Wednesday 28 October 2009
Sector Timing is a process of continuous upgrading your investment holdings to maximize portfolio returns.
A simple strategy for keeping your portfolio invested in the strongest sectors of the stock market at all times. The strategy behind the Sector Timing Report is a process of continuous upgrading your investment holdings to maximize portfolio returns. Our upgrading strategy works because as economic and market conditions change, new sector leaders rise to the top of our proprietary sector scoring system. We buy these top ranked sectors and hold them for as long as they outperform their sector peers. When a holding starts to drop in rankings we sell it and move on the the next hot sectors in the market. Rebalancing our holdings monthly keeps us in the latest leadership sectors at all times.
Market Timing: Taking advantage of the periodic bouts of market madness
The most important use of past information is to tell us when the market has moved too far out of line.
By looking at the chart, you would have noticed that the price rises of 1972 or 1981 or 1987 (or 1993 or 1996 or 2007) were excessive and could not possibly be sustained. If we were rational at that time, we should have liquidated our holding and got out of the market. (wishful thinking!! worth a serious look into!!!)
Similarly, in 1975 or 1976/1978 or 1986 (or 1998 or 2008), by looking at the chart, we could have seen that the market had become very undervalued and we should have increased our holding, even if it meant that we had to borrow money to do so. (shocking!!hmmm!!!)
For the rest of the time, we should buy individual shares as and when we believe they have become undervalued, keeping the chart in the background as a point of reference when we evaluate individual shares. So long as the market as a whole is not too far above the trend line, we can purchase shares which are undervalued according to our computation. Provided we are reasonably good in our valuation, the long-term improvement in the market should ensure that we make money over the long run. (very sound advice indeed)
At times, the market may fall below or even well below the level at which we have made our purchases. This should not worry us because we have based our purchases on good dividend yield and we do not need to sell. Furthermore, we can take the opportunity to buy more shares and average down the prices of our investments.
Occasionally, we may even stand to make a lot of money by selling out if our chart tells us that the market has gone mad, as it is prone to now and again.
We are therefore practising a very defensive strategy, only buying if the shares are undervalued and quickly selling to take advantage of the periodic bouts of market madness when they occur.
Ref: Stock Market Investment in Malaysia and Singapore by Neoh Soon Kean
By looking at the chart, you would have noticed that the price rises of 1972 or 1981 or 1987 (or 1993 or 1996 or 2007) were excessive and could not possibly be sustained. If we were rational at that time, we should have liquidated our holding and got out of the market. (wishful thinking!! worth a serious look into!!!)
Similarly, in 1975 or 1976/1978 or 1986 (or 1998 or 2008), by looking at the chart, we could have seen that the market had become very undervalued and we should have increased our holding, even if it meant that we had to borrow money to do so. (shocking!!hmmm!!!)
For the rest of the time, we should buy individual shares as and when we believe they have become undervalued, keeping the chart in the background as a point of reference when we evaluate individual shares. So long as the market as a whole is not too far above the trend line, we can purchase shares which are undervalued according to our computation. Provided we are reasonably good in our valuation, the long-term improvement in the market should ensure that we make money over the long run. (very sound advice indeed)
At times, the market may fall below or even well below the level at which we have made our purchases. This should not worry us because we have based our purchases on good dividend yield and we do not need to sell. Furthermore, we can take the opportunity to buy more shares and average down the prices of our investments.
Occasionally, we may even stand to make a lot of money by selling out if our chart tells us that the market has gone mad, as it is prone to now and again.
We are therefore practising a very defensive strategy, only buying if the shares are undervalued and quickly selling to take advantage of the periodic bouts of market madness when they occur.
Ref: Stock Market Investment in Malaysia and Singapore by Neoh Soon Kean
Market timing: The relative position of a share's price to its own intrinsic value is of greater importance.
The market's movements are not perfectly reflected in the movement of the individual share.
Market timing is more an art than a science.
- Even during the sharpest decline, some of the shares hold their value very well.
- During the bull run, some of the shares do not go anywhere.
