Survey: Investors to stick to mainstream investments

Survey: Investors to stick to mainstream investments
Published: 2009/08/26

In the retail space, asset managers believe that clients will focus more on capital protection rather than returns they can potentially earn.

POST financial crisis, investors worldwide will likely stick to simpler and safer mainstream investments for a long time to come instead of blindly chasing high returns, a global survey of asset managers shows.

"Retail clients are likely to display stronger behavioural changes than other segments. Loss aversion will be rife for the foreseeable future. Priorities will change," said Barbara McKenzie, the chief operating officer of Principal Global Investors, which commissioned the study.

"The memory and impact of the recent financial crisis will last longer this time."

The research sought to assess industry sentiment and how the global asset management industry will evolve after the crisis. The survey was conducted on 225 asset managers and pension funds in 30 countries, responsible for US$18.2 trillion (US$1 = RM3.51) of assets as at April this year.

In the retail space, asset managers believe that clients will focus more on capital protection rather than returns they can potentially earn.

Institutional clients, meanwhile, are expected to stress on expected risks instead of the expected returns, the survey showed.

"Simplicity, safety and quality are now the watchwords underpinning clients' investment goals," McKenzie said in a media briefing in Kuala Lumpur yesterday.

Datuk Noripah Kamso, the chief executive of CIMB-Principal Islamic Asset Management Sdn Bhd, said syariah-based investment management will gain momentum riding on this shift in investors' behaviour.

The values of Islamic asset management, which filters out risky investments and stress on the fair distribution of wealth, fit well with investors new priorities, she said.

CIMB-Principal Islamic Asset Management, which manages US$1.3 billion at the end of June, expects to pull in another US$400 million by the end of the year, Noripah said. The company is a partnership between Principal Global Investors and CIMB Group.

http://www.btimes.com.my/Current_News/BTIMES/articles/prinpo/Article/

UMW may reapply for O&G unit listing

UMW may reapply for O&G unit listing
By Francis Fernandez
Published: 2009/09/09

The assembler of Toyota Motor Corp cars in Malaysia will likely submit a fresh IPO application to the Securities Commission by end-month

UMW Holdings Bhd (4588), the assembler of Toyota Motor Corp cars in Malaysia, will likely submit a fresh initial public offer application to the Securities Commission (SC) by month-end to list its oil and gas (O&G) subsidiary, TA Research said in a report yesterday.

The research house, which held discussions with the UMW management recently, said that the group has to update and make several key amendments to the new application in tandem with the changes seen in the group's O&G division over the past year.

UMW, which started its oil and gas business in 2002 currently has projects in 12 countries including Singapore, Thailand, China, Indonesia and the Middle East.

For the year ended December 31 2008, UMW's O&G division posted RM754.66 million revenue, making the third largest contributor to the group revenue, which was dominated by the automotive division, raking in sales of RM10.03 billion.
UMW have been looking to raise as much as RM425 million by selling shares of its O&G unit to the public. It had announced the listing plans in February last year, but stalled on the floatation plan due to weak market conditions.

"The exercise has since been postponed twice, with the second extension from the SC valid till September 30 2009. Although UMW now has less than 30 days to list its O&G unit, the group has not provided investors with any new updates on the status of the listing," TA said in the report.

It speculates that UMW could bid its time, and possibly list the O&G unit by as early as the second half of next year, when market conditions are expected to be much better than now.


http://www.btimes.com.my/Current_News/BTIMES/articles/umwz/Article/

FBMKLCI rises to new high

FBMKLCI rises to new high
Published: 2009/10/14

THE FTSE Bursa Malaysia Kuala Lumpur Composite Index (FBM KLCI) jumped to the year's new high as investors snapped up banking-related stocks today.

The benchmark index closed 13.33 points higher at 1,246.84 after hitting an intraday high of 1,248.14.

Dealers said the Malaysian Institute of Economic Research's forecast that the country's economy would shrink at a slower pace of 3.3 per cent this year, an improvement from 4.2 per cent projected earlier, provided some support.

Rising buying interest in penny and small cap stocks with the return of risk appetite was also evident, they said.

"Follow-through buying by foreign funds in key banking-related stocks such as Maybank and CIMB Group helped the FBM KLCI extend its gain," a dealer said.

At the close, the FBM Emas Index gained 97.57 points to 8,393.58, the FBM Top 100 increased 91.98 points to 8,171.25, the FBM 70 jumped 111.23 points to 8,257.70 and the FBM ACE Index advanced 48.30 points to 4,269.02.

