, they warned that there are a number of potential monetary and economic factors that could derail the global recovery.
To protect against these, Schroders recommended a more dynamic approach to asset management involving greater diversification and flexibility in order to protect clients’ portfolios.
Close Asset Management believe that emerging markets here to stay. "The growing strain on Western consumers and government finances are likely to be reflected in weaker macroeconomic data and pressure on revenues for many years to come," said Stuart Dyer, head of distribution for Close. "Equity market valuations do not look well underpinned in an environment of low or faltering growth.
For investors seeking long-term growth emerging markets are likely to look increasingly attractive and we are already seeing a sea-change in risk attitudes to investment in these markets; expect this to continue and exposure to these markets to increase."
Fidelity International's Mr Teera Chanpongsang, portfolio manager for their India Focus Fund and Emerging Markets Fund agreed. He said that emerging markets would continue to offer strong long term investment opportunities and stable governments and developing industry will fuel growth.
He said: “Early signs of a recovery are visible in recent economic indicators and earnings upgrades. The region has one of the strongest GDP growth rates in the world, driven by favourable demographics and healthy population growth, which means more people are added to the region’s work force."
http://www.telegraph.co.uk/finance/personalfinance/investing/6817246/Outlook-2010-Emerging-Markets-to-lead-the-recovery.html
Investors who held their nerve have seen great returns as emerging economies continue to out-perform their developed counterparts. We ask those in the know whether 2010 offers the same investment opportunties?
Compiled by Emma Wall
Published: 3:58PM GMT 15 Dec 2009
India's vibrant economy has produced a 250m-strong middle class Photo: HEATHCLIFF O'MALLEY
When The Association of Investment Companies (AIC) asked investment company fund managers to tip their top performing region for 2010, emerging markets came top with 35pc of the vote. Second and third were also sectors that can be included in the emerging markets umbrella- Latin America and the Far East excluding Japan respectively with 22pc and 18pc of the vote.
Dr Slim Feriani, chief executive of Advance Emerging Capital and manager of Advance Developing Markets said: “The performance of emerging market equities has handsomely outpaced that of developing markets in the past five years and we expect that outperformance to continue over the next five years.
Emerging countries have emerged as the “relative winners” from the subprime crisis and resulting recession for two prime reasons: the quality of their sovereign and household balance sheets has never looked so strong compared with developed countries as it does currently; and their economic and corporate earnings growth is and will continue to easily outstrip that of the developed world in both real and nominal terms for the foreseeable future."
Following Schroders’ annual outlook for 2010 media presentation, Alan Brown and Keith Wade predicted that the current global rally is likely to continue into 2010 with emerging markets leading the economic recovery. However, they warned that there are a number of potential monetary and economic factors that could derail the global recovery.
To protect against these, Schroders recommended a more dynamic approach to asset management involving greater diversification and flexibility in order to protect clients’ portfolios.
Close Asset Management believe that emerging markets here to stay. "The growing strain on Western consumers and government finances are likely to be reflected in weaker macroeconomic data and pressure on revenues for many years to come," said Stuart Dyer, head of distribution for Close. "Equity market valuations do not look well underpinned in an environment of low or faltering growth.
For investors seeking long-term growth emerging markets are likely to look increasingly attractive and we are already seeing a sea-change in risk attitudes to investment in these markets; expect this to continue and exposure to these markets to increase."
Fidelity International's Mr Teera Chanpongsang, portfolio manager for their India Focus Fund and Emerging Markets Fund agreed. He said that emerging markets would continue to offer strong long term investment opportunities and stable governments and developing industry will fuel growth.
He said: “Early signs of a recovery are visible in recent economic indicators and earnings upgrades. The region has one of the strongest GDP growth rates in the world, driven by favourable demographics and healthy population growth, which means more people are added to the region’s work force."
http://www.telegraph.co.uk/finance/personalfinance/investing/6817246/Outlook-2010-Emerging-Markets-to-lead-the-recovery.html
Outlook 2010: UK Equities
Outlook 2010: UK Equities
The past year will be remembered for extreme market volatility- few predicted the crash of March when the FTSE hit 3,512, but those who held their nerve would have greatly gained from the subsequent rise to 5,383 in November. We ask the experts- will the UK continue to grow in 2010?
Compiled by Emma Wall
Published: 12:34PM GMT 16 Dec 2009
"The outlook for 2010 is far from certain. The Government has to walk a tightrope between ongoing fiscal and monetary support for the economy and handing over to the private sector again as growth resurfaces.
Too much support could cause inflation to spike upwards and too little could cause the economy to fall back into recession.
Government intervention in markets and the economy has prevented the huge deflation feared at the start of the year. Sentiment has turned positive following an improvement in key leading economic indicators and corporate earnings.
Market direction for 2010 will be determined ultimately by a return of volume growth feeding through into corporate earning. The focus of the portfolio will be upon finding companies capable of growing their profits in an uncertain environment
David Stevenson, founding partner of Cartesian Capital Partners
“Stock selection from here should, therefore, focus on companies that can exhibit sustained sales and earnings growth in a post-stimulus environment.
Although the UK market has been hitting new highs in 2009, there have been recent signs of a change in mix within the overall index. Mid and small cap companies have lost some momentum after significantly outperforming large cap companies for most of 2009.
Having been the focus for risk and recovery appetite amongst investors, the underperformance of mid and small caps may mark the beginning of a broader market dynamic for 2010.
The recent preference for large cap includes many non-cyclical growth companies which have lagged the 2009 rally, and also internationally exposed companies, which are proving more attractive as domestic sentiment struggles under the prospective tightening of government policy.
We will continue to focus on an investment theme of visible earnings, spread across genuine recovery companies and durable growth companies where both are undervalued. The range of sectors involved is likely to be diverse, but with a leaning towards international plays until the UK economic picture becomes clearer.”
David Jane, head of multi-asset M&G
“Sterling and US dollar based assets are likely to suffer due to the risk of further quantitative easing, the indebted state of public finances and the poor economic outlook.
A long period of low UK interest rates and continued money printing from the Bank of England is unlikely to help the pound.
However, my negative view on sterling does not include UK equities, which I am positive on owing to their status as a real asset offering attractive long-term returns as well as the very international nature of the UK stockmarket.
Most FTSE 100 companies are large global blue-chips which generate significant revenue outside the UK and are not dependent on the UK consumer, nor are they overly exposed to the pound’s value falling.”
http://www.telegraph.co.uk/finance/personalfinance/investing/6817247/Outlook-2010-UK-Equities.html
The past year will be remembered for extreme market volatility- few predicted the crash of March when the FTSE hit 3,512, but those who held their nerve would have greatly gained from the subsequent rise to 5,383 in November. We ask the experts- will the UK continue to grow in 2010?
Compiled by Emma Wall
Published: 12:34PM GMT 16 Dec 2009
"The outlook for 2010 is far from certain. The Government has to walk a tightrope between ongoing fiscal and monetary support for the economy and handing over to the private sector again as growth resurfaces.
Too much support could cause inflation to spike upwards and too little could cause the economy to fall back into recession.
Government intervention in markets and the economy has prevented the huge deflation feared at the start of the year. Sentiment has turned positive following an improvement in key leading economic indicators and corporate earnings.
Market direction for 2010 will be determined ultimately by a return of volume growth feeding through into corporate earning. The focus of the portfolio will be upon finding companies capable of growing their profits in an uncertain environment
David Stevenson, founding partner of Cartesian Capital Partners
“Stock selection from here should, therefore, focus on companies that can exhibit sustained sales and earnings growth in a post-stimulus environment.
Although the UK market has been hitting new highs in 2009, there have been recent signs of a change in mix within the overall index. Mid and small cap companies have lost some momentum after significantly outperforming large cap companies for most of 2009.
Having been the focus for risk and recovery appetite amongst investors, the underperformance of mid and small caps may mark the beginning of a broader market dynamic for 2010.
The recent preference for large cap includes many non-cyclical growth companies which have lagged the 2009 rally, and also internationally exposed companies, which are proving more attractive as domestic sentiment struggles under the prospective tightening of government policy.
We will continue to focus on an investment theme of visible earnings, spread across genuine recovery companies and durable growth companies where both are undervalued. The range of sectors involved is likely to be diverse, but with a leaning towards international plays until the UK economic picture becomes clearer.”
David Jane, head of multi-asset M&G
“Sterling and US dollar based assets are likely to suffer due to the risk of further quantitative easing, the indebted state of public finances and the poor economic outlook.
A long period of low UK interest rates and continued money printing from the Bank of England is unlikely to help the pound.
However, my negative view on sterling does not include UK equities, which I am positive on owing to their status as a real asset offering attractive long-term returns as well as the very international nature of the UK stockmarket.
Most FTSE 100 companies are large global blue-chips which generate significant revenue outside the UK and are not dependent on the UK consumer, nor are they overly exposed to the pound’s value falling.”
http://www.telegraph.co.uk/finance/personalfinance/investing/6817247/Outlook-2010-UK-Equities.html
Where was the smart money in 2009?
Where was the smart money in 2009?
Smart investors have managed to make money regardless of the recession and economic doom and gloom.
Emma Simon
Published: 6:44AM GMT 15 Dec 2009
For many families 2009 has been a tough year: unemployment is rising, pay packets have been squeezed and easy credit is hard to find, despite the fact that interest rates fell to a historic low.
But smart investors have managed to make money regardless of the prevailing recession and economic doom and gloom.
Gold has long proved to be the ultimate safe haven in times of global turbulence. And those who invested in this precious metal have enjoyed sparkling returns, with the gold price rising by almost a third.
It isn't just cautious investors who have profited. Those bold enough to stick with the stock market have, on the whole, enjoyed bumper returns.
The figures speak for themselves. On January 2, the FTSE100 stood at 4,434. For the first three months of 2009, share prices continued to fall, with the stock market hitting a low of 3,460 in March.
However, since then the market has enjoyed a sustained, and largely unexpected, recovery. Last week the FTSE100 closed at 5,261 – a return of almost 20 per cent on the whole of the year.
Those who have kept their money in cash have not fared so well. According to Moneyfacts, the financial information group, the average savings account is paying just 0.67 per cent after tax.
But beleaguered property owners have enjoyed a turnaround in fortunes. The slump in house prices bottomed out this year, with prices slowly starting to inch upwards again.
Property speculators may not be seeing the stellar gains that fuelled dinner party conversation a few years ago, but at least the home owner can end the year knowing the roof over their head is worth more than it was 12 months ago.
Below we take a closer look at where the smart money was invested this year, and examine the outlook for 2010.
Gold
Gold prices started rising in 2003 and did not lose their lustre this year. At the start of the year, gold prices stood at $869 per ounce and now hover about the $1,142 mark – a rise of 31 per cent.