- At the same time, some shares magnify the movements of the market by two or three times, while others (mainly blue chips) only partially reflect the market movements.
- Thus even if we get the market timing right, it is not possible to match exactly what is achieved by the market.
- The relative position of a share's price to its own intrinsic value is of equal if not of greater importance.
Market timing is more an art than a science.
- There are some people who are highly gifted and are able to make good market timing decisions. And yet precisely because market timing decisions only have to be made once every 5 years, it is critical that they are made in the correct way.
- One wrong decision can either leave one out of the market for several years (i.e. after missing the start of a new bull run) or suffer heavy losses (i.e. missing the start of a new bear run).
- There are few of us who can be like Warren Buffet who made two timing decisions in 15 years and both of them were nearly spot on.
- We can never hope to be like Warren Buffett but we can use records of past market movements to help our investment decision making.
Market Timing is difficult
Some of you may be tempted to think that it is easy to carry out market timing. They may think that all one has to do is to take an index chart and draw in the trend line, making purchases or sales whenever the market price gets too far from the trend.
There are, however, two enormous difficultites in trying to make market timing decisions based on past prices.
1. First, there is the problem of future changes in the companies' business and political environment.
2. Second, there is the problem of not knowing in advance how far will the market move above or below the trend.
There are, however, two enormous difficultites in trying to make market timing decisions based on past prices.
1. First, there is the problem of future changes in the companies' business and political environment.
- The world of business is never static. There will always be changes, some small and some large to the environment which the companies operate in.
- In order for the stock market to perform as well as it had done in the past, the country must continue to prosper and the political climate has to be stable. How can we be sure that the future growth trend will be the same as in the past?
- In order to be a good forecaster, one must have a very good knowledge of economics and political science. This is hardly a qualification that is within the reach of laymen. Even with such qualifications, forecasting can still be very difficult. Professional economists and moneymen can make collective forecasting errors very frequently.
2. Second, there is the problem of not knowing in advance how far will the market move above or below the trend.
- As we have seen from past records, the distance the market moved from the trend had been irregular and unpredictable.
- We can take the 1983, 1987, 1993, 1996 and 2007 booms as examples. Many professional market-watchers, did not anticipate correctly the heights to which the market went.
- Similarly, very few market-watchers anticipated the severe market declines of 1973, 1985, 1987, 1997, 2001 and 2008.
Find Your Financial Style -- and Avoid Its Pitfalls
Find Your Financial Style -- and Avoid Its Pitfalls
by Jonnelle Marte
Tuesday, October 27, 2009
provided by The Wall Street Journal
There are few relationships more complicated than the one we have with money.
Some of us are intimate with our finances, endlessly doing research and keeping track of every penny. Others are more distant; they have a general idea of where their money is going, but aren't sure if it's the right move or if it's enough. Then there are the emotional ones, those who cling to money at the wrong times and make impulsive decisions.
So, what kind of investor and saver are you?
Not sure? Ask yourself these questions: Do I consistently keep track of my spending? And do I do so weekly, monthly or annually? Do I feel that I'm OK financially as long as my checks don't bounce? Do I plan and save for big purchases or do I buy on a whim?
There also are online quizzes, such as J.P. Morgan Chase's "Financial Styles" found at ChaseFinancialStyle.com, that can help you determine your investing and saving profile.
Once you determine your style, you can use certain strategies and tools to reinforce the positive aspects of your approach -- and contain the negative ones.
Understanding your financial approach can help you figure out where your "strategy is most vulnerable to pitfalls or problems," says Hersh Shefrin, a professor of behavioral finance at Santa Clara University who helped J.P. Morgan Chase develop its quiz.
The Analytical Investor
You're a stickler for details and data. And while it's good to be thorough with your research, if taken to an extreme people can forget to take their personal situation and goals into account when making financial and investment decisions.
This type of investor can get hit with what some advisers call "analysis paralysis," where they have trouble making decisions because they can't help thinking there is always more research to be done.
"They're what I call 'see mores' -- they always want to see more," says Bryan Place, founder of Place Financial Advisors, a financial-planning firm in Manlius, N.Y. "Rather than overwhelming themselves and spending too much time digging through content," they should limit themselves to three or four reliable sources, he says.