The Finance Index surged 171.58 points to 10,528.24, the Plantation Index gained 43.75 points to 6,031.33 and the Industrial Index added 13.85 points to 2,667.12.

Gainers outnumbered losers by 574 to 174 while 208 counters unchanged and 338 others untraded.

Turnover increased to 1.261 billion shares valued at RM1.655 billion from 939.925 million shares worth RM1.005 billion yesterday.

Among active counters, KNM Group rose four sen to 84.5 sen, SAAG Consolidated added three sen to 23.5 sen and Silk Holdings advanced 5.5 sen to 50 sen.

Time Engineering inched up 1.5 sen to 38 sen, Hubline Bhd-OR added one sen to 11 sen and Green Packet-Warrants gained 5.5 sen to 42.5 sen.

Conglomerate Sime Darby rose seven sen to RM8.69 while finance heavyweight Maybank gained 22 sen to RM6.96.

CIMB Group advanced 16 sen to RM12.32, Tenaga Nasional rose two sen to RM8.25, IOI Corp edged up six sen to RM5.33 and Genting gained seven sen RM7.39.

The Main Market turnover jumped to 1.173 billion shares worth RM1.633 billion from 820.767 million shares worth RM982.236 million yesterday.

The ACE Market volume, however, decreased to 49.662 million shares valued at RM11.937 million from 100.747 million shares valued at RM18.028 million while warrants increased to 28.860 million units worth RM7.071 million from 14.911 million unit worth RM3.664 million.

Consumer products accounted for 51.489 million shares traded on the Main Market, industrial products 284.396 million, construction 59.883 million, trade and services 368.269 million, technology 100.543 million, infrastructure 63.492 million, finance 76.327 million, hotels 4.486 million, properties 145.674 million, plantations 15.498 million, mining 92,200, REITs 2.852 million and closed/fund 133,000.

Bernama

Nestle aims to double out-of-home market share

Nestle aims to double out-of-home market share
By Zaidi Isham Ismail
Published: 2009/10/14


FOOD and beverage (F&B) maker Nestle (Malaysia) Bhd (4707)aims to double its share of Malaysia's out-of-home market worth RM11.2 billion to 70 per cent in the next five years.

Out-of-home business refers to F&B-related businesses that take place out of the home such as buying fast food, teh tarik, coffee and snacks at supermarkets, mamak stalls or five-star hotels.

Nestle executive director Zainun Nur Abdul Rauf said the goal is achievable, in line with an increasing affluence of Malaysians.

"Malaysians spend 35 per cent of their income for in home business such as buying instant noodles and 65 per cent outside of the home on food and drinks.

"The 65 per cent ratio is likely to increase in the future as more and more Malaysians become affluent and eat out," Zainun told reporters at the launch of its Nescafe Professional branding initiative in Kuala Lumpur yesterday.

Zainun said for the past 15 months, consumer trend has been eating at home due to the global economic slowdown, but this is likely to change in the near future, in line with a recovering economy.

"We will also work closer with our food partners such as hotels and mamak stalls by providing new innovative coffee concoctions, Milo and Maggi," said Zainun.

Nestle Malaysia is part of Swiss group Nestle, which is the world's largest food company, marketing more than 8,000 brands and 30,000 products with 500 factories spread over 80 countries and employing 250,000 people.

http://www.btimes.com.my/Current_News/BTIMES/articles/NESDOU/Article/

Top Glove optimistic of good dividends

Top Glove optimistic of good dividends
Published: 2009/10/14

TOP Glove Corp Bhd's shareholders can expect better dividend income going forward based on the company's optimism of continuing to record double-digit growth for at least 1-2 years more based on strong demand for rubber gloves and its expansion.

For financial year ended Aug 31, 2009 (FY09), the world's largest rubber glove manufacturer paid a dividend of 22 sen, a 100 per cent increase from 11 sen previously.

Its chairman Tan Sri Lim Wee Chai said the company, which targeted to pay 30 per cent dividend annually, would consider a special dividend if it continued to record strong performance.

"The chances are always good for us to achieve growth of more than 10 per cent, at least for the next one to two years and this will translate into a possible high dividend.



"With good earnings and strong cash, we should also be able to pay a good or even better dividend in the coming years," he told a media briefing on the company's performance for 2009 financial year in Kuala Lumpur today.