But British investors have not seen such substantial gains. This is because gold is priced in dollars, and a weak dollar means that we lose out.
The prevailing exchange rate at the start of the year meant an ounce of gold cost £599; at the end of last week, this same ounce could be sold for £700 – a more modest rise of 17 per cent.
It is not hard to understand why gold prices have risen. It is seen as a safe asset in times of economic upheaval. Those spooked by recession, financial crisis and volatile stock markets not surprisingly prefer to invest in solid gold bars rather than paper share certificates.
Those concerned about inflation have also turned to gold: there are concerns that that "quantitative easing" measure adopted by central banks to kick-start the economy may causes prices to rise in future. In times of inflation, gold tends to keep its value far better than money simply saved in a bank account.
The price of gold has also been buoyed by strong demand from the emerging economic powerhouses of China, India and Russia.
Will it continue to perform well next year?
Analysts are split. Few assets deliver consistently over such sustained periods and many suggest that gold prices may be due a fall. However, others point out that while China keeps buying gold, the economy continues to falter and fears of inflation remains, gold will continue to shine as an investment.
British investors can either buy gold bars or coins through bullion dealers such as Baird & Co. Prices will be higher than the "spot" market price, due to investor demand. Coins currently attract a higher premium than bars, particularly larger ones where there are storage costs to consider.
Alternatively, investors can buy funds that invest in gold-related shares, such as mining companies, or exchange traded funds, which are securities traded on the stock market whose price closely follows the gold "spot" rate.
Equities
The stock market bounced back this year, and investors in the best-performing funds managed to triple their money. A look at the best-performing funds of the year reveals that it is those with their money in specialist high-risk areas that have raked in the biggest gains.
Top of the tree is the Special Situations fund run by Close Asset Management. This fund, which invests in smaller companies, rose in value by almost 250 per cent over the past year. So someone investing £,1000 at the beginning of January would now be sitting on a nest egg of £3,464, according to Morningstar UK, the fund analysts.
Aside from smaller company funds, those who invested in gold and oil have also done well. JP Morgan's Natural Resources fund and CF Ruffer Baker Steel Gold fund have both risen by about 100 per cent this year.
Rising commodity prices have also benefited funds focused on Russian markets, while other emerging market funds have also performed well.
Neptune Russia & Greater Russia fund is up 105 per cent, for example, and JP Morgan's New Europe fund has posted a 93 per cent rise.
Justin Modray, the director of candidmoney.com says: "2009 has been a good year for investors who have had exposure to oil and gold. It's therefore little surprise that funds with exposure to these commodities have performed well.
"Good opportunistic UK fund managers have also done well by seizing the lucrative investment opportunities thrown up by volatile markets.
"Deryck Noble-Nesbitt, manager of Close Special Situations has delivered exceptional returns by investing in small, unloved companies that bounced back into favour this year, and exposing about a third of his fund to commodities."
Jackie Beard, the director of fund research at Morningstar UK, added that the returns on such niche funds tended to be exaggerated. Those with money in Russia may have made spectacular gains this year, but twice in the last decade, investors could have lost 85 per cent of their money.
Will such sectors prove as profitable in 2010? Ms Beard urges caution: "The top-performing funds in one year rarely do so well in the next," she says. "And there is a danger you could simply be buying near the top.
"We aren't strong advocates of niche funds. Investors should only have a small portion of their portfolio in such funds. Investors should be taking a long-term view and opt for diversified investments."
Mr Modray says the outlook for 2010 is very uncertain. "The initial stock-market bounce, once investors realised the global banking system wouldn't collapse, has been and gone. Future returns will depend more heavily on economic fundamentals, which are all rather depressing in most Western markets.
"Emerging markets and commodities still offer some appeal, but the high potential risk involved means investors should only view them as a long-term play. If you want to invest in the UK stock market, I'd look for funds that offer some protection."
He recommends the Invesco Perpetual High Income fund, managed by Neil Woodford and the Cazenove UK Absolute Target fund.
http://www.telegraph.co.uk/finance/personalfinance/investing/6812083/Where-was-the-smart-money-in-2009.html
Smart investors have managed to make money regardless of the recession and economic doom and gloom.
Emma Simon
Published: 6:44AM GMT 15 Dec 2009
For many families 2009 has been a tough year: unemployment is rising, pay packets have been squeezed and easy credit is hard to find, despite the fact that interest rates fell to a historic low.
But smart investors have managed to make money regardless of the prevailing recession and economic doom and gloom.
Gold has long proved to be the ultimate safe haven in times of global turbulence. And those who invested in this precious metal have enjoyed sparkling returns, with the gold price rising by almost a third.
It isn't just cautious investors who have profited. Those bold enough to stick with the stock market have, on the whole, enjoyed bumper returns.
The figures speak for themselves. On January 2, the FTSE100 stood at 4,434. For the first three months of 2009, share prices continued to fall, with the stock market hitting a low of 3,460 in March.
However, since then the market has enjoyed a sustained, and largely unexpected, recovery. Last week the FTSE100 closed at 5,261 – a return of almost 20 per cent on the whole of the year.
Those who have kept their money in cash have not fared so well. According to Moneyfacts, the financial information group, the average savings account is paying just 0.67 per cent after tax.
But beleaguered property owners have enjoyed a turnaround in fortunes. The slump in house prices bottomed out this year, with prices slowly starting to inch upwards again.
Property speculators may not be seeing the stellar gains that fuelled dinner party conversation a few years ago, but at least the home owner can end the year knowing the roof over their head is worth more than it was 12 months ago.
Below we take a closer look at where the smart money was invested this year, and examine the outlook for 2010.
Gold
Gold prices started rising in 2003 and did not lose their lustre this year. At the start of the year, gold prices stood at $869 per ounce and now hover about the $1,142 mark – a rise of 31 per cent.
But British investors have not seen such substantial gains. This is because gold is priced in dollars, and a weak dollar means that we lose out.
The prevailing exchange rate at the start of the year meant an ounce of gold cost £599; at the end of last week, this same ounce could be sold for £700 – a more modest rise of 17 per cent.
It is not hard to understand why gold prices have risen. It is seen as a safe asset in times of economic upheaval. Those spooked by recession, financial crisis and volatile stock markets not surprisingly prefer to invest in solid gold bars rather than paper share certificates.
Those concerned about inflation have also turned to gold: there are concerns that that "quantitative easing" measure adopted by central banks to kick-start the economy may causes prices to rise in future. In times of inflation, gold tends to keep its value far better than money simply saved in a bank account.
The price of gold has also been buoyed by strong demand from the emerging economic powerhouses of China, India and Russia.
Will it continue to perform well next year?
Analysts are split. Few assets deliver consistently over such sustained periods and many suggest that gold prices may be due a fall. However, others point out that while China keeps buying gold, the economy continues to falter and fears of inflation remains, gold will continue to shine as an investment.
British investors can either buy gold bars or coins through bullion dealers such as Baird & Co. Prices will be higher than the "spot" market price, due to investor demand. Coins currently attract a higher premium than bars, particularly larger ones where there are storage costs to consider.
Alternatively, investors can buy funds that invest in gold-related shares, such as mining companies, or exchange traded funds, which are securities traded on the stock market whose price closely follows the gold "spot" rate.
Equities
The stock market bounced back this year, and investors in the best-performing funds managed to triple their money. A look at the best-performing funds of the year reveals that it is those with their money in specialist high-risk areas that have raked in the biggest gains.
Top of the tree is the Special Situations fund run by Close Asset Management. This fund, which invests in smaller companies, rose in value by almost 250 per cent over the past year. So someone investing £,1000 at the beginning of January would now be sitting on a nest egg of £3,464, according to Morningstar UK, the fund analysts.
Aside from smaller company funds, those who invested in gold and oil have also done well. JP Morgan's Natural Resources fund and CF Ruffer Baker Steel Gold fund have both risen by about 100 per cent this year.
Rising commodity prices have also benefited funds focused on Russian markets, while other emerging market funds have also performed well.
Neptune Russia & Greater Russia fund is up 105 per cent, for example, and JP Morgan's New Europe fund has posted a 93 per cent rise.
Justin Modray, the director of candidmoney.com says: "2009 has been a good year for investors who have had exposure to oil and gold. It's therefore little surprise that funds with exposure to these commodities have performed well.
"Good opportunistic UK fund managers have also done well by seizing the lucrative investment opportunities thrown up by volatile markets.
"Deryck Noble-Nesbitt, manager of Close Special Situations has delivered exceptional returns by investing in small, unloved companies that bounced back into favour this year, and exposing about a third of his fund to commodities."
Jackie Beard, the director of fund research at Morningstar UK, added that the returns on such niche funds tended to be exaggerated. Those with money in Russia may have made spectacular gains this year, but twice in the last decade, investors could have lost 85 per cent of their money.
Will such sectors prove as profitable in 2010? Ms Beard urges caution: "The top-performing funds in one year rarely do so well in the next," she says. "And there is a danger you could simply be buying near the top.
"We aren't strong advocates of niche funds. Investors should only have a small portion of their portfolio in such funds. Investors should be taking a long-term view and opt for diversified investments."
Mr Modray says the outlook for 2010 is very uncertain. "The initial stock-market bounce, once investors realised the global banking system wouldn't collapse, has been and gone. Future returns will depend more heavily on economic fundamentals, which are all rather depressing in most Western markets.
"Emerging markets and commodities still offer some appeal, but the high potential risk involved means investors should only view them as a long-term play. If you want to invest in the UK stock market, I'd look for funds that offer some protection."
He recommends the Invesco Perpetual High Income fund, managed by Neil Woodford and the Cazenove UK Absolute Target fund.
http://www.telegraph.co.uk/finance/personalfinance/investing/6812083/Where-was-the-smart-money-in-2009.html
Moody’s warns of 'social unrest’ as sovereign debt spirals
Moody’s warns of 'social unrest’ as sovereign debt spirals
Britain and other countries with fast-rising government debts must steel themselves for a year in which “social and political cohesiveness” is tested, Moody’s warned.
By Edmund Conway
Published: 7:35PM GMT 15 Dec 2009
Riot police clash with protestors during an anti G20 demonstration near the Bank of England. Moody's has warned future tax rises and spending cuts could trigger more social unrest.
In a sombre report on the outlook for next year, the credit rating agency raised the prospect that future tax rises and spending cuts could trigger social unrest in a range of countries from the developing to the developed world.
It said that in the coming years, evidence of social unrest and public tension may become just as important signs of whether a country will be able to adapt as traditional economic metrics. Signalling that a fiscal crisis remains a possibility for a leading economy, it said that 2010 would be a “tumultuous year for sovereign debt issuers”.