If you have a tendency to delay acting on your financial goals, Mr. Place says, make a list of the pros and cons and give yourself a deadline to decide -- and stick to it.
While you may be great at budgeting, you might benefit from online expense-tracking tools offered by Mint.com or financial-planning software from Quicken (quicken.intuit.com) that can help you distance yourself from your day-to-day transactions to recognize spending and saving trends over time.
At Mint.com, you can build graphs that show how your spending, income, debt or net worth has changed over a specific period. You also can see changes in spending in certain categories, such as groceries.
The Big-Picture Investor
You know your bottom line, but you don't keep track of every transaction or plan every action or expense. While this approach can be less stressful if you're able to consistently save and meet your financial goals, it can leave you unsure about exactly where your money is going and where you can cut back.
To avoid falling into a set-it-and-forget-it routine and ending up with outdated and unsuccessful strategies for investing and saving, review your strategies at least once a year. For instance, the retirement-savings plan you started five years ago might not be on pace to fund the lifestyle you live today given the recession, so re-evaluate allocations at least once a year, says Carlo Panaccione, a financial planner in Redwood Shores, Calif.
Break down your expenses into two categories: "necessities," which would include mortgage payments, utility bills and food; and "lifestyle," optional costs such as cable television and gym memberships, says Larry Rosenthal, a financial planner near Washington, D.C. Tools at Mint.com and Quicken's software allow you keep track of spending in each category.
To monitor your spending, use a debit card or credit card instead of cash, says Mr. Place, and look at your accounts online at least once or twice a week. But make sure to pay off the credit-card balance each month.
Meanwhile, online calculators such as the one offered by Discover Financial Services, discoverbank.com/calculators.html, can help you devise a monthly plan for reaching a long-term savings goal.
The Emotional Investor
Emotional investors are reactionary, often making financial decisions based on what's happening at the moment and ignoring long-term needs and goals.
"They might look at it as 'Gee, my kid's education is really coming up soon, I have to focus on that and kind of put their retirement on the back burner," says Mr. Panaccione.
For such investors, he suggests creating two lists: one with short-term goals, such as a vacation or car purchase, and one with long-term goals, such as saving for retirement.
Then, set up savings or investing accounts for each goal -- one account for, say, the purchase of a house, one for retirement and another for college tuition. To ensure that each portion is funded consistently, set up automatic deposits to each account, says Mr. Rosenthal.
Matt Havens, partner at Global Vision Advisors, a financial-services firm in Hingham, Mass., suggests forcing yourself to plan for emergencies by building a cash reserve to cover at least six months of expenses. Having that safety net will help you avoid an impulsive move.
And when it comes to investing, don't make drastic changes to your asset allocation. "A main weakness of this group is that they tend to buy high and sell low because of emotion and fear," says Bryan Hopkins, a financial planner in Anaheim Hills, Calif. It might help to sit down with a planner to create a long-term investment plan.
http://finance.yahoo.com/banking-budgeting/article/108022/find-your-financial-style-and-avoid-its-pitfalls;_ylt=Aue6pPmm7eT0U980IRHY3ha7YWsA;_ylu=X3oDMTFhYjhrOGtsBHBvcwMzBHNlYwNwZXJzb25hbEZpbmFuY2UEc2xrA3NtYXJ0d2F5c3Rvcw--?mod=oneclick
by Jonnelle Marte
Tuesday, October 27, 2009
provided by The Wall Street Journal
There are few relationships more complicated than the one we have with money.
Some of us are intimate with our finances, endlessly doing research and keeping track of every penny. Others are more distant; they have a general idea of where their money is going, but aren't sure if it's the right move or if it's enough. Then there are the emotional ones, those who cling to money at the wrong times and make impulsive decisions.
So, what kind of investor and saver are you?
Not sure? Ask yourself these questions: Do I consistently keep track of my spending? And do I do so weekly, monthly or annually? Do I feel that I'm OK financially as long as my checks don't bounce? Do I plan and save for big purchases or do I buy on a whim?