As at Aug 31, 2009, Top Glove's cash in banks stood at RM197.2 million and total borrowings at RM20.5 million.

Lim said the global demand for rubber gloves grew at between 8-10 per cent annually.

He said Top Glove had enough cash to pay dividend and the land for expansion.

The company, which has been on expansion mode with the opening of a new factory every year, is enthusiastic about increasing its capacity either through organic growth or acquisitions.

Currently, it has the capacity to produce 31.5 billion pieces of gloves annually, but that will be increased to 34.5 billion next year with the operation of factory number 20 in February next year and factory number 21 somewhere in the middle of next year.
Each factory has the capacity to produce 1.5 billion pieces annually.

At the moment, it has 17 gloves factories and two latex concentrate factories and its target is to capture 30 percent of the global market by 2012 compared to 22 percent now.

Lim said the company's capital expenditure for FY2010 was RM70 million.

He said the company would continue to expand its manufacturing plants in Malaysia, Thailand and China.

"We have the land to build one or two more factories every year to meet the increasing demand," he said.

The company has 7.2 hectares in Klang for future development, 8.4ha in Thailand and six ha in China.

He said investment in China was a challenge as many companies had suffered losses.

Top Glove's venture, however, is profitable, he said.

On acquisition, he said, although Top Glove was receptive it would be careful as not all acquisitions would be successful.

He said money alone would not ensure the success of the acquisition as there were also a need for adequate resources in areas such as human resources and marketing.

For FY09, its pre-tax profit rose by 65 per cent to RM221.5 million from RM134.6 million in the same period of 2008.

Revenue surged 11 per cent to RM1.53 billion from RM1.38 billion previously.

The record profit has been achieved on a high EBITDA (earnings before interest, tax, depreciation and amortisation) margin of 18.7 per cent in FY2009 compared to 14.4 per cent in FY2008.

Executive director, Lim Cheong Guan, said the 18 per cent plus margin was on the high side and did not expected a repeat in the near term.

Lim, however, still expected the margin to be in 16-17 per cent range going forward based on strong demand for rubber gloves.

Meanwhile, another executive director, Lee Kim Meow, said the prospect for the rubber glove industry was bright given its resilience to recession and rising demand due to increase awareness among the governments on global health threats.

"We expect government allocations for healthcare-related products such as gloves, to increase in future and this will boost our business," he said.

China and India, including Malaysia spent about 4.5 per cent of their gross domestic product on healthcare compared with the US at 15.3 per cent.

Top Glove rose 24 sen to close at RM8.40 on Bursa Malaysia today. -- BERNAMA


http://www.btimes.com.my/Current_News/BTIMES/articles/20091014190121/Article/index_html

Strong Earnings Push Wall Street Higher

Strong Earnings Push Wall Street Higher

By JACK HEALY
Published: October 14, 2009

For Wall Street, the news was sweet: a major bank turned a $3.6 billion profit, earnings were up at a major computer-chip maker, and retail sales held up better than expected.

And so investors around the world went shopping, lifting stock markets from London to New York to Mexico City. On Wall Street, shares touched their highest levels of the year, and the Dow flirted again with retaking 10,000.

Many investment experts dismiss the significance of such big, round benchmark numbers, and say that no sophisticated investors or hedge funds make investment decisions based on whether a stock index’s total value can be measured in four or five digits.

The Dow Jones industrial average, one of the most-watched measures of the financial markets, surged at the opening and was up 73 points, or 0.7 percent, at about 10:30 a.m. The broader Standard & Poor’s 500-stock index and the Nasdaq were about 0.9 percent higher.

The major stock indexes have rebounded by 50 percent or more in a scorching rally that began in early March and galloped higher through the summer and early autumn, as the economy stabilized and once-bleeding companies began to report better profits and rising revenue.

That optimism got louder on Wednesday.

Investors rushed to take positions on companies and commodities that could benefit from a broad upturn in corporate profits and the global economy. Crude oil prices hit their highest levels since last October, topping $75 a barrel. Safety bets like the dollar and government bonds got creamed.

Financial stocks surged after JPMorgan Chase announced a third-quarter profit that trounced expectations. JPMorgan was the first major financial company to announce earnings, and the sight of rising revenues and stabilizing losses at one of Wall Street’s most powerful banks lifted expectations that the financial sector was back on its feet, a year after its near-implosion.