It added that the sheer quantity of debt to be raised by Britain and other leading nations would increase the risk of investor fright.
Strikingly, however, it added that even if countries reached agreement on the depth of the cuts necessary to their budgets, they could face difficulties in carrying out the cuts. The report, which comes amid growing worries about Britain’s credit rating, said: “In those countries whose debt has increased significantly, and especially those whose debt has become unaffordable, the need to rein in deficits will test social cohesiveness. The test will be starker as growth disappoints and interest rates rise.”
It said the main obstacle for fiscal consolidation plans would be signs not necessarily of economic strength but of “political and social tension”.
Greece, where the government has committed to drastic cuts in public expenditure, has suffered a series of riots over the past year which are thought to have been fuelled by economic pressures.
http://www.telegraph.co.uk/finance/economics/6819470/Moodys-warns-of-social-unrest-as-sovereign-debt-spirals.html
Britain and other countries with fast-rising government debts must steel themselves for a year in which “social and political cohesiveness” is tested, Moody’s warned.
By Edmund Conway
Published: 7:35PM GMT 15 Dec 2009
Riot police clash with protestors during an anti G20 demonstration near the Bank of England. Moody's has warned future tax rises and spending cuts could trigger more social unrest.
In a sombre report on the outlook for next year, the credit rating agency raised the prospect that future tax rises and spending cuts could trigger social unrest in a range of countries from the developing to the developed world.
It said that in the coming years, evidence of social unrest and public tension may become just as important signs of whether a country will be able to adapt as traditional economic metrics. Signalling that a fiscal crisis remains a possibility for a leading economy, it said that 2010 would be a “tumultuous year for sovereign debt issuers”.
It added that the sheer quantity of debt to be raised by Britain and other leading nations would increase the risk of investor fright.
Strikingly, however, it added that even if countries reached agreement on the depth of the cuts necessary to their budgets, they could face difficulties in carrying out the cuts. The report, which comes amid growing worries about Britain’s credit rating, said: “In those countries whose debt has increased significantly, and especially those whose debt has become unaffordable, the need to rein in deficits will test social cohesiveness. The test will be starker as growth disappoints and interest rates rise.”
It said the main obstacle for fiscal consolidation plans would be signs not necessarily of economic strength but of “political and social tension”.
Greece, where the government has committed to drastic cuts in public expenditure, has suffered a series of riots over the past year which are thought to have been fuelled by economic pressures.
http://www.telegraph.co.uk/finance/economics/6819470/Moodys-warns-of-social-unrest-as-sovereign-debt-spirals.html
Excellent corporate governance essential to good results
Excellent corporate governance essential to good results, says Teh
Tags: Bursa Malaysia Bhd | Excellent corporate governance | Good business performance | NUBS | Overall Excellence Award | Public Bank Bhd | TanSri Dr Teh Hong Piow | Transparency Index Award
Written by Financial Daily
Monday, 14 December 2009 11:21
KUALA LUMPUR: Excellent corporate governance is essential to good business performance as well as in ensuring that the interests of investors and all other stakeholders are well taken care of, said Tan Sri Dr Teh Hong Piow, the founder and chairman of one of Malaysia’s most renowned banking groups.
Teh and his management team should know about the correlation between good corporate governance and strong financial results given that PUBLIC BANK BHD [] has had an unbroken profit track record for over 40 years. The banking group has won numerous awards locally and overseas for its exemplary corporate governance.
“The board, management and staff of Public Bank will remain steadfast and committed in ensuring the highest level of corporate governance at Public Bank so that the interests of investors and all other stakeholders are well taken care of,” he said in a statement last Friday.
He said this after the banking group on Thursday yet again grabbed the top awards for excellence in corporate governance.
Teh lauded the Minority Shareholder Watchdog Group (MSWG) for launching the Malaysian Corporate Governance (MCG) Index, a premier index for investors to gauge corporate governance levels of public-listed companies in Malaysia.
Teh
The MCG Index is an extension of MSWG’s corporate governance survey collaboration with Nottingham University Business School (NUBS) in 2004 – 2008.
Teh expressed pride that Public Bank had won the Overall Excellence Award and the Best AGM Conducted in 2009 Award under the MCG Index 2009, especially as Public Bank had been ranked No 1 for four consecutive years in the MSWG–NUBS corporate governance surveys conducted in 2004–2008.
He said the Overall Excellence Award was a testimony to Public Bank’s strong corporate culture inculcated in the staff with everyone delivering as a team. Apart from Public Bank, BURSA MALAYSIA BHD [] was jointly awarded the Overall Excellence Award. Bursa also won the Best Governance and Transparency Index Award.
This article appeared in The Edge Financial Daily, December 14, 2009.
Tags: Bursa Malaysia Bhd | Excellent corporate governance | Good business performance | NUBS | Overall Excellence Award | Public Bank Bhd | TanSri Dr Teh Hong Piow | Transparency Index Award
Written by Financial Daily
Monday, 14 December 2009 11:21
Teh and his management team should know about the correlation between good corporate governance and strong financial results given that PUBLIC BANK BHD [] has had an unbroken profit track record for over 40 years. The banking group has won numerous awards locally and overseas for its exemplary corporate governance.
“The board, management and staff of Public Bank will remain steadfast and committed in ensuring the highest level of corporate governance at Public Bank so that the interests of investors and all other stakeholders are well taken care of,” he said in a statement last Friday.
He said this after the banking group on Thursday yet again grabbed the top awards for excellence in corporate governance.
Teh lauded the Minority Shareholder Watchdog Group (MSWG) for launching the Malaysian Corporate Governance (MCG) Index, a premier index for investors to gauge corporate governance levels of public-listed companies in Malaysia.
Teh
The MCG Index is an extension of MSWG’s corporate governance survey collaboration with Nottingham University Business School (NUBS) in 2004 – 2008.
Teh expressed pride that Public Bank had won the Overall Excellence Award and the Best AGM Conducted in 2009 Award under the MCG Index 2009, especially as Public Bank had been ranked No 1 for four consecutive years in the MSWG–NUBS corporate governance surveys conducted in 2004–2008.
He said the Overall Excellence Award was a testimony to Public Bank’s strong corporate culture inculcated in the staff with everyone delivering as a team. Apart from Public Bank, BURSA MALAYSIA BHD [] was jointly awarded the Overall Excellence Award. Bursa also won the Best Governance and Transparency Index Award.
This article appeared in The Edge Financial Daily, December 14, 2009.
LCL at historic low, more bad news ahead?
LCL at historic low, more bad news ahead?
Tags: Affin Bank Bhd | Bank Islam Malaysia Bhd | CIMB Research | Dubai debacle | Historic low | LCL Corporation Bhd | LCL Furniture Sdn Bhd
Written by Joy Lee
Monday, 14 December 2009 11:26
KUALA LUMPUR: LCL Corp Bhd, which saw its share price drop to a historic low of 21 sen in intra-day trade last Friday on loan defaults, may get more bad news ahead as the Dubai debacle seems unlikely to abate any time soon.
LCL said it had been severely affected by the financial turmoil in Dubai and plunging property prices had resulted in delay and non-payment of its receivables. “Hence, LCL and its subsidiaries have been unable to meet its repayment obligations,” it said in a recent announcement.
The interior fit-out (IFO) company’s share price tumbled 10 sen or 31.25% to close at 22 sen last week, after wholly owned subsidiary LCL Furniture Sdn Bhd defaulted on loans worth RM72 million to two banks, Affin Bank Bhd and Bank Islam Malaysia Bhd.
The stock rose to a 52-week high of 95 sen on Aug 13, 2009.
Analysts were not surprised by the defaults given its high debt and slow collection problems in Dubai since the fourth quarter of last year. As at end-September 2009, its net debt totalled RM376 million and net gearing was 4.7 times.
CIMB Research expects the company to default on more loans in the coming months unless Dubai’s financial position turned around, which it said was a less likely scenario.
LCL had said the defaulted bank borrowings with Affin Bank and Bank Islam would have a consequence on the group’s other ongoing bank borrowings, which would also be declared in default under the cross default clause.
It cautioned that legal proceedings may be initiated by the lenders against LCL group of companies.
LCL’s borrowings are mainly short-term loans. CIMB Research said more than 75% or a total of RM293 million of the group’s loans as at end-December 2008 matured in less than a year.
“This is because almost all of the group’s borrowings are used for working capital. LCL’s interior fit-out business has close to six months funding for working capital.
“The group purchases raw materials like plywood and steel and undertakes the necessary fabrication, which takes three to four months to complete. LCL only gets to collect most of its outstanding receivables two to three months later assuming no delays in its collection.
“Clients have delayed payments to LCL for more than four to five months and this is having an adverse impact on its operational cash flows,” the research house said in a recent report.
News flow out of Dubai has not been positive and may remain that way for some time which may prove to be detrimental to LCL over the next few months.
“It is unfortunate that LCL has reached this stage. The company offered so much potential two to three years back but its operations and balance sheet were hit hard after working conditions in Dubai deteriorated rapidly in the aftermath of the 4Q08 property crash.
“The challenges are not just hitting LCL but also hitting hard on the main contractors in Dubai, including the Korean and Japanese contractors,” CIMB Research added.
It maintained its earnings forecasts and target price of 25 sen with an unchanged 75% discount to its 1.8 times target of price-to-book value for the CONSTRUCTION [] sector.
Meanwhile, LCL said the board was deliberating the group’s solvency status and would make the necessary announcement within the required time frame.
This article appeared in The Edge Financial Daily, December 14, 2009.
http://www.theedgemalaysia.com/business-news/155576-lcl-at-historic-low-more-bad-news-ahead.html
Tags: Affin Bank Bhd | Bank Islam Malaysia Bhd | CIMB Research | Dubai debacle | Historic low | LCL Corporation Bhd | LCL Furniture Sdn Bhd
Written by Joy Lee
Monday, 14 December 2009 11:26
KUALA LUMPUR: LCL Corp Bhd, which saw its share price drop to a historic low of 21 sen in intra-day trade last Friday on loan defaults, may get more bad news ahead as the Dubai debacle seems unlikely to abate any time soon.
LCL said it had been severely affected by the financial turmoil in Dubai and plunging property prices had resulted in delay and non-payment of its receivables. “Hence, LCL and its subsidiaries have been unable to meet its repayment obligations,” it said in a recent announcement.
The interior fit-out (IFO) company’s share price tumbled 10 sen or 31.25% to close at 22 sen last week, after wholly owned subsidiary LCL Furniture Sdn Bhd defaulted on loans worth RM72 million to two banks, Affin Bank Bhd and Bank Islam Malaysia Bhd.
The stock rose to a 52-week high of 95 sen on Aug 13, 2009.