There also are online quizzes, such as J.P. Morgan Chase's "Financial Styles" found at ChaseFinancialStyle.com, that can help you determine your investing and saving profile.
Once you determine your style, you can use certain strategies and tools to reinforce the positive aspects of your approach -- and contain the negative ones.
Understanding your financial approach can help you figure out where your "strategy is most vulnerable to pitfalls or problems," says Hersh Shefrin, a professor of behavioral finance at Santa Clara University who helped J.P. Morgan Chase develop its quiz.
The Analytical Investor
You're a stickler for details and data. And while it's good to be thorough with your research, if taken to an extreme people can forget to take their personal situation and goals into account when making financial and investment decisions.
This type of investor can get hit with what some advisers call "analysis paralysis," where they have trouble making decisions because they can't help thinking there is always more research to be done.
"They're what I call 'see mores' -- they always want to see more," says Bryan Place, founder of Place Financial Advisors, a financial-planning firm in Manlius, N.Y. "Rather than overwhelming themselves and spending too much time digging through content," they should limit themselves to three or four reliable sources, he says.
If you have a tendency to delay acting on your financial goals, Mr. Place says, make a list of the pros and cons and give yourself a deadline to decide -- and stick to it.
While you may be great at budgeting, you might benefit from online expense-tracking tools offered by Mint.com or financial-planning software from Quicken (quicken.intuit.com) that can help you distance yourself from your day-to-day transactions to recognize spending and saving trends over time.
At Mint.com, you can build graphs that show how your spending, income, debt or net worth has changed over a specific period. You also can see changes in spending in certain categories, such as groceries.
The Big-Picture Investor
You know your bottom line, but you don't keep track of every transaction or plan every action or expense. While this approach can be less stressful if you're able to consistently save and meet your financial goals, it can leave you unsure about exactly where your money is going and where you can cut back.
To avoid falling into a set-it-and-forget-it routine and ending up with outdated and unsuccessful strategies for investing and saving, review your strategies at least once a year. For instance, the retirement-savings plan you started five years ago might not be on pace to fund the lifestyle you live today given the recession, so re-evaluate allocations at least once a year, says Carlo Panaccione, a financial planner in Redwood Shores, Calif.
Break down your expenses into two categories: "necessities," which would include mortgage payments, utility bills and food; and "lifestyle," optional costs such as cable television and gym memberships, says Larry Rosenthal, a financial planner near Washington, D.C. Tools at Mint.com and Quicken's software allow you keep track of spending in each category.
To monitor your spending, use a debit card or credit card instead of cash, says Mr. Place, and look at your accounts online at least once or twice a week. But make sure to pay off the credit-card balance each month.
Meanwhile, online calculators such as the one offered by Discover Financial Services, discoverbank.com/calculators.html, can help you devise a monthly plan for reaching a long-term savings goal.
The Emotional Investor
Emotional investors are reactionary, often making financial decisions based on what's happening at the moment and ignoring long-term needs and goals.
"They might look at it as 'Gee, my kid's education is really coming up soon, I have to focus on that and kind of put their retirement on the back burner," says Mr. Panaccione.
For such investors, he suggests creating two lists: one with short-term goals, such as a vacation or car purchase, and one with long-term goals, such as saving for retirement.
Then, set up savings or investing accounts for each goal -- one account for, say, the purchase of a house, one for retirement and another for college tuition. To ensure that each portion is funded consistently, set up automatic deposits to each account, says Mr. Rosenthal.
Matt Havens, partner at Global Vision Advisors, a financial-services firm in Hingham, Mass., suggests forcing yourself to plan for emergencies by building a cash reserve to cover at least six months of expenses. Having that safety net will help you avoid an impulsive move.