Shares of JPMorgan climbed 3 percent in early trading, and its rising tide lifted shares of other banks like Goldman Sachs, Wells Fargo, Bank of America and Citigroup, which are all scheduled to report their own quarterly results in the days ahead.

Even regional banks shared in the hoopla, despite lingering problems with their mortgage portfolios and worries that the smaller banks are more exposed to losses in the commercial real estate market.

Investors swept up shares of computer companies, search engines and software makers after Intel reported profits that surpassed Wall Street’s expectations and foreshadowed a return to global growth. Shares of Intel, which reported a profit after markets closed on Tuesday, were up 3 percent.

Shares were also higher in Asia and Europe. The FTSE 100 in London rose 1.7 percent while the DAX in Frankfurt was 2 percent higher. The CAC-40 in Paris rose 1.7 percent.

In Asia, the Shanghai index rose 1.2 percent, while Hong Kong’s Hang Seng index increased 2 percent. Japan’s Nikkei index slipped 0.2 percent.

http://www.nytimes.com/2009/10/15/business/15markets.html?hpw

Smart guys started going to Wall Street

Op-Ed Contributor

Wall Street Smarts

By CALVIN TRILLINPublished: October 13, 2009

“IF you really want to know why the financial system nearly collapsed in the fall of 2008, I can tell you in one simple sentence.”

The statement came from a man sitting three or four stools away from me in a sparsely populated Midtown bar, where I was waiting for a friend. “But I have to buy you a drink to hear it?” I asked.

“Absolutely not,” he said. “I can buy my own drinks. My 401(k) is intact. I got out of the market 8 or 10 years ago, when I saw what was happening.”

He did indeed look capable of buying his own drinks — one of which, a dry martini, straight up, was on the bar in front of him. He was a well-preserved, gray-haired man of about retirement age, dressed in the same sort of clothes he must have worn on some Ivy League campus in the late ’50s or early ’60s — a tweed jacket, gray pants, a blue button-down shirt and a club tie that, seen from a distance, seemed adorned with tiny brussels sprouts.

“O.K.,” I said. “Let’s hear it.”

“The financial system nearly collapsed,” he said, “because smart guys had started working on Wall Street.” He took a sip of his martini, and stared straight at the row of bottles behind the bar, as if the conversation was now over.

“But weren’t there smart guys on Wall Street in the first place?” I asked.

He looked at me the way a mathematics teacher might look at a child who, despite heroic efforts by the teacher, seemed incapable of learning the most rudimentary principles of long division. “You are either a lot younger than you look or you don’t have much of a memory,” he said. “One of the speakers at my 25th reunion said that, according to a survey he had done of those attending, income was now precisely in inverse proportion to academic standing in the class, and that was partly because everyone in the lower third of the class had become a Wall Street millionaire.”

I reflected on my own college class, of roughly the same era. The top student had been appointed a federal appeals court judge — earning, by Wall Street standards, tip money. A lot of the people with similarly impressive academic records became professors. I could picture the future titans of Wall Street dozing in the back rows of some gut course like Geology 101, popularly known as Rocks for Jocks.

“That actually sounds more or less accurate,” I said.

“Of course it’s accurate,” he said. “Don’t get me wrong: the guys from the lower third of the class who went to Wall Street had a lot of nice qualities. Most of them were pleasant enough. They made a good impression. And now we realize that by the standards that came later, they weren’t really greedy. They just wanted a nice house in Greenwich and maybe a sailboat. A lot of them were from families that had always been on Wall Street, so they were accustomed to nice houses in Greenwich. They didn’t feel the need to leverage the entire business so they could make the sort of money that easily supports the second oceangoing yacht.”

“So what happened?”

“I told you what happened. Smart guys started going to Wall Street.”

“Why?”

“I thought you’d never ask,” he said, making a practiced gesture with his eyebrows that caused the bartender to get started mixing another martini.

“Two things happened. One is that the amount of money that could be made on Wall Street with hedge fund and private equity operations became just mind-blowing. At the same time, college was getting so expensive that people from reasonably prosperous families were graduating with huge debts. So even the smart guys went to Wall Street, maybe telling themselves that in a few years they’d have so much money they could then become professors or legal-services lawyers or whatever they’d wanted to be in the first place. That’s when you started reading stories about the percentage of the graduating class of Harvard College who planned to go into the financial industry or go to business school so they could then go into the financial industry. That’s when you started reading about these geniuses from M.I.T. and Caltech who instead of going to graduate school in physics went to Wall Street to calculate arbitrage odds.”