Analysts were not surprised by the defaults given its high debt and slow collection problems in Dubai since the fourth quarter of last year. As at end-September 2009, its net debt totalled RM376 million and net gearing was 4.7 times.
CIMB Research expects the company to default on more loans in the coming months unless Dubai’s financial position turned around, which it said was a less likely scenario.
LCL had said the defaulted bank borrowings with Affin Bank and Bank Islam would have a consequence on the group’s other ongoing bank borrowings, which would also be declared in default under the cross default clause.
It cautioned that legal proceedings may be initiated by the lenders against LCL group of companies.
LCL’s borrowings are mainly short-term loans. CIMB Research said more than 75% or a total of RM293 million of the group’s loans as at end-December 2008 matured in less than a year.
“This is because almost all of the group’s borrowings are used for working capital. LCL’s interior fit-out business has close to six months funding for working capital.
“The group purchases raw materials like plywood and steel and undertakes the necessary fabrication, which takes three to four months to complete. LCL only gets to collect most of its outstanding receivables two to three months later assuming no delays in its collection.
“Clients have delayed payments to LCL for more than four to five months and this is having an adverse impact on its operational cash flows,” the research house said in a recent report.
News flow out of Dubai has not been positive and may remain that way for some time which may prove to be detrimental to LCL over the next few months.
“It is unfortunate that LCL has reached this stage. The company offered so much potential two to three years back but its operations and balance sheet were hit hard after working conditions in Dubai deteriorated rapidly in the aftermath of the 4Q08 property crash.
“The challenges are not just hitting LCL but also hitting hard on the main contractors in Dubai, including the Korean and Japanese contractors,” CIMB Research added.
It maintained its earnings forecasts and target price of 25 sen with an unchanged 75% discount to its 1.8 times target of price-to-book value for the CONSTRUCTION [] sector.
Meanwhile, LCL said the board was deliberating the group’s solvency status and would make the necessary announcement within the required time frame.
This article appeared in The Edge Financial Daily, December 14, 2009.
http://www.theedgemalaysia.com/business-news/155576-lcl-at-historic-low-more-bad-news-ahead.html
The Future of Gold, the Dollar, and More
The Future of Gold, the Dollar, and More
By Jennifer Schonberger
December 11, 2009
The dollar has had a huge effect on the stock market's moves this year. As the dollar has depreciated, many stocks have climbed higher; the logic is that a weaker dollar will boost the bottom lines of companies such as McDonald's (NYSE: MCD), Aflac (NYSE: AFL), and Coca-Cola (NYSE: KO), all of which derive a substantial portion of their revenues from abroad. The depreciating dollar has also boosted commodity prices and associated commodity stocks such as Freeport-McMoRan (NYSE: FCX) or Newmont Mining (NYSE: NEM), serving to lift the market.
As we approach 2010, what is the future of the dollar, and what are the implications for the asset prices that move inversely to it? What does it all mean when it comes to rebalancing the global economy and our economic relationship with China?
For some insight on all this, I spoke with the man who had the foresight to call the financial meltdown in 2006: Peter Schiff, president and chief global strategist of Euro Pacific Capital and author of the newly updated book Crash Proof 2.0.
Schiff believes the dollar is on a long-term downward trajectory, and that it could collapse if the government continues its current policies. That has implications for the stock market and gold, which he thinks could go to $5,000 an ounce.
Here's an edited transcript of our conversation:
Jennifer Schonberger: You've been bearish on the dollar for some time. Do you still stand by your bearish call for the greenback?
Peter Schiff: Yes. I think the dollar is going to fall for years. It's not going to fall every day, or every week. There are going to be periods of time where the dollar rallies -- that's how markets work. Like a bull market climbs a wall of worry, a bear market follows a slope of hope. And there's always going to be hope that the dollar is going to recover, based on "maybe the Fed will raise interest rates," "maybe the U.S. economy will improve." But none of that is going to help the dollar. I think the dollar's fate has been sealed by the policies being pursued by the government and the Federal Reserve, and unfortunately it's a grim fate.
Schonberger: If the dollar does remain weak, as you expect, what are the implications in terms of rebalancing the global economy?
Schiff: Part of rebalancing the global economy is going to necessitate a lower dollar. The reason the global economy is so out of balance is because the dollar is artificially strong. It's been propped up by foreign central banks, and this enables Americans to import products they really can't afford. So if we want the global imbalances to be solved, it's going to require a lower dollar -- and that's what's going to happen. The longer foreign central banks artificially prop up the dollar, enabling Americans to keep spending borrowed money, the worse the global imbalances are going to get.
Schonberger: You recently wrote, "While [China's] peg [to the U.S. dollar] certainly is responsible for much of the world's problems, its abandonment would cause severe hardship in the United States." Why?
Schiff: It would cause hardship in the U.S., but it's something that we have to deal with sooner rather than later. By propping up the U.S. dollar and by carrying U.S.-dollar-denominated debt -- U.S. Treasuries, mortgage-backed securities -- the Chinese have kept interest rates and consumer prices artificially low. Americans have been able to benefit from that in the short run because their mortgages, car payments, and credit card payments are lower. They can go to stores like Wal-Mart (NYSE: WMT) and get those everyday low prices. But those prices aren't because of Wal-Mart, they're because of China.
When the Chinese government removes all those subsidies, there's going to be an immediate benefit to the Chinese people, because they're suddenly going to see lower prices and more access to capital. In America, we're going to have the rug pulled out from under us ...
Schonberger: The dollar is central to the relationships of other assets' prices. There is an inverse relationship between the dollar and equities. Do you expect that linkage (between the dollar and equities) to continue into next year?
Schiff: Remember, there's an inverse relationship between the dollar and the price of everything, because as the dollar loses value, you need more dollars to buy anything. That's true for an ounce of gold, a barrel of oil, a bushel of wheat, or shares of stock. So you're always going to see prices rising as the dollar is falling. That's what's happening now.
Now at some point, inflation could be so problematic that it drives interest rates up substantially, and as inflation gets bigger and bigger, the prices that tend to react more quickly will be things like food and energy. So if U.S. corporations suddenly see the cost of their long-term debt or short-term debt jump up and their customers don't have any money to buy their products because they're spending all their money on food, then ultimately you could see falling stock prices as the dollar is falling.
Schonberger: Speaking of relationships, you expect gold to go to $5,000 an ounce, correct?
Schiff: Yeah. It could go higher than that, but I think $5,000 is a reasonable expectation of where gold is headed over the course of the next several years, based on monetary and fiscal policy that is in place. Now if the government were to reverse course -- if they suddenly brought the budget into surplus, and if the Fed aggressively raised interest rates back up to a reasonable level, say 5%, 6%, or 7%, not just a quarter-point every few months -- then gold would probably not get to $5,000.
But I don't think they're going to do that. Based on what the Fed is saying and doing, they're going to keep interest rates at practically nothing for as far as the eye can see. The U.S. economy is not recovering. All we're doing is spending stimulus money. The minute you take away the stimulus, all the GDP growth, all the jobs that are associated with that stimulus spending, will vanish. So they can't take the stimulus away without destroying the phony recovery. So if interest rates are going to stay low and they're going to keep printing money, the only thing that's going to happen is the dollar is going to fall until it all of a sudden collapses ...
Schonberger: So then you're actually calling for a collapse in the dollar relatively soon?
Schiff: Relatively soon, yes. Maybe not tomorrow, but I think it will happen soon. I think it will happen before Barack Obama leaves office even if he's only a one-termer. The first initial collapse in the dollar will be about a 50%, 60%, or 70% decline in dollar value. That collapse will usher in the new leg -- the much more severe leg of our economic downturn. Not only will we have a financial crisis, but we'll also have a currency and economic crisis.
Hopefully that will be the tough medicine, the shock that finally causes Congress and the Fed to abandon its current policy and start doing the right thing. If it doesn't -- if they respond to that big drop in the dollar by creating more inflation, and if they fail to raise interest rates aggressively and withdraw liquidity -- then they will turn the dollar into confetti. Then we will have hyperinflation. If we go down that road, gold prices aren't just going to $5,000, they'll go to $50,000, or $500,000. I hope that cooler heads will prevail before we go down that road, but from this point that's still a possibility if we don't change policies.
Strong words from Peter Schiff.
Fool contributor Jennifer Schonberger does not own shares of any of the companies mentioned in this article. AFLAC is a Stock Advisor recommendation. Coke and Wal-Mart are Inside Value picks. Coke is also an Income Investor recommendation. The Motley Fool has a disclosure policy.
http://www.fool.com/investing/general/2009/12/11/the-future-of-gold-the-dollar-and-more.aspx
By Jennifer Schonberger
December 11, 2009
The dollar has had a huge effect on the stock market's moves this year. As the dollar has depreciated, many stocks have climbed higher; the logic is that a weaker dollar will boost the bottom lines of companies such as McDonald's (NYSE: MCD), Aflac (NYSE: AFL), and Coca-Cola (NYSE: KO), all of which derive a substantial portion of their revenues from abroad. The depreciating dollar has also boosted commodity prices and associated commodity stocks such as Freeport-McMoRan (NYSE: FCX) or Newmont Mining (NYSE: NEM), serving to lift the market.
As we approach 2010, what is the future of the dollar, and what are the implications for the asset prices that move inversely to it? What does it all mean when it comes to rebalancing the global economy and our economic relationship with China?
For some insight on all this, I spoke with the man who had the foresight to call the financial meltdown in 2006: Peter Schiff, president and chief global strategist of Euro Pacific Capital and author of the newly updated book Crash Proof 2.0.
Schiff believes the dollar is on a long-term downward trajectory, and that it could collapse if the government continues its current policies. That has implications for the stock market and gold, which he thinks could go to $5,000 an ounce.
Here's an edited transcript of our conversation:
Jennifer Schonberger: You've been bearish on the dollar for some time. Do you still stand by your bearish call for the greenback?
Peter Schiff: Yes. I think the dollar is going to fall for years. It's not going to fall every day, or every week. There are going to be periods of time where the dollar rallies -- that's how markets work. Like a bull market climbs a wall of worry, a bear market follows a slope of hope. And there's always going to be hope that the dollar is going to recover, based on "maybe the Fed will raise interest rates," "maybe the U.S. economy will improve." But none of that is going to help the dollar. I think the dollar's fate has been sealed by the policies being pursued by the government and the Federal Reserve, and unfortunately it's a grim fate.
Schonberger: If the dollar does remain weak, as you expect, what are the implications in terms of rebalancing the global economy?
Schiff: Part of rebalancing the global economy is going to necessitate a lower dollar. The reason the global economy is so out of balance is because the dollar is artificially strong. It's been propped up by foreign central banks, and this enables Americans to import products they really can't afford. So if we want the global imbalances to be solved, it's going to require a lower dollar -- and that's what's going to happen. The longer foreign central banks artificially prop up the dollar, enabling Americans to keep spending borrowed money, the worse the global imbalances are going to get.