And when it comes to investing, don't make drastic changes to your asset allocation. "A main weakness of this group is that they tend to buy high and sell low because of emotion and fear," says Bryan Hopkins, a financial planner in Anaheim Hills, Calif. It might help to sit down with a planner to create a long-term investment plan.
http://finance.yahoo.com/banking-budgeting/article/108022/find-your-financial-style-and-avoid-its-pitfalls;_ylt=Aue6pPmm7eT0U980IRHY3ha7YWsA;_ylu=X3oDMTFhYjhrOGtsBHBvcwMzBHNlYwNwZXJzb25hbEZpbmFuY2UEc2xrA3NtYXJ0d2F5c3Rvcw--?mod=oneclick
Past Market Movements: Big Booms Are Irregular
Examination of Past Market Movements of Malaysia KLSE
What can we learn from the history of overall market movements in the Malaysia KLSE?
1. Generally Upward Trend
2. Trends Not Consistent
3. Irregular Price Patterns
4. Prices Can Be Very Volatile
5. Prices Move Volatile Upward
6. Big Booms Are Irregular
-----
6. Big Booms Are Irregular
It appears that the big booms take place somewhat irregularly.
There have been three in the last 18 years from 1970 to 1988; 1972/1973, 1980/1981 and 1986/1987.
Not only are they irregular but they are of short duration, one to two years appears to be the usual length.
This means that it is difficult to catch a big boom at its beginning.
If one goes in after the market has already moved up a great deal, there is a big risk that the market will crash shortly after.
What can we learn from the history of overall market movements in the Malaysia KLSE?
1. Generally Upward Trend
2. Trends Not Consistent
3. Irregular Price Patterns
4. Prices Can Be Very Volatile
5. Prices Move Volatile Upward
6. Big Booms Are Irregular
-----
6. Big Booms Are Irregular
It appears that the big booms take place somewhat irregularly.
There have been three in the last 18 years from 1970 to 1988; 1972/1973, 1980/1981 and 1986/1987.
Not only are they irregular but they are of short duration, one to two years appears to be the usual length.
This means that it is difficult to catch a big boom at its beginning.
If one goes in after the market has already moved up a great deal, there is a big risk that the market will crash shortly after.
Past Market Movements: Prices Move Volatile Upward
Examination of Past Market Movements of Malaysia KLSE
What can we learn from the history of overall market movements in the Malaysia KLSE?
1. Generally Upward Trend
2. Trends Not Consistent
3. Irregular Price Patterns
4. Prices Can Be Very Volatile
5. Prices Move Volatile Upward
6. Big Booms Are Irregular
----
5. Prices Move Volatile Upward
It appears that prices can move very much further from the trend line on the up side than on the downside.
Except for a short period at certain times in severe bear market or market crash, the prices do not move very far from the trend line on the down side.
But it can move a considerable distance on the up side.
It would appear also that there are more up years than down years. This means that the prices tend to build up slowly over several years and then fall much faster than they rise.
However, big upward movements tend to be followed by sharp downward movements. It is thus a lot safer to buy when the prices are below their intrinsic value than when they are high.
What can we learn from the history of overall market movements in the Malaysia KLSE?
1. Generally Upward Trend
2. Trends Not Consistent
3. Irregular Price Patterns
4. Prices Can Be Very Volatile
5. Prices Move Volatile Upward
6. Big Booms Are Irregular
----
5. Prices Move Volatile Upward
It appears that prices can move very much further from the trend line on the up side than on the downside.
Except for a short period at certain times in severe bear market or market crash, the prices do not move very far from the trend line on the down side.
But it can move a considerable distance on the up side.
It would appear also that there are more up years than down years. This means that the prices tend to build up slowly over several years and then fall much faster than they rise.
However, big upward movements tend to be followed by sharp downward movements. It is thus a lot safer to buy when the prices are below their intrinsic value than when they are high.
Past Market Movements: Prices Can Be Very Volatile
Examination of Past Market Movements of Malaysia KLSE
What can we learn from the history of overall market movements in the Malaysia KLSE?
1. Generally Upward Trend
2. Trends Not Consistent
3. Irregular Price Patterns
4. Prices Can Be Very Volatile
5. Prices Move Volatile Upward
6. Big Booms Are Irregular
-----
4. Prices Can Be Very Volatile
The price movements even within a year can be considerable - the average is 38%.
The minimum movement within a year is still 19% from the highest to the lowest which is about six times greater than the average dividend yield.