“But you still haven’t told me how that brought on the financial crisis.”


“Did you ever hear the word ‘derivatives’?” he said. “Do you think our guys could have invented, say, credit default swaps? Give me a break! They couldn’t have done the math.”

“Why do I get the feeling that there’s one more step in this scenario?” I said.

“Because there is,” he said. “When the smart guys started this business of securitizing things that didn’t even exist in the first place, who was running the firms they worked for? Our guys! The lower third of the class! Guys who didn’t have the foggiest notion of what a credit default swap was. All our guys knew was that they were getting disgustingly rich, and they had gotten to like that. All of that easy money had eaten away at their sense of enoughness.”

“So having smart guys there almost caused Wall Street to collapse.”

“You got it,” he said. “It took you awhile, but you got it.”

The theory sounded too simple to be true, but right offhand I couldn’t find any flaws in it. I found myself contemplating the sort of havoc a horde of smart guys could wreak in other industries. I saw those industries falling one by one, done in by superior intelligence. “I think I need a drink,” I said.

He nodded at my glass and made another one of those eyebrow gestures to the bartender. “Please,” he said. “Allow me.”

Calvin Trillin is the author, most recently, of “Deciding the Next Decider: The 2008 Presidential Race in Rhyme.”

http://www.nytimes.com/2009/10/14/opinion/14trillin.html?_r=1

FTSE 100 back above 5,200 as gold hits new record high

The FTSE 100 rallied back above 5,200 as investors took heart at strong US corporate results and encouraging economic news from China and a weak dollar pushed gold to a fresh record high.

Published: 3:42PM BST 14 Oct 2009

FTSE 100
London's index of leading shares rose 1.7pc to 5241 as investors ploughed back into the market, lifted by positive results from US bank JP Morgan and chipmaker Intel.

The dollar slumped to a fresh 14-month low against other major currencies as investors' appetite for risk increased, sending gold to another record high of $1,072 an ounce.

Oil prices rose above $75 a barrel in New York for the first time in a year.

Miners surged in London after China said its slump in exports eased in September, offering a further sign that global trade is improving. Kazakhmys, up 8.4pc to £12.78, was the leading riser in the blue chip index.

Rio Tinto (up 4pc) fuelled this view after it raised full-year production targets on the back of continued strong demand from Chinese steelmakers.

Barclays , Royal of Scotland and Lloyds Banking Group got a boost from a sevenfold rise in third-quarter profits to $3.6bn at JP Morgan.

The bank's bumper profits and a better-than-expected 5pc fall in Intel's third-quarter profits to $1.9bn pushed Wall Street back toward 10,000. America's blue chip index was up nearly 1pc at 9954 in early trading.

http://www.telegraph.co.uk/finance/markets/6327173/FTSE-100-back-above-5200-as-gold-hits-new-record-high.html

Time for rate increases is approaching

Near-zero policy interest rates are powerful. If the claims of financial economists are to be believed, they are holding up economic activity and bank balance sheets. But their magic isn’t only beneficial. They also distort behaviour in dangerous ways.

By Edward Hadas, Breakingviews.com
Published: 1:13PM BST 14 Oct 2009

The US Federal Reserve, still the world leader in central banking, has kept its overnight policy rate at 0pc-0.25pc for 10 months and is in no hurry to change. Ultra-low rates will be needed for an “extended period”, says Donald Kohn, the Fed’s vice chairman.

Most central bankers don’t think zero is actually low enough to deal with weak economic activity, high unemployment, low confidence and a still fragile banking system. In the standard calculation, current conditions are so dire that people and companies should be paid to spend money. But zero rates are better than nothing, so to speak. Central banks are at least not doing anything to impede lending.

That’s the theory. But with the financial system still in post-traumatic shock, it’s not certain that the ultra-low policy rates are getting through the banks and into the real economy. Business lending remains weak.

Even if the aggressively low rates are helping activity, the gains come with losses. The financial infrastructure is being undermined. Central bankers think almost entirely about the incentive to borrow, but non-zero rates also create an incentive to save. When the policy rate is zero, so is the incentive. A prolonged period of nearly free official money makes it hard to recreate a much needed culture of savings in the US and UK.