Schonberger: You recently wrote, "While [China's] peg [to the U.S. dollar] certainly is responsible for much of the world's problems, its abandonment would cause severe hardship in the United States." Why?
Schiff: It would cause hardship in the U.S., but it's something that we have to deal with sooner rather than later. By propping up the U.S. dollar and by carrying U.S.-dollar-denominated debt -- U.S. Treasuries, mortgage-backed securities -- the Chinese have kept interest rates and consumer prices artificially low. Americans have been able to benefit from that in the short run because their mortgages, car payments, and credit card payments are lower. They can go to stores like Wal-Mart (NYSE: WMT) and get those everyday low prices. But those prices aren't because of Wal-Mart, they're because of China.
When the Chinese government removes all those subsidies, there's going to be an immediate benefit to the Chinese people, because they're suddenly going to see lower prices and more access to capital. In America, we're going to have the rug pulled out from under us ...
Schonberger: The dollar is central to the relationships of other assets' prices. There is an inverse relationship between the dollar and equities. Do you expect that linkage (between the dollar and equities) to continue into next year?
Schiff: Remember, there's an inverse relationship between the dollar and the price of everything, because as the dollar loses value, you need more dollars to buy anything. That's true for an ounce of gold, a barrel of oil, a bushel of wheat, or shares of stock. So you're always going to see prices rising as the dollar is falling. That's what's happening now.
Now at some point, inflation could be so problematic that it drives interest rates up substantially, and as inflation gets bigger and bigger, the prices that tend to react more quickly will be things like food and energy. So if U.S. corporations suddenly see the cost of their long-term debt or short-term debt jump up and their customers don't have any money to buy their products because they're spending all their money on food, then ultimately you could see falling stock prices as the dollar is falling.
Schonberger: Speaking of relationships, you expect gold to go to $5,000 an ounce, correct?
Schiff: Yeah. It could go higher than that, but I think $5,000 is a reasonable expectation of where gold is headed over the course of the next several years, based on monetary and fiscal policy that is in place. Now if the government were to reverse course -- if they suddenly brought the budget into surplus, and if the Fed aggressively raised interest rates back up to a reasonable level, say 5%, 6%, or 7%, not just a quarter-point every few months -- then gold would probably not get to $5,000.
But I don't think they're going to do that. Based on what the Fed is saying and doing, they're going to keep interest rates at practically nothing for as far as the eye can see. The U.S. economy is not recovering. All we're doing is spending stimulus money. The minute you take away the stimulus, all the GDP growth, all the jobs that are associated with that stimulus spending, will vanish. So they can't take the stimulus away without destroying the phony recovery. So if interest rates are going to stay low and they're going to keep printing money, the only thing that's going to happen is the dollar is going to fall until it all of a sudden collapses ...
Schonberger: So then you're actually calling for a collapse in the dollar relatively soon?
Schiff: Relatively soon, yes. Maybe not tomorrow, but I think it will happen soon. I think it will happen before Barack Obama leaves office even if he's only a one-termer. The first initial collapse in the dollar will be about a 50%, 60%, or 70% decline in dollar value. That collapse will usher in the new leg -- the much more severe leg of our economic downturn. Not only will we have a financial crisis, but we'll also have a currency and economic crisis.
Hopefully that will be the tough medicine, the shock that finally causes Congress and the Fed to abandon its current policy and start doing the right thing. If it doesn't -- if they respond to that big drop in the dollar by creating more inflation, and if they fail to raise interest rates aggressively and withdraw liquidity -- then they will turn the dollar into confetti. Then we will have hyperinflation. If we go down that road, gold prices aren't just going to $5,000, they'll go to $50,000, or $500,000. I hope that cooler heads will prevail before we go down that road, but from this point that's still a possibility if we don't change policies.
Strong words from Peter Schiff.
Fool contributor Jennifer Schonberger does not own shares of any of the companies mentioned in this article. AFLAC is a Stock Advisor recommendation. Coke and Wal-Mart are Inside Value picks. Coke is also an Income Investor recommendation. The Motley Fool has a disclosure policy.
http://www.fool.com/investing/general/2009/12/11/the-future-of-gold-the-dollar-and-more.aspx
"It's far better to buy a wonderful company at a fair price than a fair company at a wonderful price."
By John Reeves
December 9, 2009
"It's far better to buy a wonderful company at a fair price than a fair company at a wonderful price."
An interesting academic study illustrates Buffett's amazing investment genius. From 1980 to 2003, the stock portfolio of Berkshire Hathaway (NYSE: BRK-A) beat the S&P 500 index in 20 out of 24 years. During that period, Berkshire's average annual return from its stock portfolio outperformed the index by 12 percentage points. The efficient market theory predicts that this is impossible. In this case, the theory is clearly wrong.
Buying great companies at reasonable prices can deliver solid returns for long-term investors. The challenge, of course, is identifying great companies -- and determining what constitutes a reasonable price.
- He also suggests that you look for companies with a huge economic moat to protect them from competitors.
- You can identify companies with moats by looking for strong brands that stand alongside consistent or improving profit margins and returns on capital.
Before they can capture Buffett-like returns, beginning investors will need to develop their skills in identifying profitable companies and determining intrinsic values. In the meantime, consider looking for stock ideas among Berkshire's own holdings.
Picking next year's winners might be a lot tougher.
What Will Be the Best Stock for 2010?
By Dan Caplinger
December 15, 2009
During 2009, finding winning stocks was like shooting fish in a barrel. But if what goes up must come down, picking next year's winners might be a lot tougher.
Among more than 4,000 stocks with market caps above $100 million that traded on major U.S. stock exchanges, more than 700 have doubled in price this year, and 84 have managed to see their prices rise 400% or more. Some of the top gainers include:
Stock
2009 YTD Return
Diedrich Coffee (Nasdaq: DDRX)
9,578%
Human Genome Sciences (Nasdaq: HGSI)
1,247%
Pier 1 (NYSE: PIR)
1,235%
Kirkland's (Nasdaq: KIRK)
615%
Teck Resources (NYSE: TCK)
551%
Dendreon (Nasdaq: DNDN)
469%
Sirius XM Radio (Nasdaq: SIRI)
411%
Source: Capital IQ, a division of Standard and Poor's. As of Dec. 14.
No encore
With those staggering numbers almost in the record books, a repeat performance of 2009 seems unlikely for most of those stocks. Still, that doesn't mean that there won't be any great stock returns in 2010.
Nevertheless, I'm not going to try to sell you on any hot predictions for next year. After all, I'm still reeling from my pick of Diedrich as the year's scariest stock. The company went on to jump another 60% in the month or so after I made that call.
How about you?
http://www.fool.com/investing/general/2009/12/15/what-will-be-the-best-stock-for-2010.aspx
By Dan Caplinger
December 15, 2009
During 2009, finding winning stocks was like shooting fish in a barrel. But if what goes up must come down, picking next year's winners might be a lot tougher.
Among more than 4,000 stocks with market caps above $100 million that traded on major U.S. stock exchanges, more than 700 have doubled in price this year, and 84 have managed to see their prices rise 400% or more. Some of the top gainers include:
Stock
2009 YTD Return
Diedrich Coffee (Nasdaq: DDRX)
9,578%
Human Genome Sciences (Nasdaq: HGSI)
1,247%
Pier 1 (NYSE: PIR)
1,235%
Kirkland's (Nasdaq: KIRK)
615%
Teck Resources (NYSE: TCK)
551%
Dendreon (Nasdaq: DNDN)
469%
Sirius XM Radio (Nasdaq: SIRI)
411%
Source: Capital IQ, a division of Standard and Poor's. As of Dec. 14.
No encore
With those staggering numbers almost in the record books, a repeat performance of 2009 seems unlikely for most of those stocks. Still, that doesn't mean that there won't be any great stock returns in 2010.
Nevertheless, I'm not going to try to sell you on any hot predictions for next year. After all, I'm still reeling from my pick of Diedrich as the year's scariest stock. The company went on to jump another 60% in the month or so after I made that call.
How about you?
http://www.fool.com/investing/general/2009/12/15/what-will-be-the-best-stock-for-2010.aspx
What Was Your Worst Investment Mistake in 2009?
What Was Your Worst Investment Mistake in 2009?
By Dan Caplinger
December 15, 2009
In 2008, nearly everybody made bad investments. By comparison, 2009 was a complete delight.
Still, investors made mistakes. Even with the huge rally, some stocks, including Valero Energy (NYSE: VLO), MetroPCS (NYSE: PCS), and Apollo (Nasdaq: APOL), managed to drop this year. In addition, Treasury bonds, which rode high during 2008, also knocked investors for a big loss this year.
What might have been
Personally, though, my biggest mistake this year was in cutting my winners short. The decision to take some profits on part of my positions in Starbucks (Nasdaq: SBUX) and Freeport-McMoRan (NYSE: FCX) well into the rally seemed like a no-brainer at the time, but those stocks just kept going up. Similarly, I trimmed my holdings in junk bond mutual funds and some international bonds, figuring that gains might well prove short-lived. Although that didn't cause any losses, the opportunity cost of getting out too early was extremely high.
There's a lesson in that. Plenty of investors are smart enough to buy top performers like Apple (Nasdaq: AAPL) and Green Mountain Coffee Roasters (Nasdaq: GMCR), and a good number of them earn decent profits from them. But only the most disciplined, patient investors stick with those winners for the long haul, squeezing every penny of potential gain out of their shares and turning a modest winner into a gold mine for their portfolio.
How about you?
http://www.fool.com/investing/dividends-income/2009/12/15/what-was-your-worst-investment-mistake-in-2009.aspx
By Dan Caplinger
December 15, 2009
In 2008, nearly everybody made bad investments. By comparison, 2009 was a complete delight.
Still, investors made mistakes. Even with the huge rally, some stocks, including Valero Energy (NYSE: VLO), MetroPCS (NYSE: PCS), and Apollo (Nasdaq: APOL), managed to drop this year. In addition, Treasury bonds, which rode high during 2008, also knocked investors for a big loss this year.
What might have been
Personally, though, my biggest mistake this year was in cutting my winners short. The decision to take some profits on part of my positions in Starbucks (Nasdaq: SBUX) and Freeport-McMoRan (NYSE: FCX) well into the rally seemed like a no-brainer at the time, but those stocks just kept going up. Similarly, I trimmed my holdings in junk bond mutual funds and some international bonds, figuring that gains might well prove short-lived. Although that didn't cause any losses, the opportunity cost of getting out too early was extremely high.