This means that price changes can very quickly wipe out any return provided by dividend.
This means that the value of one's investment can vary considerably from year to year.
One must be able to sustain such losses if one wishes to invest in shares.
What can we learn from the history of overall market movements in the Malaysia KLSE?
1. Generally Upward Trend
2. Trends Not Consistent
3. Irregular Price Patterns
4. Prices Can Be Very Volatile
5. Prices Move Volatile Upward
6. Big Booms Are Irregular
-----
4. Prices Can Be Very Volatile
The price movements even within a year can be considerable - the average is 38%.
The minimum movement within a year is still 19% from the highest to the lowest which is about six times greater than the average dividend yield.
This means that price changes can very quickly wipe out any return provided by dividend.
This means that the value of one's investment can vary considerably from year to year.
One must be able to sustain such losses if one wishes to invest in shares.
Past Market Movements: Irregular Price Patterns
Examination of Past Market Movements of Malaysia KLSE
What can we learn from the history of overall market movements in the Malaysia KLSE?
1. Generally Upward Trend
2. Trends Not Consistent
3. Irregular Price Patterns
4. Prices Can Be Very Volatile
5. Prices Move Volatile Upward
6. Big Booms Are Irregular
----
4. Irregular Price Patterns.
Although the price movements appear to be centered around the trend lines, they do not appear to be regular. Small troughs can be followed by big peaks and vice versa.
The period in which the market prices stay above or below the trend line is not regular either.
The market can stay under or overvalued for some years.
This means that it is probably very difficult to predict accurately the direction of market movements over the short run.
What can we learn from the history of overall market movements in the Malaysia KLSE?
1. Generally Upward Trend
2. Trends Not Consistent
3. Irregular Price Patterns
4. Prices Can Be Very Volatile
5. Prices Move Volatile Upward
6. Big Booms Are Irregular
----
4. Irregular Price Patterns.
Although the price movements appear to be centered around the trend lines, they do not appear to be regular. Small troughs can be followed by big peaks and vice versa.
The period in which the market prices stay above or below the trend line is not regular either.
The market can stay under or overvalued for some years.
This means that it is probably very difficult to predict accurately the direction of market movements over the short run.
Past Market Movements: Trends Not Consistent
Examination of Past Market Movements of Malaysia KLSE
What can we learn from the history of overall market movements in the Malaysia KLSE?
1. Generally Upward Trend
2. Trends Not Consistent
3. Irregular Price Patterns
4. Prices Can Be Very Volatile
5. Prices Move Volatile Upward
6. Big Booms Are Irregular
----
2. Trends Not Consistent
It is very difficult to draw trends to fit stock market movements.
The main problem is determining the starting point of the trend.
While it is true that statistical programmes can be used for trend determination, one still has to rely on subjective judgement to determine the beginning and ending point of a trend. The trend lines shown in charts are drawn based on the best available projected knowledge.
What can we learn from the history of overall market movements in the Malaysia KLSE?
1. Generally Upward Trend
2. Trends Not Consistent
3. Irregular Price Patterns
4. Prices Can Be Very Volatile
5. Prices Move Volatile Upward
6. Big Booms Are Irregular
----
2. Trends Not Consistent
It is very difficult to draw trends to fit stock market movements.
The main problem is determining the starting point of the trend.
While it is true that statistical programmes can be used for trend determination, one still has to rely on subjective judgement to determine the beginning and ending point of a trend. The trend lines shown in charts are drawn based on the best available projected knowledge.
Past Market Movements: Generally Upward Trend
Examination of Past Market Movements of Malaysia KLSE
What can we learn from the history of overall market movements in the Malaysia KLSE?
1. Generally Upward Trend
2. Trends Not Consistent
3. Irregular Price Patterns
4. Prices Can Be Very Volatile
5. Prices Move Volatile Upward
6. Big Booms Are Irregular
-----
1. Generally Upward Trend
We can see that although there are peaks and troughs, the overall tendency is for the market to be moving upwards. From 1970 to 1981, the Malaysian market was growing at an annual rate of about 12% (Singapore market 15%). From 1981 to 1987, the trend appears to be much less, around 4% per annum for the Malaysian market (6% for Singapore market). The reason for the slowdown in the growth trend from 1981 to 1987 was deflation and the negative growth experienced during the first half of the Eighties.