Also, whether or not the transmission from policy rate to real economy is working well, financial markets seem to respond all too strongly. Commodity prices have risen sharply and the dollar and pound – the currencies of the central banks most committed to ultra-cheap money – are dropping.

Ultra-low rates were justified, despite the risks, when GDP and trade were in freefall and banks were gasping for support. But conditions are now more stable. The risks are starting to outweigh the rewards. Central bankers should put rate increases back on the agenda.

http://www.telegraph.co.uk/finance/breakingviewscom/6325982/Time-for-rate-increases-is-approaching.html

"Four Bad Bears" comparison.

Bear Turns to Bull?


October 13, 2009 updated each market day

The S&P 500 closed the day 58.6% above the March 9th low, which is 31.4% below the peak in October 2007.

http://dshort.com/articles/2009/bear-turns-to-bull.html

A Rising Tide Lifts All Boats

When the economy is doing well, most companies do well as a result. This is the reasoning behind this old adage. If you ignore rising tides in economies, industries, and sectors, you could miss out on big profits. Missing out on these types of profits can hurt you because trend following is one of the easiest and most reliable investing strategies (as long as you're not the last one that follows).

If you see trends forming early on in any market, and invest in that market, you can make a very nice profit. The important part again, is to do your homework to identify the most credible trends and take advantage of them before anyone else. The earlier you get in on an upward trend, the better off you'll be.

But also be aware of the other adage: "the financial genius in a rising market."

What is the most important question for a stockmarket investor?

What is the most important question for a stockmarket investor?

Whether the market is undervalued or overvalued? No!
Whether interest rates will go up or down? No!
Whether a particular company is undervalued or overvalued? No!
Whether you should buy ABC or XYZ? No!
Whether Joe Bloggs, the famous analyst, says it is a great buy? No!

Tempting as it is to look for answers to these, we will soon see that they are misleading.

Yet, there are whole office buildings full of people pumping out answers to these questions. From their side they are not trying to mislead you. They are just trying to supply answers to these questions because people keep asking them and are willing to pay large amounts of money for the answers.

Even if they could be answered, the answers will not help you reach your financial goals. Why? Because they are the wrong questions.

Warren Buffett said that he has no idea what the market is going to do and whether it is undervalued or overvalued, whatever that may mean. What is more, he is not interested in knowing.

The same applies to interest rates. Buffett once said, "If the Federal Reserve Chairman Alan Greenspan were to whisper to me what his monetary policy was going to be over the next two years, it wouldn't change one thing I do."

There is only one question. Underneath it all, there is only one question. What is my profit rate or percentage return going to be?

The core activity of an investor is to estimate with confidence the percentage return over a specified holding period when buying stock in a company. And you want to be able to do this based on reliable numbers and information.

http://myinvestingnotes.blogspot.com/2009/08/hidden-desire-of-investors.html

Multi-baggers

"The majority of the multi-baggers owe their stellar returns to the market “re-rating”, rather than an impressive expansion in their earnings."


The above statement is probably true for the short term.  However, over the long term, multi-baggers are the result of their long term earnings growth.

Investing for the long haul: Sell the losers, let the winners run.

This is the time people should review their holdings, keep the stocks with the best potential, sell the losers (not those with the depressed prices but those whose revenues and earnings aren't capable of growing adequately), and buy others with better potential while they're selling cheap.

Sell the losers, let the winners run.  But you shouldn't jump into any "hot stock" without knowing what you're doing.


Read also:
The Ultimate Hold-versus-Sell Test
http://myinvestingnotes.blogspot.com/2009/09/ultimate-test.html

Let Your Winners Run, Cut Your Losers

When you invest, it is easy to sell your successful investments and keep your failing ones. This is what comes intuitively to most investors but can end up costing you a lot of potential profits. By selling your winners too early, you could miss out on huge gains. By keeping your losers too long, you could realize many losses. This isn't always true, but it makes mathematical sense; if you keep your money in losing investments instead of winning ones, you'll more likely end up losing money.

If you have an investment that has been performing consistently well, there is no good reason to sell it. As the adage states, it is important to let your winners run. By selling too early, you could miss out on a lot more than holding onto a losing investment for too long. When holding onto a losing investment too long, you can only lose the money you initially spent. If you sell too early, you could lose many times the amount of money you initially spent. By letting your winners run, and cutting your losers, you can do much better than doing the opposite. As with all investments, it is still important to do your homework.