There's a lesson in that. Plenty of investors are smart enough to buy top performers like Apple (Nasdaq: AAPL) and Green Mountain Coffee Roasters (Nasdaq: GMCR), and a good number of them earn decent profits from them. But only the most disciplined, patient investors stick with those winners for the long haul, squeezing every penny of potential gain out of their shares and turning a modest winner into a gold mine for their portfolio.
How about you?
http://www.fool.com/investing/dividends-income/2009/12/15/what-was-your-worst-investment-mistake-in-2009.aspx
Top Glove posts RM65.2m 1Q net profit
The glove sector continues to be resilient and growing strongly. Topglove is the leader in the group. Watch the others too.
Top Glove posts RM65.2m 1Q net profit
Written by Loong Tse Min
Wednesday, 16 December 2009 14:50
KUALA LUMPUR: Latex glove maker Top Glove Corp Bhd whose share price surged Dec 15 on expectations of strong quarterly financial results on Wednesday, Dec 16 posted a 90.9% jump in net profit to RM65.2 million in its first quarter ended Nov 30, 2009.
In its results filing to the stock exchange during the midday trading break, the company attributed the strong growth in earnings to cost-savings measures implemented at all its factories, improvements in product quality, productivity as well as aggressive marketing strategies.
Revenue for the quarter grew 22.3% to RM472.3 million from RM386.1 million in the same quarter a year earlier, with earnings per share rising to 21.94 sen from 11.60 sen. No dividends have been declared for the period under review.
In the notes accompanying the quarterly filing, the company added that its group continues to strengthen its balance sheet and working capital position, currently in net cash position of RM222 million, with RM237.1 million cash in bank as at Nov 30, 2009.
The group also has fully redeemed the bonds outstanding before its maturity date in view of its strong cash flow position. According to the company, its finance cost for current quarter has reduced by 85% to RM400,000 from RM2.7 million in quarter ended Nov 30, 2008.
Going forward, Top Glove said: "The group is confident of continuous growth and good profitable performance in current financial year".
It disclosed that its factory in Klang has commenced installation of 16 new and more advanced glove production lines with completion expected by February 2010.
It has also begun CONSTRUCTION [] of another factory in Klang that will house an additional 16 production lines with target completion by July 2010. It is also installing nine more "latex concentrate centrifuge machines" in Thailand to be ready by January 2010.
The Top Glove group currently has 355 production lines in 19 factories with a capacity of 31.5 billion pieces of gloves per annum. Staff strength stands at 9,100 employees.
At 2.30pm, Top Glove was trading unchanged at RM9.53 with 400,700 shares changing hands.
http://www.theedgemalaysia.com/index.php?option=com_content&task=view&id=155812&Itemid=79
Top Glove Q1 net almost doubles
Published: 2009/12/17
Top Glove Corp Bhd (7113) said its first quarter net profit almost doubled to RM66.5 million on cost saving measures and aggressive marketing strategies.
Revenue for the quarter ended November 30 2009 rose 22 per cent to RM472.3 million from RM386.1 million previously.
"Top Glove has adapted well to the challenging business environment, resulting from cost-saving measures implemented at at our factories in Malaysia, Thailand and China.
"In view of the strong profit growth for the first quarter, we're optimistic of positive outlook for the next few quarters," chairman Tan Sri Lim Wee-Chai, said in a statement.
To meet higher demand for latex concentrate, Top Glove is installing nine more latex concentrate centrifuge machines in Thailand.
"We should be able to complete this upgrading works next month," said Lim.
Currently, the company is in net cash position of RM222 million, with RM237.1 million cash in bank as at November 30 2009. It has fully redeemed outstanding bonds before the maturity date.
Its finance cost is also down by 85 per cent to RM400,000 in the first quarter.
In the last 10 years, Top Glove's profits expanded at an average rate of 36 per cent. Its performance far outweighs global rubber glove demand growth of 10 per cent per year.
With installed capacity of 31.5 billion pieces of gloves a year, the world's biggest glovemaker continues to build on its size.
Factory 20, which is located in Klang, Malaysia, has commenced the installation of 16 new and advanced glove production lines and is targeted to be completed by February 2010.
As for Factory 21, it is being built and is expected to start operation towards the end of next year.
http://www.btimes.com.my/Current_News/BTIMES/articles/16top/Article/
Top Glove posts RM65.2m 1Q net profit
Written by Loong Tse Min
Wednesday, 16 December 2009 14:50
KUALA LUMPUR: Latex glove maker Top Glove Corp Bhd whose share price surged Dec 15 on expectations of strong quarterly financial results on Wednesday, Dec 16 posted a 90.9% jump in net profit to RM65.2 million in its first quarter ended Nov 30, 2009.
In its results filing to the stock exchange during the midday trading break, the company attributed the strong growth in earnings to cost-savings measures implemented at all its factories, improvements in product quality, productivity as well as aggressive marketing strategies.
Revenue for the quarter grew 22.3% to RM472.3 million from RM386.1 million in the same quarter a year earlier, with earnings per share rising to 21.94 sen from 11.60 sen. No dividends have been declared for the period under review.
In the notes accompanying the quarterly filing, the company added that its group continues to strengthen its balance sheet and working capital position, currently in net cash position of RM222 million, with RM237.1 million cash in bank as at Nov 30, 2009.
The group also has fully redeemed the bonds outstanding before its maturity date in view of its strong cash flow position. According to the company, its finance cost for current quarter has reduced by 85% to RM400,000 from RM2.7 million in quarter ended Nov 30, 2008.
Going forward, Top Glove said: "The group is confident of continuous growth and good profitable performance in current financial year".
It disclosed that its factory in Klang has commenced installation of 16 new and more advanced glove production lines with completion expected by February 2010.
It has also begun CONSTRUCTION [] of another factory in Klang that will house an additional 16 production lines with target completion by July 2010. It is also installing nine more "latex concentrate centrifuge machines" in Thailand to be ready by January 2010.
The Top Glove group currently has 355 production lines in 19 factories with a capacity of 31.5 billion pieces of gloves per annum. Staff strength stands at 9,100 employees.
At 2.30pm, Top Glove was trading unchanged at RM9.53 with 400,700 shares changing hands.
http://www.theedgemalaysia.com/index.php?option=com_content&task=view&id=155812&Itemid=79
Top Glove Q1 net almost doubles
Published: 2009/12/17
Top Glove Corp Bhd (7113) said its first quarter net profit almost doubled to RM66.5 million on cost saving measures and aggressive marketing strategies.
Revenue for the quarter ended November 30 2009 rose 22 per cent to RM472.3 million from RM386.1 million previously.
"Top Glove has adapted well to the challenging business environment, resulting from cost-saving measures implemented at at our factories in Malaysia, Thailand and China.
"In view of the strong profit growth for the first quarter, we're optimistic of positive outlook for the next few quarters," chairman Tan Sri Lim Wee-Chai, said in a statement.
To meet higher demand for latex concentrate, Top Glove is installing nine more latex concentrate centrifuge machines in Thailand.
"We should be able to complete this upgrading works next month," said Lim.
Currently, the company is in net cash position of RM222 million, with RM237.1 million cash in bank as at November 30 2009. It has fully redeemed outstanding bonds before the maturity date.
Its finance cost is also down by 85 per cent to RM400,000 in the first quarter.
In the last 10 years, Top Glove's profits expanded at an average rate of 36 per cent. Its performance far outweighs global rubber glove demand growth of 10 per cent per year.
With installed capacity of 31.5 billion pieces of gloves a year, the world's biggest glovemaker continues to build on its size.
Factory 20, which is located in Klang, Malaysia, has commenced the installation of 16 new and advanced glove production lines and is targeted to be completed by February 2010.
As for Factory 21, it is being built and is expected to start operation towards the end of next year.
http://www.btimes.com.my/Current_News/BTIMES/articles/16top/Article/
Investors need to watch out for possible market corrections of at least 10%
Investors need to watch out for possible market corrections of at least 10%
By Ryan Huang/ Jonathan Peeris, Channel NewsAsia,
Posted: 14 December 2009 2054 hrs
SINGAPORE: Online financial services firm CMC Markets said investors hoping to enter the stock markets before year-end should be wary of a possible correction of about 10 per cent.
CMC said recent rallies have run ahead of fundamentals. And there are also concerns about when central banks will withdraw stimulus measures from the global financial system.
Stock markets may have rallied and shown signs of stabilising in recent months, but CMC Markets believes there should be caution going into 2010.
For one, it said, the recent stock market rallies have been fuelled by the weakness of the US dollar and Japanese yen. And when these currencies stabilise, the stock rally may falter.
Then there is the question of how markets will react to central banks eventually pulling back the massive stimulus for the global economy.
CMC believes there are significant headwinds ahead for markets.
Ashraf Laidi, chief market strategist, CMC Markets, said: "First of all, the fallout from the Dubai story is really not over yet and just starting. The question really depends upon the extent to which these various entities that are part of the Dubai Holdings umbrella may be forced sell some of their UK and US-based property."
CMC said other problem areas include the current credit tensions inside some Eurozone countries like Greece and Spain. There are also signs of weakness in the commercial real estate sector in the UK and the US.
Mr Ashraf Laidi added: "I think currencies like the Malaysian ringgit and the Singapore dollar could be boosted by a concrete improvement in interest rates.
"I think the real estate sector in these regions probably cannot be described to be in a bubble as others can. I think that services and activity in financial services here and the demand is really taking a life of its own."
CMC also sees a bright spark in gold as a long-term investment. It said while gold prices may dip in the next two quarters, the yellow metal may hit a high of US$1,500 an ounce in the second half of next year. - CNA/vm
http://www.channelnewsasia.com/stories/corporatenews/view/1024760/1/.html
By Ryan Huang/ Jonathan Peeris, Channel NewsAsia,
Posted: 14 December 2009 2054 hrs
SINGAPORE: Online financial services firm CMC Markets said investors hoping to enter the stock markets before year-end should be wary of a possible correction of about 10 per cent.
CMC said recent rallies have run ahead of fundamentals. And there are also concerns about when central banks will withdraw stimulus measures from the global financial system.
Stock markets may have rallied and shown signs of stabilising in recent months, but CMC Markets believes there should be caution going into 2010.
For one, it said, the recent stock market rallies have been fuelled by the weakness of the US dollar and Japanese yen. And when these currencies stabilise, the stock rally may falter.
Then there is the question of how markets will react to central banks eventually pulling back the massive stimulus for the global economy.
CMC believes there are significant headwinds ahead for markets.
Ashraf Laidi, chief market strategist, CMC Markets, said: "First of all, the fallout from the Dubai story is really not over yet and just starting. The question really depends upon the extent to which these various entities that are part of the Dubai Holdings umbrella may be forced sell some of their UK and US-based property."