These trend lines may be regarded as equivalent to the intrinsic value of an individual share for they mark the inherent value of the market as a whole. The market seems to fluctuate around these trend lines.
In the future, the upward tendency of the market is most likely to continue although we are not sure what will be the actual growth rate.
However, by projecting a trend which is conservatively drawn we can have some idea where the market is heading. If we buy our shares when the market is at a reasonable level (that is when the index is around the trend line or below), we can rely on the long term rising trend to obtain our gain from the market.
Unless we buy shares near the top of the peaks, we should be able to profit from buying shares after a few years. It is therefore important to go for the long run.
What can we learn from the history of overall market movements in the Malaysia KLSE?
1. Generally Upward Trend
2. Trends Not Consistent
3. Irregular Price Patterns
4. Prices Can Be Very Volatile
5. Prices Move Volatile Upward
6. Big Booms Are Irregular
-----
1. Generally Upward Trend
We can see that although there are peaks and troughs, the overall tendency is for the market to be moving upwards. From 1970 to 1981, the Malaysian market was growing at an annual rate of about 12% (Singapore market 15%). From 1981 to 1987, the trend appears to be much less, around 4% per annum for the Malaysian market (6% for Singapore market). The reason for the slowdown in the growth trend from 1981 to 1987 was deflation and the negative growth experienced during the first half of the Eighties.
These trend lines may be regarded as equivalent to the intrinsic value of an individual share for they mark the inherent value of the market as a whole. The market seems to fluctuate around these trend lines.
In the future, the upward tendency of the market is most likely to continue although we are not sure what will be the actual growth rate.
However, by projecting a trend which is conservatively drawn we can have some idea where the market is heading. If we buy our shares when the market is at a reasonable level (that is when the index is around the trend line or below), we can rely on the long term rising trend to obtain our gain from the market.
Unless we buy shares near the top of the peaks, we should be able to profit from buying shares after a few years. It is therefore important to go for the long run.
Past Market Movements: Malaysia KLSE
By using an index, we can very quickly have an idea of how much the market has moved within a noted period.
For example, if the index stood at 800 and it is now standing at 1200, we can say that the market as a whole has moved up 50% [(1200-800) divided by 800)].
Click: http://finance.yahoo.com/echarts?s=%5EKLSE#symbol=%5EKLSE;range=my
This figure shows graphically the movements of the KLSE for the years 1999 to 2009.
What can we learn from the history of the overall market movements in the Malaysia stock market?
For example, if the index stood at 800 and it is now standing at 1200, we can say that the market as a whole has moved up 50% [(1200-800) divided by 800)].
Click: http://finance.yahoo.com/echarts?s=%5EKLSE#symbol=%5EKLSE;range=my
This figure shows graphically the movements of the KLSE for the years 1999 to 2009.
What can we learn from the history of the overall market movements in the Malaysia stock market?
What is a stock market index?
A stock market index is a measure of the average price level of the shares traded in the market. Its use is analogous to the use of degree of celcius to measure the temperature. It is constructed by comparing the current price of a sample of shares with their prices at some earlier date.
The organization which is setting up the index (e.g. KLSE) has to make two decisions regarding the design of the index.
First, what are the companies to be included in the index?
Second, what is to be the starting point of the index?
Both decisions would involve a certain degree of compromise.
In general, 30 companies is a good compromise to represent the actual situation at the stock market. KLSE Indices have the starting date of 1st January 1970. The KLSE Indices are given the base value of 100 as at 1st January 1970.
There are various ways of computing an index but the easiest way to understand is probably the one using the market value of the companies included in the index.
The KLSE Industrial Index has a based value of 100 at 1st of January 1970. It stood at 700 at the end of August 1988. This means that the market value of the companies chosen for the index had increased their total value by 600 per cent since 1970 (an average annual increase of 11.5 per cent).