Be an intelligent investor through financial education

In day to day conversations, one can easily gauge that the MAJORITY of "investors" in the market are not intelligent.  An intelligent investor is as defined by Benjamin Graham in his book, The Intelligent Investor.

How can these investors acquire the financial education to guide them through the stock market investment minefields?  How can they acquire the investing philosophy and strategy to help them over many years (or decades) of their investing lifespan?  Above all to ensure that they do not lose their money in the stock market while seeking for a reasonable return.

Inevitably, this will involve acquiring a set of RELEVANT knowledge through their reading, their interactions with the other investors, their interactions with investment professionals and the market.  From personal experience, there is a huge core knowledge that has to be acquired.  This is probably too overwhelming for many potential investors. 

Therefore, though it is good to attend an hour's presentation on investment here and there, or even pay a small sum for a half day session on investment talk, this is not going to transform one into a intelligent investor.   At best, these are introductory sessions to highlight areas of investments where you may wish to explore further. How much knowledge can be acquired in a half day presentation that you cannot acquire from a good book?  At worst, you are "convinced" that you know investing when in fact the small amount of new knowledge you acquire is in fact very detrimental to your long term investing.

There is no substitute to hard work.  You would need to acquire the necessary core financial and investment knowledge.  You do not need very high power investment or financial knowledge.  However, you do need to acquire some simple knowledge in the relevant important fields to guide your investing.  Above all, you will also need to understand behavioural finance to guide your emotions.

By the way, with blogs springing up everywhere, you too have another avenue to observe investing by various individuals.  Learn their good and bad habits.  You will probably find some benefit reading this blog too. 

Good luck in your investing.

http://myinvestingnotes.blogspot.com/2008/12/investment-philosophy-strategy-and.html

http://myinvestingnotes.blogspot.com/2009/09/investing-for-beginners.html

http://myinvestingnotes.blogspot.com/2009/08/learn-to-invest-in-10-steps.html

http://myinvestingnotes.blogspot.com/2009/08/8-signs-of-doomed-stock.html

Characteristics of ideal stock you plan to purchase

Some thoughts on Analysing Stocks

Ideally a stock you plan to purchase should have all of the following charateristics:

•A rising trend of earnings, dividends and book value per share.
•A balance sheet with less debt than other companies in its particular industry.
•A P/E ratio no higher than average.
•A dividend yield that suits your particular needs.
•A below-average dividend pay-out ratio.
•A history of earnings and dividends not pockmarked by erratic ups and downs.
•Companies whose ROE is 15 or better.
•A ratio of price to cash flow (P/CF) that is not too high when compared to other stocks in the same industry.

Keep It Simple and Safe.


Also read: 
8 signs of doomed stock
http://myinvestingnotes.blogspot.com/2009/08/8-signs-of-doomed-stock.html

Buffett's focussed investing

According to Buffett, his results follow not from any master plan but from focussed investing - allocating capital by concentrating on businesses with outstanding economic characteristics and run by first-rate manager.

It is the Business that Matters

Over the long haul, stock prices tend to track the value of the business. When firms do well, so do their shares, and when business suffers, the stock will as well. Always focus on the company's fundamental financial performance.

Analyst upgrades and chart patterns may be fine tools for traders who treat the stock market like a casino, but they're of little use to investors who truly want to build wealth in the stock market. You have to get your hands dirty and understand the businesses of the stocks you own if you hope to be a successful long-term investor.

P/S: Look at Hai-O to learn that price tracks the value of the company's business.

Great Opportunities to buy companies with durable competitive advantage

a) Correction or panic during a bull market:

Any company with a durable competitive advantage will eventually recover after a market correction or panic during a bull market.

b) Bubble-bursting situation:

But beware. In a bubble-bursting situation,during which stock prices trade in excess of 40 times earnings and then fall to single-digit PEs, it may take years for them to fully recover.

After the crash of 1997, it took until 2007 to match the 1990s bull market highs. There are still companies trading today at below their last decade high price. On the other hand, if you bought during the crash, as Warren Buffett often did, it didn't take you long to make a fortune.

Stock market creates buying opportunities

The bull/bear market cycle offers many buying opportunities for the selective contrarian investor.

The most important aspect of these buying opportunities is that they offer the investor the chance to buy into durable-competitive-advantage companies that have nothing wrong with them other than sinking stock prices.

The herd mentality of the shortsighted stock market creates buying opportunities.