CMC said other problem areas include the current credit tensions inside some Eurozone countries like Greece and Spain. There are also signs of weakness in the commercial real estate sector in the UK and the US.
Mr Ashraf Laidi added: "I think currencies like the Malaysian ringgit and the Singapore dollar could be boosted by a concrete improvement in interest rates.
"I think the real estate sector in these regions probably cannot be described to be in a bubble as others can. I think that services and activity in financial services here and the demand is really taking a life of its own."
CMC also sees a bright spark in gold as a long-term investment. It said while gold prices may dip in the next two quarters, the yellow metal may hit a high of US$1,500 an ounce in the second half of next year. - CNA/vm
http://www.channelnewsasia.com/stories/corporatenews/view/1024760/1/.html
LCL Founder Loses Company After Dubai Debt Crisis
Debt and leverage are double-edged swords. You can make it big or you can be decimated. You will never be bankrupt if you are not in debt or excessively leveraged. Always be prepared for the unexpected downsides. Who would have thought that Dubai will be also mained in this financial crisis?
LCL Founder Loses Company After Dubai Debt Crisis (Update3)
By Barry Porter
Dec. 15 (Bloomberg) -- LCL Corp Bhd. Managing Director Low Chin Meng lost control of the Malaysian interior design company he founded after a debt crisis in the Gulf emirate of Dubai forced it to default on loans.
CIMB Islamic Bank Bhd. sold 16 million of Low’s LCL shares, representing his remaining 11.2 percent stake in the business, that were pledged as security against financing, Malaysian stock exchange filings show.
More than of 80 percent of Selangor-based LCL’s sales came from the United Arab Emirates last year compared to 46 percent in 2007, according to data compiled by Bloomberg, as Dubai built the world’s tallest tower and palm tree-shaped islands in a bid to lure international investors.
“When the company was growing at a fast rate it needed short-term capital to meet orders,” Nigel Foo, an analyst at CIMB Investment Bank Bhd., said in a telephone interview from Kuala Lumpur today. “To achieve this Low personally pledged his own shares.”
LCL said Dec. 10 it had been “severely” impacted by financial turmoil in Dubai and defaulted on 72 million ringgit ($21 million) of loans from Affin Bank Bhd. and Bank Islam Malaysia Bhd. because clients in the sheikhdom hadn’t paid bills. State-owned Dubai World roiled markets worldwide Dec. 1 when it said it was in talks with creditors to restructure $26 billion of debt built up during the emirate’s six-year real estate boom.
Bank Debts
LCL had 376 million ringgit of net debt as of Sept. 30, according to a Dec. 11 report by CIMB’s Foo. In addition to loans from CIMB the company borrowed from AMMB Holdings Bhd., Alliance Bank Malaysia Bhd., Bank Muamalat Malaysia Bhd., EON Capital Bhd., Public Bank Bhd., Standard Chartered Plc, Kuwait Finance House and Royal Bank of Scotland Group Plc, according to its Dec. 10 statement.
LCL jumped 8.7 percent today in Kuala Lumpur trading to close at 25 sen, giving the company a market value of 35.8 million ringgit. The stock has plunged 64.5 percent this year.
Low sold blocks of shares in the past three months, reducing his stake to 11.2 percent from 29 percent on Sept. 24, exchange filings show.
Calls to his mobile phone today weren’t answered today and officials at the company’s main office said he wasn’t there when Bloomberg called seeking comment.
Separately, the Malaysian stock exchange said today it reprimanded LCL for not submitting its annual audited accounts on time for the year ended Dec. 31 2008.
To contact the reporter responsible for this story: Barry Porter in Kuala Lumpur at bporter10@bloomberg.net
Last Updated: December 15, 2009 04:23 EST
LCL Founder Loses Company After Dubai Debt Crisis (Update3)
By Barry Porter
Dec. 15 (Bloomberg) -- LCL Corp Bhd. Managing Director Low Chin Meng lost control of the Malaysian interior design company he founded after a debt crisis in the Gulf emirate of Dubai forced it to default on loans.
CIMB Islamic Bank Bhd. sold 16 million of Low’s LCL shares, representing his remaining 11.2 percent stake in the business, that were pledged as security against financing, Malaysian stock exchange filings show.
More than of 80 percent of Selangor-based LCL’s sales came from the United Arab Emirates last year compared to 46 percent in 2007, according to data compiled by Bloomberg, as Dubai built the world’s tallest tower and palm tree-shaped islands in a bid to lure international investors.
“When the company was growing at a fast rate it needed short-term capital to meet orders,” Nigel Foo, an analyst at CIMB Investment Bank Bhd., said in a telephone interview from Kuala Lumpur today. “To achieve this Low personally pledged his own shares.”
LCL said Dec. 10 it had been “severely” impacted by financial turmoil in Dubai and defaulted on 72 million ringgit ($21 million) of loans from Affin Bank Bhd. and Bank Islam Malaysia Bhd. because clients in the sheikhdom hadn’t paid bills. State-owned Dubai World roiled markets worldwide Dec. 1 when it said it was in talks with creditors to restructure $26 billion of debt built up during the emirate’s six-year real estate boom.
Bank Debts
LCL had 376 million ringgit of net debt as of Sept. 30, according to a Dec. 11 report by CIMB’s Foo. In addition to loans from CIMB the company borrowed from AMMB Holdings Bhd., Alliance Bank Malaysia Bhd., Bank Muamalat Malaysia Bhd., EON Capital Bhd., Public Bank Bhd., Standard Chartered Plc, Kuwait Finance House and Royal Bank of Scotland Group Plc, according to its Dec. 10 statement.
LCL jumped 8.7 percent today in Kuala Lumpur trading to close at 25 sen, giving the company a market value of 35.8 million ringgit. The stock has plunged 64.5 percent this year.
Low sold blocks of shares in the past three months, reducing his stake to 11.2 percent from 29 percent on Sept. 24, exchange filings show.
Calls to his mobile phone today weren’t answered today and officials at the company’s main office said he wasn’t there when Bloomberg called seeking comment.
Separately, the Malaysian stock exchange said today it reprimanded LCL for not submitting its annual audited accounts on time for the year ended Dec. 31 2008.
To contact the reporter responsible for this story: Barry Porter in Kuala Lumpur at bporter10@bloomberg.net
Last Updated: December 15, 2009 04:23 EST
Tuesday, 15 December 2009
Another Polished Gem in Teh Hong Piow's stable of companies
10-Year Group Financial Graphical Summary (Page 62 and Page 63 of Annual Report)
http://www.lonpac.com/annualreport08/LPI08_4.pdf
http://www.lonpac.com/annualreport08/LPI08_4.pdf
Over the last 5 years, the earnings per share have increased 3x. Its share price has increased more than 2x. Dividends over the last 5 years have also grown commensurate with the earnings, though these had been flat the last 2 years.
Technicians should take note
Defensive stocks may not be spared, says chartist
Tags: BAT Malaysia Bhd | Defensive stocks | Dubai World | FBM KLCI | Finance sector | Fitch Ratings | Genting Bhd | Lee Cheng Hooi | Maybank Investment Bank | Nakheel | Petronas Dagangan Bhd | Plantations | YTL Corporation Bhd
Written by Daniel Khoo
Monday, 14 December 2009 11:34
KUALA LUMPUR: Defensive stocks may not be spared the brunt of an expected “steep correction” in the market ahead, said a technical analyst.
Maybank Investment Bank’s head of retail research, equity markets, Lee Cheng Hooi, who last Friday advised investors to liquidate their stocks, said some key FBM KL Composite Index stock constituents may lead declines in the market.
Among stocks which Lee expects will undergo a correction are YTL CORPORATION BHD [], GENTING BHD [], BAT Malaysia Bhd and PETRONAS DAGANGAN BHD [].
“Despite these stocks being defensive in nature, they don’t seem to be in great shape,” he told The Edge Financial Daily pursuant to his chart analysis of these stocks.
Lee also said banking stocks were “looking a bit high” and he did not rule out a further correction in the sector. The finance sector constitutes about 35.7% weightage on the FBM KLCI, followed by PLANTATION []s.
“The market is high, and we will likely see a snowball sell effect,” he said, adding that the local benchmark index may well fall below 1,200 since its run-up a few months ago.
In a report last Friday, Lee urged investors to liquidate their stocks in view of the “steep correction” round the corner, as the FBM KLCI hovered at a key neckline support level of the head and shoulders chart pattern.
He said the FBM KLCI may have peaked at 1,288.42 on Nov 17, 2009, and “urged investors to liquidate all their stocks on any and every rally”. He said all the FBM KLCI’s indicators (CCI, DMI, MACD, Oscillator and Stochastic) turned negative recently.
“There could be a potential steep correction very soon. Tactically, investors should liquidate all their stocks. If the FBM KLCI breaks below 1,255, the market would head down towards 1,207 (the measurement target of the dreaded head and shoulder pattern),” he said.
The head and shoulders pattern is a reversal chart pattern after a long upward trend and is recognised by technical analysts to forecast likely future trends in stock markets.
“Large local funds are distributing their massive positions, whilst maintaining the illusion that all is well with the FBM KLCI and FBM 100,” he added in the report.
Lee said weakness in most blue-chip components and mid-capped stocks would cause further market downside in the medium term, and the FBM KLCI was holding above the 50-day simple moving average for now. Lee said any US dollar’s rise would be among the factors giving downward pressure to equity markets.
FBM KLCI closed almost flat last Friday at 1,260 points with a high degree of uncertainty throughout the trading day. The benchmark index has risen about 50% from its low of 835.17 about a year ago.
There was now risk aversion to emerging markets after Dubai delayed its debt repayments, Lee further told The Edge Financial Daily, advising investors to hold cash at this point in time.
He likened the state of the world economy now to “a house of cards”.
“Dubai has started it (the correction), and these debt defaults will cause jitters in the world economy,” Lee said, referring to the latest news of debt repayment concerns in Spain and Greece.
Dubai is delaying its debt repayment, putting at risk the US$59 billion (RM200 billion) debt held by government controlled Dubai World and its property arm and an upmarket builder Nakheel.
Fitch Ratings last Tuesday announced that Latvia and Lithuania’s credit ratings were under pressure from the sharp deterioration in public finances, according to a Bloomberg report.
The same agency also cut its rating on Greek government bonds one step lower to BBB+, causing a heavy selloff on Greece’s government bond markets on fears over debt default.
Reports also said Standard and Poor’s shifted its outlook for Spain’s debt from stable to negative. The agency further said “reducing Spain’s sizeable fiscal and economic imbalances required strong policy actions, which have not yet materialised”.
Heavy bond selloffs have also been reported in countries like Portugal and Ireland as investors feared credit ratings for these countries may be downgraded.