It is worthwhile to remember how indices are calculated and remind ourselves how much the market has gone up in the bull run. When the market is next in a manic phase, we have to ask ourselves if it is feasible for the market to continue its performance in the future.
Click:
http://finance.yahoo.com/echarts?s=%5EKLSE#symbol=%5EKLSE;range=my
FTSE Bursa Malaysia KLCI Index (^KLSE)
http://blog.limkitsiang.com/2007/03/06/rm149-billion-klse-losses-in-5-days-pmministers-not-stock-market-consultants/
RM149 billion KLSE losses in 5 days
The organization which is setting up the index (e.g. KLSE) has to make two decisions regarding the design of the index.
First, what are the companies to be included in the index?
Second, what is to be the starting point of the index?
Both decisions would involve a certain degree of compromise.
In general, 30 companies is a good compromise to represent the actual situation at the stock market. KLSE Indices have the starting date of 1st January 1970. The KLSE Indices are given the base value of 100 as at 1st January 1970.
There are various ways of computing an index but the easiest way to understand is probably the one using the market value of the companies included in the index.
The KLSE Industrial Index has a based value of 100 at 1st of January 1970. It stood at 700 at the end of August 1988. This means that the market value of the companies chosen for the index had increased their total value by 600 per cent since 1970 (an average annual increase of 11.5 per cent).
It is worthwhile to remember how indices are calculated and remind ourselves how much the market has gone up in the bull run. When the market is next in a manic phase, we have to ask ourselves if it is feasible for the market to continue its performance in the future.
Click:
http://finance.yahoo.com/echarts?s=%5EKLSE#symbol=%5EKLSE;range=my
FTSE Bursa Malaysia KLCI Index (^KLSE)
RM149 billion KLSE losses in 5 days
Market Timing
The fundamental approach to investment requires one to work out the intrinsic value of a share before its purchase.
"Why don't we just wait until the whole market is low enough and then go in and buy a wide selection of shares?"
This question suggests that one invests by means of "market timing". If practical, it will surely save us a lot of time and effort.
"Why don't we just wait until the whole market is low enough and then go in and buy a wide selection of shares?"
This question suggests that one invests by means of "market timing". If practical, it will surely save us a lot of time and effort.
- Is it possible to carry out consistently correct market timing?
- How easy or difficult is the art of of market timing?
KLSE 1994 to 2009
http://finance.yahoo.com/echarts?s=%5EKLSE#symbol=%5EKLSE;range=my
Is there a correct time to buy and sell?
Is there a correct time to buy and sell?
Tuesday 27 October 2009
Insiders' actions in 3-A Resources
Click here:
http://www.klse.com.my/website/bm/listed_companies/company_announcements/changes_in_s_holding/index.jsp
Type of transaction Date of change No of securities Price Transacted ($$)
Disposed 15/10/2009 2,448,002
Disposed 16/10/2009 2,300,000
The recent budget introduces a mandatory basic insurance coverage
Insurance
A basic insurance and takaful scheme will be offered to provide mandatory basic insurance coverage for third party bodily injuries and death. The scheme is expected to be introduced by mid-2010.
Positive for insurance companies (Kurnia (NR), LPI (NR)) and banks with major insurance subsidiaries such AMMB (AmAssurance)
http://malaysiainfoedgezone.blogspot.com/2009/10/market-strategy-after-budget-2010-full.html
http://www.box.net/shared/uj9jmp9h63
A basic insurance and takaful scheme will be offered to provide mandatory basic insurance coverage for third party bodily injuries and death. The scheme is expected to be introduced by mid-2010.
Positive for insurance companies (Kurnia (NR), LPI (NR)) and banks with major insurance subsidiaries such AMMB (AmAssurance)
http://malaysiainfoedgezone.blogspot.com/2009/10/market-strategy-after-budget-2010-full.html
http://www.box.net/shared/uj9jmp9h63
Nestle 27.10.2009
http://spreadsheets.google.com/pub?key=tdjqbDNEEF54lSn6z6yORcw&output=html
Comment: Recent price has climbed faster than earnings.
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