This article appeared in The Edge Financial Daily, December 14, 2009.
Tags: BAT Malaysia Bhd | Defensive stocks | Dubai World | FBM KLCI | Finance sector | Fitch Ratings | Genting Bhd | Lee Cheng Hooi | Maybank Investment Bank | Nakheel | Petronas Dagangan Bhd | Plantations | YTL Corporation Bhd
Written by Daniel Khoo
Monday, 14 December 2009 11:34
KUALA LUMPUR: Defensive stocks may not be spared the brunt of an expected “steep correction” in the market ahead, said a technical analyst.
Maybank Investment Bank’s head of retail research, equity markets, Lee Cheng Hooi, who last Friday advised investors to liquidate their stocks, said some key FBM KL Composite Index stock constituents may lead declines in the market.
Among stocks which Lee expects will undergo a correction are YTL CORPORATION BHD [], GENTING BHD [], BAT Malaysia Bhd and PETRONAS DAGANGAN BHD [].
“Despite these stocks being defensive in nature, they don’t seem to be in great shape,” he told The Edge Financial Daily pursuant to his chart analysis of these stocks.
Lee also said banking stocks were “looking a bit high” and he did not rule out a further correction in the sector. The finance sector constitutes about 35.7% weightage on the FBM KLCI, followed by PLANTATION []s.
“The market is high, and we will likely see a snowball sell effect,” he said, adding that the local benchmark index may well fall below 1,200 since its run-up a few months ago.
In a report last Friday, Lee urged investors to liquidate their stocks in view of the “steep correction” round the corner, as the FBM KLCI hovered at a key neckline support level of the head and shoulders chart pattern.
He said the FBM KLCI may have peaked at 1,288.42 on Nov 17, 2009, and “urged investors to liquidate all their stocks on any and every rally”. He said all the FBM KLCI’s indicators (CCI, DMI, MACD, Oscillator and Stochastic) turned negative recently.
“There could be a potential steep correction very soon. Tactically, investors should liquidate all their stocks. If the FBM KLCI breaks below 1,255, the market would head down towards 1,207 (the measurement target of the dreaded head and shoulder pattern),” he said.
The head and shoulders pattern is a reversal chart pattern after a long upward trend and is recognised by technical analysts to forecast likely future trends in stock markets.
“Large local funds are distributing their massive positions, whilst maintaining the illusion that all is well with the FBM KLCI and FBM 100,” he added in the report.
Lee said weakness in most blue-chip components and mid-capped stocks would cause further market downside in the medium term, and the FBM KLCI was holding above the 50-day simple moving average for now. Lee said any US dollar’s rise would be among the factors giving downward pressure to equity markets.
FBM KLCI closed almost flat last Friday at 1,260 points with a high degree of uncertainty throughout the trading day. The benchmark index has risen about 50% from its low of 835.17 about a year ago.
There was now risk aversion to emerging markets after Dubai delayed its debt repayments, Lee further told The Edge Financial Daily, advising investors to hold cash at this point in time.
He likened the state of the world economy now to “a house of cards”.
“Dubai has started it (the correction), and these debt defaults will cause jitters in the world economy,” Lee said, referring to the latest news of debt repayment concerns in Spain and Greece.
Dubai is delaying its debt repayment, putting at risk the US$59 billion (RM200 billion) debt held by government controlled Dubai World and its property arm and an upmarket builder Nakheel.
Fitch Ratings last Tuesday announced that Latvia and Lithuania’s credit ratings were under pressure from the sharp deterioration in public finances, according to a Bloomberg report.
The same agency also cut its rating on Greek government bonds one step lower to BBB+, causing a heavy selloff on Greece’s government bond markets on fears over debt default.
Reports also said Standard and Poor’s shifted its outlook for Spain’s debt from stable to negative. The agency further said “reducing Spain’s sizeable fiscal and economic imbalances required strong policy actions, which have not yet materialised”.
Heavy bond selloffs have also been reported in countries like Portugal and Ireland as investors feared credit ratings for these countries may be downgraded.
This article appeared in The Edge Financial Daily, December 14, 2009.
EPF net buyer in banking stocks
EPF net buyer in banking stocks
Tags: Bank Negara Malaysia | CIMB Group Holdings Bhd | Domestic banking stocks | ECMLibra Investment Research | EON Capital Bhd | EPF | Hong Leong Bhd | Maybank | PBB
Written by Yong Yen Nie
Monday, 14 December 2009 11:41
KUALA LUMPUR: The Employees Provident Fund (EPF) has re-emerged as a net buyer in most domestic banking stocks, especially large-capped ones since November 2009, a significant shift from its net selling activities in the period prior starting in April this year.
According to latest filings on Bursa Malaysia, EPF has raised its stakes in MALAYAN BANKING BHD [] (Maybank) and CIMB Group Holdings Bhd to 808.7 million shares or 11.4% and 462.22 million or 12.9%, respectively.
A month earlier, EPF held 788.25 million shares or an 11.1% stake in Maybank and 441.68 million shares or a 12.3% stake in CIMB.
Prior to this, the statutory pension fund had pared down its holdings in Maybank and CIMB from April this year. At end-April, it had held 887.77 million shares or a 12.5% stake in Maybank and 623.48 million shares or a 17.4% stake in CIMB.
EPF also picked up PUBLIC BANK BHD [] (PBB) shares in November, raising its interests to 474.93 million shares or 13.4%, compared with 461.54 million shares or 13.1% at end-October.
EPF used to hold a 14.8% stake comprising 523.76 million shares in PBB but had pared down its stake in the banking group since end-August this year.
It also accumulated more AMMB HOLDINGS BHD [] shares and held a 13.4% stake or 405.35 million shares in the banking group as of end-November, compared with 395.38 million shares or 13.1% a month earlier.
EPF had been a net seller in AMMB shares since July. As at end-June, EPF had held 451.57 million shares or a 15% stake in AMMB.
Banking analysts said EPF was seen to be turning its focus on banking stocks, given the improved indicators in the financial sector and stronger expectations of an improved economic outlook in 2010.
A banking analyst with a local research house said several research houses had made overweight calls on the sector following banks’ better-than-expected financial results for the quarter ended Sept 30, 2009.
“With the anticipation of a stronger economy next year, EPF would want to have an investment strategy that benefits the most from the recovery,” she told The Edge Financial Daily last week.
The banking analyst added that while there was still some upside left in the banking stocks, most of them were approaching the target prices.
“(Nevertheless), we believe buying activities for banking stocks will continue for the first half of 2010, underpinned by stronger economic trends, while profit-taking would be more pronounced by June next year,” she said.
EPF had also accumulated shares in other mid-capped banking stocks, filings on Bursa Malaysia showed.
According to filings last Friday, EPF had raised its interests in HONG LEONG BANK BHD [] to 177.28 million shares or 11.2% from 171.32 million shares or a 10.8% stake at end-October.
The pension fund had also increased holdings in ALLIANCE FINANCIAL GROUP BHD [] (AFG) to 235.9 million shares or 15.24% at end-November from 226.02 million shares or 14.6% a month earlier. Filings showed EPF has been accumulating shares in AFG since end-June.
EPF slightly pared down holdings in EON CAPITAL BHD [] to 83.4 million shares representing 12.03% at end-November from 83.62 million shares or 12.06% a month earlier.
Recent Bank Negara Malaysia statistics showed that the decline in loans growth had bottomed in October, following a faster loans expansion of 7.5% year-on-year (y-o-y) compared with 7.2% in September this year.
In a report, ECMLibra Investment Research said the improving loans growth corresponded with a gradual recovery in economic conditions, as shown by a 1.2% contraction in gross domestic product (GDP) for the third quarter of 2009 (3Q09), which was healthier than 1Q09’s and 2Q09’s contraction of 6.2% and 3.9%, respectively.
“Going by the lending indicators, it would seem that there has been some pent-up demand for credit, as shown in the double-digit y-o-y changes in the applications and approval numbers.
“Net NPL (non-performing loans) ratio on a three-month basis remained unchanged at 2.1%, but has improved to 1.5% on a six-month basis (from 1.6% previously),” it said.
The research house added that the banking system’s capitalisation remained stable with risk-weighted capital ratio and core capital ratio of 14.5% and 13%, respectively.
This article appeared in The Edge Financial Daily, December 14, 2009.
Monday, 14 December 2009
Value Growth Investing
"Drawing on the principles of some of the most successful investors of the last century, this book is both a valuable guide to the ideas of these gurus and a fascinating elucidation of the author's own investment philosophy of 'valuegrowth'." Romesh Vaitilingam, author of The Financial Times Guide to Using the Financial Pages "Glen Arnold explores and endorses all the investment concepts that I try to promote every week in the Investors Chronicle and his portraits of the great investors are right on the mark. Despite being a professor of finance, he is eminently readable." Alistair Blair, No Free Lunch column, Investors Chronicle "Market commentators and investment managers who glibly refer to growth' and value' styles as contrasting approaches to investment are displaying their ignorance, not their sophistication." Warren Buffett, 2001 Valuegrowth Investing answers the key question for investors: "What are the crucial elements leading to the successful analysis of shares?" To be a successful investor you have to be a good evaluator of businesses.
There are too many so-called investors who occupy their time analysing the stock market, identifying trends and forecasting.Valuegrowth investors understand the companies in which they buy stocks as living businesses. This book draws on the rigorous investment techniques developed by the great investors of the last 100 years, such as Peter Lynch, Benjamin Graham and Warren Buffett. These ideas are combined with modern finance frameworks and with recent developments in the field of business strategy analysis, to create a new way of valuing shares. All investors are searching for the Holy Grail of a set of sound and profitable investment principles to guide them in share selections. Valuegrowth Investing shows that the Grail has been found.Valuegrowth Investing: *draws on investment principles discovered by world-renowned investors such as Peter Lynch and Warren Buffett *combines these principles with insights provided by recent developments in the field of business strategy to provide a coherent investment philosophy for tomorrow's investment strategies *describes what the ordinary investor should focus on and then offers evaluation techniques to identify underpriced shares *provides tools for analysing key investment factors *shows that successful investing does not require great intellect, it requires great principles.
Contents of Value Growth Investing
Part One: Investment Philosophies
1. Peter Lynch's niche investing
2. John Neff's sophisticated low price-earning ratio investing
3. Benjamin Graham: The father of modern security analysis
4. Benjamin Graham's three forms of value investing
5. Philip Fisher's bonanza investing
6. Warren Buffett and Charles Munger's business perspective investing - Part 1
7. Warren Buffett's and Charles Munger's business perspective investing - Part 2
Part Two: The Valuegrowth Method
8. The Valuegrowth Investor
9. The analysis of industries
10. Competitive Resource Analysis
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